Finding right HS codes

The Harmonised System (HS) was developed by the World Customs Organisation as a multipurpose international product classification that describes all products that may be internationally traded. For commodities to successfully cross international borders, the correct HS code (also known as an HTS code) must be declared. This code determines the appropriate duty and tax rate payable on the item.

The HS Code system uses an internationally applied 6-digit number as the basis for local country classification. The HS consists of 5,300 article or product descriptions that appear as ‘headings’ and ‘subheadings’. In theory, all countries using the HS agreement should classify a certain product with the same HS section, chapter, heading and subheading; though in practice conflicts can arise.

Unfortunately, not all countries apply the same HS versions, or apply the rules in an identical manner. This uncertainty, as well as the increasing complexity of products, historic ruling decisions and a lack of expertise concerning the technical aspects of a given product, combine to create complex, inconsistent and risky classification rules which can be difficult to navigate.

As an importer or exporter, it is your legal responsibility to correctly classify the goods being shipped. Sparkle Logistics then correctly declare that classification on your behalf to customs, acting in your name.

HS classifications are risky if you classify incorrectly, as you may be paying the wrong duty and tax on your products. This can result in a retrospective duty or tax bill for the back payment of all the goods you incorrectly classified. This can lead to substantial penalties and fines, and even cause your goods to be seized or destroyed.

An incorrect classification can also lead to overpayment of duty and tax, which has implications for your business’ cash flow. It is possible to make a retrospective claim for overpaid duties, but you must be able to fully back up your arguments for such a retrospective change and claim.

Tariff classification is a specialised skill that requires a broad knowledge base and experience. Not all importers or exporters necessarily have this expertise. At Sparkle Logistics, we have vast experience in shipping goods worldwide and declaring goods to customs agencies correctly is a key element of our services. The customs and trade compliance teams of Sparkle Logistics and our partners worldwide are up-to-date with all aspects of customs activity and we are efficient in HS classification, and are ready to support you with advice on how best to classify your products. Furthermore, we can identify where there may be risk in your classification and optimise your classifications, taking advantage of available benefits – such as legitimate re-classification and reduced duty rates – and duty suspensions.