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Importing Series: 1. How To Find The Correct Commodity Codes For Your Goods

How to Find the Correct Commodity Codes For Your Goods

To start the series, we'll be dealing with the first bullet point in the list "find the correct commodity codes for your goods".

To import goods into the UK from outside the European Union (EU) or move them from another EU country you have to:

  • find the correct commodity code for your goods
  • pay VAT in some cases
  • fill in a VAT return if you're VAT registered
  • register with the CHIEF system for importers if you're importing from outside the EU
  • declare the goods you import using the CHIEF system
  • pay duty in some cases
  • get a licence for some goods (eg firearms)
  • check if the goods are banned from being imported into the UK or require an import licence

https://www.gov.uk/starting-to-import/overview

The Tariff Classification Service Enquiry Line on 01792 366 077 can help with commodity codes. You can ask advice on up to three items per call.

Some websites have tariff lookup tools that you can use like search engines.

In this article you will learn:

  • How to understand the General Interpretative Rules
  • The consequences if you use the wrong commodity code
  • What third party and Government assistance is available

Commodity codes are used to classify goods to ensure you pay the right duties and tax and follow regulations, and so that HMRC can collect data about imports.

HMRC organises codes into the UK Integrated Trade Tariff, which is commonly called The Tariff . You will have to search this in order to find the right commodity codes. The Tariff is a big document that is published annually and updated monthly based on EU legislation.

You might hear commodity codes referred to as HS codes. HS means harmonised system and this is what classification is based on in the EU.

How to Find the Right Code

  • The code you are looking for is a ten-digit number (sometimes it will be a 14-digit number).
  • Use the General Interpretative Rules to search the Trade Tariff for the right code.

The General Interpretative Rules

Rule 1

1.The titles of Sections, Chapters and Sub-Chapters are provided for ease or reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions [that is rule 2 or 6].

This rule should be sufficient to classify most products. The Section and Chapter titles are just guides to the area of the Tariff in which the product code is most likely to be found. But, the associated notes may specifically exclude your product, so make sure you read through them to check. The words in the Section and then Chapter should describe your product.

If they do, and the notes don't exclude your product, then you've found the right code. Often this can be sufficient to classify your product.

Quick Guide

  • This is a "common sense" rule
  • Most products can be classified using it
  • Look in the section that best describes your product
  • Then look in the chapter that best describes your product and continue clicking through subheadings to find the most specific description of your product.

Rule 2a

2a. Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.

This rule is a bit confusing but it's actually not that hard to understand once broken down. Sometimes products might be sent out unassembled or only in part. It is ok to classify them under the header of a complete or finished product as long as they have the essential characteristic of the finished product. E.g. a bike without its wheels would still be classified as a bike.

Quick Guide

  • A good which is in part or has parts missing does not need a special code.
  • It can be classified as what it would be in whole (as long as it has the essential characteristic)
  • Example: a bike with no wheels is still classified as a bike.

Rule 2b

2.b Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.

When a product doesn't fit into 1 or 2a and is composed of mixed materials so would logically need two commodity codes you should refer to rule 3 because it is illegal to have more than one commodity code. A heading which refers to a given material or substance includes mixtures of that substance with others. Likewise a reference to a product composed of a given material includes products composed either wholly or partly of the material.

Quick Guide

  • Don’t worry about headings which refer to materials when your product is made of a mixture of materials. The code assumes that the product is made of mixed materials and will assume that the good is made of it in whole or in part.
  • If your product could be logically classified under two headings refer to rule 3. It is illegal to have two commodity codes.

Rule 3a

3. When by application of Rule 2(b) or for any other reason; goods are prima facie, classifiable under two or more headings, classification shall be effected as follows:

(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed of composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

This rule is actually quite common sense. When you are directed to 3 because your product could come under two headings you should choose the most specific. So go for the heading which actually names the product rather than the category that it could belong to. Globaltariff.com use mint tea as an example. There's no specific product of mint tea in the Tariff. Product descriptions are available for mint and tea, but the product would have to go under tea as it is first and foremost tea and mint is just the flavour.

Quick Guide

  • When there are two codes that a product could go under, pick the heading that names the product rather than a category it could belong to.
  • Example: there is no product of mint tea named in the Tariff. The product would come under tea, as mint is just its flavour.

