Have you heard of the saying that HS codes will soon become a fact of life? In the real sense, traders in various countries may have no option than to depend on HS codes to get things running as far as freight shipping is concerned. The importance of an HS Code can actually not be overemphasized.
In this week’s article, we want our readers to understand what an HS Code is all about, its importance, how it works, and how to find your HS codes.
In simple term, HS Code is that 6 to 10 digit number that categorizes any imported or exported product. It is used internationally to accurately track and tax goods coming in and going out of a country. HS Code classifies your product for international trade and international freight.
HS Code refers to the Harmonized System, otherwise shorthand for ‘Harmonised Commodity Description and Coding System.’
It is the common standard used worldwide for describing the type of commodity of import and export; a recognized system that covers 98% of all goods traded globally. Commodity groups of over 5000 in the nomenclature carry an HS code, whether you are trading textiles or tilapia.
Importance of an HS Codes in Freight Shipping
The HS code requires to be properly categorised because of the following importance.
- For taxes & accurate tracking of traded goods: Government officials require the HS Code to identify imported and exported goods for proper taxes. Correctly categorised goods with the HS code also helps for tracking purposes.
- It is part of the Importers/Exporters Legal Responsibility: It is not a good business practice to Ship before assigning an HS code. Improper assigning or none assigning of an HS Code for your good can cause costly challenges. It can harm the business of all those concerned, e.g. the importer/exporter and the suppliers. Further Consequence like damaging the business reputations of individual concerned due to legal implications.
Implications of Getting the HS Codes Wrong
1. Effect on Duty Rates: The entire shipping process requires understanding standing duty tariffs. And the HS Code is closely involved in determining duty rates, as well as antidumping and countervailing duties. To avoid a very dangerous commercial risk on your business, you want to ensure you get the HS codes of your goods right.
2. Risk of Delays: One factor among many others responsible for the delayed arrival of shipment is incorrect HS Codes. When an importer fails to get right the HS Code, it posses a major challenge for the shippers as it risks delays. In connection, when customs brokers can not classify and identity a shipment correctly and the commodity respectively with its proper HS codes before the vessel arrives and free time at the terminal expires, the shipper faces storage charges.
3. Regulatory Intervention Risk: Shippers also risk regulatory intervention. Assigning HS codes on the fly is a risky venture resulting in lower accuracy. Improper HS codes can lead to the importer paying too much duty or being fined for the inaccuracy.
How to Find the HS Codes of your Products
It is highly imperative to understand customs tariff.
If the entire concept of HS code is new to you, the HS code includes 6-digits where the first 2 digit is the HS Chapter. The second 2 digits designate the HS heading, while the third 2 digits call the HS subheading and last two digits designate tariff item level.
HS Code 5911.90.00, Indicates Chapter 59 (Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use), Heading 11 (Textile products and articles, for technical uses, specified in Note 7 to the Chapter), Subheading 90 and Tariff Item Level 00.
To find your HS Code, you’ll require
In an early post, we demonstrated how to calculate customs duty. To determine the duty charge, the HS Code of the product is highly important.
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We provide adequate logistics and clearing services for our numerous clients. Our operational systems include handling of all relevant documents, freight forwarding, customs clearance, warehousing and transportation of consignment on behalf of the consignee. Proper monitoring of all inward and outward bound consignments is ensured by our efficient and dedicated staff.
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