What is Hs Code?
Hs Code is a system for identification, control and classification of products which is determined by the governments according to the economic and political policies and the type of budgeting of the country. Hs Code is also called customs tariff. In this system, all products are identified by an 8-10digit code.
What does each of the Hs Code numbers represent?
Hs Code consists of 8-10 digits, the first 4-6 digits are usually common among the member countries, the next 2-4 digits are determined by the classification made by the countries. These codes are used in all countries, they are classified into 21 parts and 98 chapters. In these classifications, products with similar characteristics and specifications are placed in a category or group with a certain order. The purpose of using these codes is to facilitate international trade. Use of Hs Code not only has facilitated customs clearance but also has facilitated statistical surveys of international trade.
What is the basis for coding and classification of products?
We should say that each country determines the coding of products based on its economic and political policies, but usually products are classified alphabetically or based on the type of ingredients or even the technology used in their production or even what the final uses of the products are and how they are combined.
What are the benefits of products classification?
The classification of products in international trade has many advantages. Since using such lists in countries will lead to contracts and concepts which are clear for the parties to the contract. However, you should keep in mind that occasionally, due to the introduction of new products or changes in international trade, these classification lists and their basis will be changed and updated.
How many types of product classification system or HS CODE are there?
Country classification lists are usually of two types (CCCN) or (HS). The first category is the classification system of the Customs Cooperation Council of the countries and the next case is its alternative system, or the harmonized system of description and coding of products or harmonization.
What does Hs Code determine?
The international code for products, or Hs Code, specifies many details of products. This is the reason why buyers and sellers in global markets use this international code in their invoices and register them by using Hs Code. As we mentioned, Hs Code is a system of standardization, product identification and classification control which is determined by governments based on financial, political, fiscal, and budgeting condition. This international system has been implemented by the WTO. Due to the tariff and non-tariff regulations included in the regulations of international trade and economic activities, this Hs Code system and its maintenance have been considered in the customs statistics. Hs Codes are usually used in proforma invoices or invoices. However, it is sufficient to mention the name of the product in these documents and it is not necessary to enter these codes.
What are the consequences of using a wrong Hs Code?
The exporters or sellers are supposed to enter the correct Hs Code in their invoices. In case if an incorrect Hs Code is entered intentionally or unintentionally violation of the law has taken place. This violation has some consequences and will lead to punishment. These are administrative penalties and fines ranging from 50 to 200 percent of the customs value of the products. Because these international codes, Hs Codes, determine the import rights of products and also determine whether or not to obtain licenses. Entering wrong codes has serious consequences, which will be fined by the owner of the products or his legal representative.