Tariff Classification is one of the main areas of
Customs Law and is crucial when imposing customs duties. Specific rules on
classification can be found in HS Convention to which almost all the WTO
Members (except Taipei) are party. HS consists of over 5000 commodity groups
with a six-digit code. HS consists of:
(1) Chapter, Heading and Sub-heading
Notes; and
(2) General Rules for the Interpretation (GIR) of the Harmonized
System.
The first one which is Chapter, Heading and Subheading Notes is the
main step to identify the product classification.
The second part, GIR provide
certain principles to classify goods: (i) incomplete or unfinished goods if
they don’t have a proper line are classified as finished goods; (ii) when goods are prima facie classifiable under two or
more headings, classification shall be effected as follows. (a) A heading that
provides a more specific description is to preferred to the more general
description; (b) mixtures, composite goods consisting of different materials or
made up of different components, and goods put up in sets for retail sale,
shall be classified as if they consisted of the material that gives them their
essential character; and (c) if goods can not be classified under the above
rules shall be classified under the heading which occurs last in numerical order
among those which equally merit consideration. (3) If the goods can not be
classified under the above rules, then they shall be classified under the
heading appropriate to the goods to which they are most akin. The
classification of subheadings of a heading are also important and should be
referred to subheading notes and GIR of HS as well as explanatory notes and
classification opinions.
Basic principles governing tariff classification of
different countries were developed by Customs Courts and Tribunals of different
countries. For example, in EU it is the Court of Justice of the EU. In the USA
it is US Court of International Trade and Court of Appeals for the Federal
Circuit. Basic principles include first of all the wording of Heading and
Subheading that serves as the main step of classification. The second principle
includes the intended use of a product and its properties and characteristics.
The other principle are explanatory notes, consulting to the dictionaries (e.g.
Oxford dictionary), scientific authorities and other reliable sources of
information. In WTO law, tariff classification is governed under Article II of
the GATT 1994.
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