General Explanatory Notes provide the schemes of headings, subheadings of product codes at 2 digit, 4 digit, 6 digit and 8 digit level. It also provides the relevance of other columns of the Tariff and its contents. Although, this notes are in reference to the Central Excise tariff, but it makes us to understand as to how would be the classification plan under GST Tariff too.
1.General Explanatory Note 1: Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by “-“, the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by “--“, the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has “-“. Where the description of an article or group of articles is preceded by “---“ or “----“, the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has “-“ or “--“.
EXPLANATORY NOTES _____ 2012 Edition (English text) Amending Supplement n° 5 JUNE 2014 (17 sheets) ----- 1° ) Remove the following sheets and substitute those annexed. Note: Only the page modified by a new Amending Supplement has a reference to this Amending Supplement. A vertical line in the margin indicates where the text has been. Explanatory notes. The system begins by assigning goods to categories of crude and natural products, and from there proceeds to categories with increasing complexity. And the international rules and notes without deviation, but are free to adopt additional subcategories and notes. The two final chapters, 98 and 99, are reserved for.
The abbreviation “%“ in column (4) of this Schedule in relation to the rate of duty indicates that duty on the goods to which the entry relates shall be charged on the basis of the value of the goods fixed, defined or deemed to be, as the case may be, under or in sub-section (2) read with sub-section (3) of section 3 or section 4 or section 4A of the Central Excise Act, 1944, the duty being equal to such percentage of the value as is indicated in that column.
2. Additional Notes
In this Schedule:
(1) (a) “heading”, in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all sub-headings of tariff items the first four-digits of which correspond to that number;
(b) “sub-heading”, in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number;
(c) “tariff item” means a description of goods in the list of tariff provisions accompanying either eight-digit number and the rate of the duty of excise or eight- digit number with blank in the column of the rate of duty;
(2) The list of tariff provisions is divided into Sections, Chapters and Sub-Chapters;
(3) In column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics.
One of the fundamental challenges facing importers, exporters, suppliers, manufacturers and Logistics Service Providers (LSP) is item-level product classification.
The Harmonized System (HS) is used by customs authorities for levying tariffs, controlling quotas on goods and for risk management. Over 190 countries and territories use the HS as the foundation for classification. As a result, the HS has been called the language of trade. The World Customs Organization (WCO) has standardized the first six digits of the Harmonized System for participating countries.
Although members must use at least 4- or 6-digits for classification, the remaining numbers, which define specific duties and taxes, are determined at the national level.
Harmonized System Number
Chapters - 2-digit codes which are standardized among participants
Headings - 4-digit codes, with the first two being the chapter, which are standardized among participants
Subheadings - 6-digit codes, with the first four being the heading, which are standardized among participants
Country-Specific Details - The remaining numbers may include national tariff rates (generally 8-digits) or a 10-digit number may be used for statistical use, quotas and analysis. In the United States, for example, the full 10-digit number is called the Harmonized Tariff Schedule of the United States (HTSUS) code. Not all countries, such as India, have full 10-digit codes.
Harmonized System Helps Standardize the Processes for Classifying Goods
What are the General Rules for Interpretation (GRIs)?
The General Rules for Interpretation (GRI 1 to 6) are the main tools used for the daily application of the HS. The GRIs provide the overall context for classification, the specific logic that should be used and in which order.
What are WCO Explanatory Notes?
The WCO Explanatory Notes are essential to a complete understanding of and correct classification of goods. WCO Explanatory Notes generally follow the same structure as the tariff, but offer more detailed information. For example, the notes explain the terminology used, list specific exclusions or inclusions, and detail certain production or manufacturing methods that might impact classification.
What are Classification Opinions?
The Harmonized System Committee (HSC) includes representatives from participating counties. One of the responsibilities of the committee is to issue classification determinations, or opinions, on specific goods in a Compendium of Classification Opinions. The list should include the product, the HS code and if needed, the logic used to arrive at the decision. It is important to note that how an opinion is implemented can vary by country.
What are Binding Rulings?
Customs authorities, such as the Canada Border Services Agency (CBSA), U.S. Customs & Border Protection (CBP), HM Revenue & Customs (HMRC), The Dutch Tax and Customs Administration (Douane Belastingdienst) and others and may need to be called upon to issue specific classifications as needed.
At the national level, binding rulings, or Binding Tariff Information (BTI) are issued by customs authorities. In the EU, for example, a BTI from a member state will be included in the European Binding Tariff Information (EBTI) database operated by the European Commission (EC) regardless of the country that issued it. Rulings are of particular importance for classification since information not included in the tariff may only be found in a ruling.
Descartes' Harmonized System Code Software Simplifies Trade Language
Classification is only one part of successful item level compliance. Valuation, Free Trade Agreements (FTAs) and much more often come into play. Many companies find it challenging and costly to manage large and complex global databases of trade content. Different systems, manual procedures and constant changes of focus can be detrimental to effective classification and lead to potential fines. Effectively automating select processes can result in measurable increases in productivity, improved compliance and decreased costs related to Customs classification, compliance and trade data management.
With a vast database of data relating to regulations, rulings, duties and more, Descartes CustomsInfo helps clients minimize trade barriers. Multi-national shippers, customs brokers, third-party logistics providers (3PLs), freight forwarders, carriers, compliance professionals and others use Descartes CustomsInfo to help build and maintain complex classification databases for their global operations.
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