Looking for the correct HS code for a product can be a complicated process. However, there are various strategies available to identify it, including using the General Rules of Interpretation (GRI) plus developing your own techniques. By utilizing these methods, you can determine the most frequently obtained HS codes for your products
Step 1: Consider Bill of Materials(BOM) and TDS
The first step in determining your product’s HS code is to first know your product specifications. Gather the following information regarding your product:
1. Technical Data Sheet
2.Bill of materials
3.Application
4.Chemical composition
5.Packaging information
6.UN codes or any restrictions on your product
7.Manufacturing process
If you want to sell in Europe, your bill of materials needs to be REACH compliant and Caplinq can make that happen. See our REACH page for more information.
Step 2: Visit your country’s HS codes classification website
To identify your product’s HS code, you can check your country’s HS code classification website, which typically follows the same nomenclature as other countries. While the main chapters and sub-chapters are generally the same, the sub-chapters may differ. After determining your product’s physical characteristics, make note of all potential categorizations that may apply. This will help you identify the most accurate HS code for your product.
For more information on what are HS codes, see our other blog on HS codes.
Step 3: Competitor research
If you’re not the only company manufacturing a particular product or application, you’ll likely have competitors, both domestically and internationally. For domestic competition, this can be advantageous as research has already been done. If your product matches the same application, composition, bill of materials and characteristics as your competitor, you may be able to use the same HS code.
In the case of international competition, you can visit the competitor’s country’s HS code classification website and note the chapter and sub-chapter that the category belongs to. Then, review the respective chapter and sub-chapter of your own country and filter out potential codes based on competitor usage. This can narrow down your list of potential HS codes to a certain, limited, or even single code that may be suitable for your product.
Step 4: General Rules of Interpretation(GRI):
Once you have determined the product’s classification, you can use the GRI to identify the appropriate HS code. The GRI consists of six rules that provide guidelines for determining the appropriate classification of a product
GRI Rule 1: The classification of goods in the HS is governed by the terms of the headings and any relative section or chapter notes. Therefore, you should first examine the headings and notes of the relevant chapter and section to identify the appropriate HS code
GRI Rule 2: If the product cannot be classified based on Rule 1, then you should consider the headings and notes of the next lower level of classification. This process continues until the appropriate classification is identified
GRI Rule 3: When a product is not clearly classifiable based on the headings and notes of a particular section or chapter, then you should consider the most appropriate heading among those that seem to apply to the product.
GRI Rule 4: When a product could be classified under two or more headings, then the heading that provides the most specific description should be used.
GRI Rule 5: In cases where products are classified as “parts” or “accessories” of another product, they should be classified in the same heading as the principal product. However, this rule does not apply if the “parts” or “accessories” have a different classification from the principal product
GRI Rule 6: When a product is not covered by any heading or subheading of the HS, then it should be classified under the heading that most closely resembles it, and the appropriate subheading should be selected based on its essential characteristics
Step 5: Binding Tariff Information(optional)
After filtering out potential HS codes for your product, it’s important to choose the right one.
However, it’s possible that customs could dispute your code selection, so it’s important to have proof that you’re using the correct and legal HS code. This is where Binding Tariff Information (BTI) comes in. BTI is a legally binding document provided by your country’s customs authorities, which links your product with a rightful and binding HS code tariff classification.
By obtaining a BTI, customs authorities will be bound to use the specified HS code for risk analysis and customs debt calculation each time you make an import or export, as long as you provide the correct document for the respective transaction. This ensures that you’re using the correct HS code for your product and reduces the risk of disputes with customs
Strategies to maintain the HS codes compliance
Strategy 1: Expert’s advice
Consulting a customs agent can be a valuable strategy for businesses seeking to maintain compliance with HS codes. Customs agents are experts in import and export regulations and can provide guidance on the correct classification of products under the HS code system. They can also advise on any additional requirements or certifications that may be necessary to comply with local regulations. Working with a customs agent can help businesses avoid costly penalties for misclassified products and ensure that they are taking advantage of any applicable trade agreements or duty exemptions
If you become our order fulfillment client, we can help you to import effectively into the EU for business. Click here to read more about it.
Strategy 2: Periodic review and monitoring customs regulations of your country
Regularly reviewing and monitoring customs websites is an essential strategy for maintaining compliance with HS codes. Customs authorities often issue updates to their regulations and classification systems, and staying informed about these changes can help businesses ensure that their product classifications remain accurate and up-to-date. Businesses should establish a process for periodically reviewing their product classifications and verifying that they align with the latest HS code changes. In addition, monitoring customs websites and other relevant government sources for updates can provide valuable insights into changes to regulations, tariffs, and other trade policies that could impact a company’s compliance obligations. By staying on top of regulatory changes and maintaining accurate product classifications, businesses can reduce the risk of penalties for misclassified products and take advantage of any available trade benefits
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