Customs Codes

Customs Codes. HS. Classification of Commodity Codes. Combined Nomenclature. HS Codes. Certificate Rate. Mandatory Tariff Information.

Romans AntonovsRomans Antonovs

When goods are imported from third countries into the European Union (EU), they are classified according to the relevant EU nomenclature code. each of these commodity codes affects what tariff or tax rate will be applied to a good. Having the nomenclature code will help to determine the rate of import duty. It is particularly important to classify goods accurately according to the applicable codes, otherwise, you may face a fine.

How Was the Tariff Classification System for Goods Created?         

The combined nomenclature of the European Union (EU CN) is based on the requirements of EU foreign trade statistics and the common customs tariff, which are directly related to the export and import of goods into the EU.

This nomenclature is based on the harmonized commodity description and coding system (HS). It is universal and applies to all products. This system includes a wide list of product codes and descriptions and is used not only in Latvia but also in other countries of the world (177). This systematic summary is particularly useful for those who conduct active international trade or collect statistics for the industry. The list of commodity codes was created by the world customs organization, which continues to support it. Changes in the combined nomenclature are made by the European Commission, which consists of various subcommittees. Corrections in the combined nomenclature are made every year and are marked with an asterisk. 

How to Recognize Goods Customs Codes (HS Codes)?

Commodity codes consist of six digits and the HS-based CN EU code consists of eight characters. This is also called the HS code. There is also a TARIC item, and in this field, the CN codes are supplemented with 9 and 10 characters, and in some cases also four-digit additional TARIC codes. These additional codes work only in EU countries and are used for tariff classification as well as for trade integration. These measures may include, for example, tariff quotas, tax incentives, etc.

As we mentioned, when goods are imported into the EU and subject to a customs procedure, they must be declared. In this process, it is impossible to do without the product code. Accordingly, what will be the commodity codes, such will be the rates of customs duties and other tariffs.

Of course, there are cases when there are doubts about the conformity of the commodity code when filling out the necessary documents for import or export. In such situations, experts recommend consulting with customs authorities. In Latvia, they can be found in the state revenue Service (SRS), Customs administration. There will be available mandatory tariff information.

What Is Mandatory Tariff Information?

Mandatory tariff information (BTI) is an important part of international trade and this tool is used to ensure that operators comply with a single classification of goods in the European Union's combined nomenclature or Single customs tariff. However, CN also cares about legitimate business expectations. The mandatory tariff information facilitates the understanding of the CN codes and clarifies the conformity of the product to be exported or imported to a certain classification. And this, in turn, gives the necessary justification to specialists for the accurate calculation of customs duties. BTI is used to apply a single system of customs tariffs, and this statement allows the European Commission, economic operators, customs administrations of EU Member States to easily compare the classification of goods in different EU countries.

Normally, BTI is issued at no additional cost, but in situations where it is necessary to conduct an examination or analysis of the goods or the goods must be transferred to the applicant, these costs may have to be borne by the person who requested the BTI. There are cases when the BTI application does not contain all the necessary information about the product, such as the amount of sugar in its content, then additional data are required.

Customs procedures are a time-consuming and complex process, so companies and institutions often use the help of customs brokers to fulfil all the necessary requirements and perform the necessary calculations. Customs brokers are familiar with the commodity codes of the combined nomenclature and their assortment, so they can quickly and efficiently find the most suitable commodity code, which also affects the customs tariff. Brokers also help provide a better understanding of how customs codes are classified.

Why Is It Important to Classify Goods According to The Combined Nomenclature (HS)?

For anyone who imports or exports goods, HS customs codes are important and mandatory, they must be careful to ensure that the classification of the product complies with the HS system. If for any reason the wrong code is specified, the consequences may be different - a fine may be imposed, customs clearance may be delayed, it may also be a reason for the confiscation of a consignment of goods or even for such a serious process as a criminal or civil case. To avoid such risks, we recommend choosing reliable and trusted international business partners.

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