What is HS classification?

HS Classification refers to the process of assigning a tariff code to a product. This is a series of alphanumeric characters that describe a product to Customs authorities. In other words, Customs officers will use this series of characters (usually, but not always numbers). to determine the Customs and excise duties applicable to imports and exports. They may also use the HS code to determine licensing requirements.

HS Classification can be outsourced, but the liabilities associated with erroneous use of HS codes cannot be outsourced.

Who can do HS Classification?

Usually, the following people are able to do HS classification

  1. Customs broker
  2. Importer/Exporter
  3. Manufacturer
  4. Freight forwarder
  5. Trade compliance consultants
  6. Customs authorities

That being said, it is always the responsibility of the importer or exporter to ensure that the correct HS code is provided to Customs authorities.

Can HS Classification be outsourced?

Hence, although the importer or exporter can hire a third party to manage HS classifications, they cannot transfer the responsibilities completely. This means that the importer/exporter is still liable for the following:

  1. Penalties arising from wrong classifications
  2. Duty claw back from Customs due to using the wrong classification on previous imports
  3. Fines due to missed licensing conditions are a result of using the wrong HS codes

How should HS classification be managed?

All IORs/EORs should ensure that they maintain tight control of the HS codes used on Customs entries that are responsible for. This can be done by hiring a consultant to audit the HS codes or applying to Customs for a tariff classification ruling.

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