Rule 2 General Interpretative Rules of HS Classification

This is part 2 in a series of posts explaining the use of World Customs Organization’s rules relating to HS classification. You can find the first article here: General Rules of Interpretation/General Interpretative Rules of Classification : Rule 1. 

The second general interpretative rule of classification consists of 2 parts. Rule 2(a) deals with the classification of incomplete, unfinished, disassembled or knocked down products. Rules 2(b) lays the principles for the classification of products that do not consist of a single chemical, liquid, gas, solid or specific component. Effectively, rule 2(b) leads the classifier to the third rule of classification, which we cover in a separate article.

GRI 2(a) introduces an important feature of the classification rules, which is the concept of essential character.

Generally speaking, the test of essential character refers to making an assessment of whether the product, presented in it’s current state of form – already has the main characteristics, features or functionalities of the finished goods.

Essential character can be determined based on several factors such as (but not limited to) weight, volume, mass, functionality, size, melting point, cost and combustibility. These is no standard test for essential character and this often becomes the main point of contention in HS classification challenges.

Essential character is easy to determine in some cases:

1. A car without it’s windscreen is still classified as a car
2. A television without it’s power cable is still classified as a television
3. A watch without a strap is classified as a watch

However, the essential character of other products can be extremely challenging to determine:

1. A satellite phone missing the receiving module, which is arguably the most critical part of the device that allows it to function may not necessarily be classified as a satellite phone
2. A thermos flash missing it’s cover may not necessarily be classified as such, as without it’s cover it is simply a liquid container
3. A laptop missing without it’s keypad, monitor or hard disk installed; should this still be considered a laptop or as spare parts ?

Examples of using General Interpretative Rule 2(a) or GRI 2(a):

	Wooden baby cribs that need to be assembled at home are classified under HS 9403509040 in the United States.
	Using GRI 2(a), a car without its tires is still classified as a car.
	In India, a digital camera without it’s lens is still classified as a camera under HS 85258020.

References:

https://www.customs.gov.sg/-/media/cus/files/business/harmonized-system-classification-of-goods/generalrulesfortheinterpretation.pdf