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CLASSIFYING GOODS

If you import or export goods from within the European Union (EU) or outside it, you should understand the importance of commodity codes and the TARIC code.

When trading internationally, you will need to find the correct commodity code for your goods so you can fill out customs paperwork accurately. pay penalty for wrong code
Or paying extra duties because of wrong code. Export from EU, no Taxes but import to EU: pay taxes. Export coding is more general than import codes.

Once you know the commodity code, you can look up other important information such as duty rates and any import or export restrictions.

Importance of classifying goods


Pay the correct amount of duty and VAT Know if duty is suspended on any of your goods (in certain countries) Know if any preferential duty rates can be applied

Know whether you need to obtain an import or export license - For plant and animal products on health and conservation grounds or for firearms and hazardous materials

Know whether excise or anti-dumping duties apply (dumping relates to goods that are exported from one country to another at a lower than normal price) Avoid seizure of your goods or delays to their movement

Commodity Codes
Item
HS- Code - 6 numbers CN-Code - 8 numbers

X
123456 12345678 -EU-trade -Non EU trade: export declarations 1234567890 Non EU Trade/import declarations (includes tariff suspensions, tariff quotas, tariff preferences)

TARIC Code - 10 numbers

Harmonized Commodity Description and Coding System (HS)


HS is an internationally standardized system of names and numbers for classifying traded products developed and maintained by the World Customs Organization (WCO). The HS Nomenclature comprises about 5,000 commodity groups which are identified by a 6-digit code.

HS codes can be found here


http://www.foreign-trade.com/reference/hscode.htm

Combined Nomenclature
http://www.tulli.fi/en/finnish_customs/statistics/classifications/cn/index.jsp

Combined Nomenclature, CN
CN is a goods classification used in the customs administration and the foreign trade statistics of the EU. The Combined Nomenclature is the common nomenclature of the European Community. It is the primary classification standard used by Finnish foreign trade statistics. CN codes are used for trade within EU or for exports outside EU.

The Combined Nomenclature of the European Union (EU) integrates the HS Nomenclature and comprises additional 8digit subdivisions. The 8-digit sub-headings in the nomenclature are used in export declarations and in statistical declarations on internal trade. At 8-digit level, CN has about 10,000 commodity subheadings.

TARIC
TARIC (Integrated Tariff of the European Communities) (or more specifically - TARiff Integre Communautaire), TARIC code is based on CN.( extension of CN code: 2 more digits TARIC is a database which contains the various rules which apply to the import of specific products imported into the EU.

These rules cover all the measures relating to tariff, commercial and agricultural import legislation.

Purpose of TARIC
To ensure the uniform application of import rules by all EU Member States.
It does not contain information relating to rates of VAT and rates of excise duties.

Who manages TARIC database?


TARIC, is a database managed by the European Commission in Brussels and used by all Member States which is updated daily and has a simulation date facility, which allows the user to search for a rate of duty on any given date. http://ec.europa.eu/taxation_customs/dds2/taric/taric_consu ltation.jsp?Lang=en Electronic form: handy

10 digit code
The TARIC system uses a 10-digit TARIC code which builds upon the international harmonized system and the Combined Nomenclature, but which incorporates a unique 2-digit TARIC component as well (in some instances, a further four digits may be included in the code for more exact differentiations between products).

CN heading may be different in China and America

HS Chapter

2 digits

E.g. 18 - Cocoa and Cocoa Preparations E.g. 1806 - Chocolate and other food preparations containing cocoa E.g. 1806 10 - Cocoa powder, containing added sugar or other sweetening matter E.g. 1806 10 15 - Containing no sucrose or containing less than 5% by weight of sucrose (including invert sugar expressed as sucrose) or iso glucose expressed as sucrose 1806 10 15 00

HS Heading

2 digits

HS SubHeading

2 digits

CN SubHeading

2 digits

TARIC

2 digits

Finding the CN Codes

http://www.tulli.fi/en/finnish_customs/statistics/classifications/cn/index.jsp

Example: Find the code


Shoes with uppers of textile and sole of cork

How will you find it?


1. Find the right section and right chapter by checking the general description in the beginning of each section. 2. Find the right description of goods -> the right CN-code Key words: cork

1. Find the section for footwear < Section XII,

2. Find the right chapter< Chapter 64


3. Find the right description: 1 Other footwear<6405 1.1 Upper of textile material 640520 1.1.1 Sole of cork < 6405 20 10

Individual Exercise (20 minutes)


1. Find out the right code for: Teddy bear Guitar Painting Ceiling fan Wristwatch with mechanical display

Exercise 2:
Find the customs duty for the following products. Assume that these items are imported from Vietnam Teddy bear Guitar Painting Ceiling fan Wristwatch with mechanical display http://ec.europa.eu/taxation_customs/dds2/taric/taric_consu ltation.jsp?Lang=en

Individual Assignment

1. Find out the right CN code for the following: 1. 2. 3. 4. 5. School bag with outer layer made of leather Wooden door cabinet (90*45*208 cm) Sports gloves from artificial leather Leather belt Bracelet made of rubies

2. Assuming that the products are imported from China, find the Customs Duty for the above mentioned products Deadline: 20.12.2012

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