With the businesses expanding every day, a lot of companies are shipping their products worldwide. They want to expand their business globally and earn the respect they are looking for.
Classification is the foremost step in the import and export process, and if you’ve got a global classification system linked to your business, then it’s a plus for you.
HS code is widely used in every trade that is performed internationally. If you’re an importer or exporter, then you must have a piece of knowledge about HS code and proper use of it.
So, let’s get started with everything straight away!
What is HS Code?
HS code stands for Harmonized System, and it was developed by the World Customs Organization (WCO) in order to nomenclature the products that describe the type of good that is shipped. Today, the usage of HS Code is compulsory in the Custom Offices to clear every commodity that enters your border or crosses any other international border.
In short, HS code is a common term in trade language, and it’s an essential element of bringing standardization to international trade.
HS Codes are being used in more than 200 countries to help customs with the assembly of international trade statistics, and 98% of the products that are being traded internationally have HS codes. Therefore, HS code helps standardize how different products are identified globally.
What is the Structure of the HS Code?
You can describe the HS Code as follow:
- HS Code is a six-digit identification code
- It has 5000 commodity groups
- All those groups have 99 chapters
- Those chapters have 21 sections
- Everything in the chapters and articles is arranged in a legal and logical structure
- Well-defined rules in the structure of HS Code support the uniform classification worldwide
The HS Code follows from the Kyoto Convention of 1974 and helped the simplification and harmonization of all the procedures related to Customs. You’ll find out the detailed and uncomplicated procedure in Kyoto Convention and obligatory rules for their implementation. According to the 2017 report released by the Kyoto Convention, this convention has now about 106 contracting parties.
Today, HS Code is widely being used on every product but extensively in electronic messages like the EDIFACT. This has made the system easier to become a worldwide standard for defining goods on various platforms. The Universal usage of the HS Code has made it easy for the Custom Departments to identify the products and the category of the product.
Why Is HS Code Important?
“HS Codes are important for Government Official (Custom Offices and Ports) to identify the goods that are being imported or exported in order to collect the taxes.”
You can consider the HS Code as the last challenge that goods face before hitting your border, and you’ve to pay the taxes before you use those products or allow them to display in your outlets for the selling purposes. There are two major roles and objectives that HS Code serves to you apart from helping your good to get clear from the customs officers:
- HS Code helps you to identify the products that are being exported or imported through a country’s border
- HS Code classify and categorize your products in a worldwide system used for clearance purposes
“Importers and Exporters can’t ignore HS Code because having a proper product classification is a part of their responsibility.”
Before shipping your products into the importing and exporting market, it’s always crucial that you assign your products to an HS Code. Few importers and exporters might ignore HS Codes, and that isn’t a good practice at all. It can cause you many severe problems like; damaging the reputation of the company, fines and could be harmful to both parties.
What Will HS Code Influence?
Here are a few of the issues that can occur if you ignore the HS Codes and ship your products without them:
Duty Rates: Duty Rates are highly linked with the HS Codes, and if you’re not assigning your product an HS Code or providing it a wrong HS Code, then it could be commercially very risky. So, if you’re avoiding the HS Codes, then it’s not a wise decision, and you may lose a lot of your money for taking the risk.
Importer Security Filing (“10+2”): One of the most effective methods of complying with the importer security filing (“10+2”) requirements is to provide them the HS Code along with the purchase order from the importer.
Risk of Delay: When the customs officers aren’t able to identify the products or commodity through the HS Code at the time of arrival, then you might face long delays and face storage charges.
Regulatory Risk: No HS Code or providing the wrong HS Code means that the involvement of regulatory intercession. Providing wrong HS Codes indicate that you can be fined a substantial amount or can lead you to pay too much.
So, it’s always vital that you provide correct HS Codes to avoid facing such issues because it’s your legal responsibility as well.
How to Find the HS Code of My Products?
A lot of people are willing to know the HS Code of their products, but they couldn’t find a way of finding one. But there’s a website known as Find HS Code that can help you find your HS Code. To find your HS Code of the product, here’s what you’ll have to do:
- Head towards the website
- On the front page, they will ask you to enter the name of the product to know the HS Code, as shown in the screenshot:
- You’ll get the desired results when you enter the name of the product
That’s how easy it is to find the HS Code of your product.
Once you find the HS Code of your product, you can scroll down and check the import duty on your products as well.
Frequently Asked Questions
Well, you can’t say HS code as a benefit, it’s more like a requirement. You’ve to write the correct HS Code on your product that you want to ship. This is necessary in order to let custom duty members know “What you’re importing or exporting” so that they can charge you the right amount of duty rate.
The first six digits of the HS Code for all the countries are the same but every country has a different national Code.
For instance, the HS Code of USA has 10-digits. The HS Code in China has 8-digits and the same goes for India as well. So, you can say that HS Code for every country is different and they have different duty charges as well.
If you’ve used the wrong HS code to clear your imports/exports, you probably will pay a higher duty rate which you don’t deserve to as the duty rate is according to the code.
FindHS Code enables you to find the HS Code for your products both by image and text searching.
Determining the HS code can be very complicated. We suggest you use two or more HS code search engines and compare their search results. But the customs authority has the final tight to determine the HS Code.
The national code is different and you can find the code via country-wise HS code finder.
Hope this article will help you learn the basics of the HS Code and to avoid problems in the future. If there are more questions considering the import duty, the landed cost, etc, comment below or send us an email, we are ready to help.