Why is there a need for accurate tariff classification?
Well there are a number of reasons. Classification is used for economic research and analysis, international trade statistics, free trade agreements, trade negotiations, quotas, and the overseeing of controlled goods. This is also how Canada Customs Duty rates can be assessed correctly.
Agreed upon by the World Customs Organization, about 98% of the countries in world share this standardized coding system for international import and export. Basically the HS code identifies goods and provides the basis for many rules of origin. In the advent of any trade disputes, it is the WCO’s Harmonized System Committee that agrees upon the actual classification of goods. Due to its hierarchical structure the HS code system also allows for numerous levels of detail.
Using the HS System and keeping statistics allows for economic planning and research with the analysis potentially providing identification of various business opportunities. The HS code also allows regulation of controlled goods and the ability to accurately enforce quotas on various commodities.
Canada Customs Tariff
The Customs Tariff is a really thick book with all the HS codes in it. It is 21 Sections and 99 Chapters. There a 6 columns in each chapter, HS Code, Subsection, Description of goods, Unit of measure, MFN (Most Favoured Nation Tariff), and TT (Preferential Tariff Treatment).
Section 2 contains legal definitions of key terms and concepts as they are applied throughout the tariff.
Section 10 contains the General Interpretative Rules or GIR for classifying goods
Section 11 is important in that it states that in interpreting headings and subheadings, “regard shall be had” to the compendium of classification opinions and explanatory notes.
Section 20 contains the legislative authority to impose customs duties as set out in the schedule
“throughout the nomenclature” – this means that the definition or phrase that proceeds or follows these words is applicable everywhere in the Tariff, not just in that particular location.
EXAMPLE: NOTE 3 to Chapter 5
3. Throughout the Nomenclature, elephant, hippopotamus, walrus, narwhal and wild boar tusks, rhinoceros horns and the teeth of all animals are regarded as “ivory”.
“Mutatis Mutandis” – means with necessary changes being made.
EXAMPLE: Chapter 39 Supplementary note 1
- Notes 4 and 5 of this chapter apply, mutatis mutandis, to all of the tariff items of this chapter, other than those where the seventh and eighth digits are 00.
”Inter Alia” means among other things.
EXAMPLE: NOTE 1 TO CHAPTER 12
Heading 12.07 applies, inter alia, to palm nuts & kernels, cotton seeds, castor oil seeds, sesamum seeds, mustard seeds, safflower seeds, poppy seeds, shea nuts (karite nuts). It does not apply to products of heading 08.01 or 08.02 or to olives (Chapter 7 or Chapter 20).
“Prima Facie” can be defined as face value
EXAMPLE: CHAPTER 61, NOTE 6(b)
Articles which are, prima facie, classifiable both in heading 61.11 and in other headings of this chapter, are to be classified in heading 61.11.
“Except where the context otherwise requires” – means in those sections where the section or chapter notes are incompatible with the heading or subheading notes or text, the latter will take precedence
EXAMPLE: NOTE 1 TO CHAPTER 28
1. Except where the context otherwise requires, the headings of this Chapter apply only to:
(a) Separate chemical elements and separate chemically defined compounds, whether or not containing impurities;
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