What’s my HS code?
It’s a common question and also a really interesting one.
10 points if you can tell us your HS code in the comments and a GOLD STAR if you have it printed on your export documentation. If, however, you are like many exporters and you either don’t know what we are talking about, or you vaguely recall something about it but you’re not 100% clear, then a quick review of the information below is going to provide you a good grounding on the topic.
What is a HS Code?
HS codes refer to the Harmonised Commodity Description and Coding System. It is just what the title suggests. An internationally accepted system of names and numbers that classify over 5000 different products and covers over 98% of all goods traded internationally.
Developed in 1988 by the World Customs Organisation, HS codes are 6-to-10-digit figures that all goods require when moving internationally. It’s important to understand, the schedule is the same (harmonised) only to the 6 digit level. So an umbrella “6601.91” is recognised by all countries as an umbrella with a telescopic shaft. “6601.99” is for other umbrellas or sun umbrellas.
Consider the potato (dynamic example right?). The digit “0701.90” is for fresh or chilled potatoes. Frozen is “0710.10”, chips or fries are different again.
Why is this important?
Customs authorities use HS codes to identify what goods are being shipped and they also use them to apply the relevant import duties, taxes and regulations. If you don’t include them, it can result in your importer paying higher taxes, or having the cargo delayed while the classifications are decided.
When you’re shipping internationally, it’s really important that you use the correct HS code on each line of your commercial invoice (learn more about commercial invoices). Using the appropriate codes ensures that your goods’ movement through customs will be smooth and hopefully trouble free.
Case Example: Australian Swag Exports to the USA
CVEN was engaged by a client to investigate options to export swags to the USA. As part of our preparation for the market, the team made enquiries to see how the import of swags was going to be handled by US customs. The team discovered that if the swag was to be classified as a tent (similar but not the same) the product was subjected to an 8% duty and an import quota which was often exhausted 8 months into every year. This meant no more imports of this particular HS code after the quota was reached. So we needed to be very clear on just how this product was going to be handled.
“Just choose a better HS code.” I hear some of you say. Unfortunately, you can’t. It’s the import broker in the destination market that gets the final say and you can get into a lot of trouble should a foreign Government think you are being dishonest.
So with this challenge, we sought a ruling from Customs in the US. An argument was submitted why this product should not be classified as a tent. Product photos were submitted along with detailed drawings and the materials used in its manufacture. Customs ruled that the product was not a tent and awarded us a HS code that was lower in duties and did not have a quota.
A good outcome and one that when learned as part of your entry prep, ensures your goods move into market compliant and without delays.