HS Code & Classification - One takes it all

Everyone knows the HS Code. But are you aware how structured the decision making process is ?

A brief reminder

The Harmonized Commodity Description and Coding System generally referred to as "Harmonized System" or simply "HS" is a multipurpose international product nomenclature developed by the World Customs Organization (WCO).

It is governed by "The International Convention on the Harmonized Commodity Description and Coding System" and amended every 5 years.

The system is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. Over 98 % of the merchandise in international trade is classified in terms of the HS.

The HS comprises over 5,600 separate groups of goods identified by a 6-digit code (“HS Code”).

Among the maintenance of the HS, measures are being taken to secure uniform interpretation of the HS and its periodic updating in light of developments in technology and changes in trade patterns. The WCO manages this process through the Harmonized System Committee (representing the Contracting Parties to the HS Convention), which examines policy matters, takes decisions on classification questions, settles disputes and prepares amendments to the Explanatory Notes.

Harmonized System Committee

One of the HSC’s main roles is to take all measures required to secure uniformity in the interpretation and application of the Harmonized System.

Because the WCO is an intergovernmental organization, classification issues are brought to the attention of the national Customs administration concerned or another intergovernmental organization, which might then ask the WCO Secretariat to place the issue on the agenda of the Harmonized System Committee. The International Chamber of Commerce (ICC) participates as an industry representative and observer in meetings of the Harmonized System Committee.

The measures taken following the examination of a classification question can vary depending on the type of case examined

In cases where classification is already clearly determined by a Harmonized System heading or the text of the Explanatory Notes, and consequently raises no particular problems, the Committee may decide simply to refer to the question in the Report of the session at which the question was examined.

In cases where the question raised is of particular interest, the Committee may decide to issue a Classification Opinion, generally accompanied by a description of the product classified, and of its use. These Opinions may sometimes contain indicative illustrations.

These classification opinions have a great impact on how WCO Member States are classifying products in the HS. And sometimes, they have to amend their own rules if the Harmonized System Committee.

A concrete example: LED strips

In 2013, the European Union (EU) classified an article (so-called ‘LED strip’) comprising light-emitting diodes (LED), transistors, resistors and protection diodes, designed to be used, for example, in furniture as a lighting fitting, under CN code 9405 40 99 as ‘other lighting fittings’.

As the article consisted of a printed circuit assembly, it did not fulfil the conditions for semiconductor devices or a discrete LED within the meaning of heading 8541 , and the article had all the objective characteristics of a lighting fitting of heading 9405 . Consequently, classification under headings 8541 and 8543 were excluded. Given its objective characteristics the article had the essential character of a complete lighting fitting of heading 9405 as to function it only needs to be connected to a power supply.

In September 2022, the Harmonized System Committee (HSC) of the World Customs Organisation (WCO) approved classification opinion 8539.51/1 classifying a product called ‘tape lights’, a flexible indoor LED tape light, 24 V, 1,3 W, cool white. The tape lights are linkable sections of modular lighting products that consist of 18 LEDs aligned along the length of each of the sections and have LEDs connected on a printed circuit board (PCB). It is used, for example, for task and accent lighting in kitchen cabinets, back lighting and hard to reach areas. It was classified in HS subheading 8539.51 and according to its objective characteristics, corresponds to CN Code 8539 51 00 , as light-emitting diode (LED) modules.

Given the identical or very similar characteristics of the product with the LED Strip classified by the EU in 2013, the EU tariff classification was not anymore in accordance with the WCO classification opinion 8539.51/1.

As the EU is a contracting party of the International Convention on the Harmonized Commodity Description and Coding System, classification opinions approved by the HSC are guidance instruments for Union tariff measures.

With a view to securing uniformity in the interpretation and application of the Harmonized System at international level and considering that the decision of the HSC is in conformity with the wording of HS subheading 8539.51, the EU has now decided to apply classification opinion 8539.51/1 and repeal its Implementing Regulation (EU) No 708/2013.

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