Rule 3b

3. When by application of Rule 2(b) or for any other reason; goods are prima facie, classifiable under two or more headings, classification shall be effected as follows:

(b) mixtures, composite goods consisting of different materials or made up of different components and goods put up in sets for retail sale, which cannot be classified by to reference to 3(a), shall be classified as if they consisted of the material or component which gives their essential character insofar as this criterion is applicable.

When no previous rule allows you to classify the product you should classify it as if it consisted of the material or component that gives it its essential character and refer back to the previous rules.

Quick Guide

  • Refers to goods made up of lots of different products (composite goods)
  • When you are selling one product made up of a set of items or materials and previous rules do not help to classify the product, classify it as if it were made up of its essential character.
  • Example: a whiskey gift set with glasses would be classified as if it were just whiskey as that is the essential characteristic.

Rule 3c

3. When by application of Rule 2(b) or for any other reason; goods are prima facie, classifiable under two or more headings, classification shall be effected as follows:

(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

When there is no obvious "essential" characteristic, for example a gift set which includes socks, alcohol and a golf ball you should classify the product under the code which is last when you put all of them in numerical order.

Quick Guide

  • Applicable when there is no “essential” characteristic.
  • Classify product under code which is last when you put all potentially relevant codes in numerical order.

Rule 4

4. Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.

This tends to apply most to new products and is considered a last resort if your product doesn't come under any of the other rules. In this case you classify the product under the heading which is most similar to the product.

Quick Guide

  • This is a last resort rule.
  • It normally only applies to new products.
  • Classify your product under the heading which is most similar to the product.

Rule 5a

5. In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein:

(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace case and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character;

This rule means that when a product is sold with a case, the case does not need separate classification unless the case gives the product its essential characteristic.

Quick Guide

  • A case for the good does not affect the code.

Rule 5b

5. In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein:

(b) subject to the provisions of rule 5 (a) packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.

Rule 5b relates to packing materials. Like cases, the packing materials won't need separate classification as long as they can't be used over and over.

Quick Guide

  • Like a case, packing materials do not need classification.

Rule 6

6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and mutatis mutandis to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule the relative section and chapter notes also apply, unless the context otherwise requires.

This rule basically means that once you have used rules 1-5 to get to the first heading, you need to use them again at subheading level and so on until you have the most specific code, taking into account any exceptions or special cases noted in the Legal Notes.

Quick Guide

  • Once you’ve used the rules to get to the heading, use them again to get to all subsequent subheadings.
  • Check subheading notes to make sure your good doesn’t come under any exceptions.

Example Code: Incense Stick - 33074100

  1. Start with the Section "Product of the chemical or allied industries" which leads you to the chapters 28 to 38.
  2. Within that you would pick Chapter 33 "Essential oils and resinoids; perfumery, cosmetic or toilet preparations"
  3. And within Chapter 33, 07 is the most appropriate description:

"Pre-shave, shaving or aftershave preparations, personal deodorants, bath preparations, depilatories and other perfumery, cosmetic or toilet preparations, not elsewhere or included; prepared room deodorisers, whether or not perfumed or having disinfectant properties."

This is further clarified by the fact that 07 includes "Preparations for perfuming or deodorising rooms, including odoriferous preparations used during religious rites" which is a much more specific description of incense.

  1. Within this is an option to pick "‘Agarbatti' and other odoriferous preparations which operate by burning" which is an exact description of the product we're trying to categorise.

So the eventual code will be:

33074100

What Happens if you get the Code Wrong?

HMRC can fine you and/or seize your goods and delay their release if you import goods with the wrong code.

Make sure you don't just rely on the codes provided by the manufacturer as codes across different countries can differ. You need to make sure you are using the appropriate code for the UK. 

If you need help clarifying which code you should be using, you can call the Tariff Classification Service Enquiry Line on 01792 366 077. You can ask advice on up to three items per call.

Using Third Parties To Help

Classification codes are complex and often companies will use third parties to help them out. There are some useful resources around the web which should help you figure out which code you need, but remember that you are ultimately responsible if you do not use the right code. If you would like customs to make a binding decision on the correction code you can apply for a Binding Tariff Information Ruling .

Tariff Search Tools

Some websites have tariff lookup tools that you can use like search engines:

http://www.3ce.com - offers a free trial

http://www.dutycalculator.com/hs-lookup - offers three free look ups

Useful Resources

https://www.nibusinessinfo.co.uk/content/using-commodity-codes-classification-terms-and-tariff

https://www.gov.uk/classification-of-goods

http://www.globaltariff.com/RulesofInterpretation.cfm

http://www.wcoomd.org



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