The correct classification of internationally traded goods using HS codes requires lot of experience and insight. A small mistake in correct classification of traded goods can lead to over payment or under payment of customs duties and hence trigger audits and penalties by customs authorities. Transmanna can assist you in taking advantage of this service. Our experts can assist you in correct classification of your goods into right category for valuation and determination of customs duty and thus reduce risk from: shipment delays, increased inspections, fines or other administrative penalties or loss due to missed opportunity of paying reduced customs duty.
What can we do for you?
Our compliance experts can work with you to analyze the function, form, composition and end use of your products and apply appropriate classification procedures to ensure that all your traded items are correctly classified and right duty rate is applied and if possible, a preferential duty rates an international free trade agreements, is applied.
The Canadian Harmonized System of Tariff Classification (HS System)
The correct tariff classification of traded goods is the basic requirement of international trade compliance. Canadian customs authorities impose customs duty on traded goods based on their classification of goods and services into various categories by using HS system. All goods that are imported into Canada must be classified into one of the 10-digit tariff classification numbers found in the Customs Tariff 1 under Canadian Harmonized System of Tariff Classification. The rate of duty that is applied to the imported goods will depend on the tariff classification and the tariff treatment for those goods. The Canadian HS code takes the international HS code base of 6 digits and adds an additional 4 digits, which describe both the intended purpose and the constituent materials of the imported goods. Within the Customs Tariff, goods are classified numerically and divided by chapter (first two digits), heading (first four digits), subheading (first six digits), tariff item (first eight digits), and a final 10-digit classification number. Thus a Canadian HS Code contains a total of 10 digits. There are thousands of HS codes divided up in 98 chapters. Each chapter of the customs tariff includes legal and interpretative notes.Improve your experience with customs authorities.
- Improve your experience with customs authorities.
- Avoid delays in shipping and delivery of goods.
- Avoid initiation of costly customs audits.
- Avoid fines and administrative penalties.
- Save embarrassing situations that lead to bad company image and reputation.
General Rules of Interpretation (GRI) for Classification of Goods
Rule 1 Basis for classification
Rule 2(a,b) Alternative to Rule 1
Rule 3(a,b,c) – Resolves cases with headings describing similar goods
Rule 4 – The last resource rule
Rule 5(a,b) – Product Cases and Packaging Materials
Rule 6 – Application of rules 1 to 5 at the subheading level
Customs Traffic- Schedule
Issued January 1, 2013 GENERAL RULES FOR THE INTERPRETATION OF THE HARMONIZED SYSTEM Classification of goods in the Nomenclature shall be governed by the following principles:
The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions.
(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.
(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.
When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to Rule 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to Rule 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.
In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein:
(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This Rule does not, however, apply to containers which give the whole its essential character.
(b) Subject to the provisions of Rule 5 (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purpose of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.
For legal purposes, the classification of goods in the tariff items of a subheading or of a heading shall be determined according to the terms of those tariff items and any related Supplementary Notes and, mutatis mutandis, to the General Rules for the Interpretation of the Harmonized System, on the understanding that only tariff items at the same level are comparable. For the purpose of this Rule the relative Section, Chapter and Subheading Notes also apply, unless the context otherwise requires.
Where both a Canadian term and an international term are presented in this Nomenclature, the commonly accepted meaning and scope of the international term shall take precedence.
For the purpose of Rule 5 (b) of the General Rules for the Interpretation of the Harmonized System, packing materials or packing containers clearly suitable for repetitive use shall be classified under their respective headings.