How to determine the product code for foreign trade operations

The term "commodity nomenclature of foreign economic activity", or HS, has been introduced into the lexicon of economic and customs structures since 1988 after the accession of the Soviet Union to the International Convention on the Harmonized Commodity Description and Coding System (HS). It follows from the name that any products involved in foreign trade operations are classified for the purpose of description and encoding.

The HS code serves as the basis for declaring transported goods and collecting customs duties. An incorrect definition of the HS code may be regarded by the customs authority as an attempt by the declarant to save on duties. This, in turn, will lead to cargo delays, fines and other sanctions.

The collapse of the USSR led to the need to revise some provisions of the former nomenclature and develop new ones. First, in 1995, an Agreement between the CIS member states came into force. Then, after the formation of the Customs Union on the basis of the EAEU, a Single Commodity Nomenclature of the Foreign Economic Activity of the Union was developed, and the codes of this nomenclature became known as the codes of the HS of the EAEU.

Directory of HS codes
The new HS code classifier is an expanded version of the HS system on which the commodity classification in the EU countries and beyond is based. According to this classifier, the product must be assigned a 10-digit (or 14-digit for some product categories) code. Decoding the code makes it possible to find out:

commodity group of HS (according to the first 2 digits);
product position (according to the first 4 digits);
commodity subposition (according to the first 6 digits);
the product sub-item (according to the full product code).
For example, the HS code 6106, meaning the heading "Blouses, blouses and blouses knitted by machine or hand knitting, for women or for girls", includes 3 more subsidiary (clarifying) subheadings for different types of similar goods.

How to find out the HS code of goods
The declarant must determine the HS code of the transported goods. The customs authority is obliged to check the correctness of its search and selection. HS codes affect the amount of customs payments and the list of permits required for customs clearance.

The declarant must have the skills to determine the HS code in order to exclude the possibility of submitting incorrect data and incorrect calculation of payments, or you can contact us for help in processing documents.   

The search for the HS code is carried out in the directory, which is published annually on government websites related to foreign trade activities. To learn it by the name of the product, you need to familiarize yourself with the Basic Rules of Interpretation (OPI) of the commodity nomenclature of foreign economic activity.

The OPI sets the algorithm of action for classification by 6 items, the first 5 of which allow you to attribute products to a certain commodity position, and the 6th item with sub–items - to display the sub- and sub-item of the goods. The paragraphs are applied sequentially, and their extension or deviation from them is unacceptable.

The basic criteria for the classification of goods subject to labeling and assignment of HS codes to them are such characteristics and properties of the product that can be the basis of classification. The main parameters include:

type of raw material or material of production;
chemical composition and structure of the product;
purpose and scope of application;
manufacturing technology and design features;
the degree of processing, type of finishing and more.
To find the code by the name of the product, you will need to know its exact name and reliable characteristics, as well as an understanding of the tree structure of the classifier. These rules are the main ones for determining the HS code.

Tips for selecting codes from the reference book
The selection of the HS code is possible according to the online directory on resources that publish such documentation in full. Suppose it is necessary to determine the labeling of such a product as knitted gloves made of synthetic machine knitting threads. Algorithm of actions:

Open the classifier of HS 2020 codes with the decryption, where you can find the desired code.
We find a section that corresponds to the product category (in this case, it will be section XI "Textile materials and textile products", including commodity groups 50-63).
Moving down the "tree", we find the necessary product group: "Garments and clothing accessories, knitted or crocheted" at number 61, these will be the first 2 digits of the code.
Going down further, we find the item number 6116 "Gloves, mittens and mittens of machine or hand knitting".
We specify the subposition according to the material of manufacture of our product (synthetic) and get the code 6116930000.
You can also find out the HS code for products in another way by simply entering the product name in the classifier's search box. However, in this case, about 100 variants of codes are issued, among the voluminous descriptions of which it is necessary to choose exactly the appropriate one for your product.

Decryption of codes, usage examples
You can use the 2020 classifier with decryption not only to search for the HS code, but also to determine the product by labeling. Here are examples of decryptions of codes 6302, 6201, 6202:

An attempt to determine the code of the commodity nomenclature independently is always fraught with the risk of making mistakes or inaccuracies. 

To an inexperienced declarant, such inaccuracies may seem insignificant, but the customs authority may regard them as a serious offense and impose penalties and other sanctions on the goods.

In order to avoid unpleasant situations, it is advisable to entrust the definition of the HS code and the maintenance of goods to a professional customs representative.