How to Apply Harmonized System Codes

Rules to Quickly Find Correct Tariff Classifications

Jun 12, 2009 Daniel Workman

This article serves as a cheat sheet for exporters and importers who want to quickly choose from over 20,000 tariff item codes that decide tariff duty rates.

The World Customs Organization (WCO) developed and maintains the Harmonized Commodity Description and Coding System (HS) used by some 200 countries representing 98% of international trade.

HS codes are invaluable tools used to determine rates for customs tariff duties. For example, prepared mustard is assigned the 10-digit code 2103.30.20.00. That code corresponds with a 9.5% tariff for prepared mustard imported into Canada from countries not covered by a preferential tariff. The first 6 digits (2103.30) represent the international chapter (21), heading (03) and subheading (30) under the HS. The first 8 digits (2103.30.20) represent the tariff item for the purposes of setting duty rates. The ninth and tenth codes are used for classification purposes and statistical studies.

This analysis presents some tips on finding the correct harmonized tariff item code.

Searching by Section and Chapter Title

The customs tariff schedule has 21 sections under which 97 chapters are organized. Each chapter lists hundreds of tariff items. Titles for sections, chapters and sub-chapters are provided for easy reference only. For example, the titles for maple sugar are:

• Section IV Prepared Foodstuffs
• Chapter 17 Sugars and Sugar Confectionary
• Heading Other sugars (code 1702)
• Subheading Maple sugar and maple syrup (1702.20.00)
• Tariff item Maple sugar (1702.20.00.20).

Assigning Tariff Codes by Final Product End Use

Rules for assigning harmonized system codes can be confusing. This is particularly true for incomplete, unfinished, unassembled or disassembled products as well as parts, components and mixtures.

That’s because tariff rates are charged based on the final product, unless that final product will be sold wholesale. Therefore, sugar imported for the sole purpose of making cakes will be subject to the tariff charges applicable to the final product (tariff item 1905.90.59.91- Pies, cakes and pastry not frozen).

Similarly, exporters often ship disassembled bicycles so that they can use smaller packages that qualify for lower shipping charges. Even though the tariff code for a bicycle wheel is 8714.99.10.00 and may entitle the importer to a lower tariff rate, the end-use product code for a fully assembled bicycle (8712.00.00) must be assigned. Again, wholesalers are exempted.

Assigning Tariff Codes by Most Specific Title

Where a product cannot be readily classified by prima facie (first impression) evidence, customs officials will then search for the most specific tariff item title. That often means using a catch-all classification titled Other.

For example, Hulk Hogan uses a Segway, which is a self-balancing personal transportation device with two wheels. Because Segways represent a relatively new product, there is no separate tariff item code for Segways under heading 87.11 for Motorcycles (including mopeds) and cycles fitted with an auxiliary motor. Instead, a shipment of Segways fits would be coded under catchall tariff item (8711.90.00.00) titled Other.

Using Akin Goods to Assign Tariff Codes

If a good cannot be classified under a tariff item code, customs officials look for products with similar characteristics and qualities. One example is a special 4-wheel pedal cycle invented for disabled athletes looks and performs in a manner akin to what one might expect from a bicycle.

The pedal cycle would thus be coded under Bicycles and other cycles, not motorized (8712.00.00) using the catchall tariff item (8712.00.00.90) titled Other.

Imported Goods Missing a Component or Part

If an importer receives a shipment that is missing a component or part, the subsequent shipment will have to declare that item separately. Duty calculated for the second shipment will be based on the separate item. A cargo shipment of cameras delivered without their cases will require that duties be paid when the camera cases (4202.11.00.00) eventually pass through customs. Customs Canada allows a C$700 deductible if the follow-up delivery arrives more than 7 days after the original shipment.

Practical Tip for Finding Tariff Item Codes

Most online customs tariff schedules can be searched, particularly those in Adobe Acrobat PDF format. By pressing down the control and F keys at the same time, users can enter a search keyword for the tariff item into the find dialogue box.

Using the above method to search for “scooters” proved to be the fastest and most convenient way to find the 10-digit tariff classification for four-wheeled mobility scooters (8713.90.00.20) used by disabled persons.

Sources for this Article

This article presents independent insights based on Customs Tariffs Departmental Consolidation 2009.

The copyright of the article How to Apply Harmonized System Codes in International Trade is owned by Daniel Workman. Permission to republish How to Apply Harmonized System Codes in print or online must be granted by the author in writing.

Harmonized System code 8711.90.00.00 for segways