Harmonized System (HS) Classification Rules

Art of Classification

• Prepared by Mitchelle B. Pagcu, LCB

Topics Covered

• General Interpretative Rules
• Roles of Punctuations
• Dash System

General Interpretative Rules (GIRs)

• Govern the principles of goods classification under the Harmonized System (HS) and all HS-based tariff nomenclatures, especially the AHTN and TAP-AHTN.
• Contracting parties to the HS convention must apply the GIRs for tariff classification purposes.
• GIRs must be used in sequential order.

Rule 1

• General rule stating that classification is determined principally by the terms of the headings and any relative Section or Chapter notes.
• Sections, Chapters and Sub-Chapters titles are provided for reference only.

Step by Step Process

• Identify the goods
• Identify the possible Chapters
• Consider the appropriate Section and Chapter Notes
• Locate the appropriate headings
• Classify at the heading level

Rule 2

• Deals with incomplete/unfinished and unassembled/disassembled articles (2A), and mixtures or combinations (2B).

Rule 2a

• Provides that an article presented for importation in an unassembled or disassembled state should be classified under the same heading as the assembled article.
• An incomplete or unfinished article is classified as the complete article.

Rule 2b

• Each heading which relates to a particular material or substance shall also apply to the mixtures and combinations consisting of it.
• Goods are classified according to the essential character of the item.
• 2(b) indicate that this provision cannot be used so as to cover goods which cannot be regarded, as required under Rule 1, as answering the description in the heading.

Rule 3

• Applies when goods are classifiable under two or more headings and must be applied sequentially

Rule 3a

• Most specific description is preferred

Rule 3b

• Applies to classifying mixtures or sets based on the material or component that gives them their essential character.
• Relates to mixtures, composite goods of different materials, different components, or goods in retail sets.

Rule 3c

• Used if goods cannot be classified by Rule 3b.
• States that goods should be classified under the heading which occurs LAST IN NUMERICAL ORDER from among those that equally merit consideration

Rule 4

• States that if a product cannot be classified as per Rules 1-3 then it would be classified under the heading appropriate to the goods to which they are most akin.
• "Akin" is defined as ESSENTIALLY SIMILAR in character or quality.
• It is Rarely applied, mostly to new technologies

Rule 5

• Rule for containers, cases and packaging of imported articles.

Rule 5a

• Deals with the classification of long-term use cases, boxes, and similar containers presented with articles they are specially shaped or fitted to contain.
• Cases will be classified to its own heading when imported separately.

Rule 5b

• Deals with packing materials and packing containers, other than those stated under 5a and of a kind normally used for packing goods they are presented with.
• Packaging materials and packing containers, not normally intended to be REUSED, are to be classified with the articles which they are presented with

Exemption to Rule 5

• Does not apply to containers that give the imported article its essential character or to packaging materials or packaging containers clearly suitable for repetitive use.

Rule 6

• Applies after the heading has been determined
• Used to govern the SUBHEADING LEVELS of classification. After classifying items under Rule 1 to 5, rule 6 must be applied accordingly.
• Subheading level are comparable only to the the same level of subheading. Heading shall be determined according to the terms of those subheadings, and any related subheading notes, to the above rules.

Roles of Punctuation

Comma (,)

• Used to separate items or list of goods described in the heading and subheading texts.
• Used to INDIVIDUALLY SEPARATE goods or type of goods as described in the Heading or Sub-heading texts
• Used to SEPARATE type of goods from the DESCRIPTOR PHRASE or from a series of descriptors to which the goods belong.

Terminology regarding And/Or

• The word 'And' is used in the same way as a comma, to connect items in a series which are all to be included together. 'And' may also be used when there is more than one condition which pertains to an item
• The word 'Or' is generally used to show that alternatives exist

Period (.)

• Used to indicate a full stop in the heading text which means only those products mentioned are included and nothing more.
• The period indicates the end of the descriptive text of the heading. Only those article described therein can be classified under the term of that heading

Semi-colon (;)

• Used to indicate a full-stop and that a good or list of goods separated by semi-colons must be treated as distinct and separate from each other when considering tariff classification at the heading or subheading level.
• Indicate a full stop; separate items within the descriptive text into independent units.

Colon (:)

• Used to indicate that further subdivisions will occur.
• Indicate that further subdivisions will take place.
• Indicates that there is additional information to follow that is part of the description of the goods classified under the Tariff provision.

Dash System

• In the Harmonized System (HS), when a Heading is divided into two or more 6-digit subheadings, a single dash appears before the description of products to indicate the first level of divisions.
• When necessary, subheadings are broken down into two or more 2-dash subheadings to indicate the second level of subdivisions.
• Dashes are laid down in an increasing manner. A one- dash is followed by two

How to read "Dashes"

• Only compare one-dash subheadings that are under the same heading. Choose the one-dash subheading that fits the description of the goods being classified.
• if the established one-dash subheading is further divided, compare all two-dash subheadings that are under that one-dash subheading and choose the two-dash subheading that fits the description of the goods being classified
• Compare all three-dash subheadings under the established two-dashed and determine the correct three-dash subheading.