Have a Better Understanding of Hs Classification Code
‘HS codes’ the most important component for Exim purpose but why is it so important and what it means?
The harmonized commodity description and coding system generally referred to as "Harmonized System" or simply "HS" is a multipurpose international product nomenclature developed by the world customs organization (WCO).
HS Classification comprises of more than 5,000 commodity groups, each arranged in a legal and logical structure and is supported by well-defined rules and regulations to achieve uniform classification.
The system is used by more than 200 countries all members of the WCO as a basis for their customs tariffs and the collection of international trade statistics. The HS codes contribute to the harmonization of customs and trade procedures, and the non-documentary trade data interchange in connection with such procedures, thus reducing the costs related to international trade.
It is also extensively used by governments, international organizations and the private sector for many other purposes such as
- internal taxes
- trade policies
- monitoring of controlled goods
- rules of origin, freight tariffs
- transport statistics
- price monitoring
- quota controls
- compilation of national accounts
- Economic research and analysis
The Harmonized System is governed by "the international convention on the harmonized commodity description and coding system". The maintenance of the HS code is a WCO priority. This activity includes measures to secure uniform interpretation of the code and periodic updating of the list of HS codes in light of developments in technology and changes in trade patterns. The WCO manages this process through the harmonized system committee, which examines policy matters, takes decisions on classification questions, settles disputes and prepares amendments to the Explanatory Notes. The HS Committee also prepares amendments updating the HS code in every 5 to 6 years. The latest edition of the revised HS code list is of 2017.
Decisions concerning the interpretation and application of the HS classification, such as classification decisions and amendments to them and many more become effective two months after the approval by the HS committee.
Therefore, the HS classification code is a global trade language developed for simple and easier trade functions.
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