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The Harmonized System – Tariff Classification
Harmonized System Structure
The HS is a structured, hierarchical system; meaning it has progressively more specific levels of detail.
- Sections
- Chapters
- Headings
- Subheadings
The Canadian Customs Tariff then adds Tariff items for additional detail and to assign rates of duty, and statistical suffixes for Statistics Canada purposes.
Sections, Chapters, Headings & Sub-Headings are each organized by:
• state of manufacture
(e.g., raw materials to finished goods) or
(e.g., raw materials to finished goods) or
• technological complexity.
Domestically we follow the same principle for Tariff Items and Statistical suffixes.
Sections
A section is essentially a group of chapters which cover similar or related goods, for example Section 1: Contains five chapters relating to:
Chapter 1. Live animals,
Chapter 2. Meat and Edible Offal,
Chapter 3. Fish and Crustaceans,
Chapter 4. Dairy and Produce,
Chapter 5. Products of animal origin not elsewhere specified or included
Chapters
• Are essentially Sub-divisions of Sections
• The first two digits of a classification number
• Some Chapters have Sub-Chapters to allow for further groupings and to assist with certain legal notes
• Chapter 77 is not used (reserved for possible future use).
There are also additional Chapters 98 & 99, which have been reserved for used by individual countries.
Chapter 98 contains provisions which are specific to Canada. Such as Canadian goods returning, returning residents, settlers effects etc.
NOTE: In order to use a CHAPTER 99 Conditional Tariff item, the goods must first be classified within Chapters 1- 98. Then you apply the first 4 digits (Heading level) of the Conditional Tariff Item.
Heading
The heading is comprised of 4 digits.
The first 2 digits of the number indicate the Chapter in which the number appears.
The next two digits indicate the positions of the heading in the chapter.
When referring to a heading, the first two digits are separated from the last two by a decimal. However, when additional digits are added, the decimal moves to after the fourth digit.
If headings have not been further subdivided, the 5th and 6th digits are zeros. An example of a heading which has not been further subdivided is heading 48.01
Newsprint – 4801.00.00.00
The headings can be easily found on the tariff page because they are in numerical sequence and are printed in bold face type.
Subheadings
Once the proper heading is established, the next step is locating the specific subheading. A subheading is comprised of six digits.
7204.10
The Subheading is considered International in its scope.
Tariff Item
The term “TARIFF ITEM” refers to any 8 digit number
e.g. 0702.00.92
In Canada, this is the level at which rates of duty are assigned.
Classification Number
The 9TH and 10TH digits are the statistical suffix which complete the
10 digit number referred to as the HS classification number
e.g. 7407.29.90.40
How the Tariff Classification Number is structured
Chapter 8525.60.00.30
Heading 8525.60.00.30
Subheading 8525.60.00.30
Tariff 8525.60.00.30
Statistical Suffix 8525.60.00.30
Breakout dash structure summary
• All you have to do is count the number of dashes starting from the decimal after the last digit of the Heading.
Subheading 5th and 6th digits
1 dash - First level subheading breakout
2 dashes - – Second level subheading breakout
27.11 Petroleum gases and other gaseous hydrocarbons.
- Liquefied
2711.12 – - Propane
Tariff Item 7th and 8th digits
3 dashes – - – First level Tariff Item breakout
4 dashes – - – - Second level Tariff Item breakout
- Liquefied
2711.12 – - Propane
2711.12.10.00 – - – In containers ready for use
2711.12.19.00 – - – - Domestic
Statistical Suffix 9th and 10th digits
5 dashes – - – - – First “stats” breakout
6 dashes – - – - – - Second “stats” breakout
- Liquefied
2711.12 – - Propane
2711.12.10 – - – In containers ready for use
2711.12.19 – - – - Domestic
2711.12.19.10 – - – - – Made in Canada
2711.12.19.18 – - – - – - Ontario
27.11 Petroleum gases and other gaseous hydrocarbons.
- Liquefied:
2711.11.00.00- – Natural gas
2711.12 – - Propane
2711.12.10.00- – - In containers ready for use
2711.12.90.00- – - Other
2711.13.00.00- – Butanes
2711.14.00 – - Ethylene, propylene, butylene and butadiene
10 – - – - – Ethylene
20 – - – - – Propylene
30 – - – - – Butylene
40 – - – - – Butadiene
2711.19 – - Other
2711.19.10.00- – - In containers ready for use
2711.19.90.00- – - Other
PUNCTUATION
Comma(,) – Separates items of a list
42.02 Trunks , suit-cases , vanity-cases , executive-cases , briefcases…
Or sets off descriptors
41.11 Composition leather with a basis of leather or leather fibre,
in slabs , sheets or strip , whether or not in rolls.
Semi-Colon (;) – Indicates a full stop and separates items within
descriptive text into independent units
descriptive text into independent units
49.07 Unused postage, revenue or similar stamps of current or new issue in the country to which they are destined ; stamp-impressed paper ; banknotes ; cheque forms ; stock, share or bond certificates and similar documents of title.
This heading has five parts: (1) stamps, (2) stamp-impressed papers/forms, (3) banknotes, (4) cheques, and (5) various certificates and documents of title.
Colon (:) – Indicates that there is a list to follow.
E.G. 61.03
SUITS:
–OF WOOL OR FINE
ANIMAL HAIR
–OF COTTON
–OF SYNTHETIC FIBRES
–OF OTHER TEXTILE MATERIALS
AND adds conditions or descriptors
OR indicates alternatives; it is inclusive, not exclusive
64.03 Footwear with outer soles of rubber,
plastics, leather or composition leather
and uppers of leather.
OR indicates the outer soles may be of any of the materials in that list, while AND indicates that there are also requirements for the composition of the uppers of the footwear.
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Intro to Canada Customs Tariff Classification – Canada Customs Duty
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
Terminology
“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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