Tariff Management 2

Commodity Classification
Midterm | Second Semester SY 2019-2020
The General Interpretative Rules 1

Classification Techniques 2
The General Interpretative Rules 1

Classification Techniques 2
 1 The General Interpretative
Rules
There are SIX GENERAL RULES.
• The first five (5) Rules relate to classification in the 4-digit
headings.
• Rule 6 relates to classification at the subheading level.
The Rules set out the principles for classification in the HS
nomenclature.
They are an integral part of the Nomenclature, providing
uniform application and interpretation.
The GIRs are incorporate in the CMTA, RA 10863 under Sec.
1610
 1 Application of the GIRs
The application of the GIRs 1 to 4 should always be in
SEQUENTIAL ORDER.
Rule 1 is to be taken into consideration first.
If classification is not covered by the provisions of Rule 1,
then apply rule 2, and so on up to Rule 4.
Rule 5 and 6 stand on their own to be applied as needed.
Goods must first be classified I the 4-digit HS heading whose
terms most specifically describe the good, and…
 1 Application of the GIRs
Only 4-digit headings are comparable:
Never compare a heading description with that of a subheading
description.
Example:
Classification of an electric toothbrush.
? Heading 85.09 as an “Electro-mechanical domestic appliances with
self-contained electric motor….”
Or
? Subheading 9603.21 which provides for “Toothbrushes….”
(Heading 96,03 provides for “Brooms. Brushes….. not motorized
xxx”)
1 The General Interpretative Rules
Rule 1

Terms of the Headings, Section/Chapter Notes Rule 2 (a)

Rule 2 (b)
Rule 1:
 Title of Sections, Chapters and Sub-Chapters are provided Rule 3
for ease of reference only.
Rule 3 (a)
 Classification shall be determined according to the TERMS
of HEADINGS and any relative SECTION or CHAPTERS Rule 3 (b)
NOTES.
Provided such headings or Notes do not otherwise Rule 3 (c)
require , according to the following provisions, i.e., GIRs 2 to 6. Rule 4
 This is the 1st rule to be considered in classifying any
product. Most Products are classified according to GIR 1. Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)

Incomplete or unfinished; Unassembled or disassembled Rule 2 (b)

Rule 3
Rule 2:
Extends the scope of classification to include goods imported in Rule 3 (a)
a condition not specifically recognized in the tariff
nomenclature. Rule 3 (b)
 “Incomplete” , “unfinished” , “unassembled” or Rule 3 (c)
“disassembled” goods
 Reference to goods comprised of different materials or Rule 4
substances. Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)

Incomplete or unfinished; Unassembled or disassembled Rule 2 (b)

Rule 3
Rule 2 (a)
“INCOMPLETE” or “UNFINISHED” articles, provided that, as Rule 3 (a)
presented, has the essential character of the complete or
finished article. Rule 3 (b)
Rule 3 (c)
Complete or finished article presented (imported)
“UNASSEMBLED” or “DISASSEMBLED” condition. Rule 4
Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)
Rule 2 (b)
Rule 3
Mixtures or combinations
Rule 3 (a)
Rule 2 (b)
Any reference in a heading to a material or substance shall be Rule 3 (b)
taken to include a reference to mixtures or combinations of that Rule 3 (c)
material or substance with other materials or substances.
Rule 4
Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1

2 or more headings Rule 2 (a)

Rule 2 (b)
Rule 3:
For goods classifiable under two or more headings: Rule 3
Rule 3 (a)
(a) Most specific description.
Rule 3 (b)
(b) Mixtures, composite goods, and goods put up in sets for
retail sale, shall be classified on the material or component Rule 3 (c)
that gives the essential character. Rule 4

(c) Classified under the heading which occurs last in numerical Rule 5 (a)
order. Rule 5 (b)
Rule 6
1 The General Interpretative Rules
What is the Essential Character of a Product? Rule 1

The essential character of a product , may, for example, be Rule 2 (a)

determined by: Rule 2 (b)
 The nature of the material or component: Rule 3
Its bulk
Rule 3 (a)
Its quality
Its weight Rule 3 (b)
Its value
Rule 3 (c)
 Role of the constituent materials in relation to the use of the Rule 4
goods; and
Rule 5 (a)
 Other factors Rule 5 (b)

The essential character is determined on a case-to-case basis Rule 6

1 The General Interpretative Rules
Rule 1
Rule 2 (a)
Rule 2 (b)
Rule 3
Most akin
Rule 3 (a)
Rule 4:
Goods which cannot be classified in accordance with the above Rule 3 (b)
Rules shall be classified under the heading appropriate to the Rule 3 (c)
goods to which they are most akin.
Rule 4
Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)
Rule 2 (b)
Kinship may depend on such factors as:
Rule 3
 Description Rule 3 (a)
 Character
 Purpose or intended use Rule 3 (b)
 Design Rule 3 (c)
 Production
 Nature of the goods Rule 4
Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Special containers Rule 1
Rule 2 (a)
Rule 5 (a):
The case or container presented normally with article is Rule 2 (b)
classified under the heading where the article is classified.
Rule 3
 Containers to be classified with the articles for which they Rule 3 (a)
are intended are:
Rule 3 (b)
1) Specially shaped or fitted for the articles they will contain; Rule 3 (c)
2) Suitable for long-term use;
3) Presented with the articles for which they are intended, Rule 4
whether or not the articles are packed separately for Rule 5 (a)
convenience of transport; and
4) Of a kind normally sold with such articles. Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)
Rule 2 (b)
Packing materials and containers
Rule 3
Rule 5 (b):
Rule 3 (a)
Packing materials and packing containers entered with the
goods are classified with the goods. Rule 3 (b)

 If of a kind normally used for packing. Rule 3 (c)

 But not when such packing materials or containers are Rule 4
clearly suitable for repetitive use.
Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)
Rule 2 (b)
Rule 3
SUBHEADING RULE
Rule 3 (a)
Rule 6: Classification of goods in the subheadings shall be Rule 3 (b)
determined according to the terms of those subheadings and
any related Subheading Notes Rule 3 (c)
Rule 4
Rule 5 (a)
Rule 5 (b)
Rule 6
1 The General Interpretative Rules
Rule 1
Rule 2 (a)
Rule 2 (b)
SUBHEADING RULE
Rule 3
Once goods have been classified in the Heading level by GIRs 1
Rule 3 (a)
to 5, then classification in the Subheading level can take place
by repeating the principles of GIRs 1 to 5 and taking into Rule 3 (b)
account any related subheading Notes.
Rule 3 (c)
Remember that ONLY subheadings at the SAME LEVEL are Rule 4
comparable.
Rule 5 (a)
Rule 5 (b)
Rule 6
The General Interpretative Rules 1

Classification Techniques 2
2 Classification Techniques

I. Identification of the good

II. Tariff nomenclature familiarization

III. Legal notes: Section, Chapter and Subheading Notes

IV. Examine the Headings and Subheadings

2 Classification Techniques

I. Identification of the good

II. Tariff nomenclature familiarization

III. Legal notes: Section, Chapter and Subheading Notes

IV. Examine the Headings and Subheadings

2 Classification Techniques

I. Identification of the good

1. What is it?
(e.g., Animal, Clothing, tools or Machine?)

2. What is its characteristics?

(e.g., Material Composition, Weight, Dimension, Rating)

3. What is its function or intended application?

(e.g., Domestic or Industrial Use)

4. Under what condition is it imported?

(e.g., Fresh ,Frozen, in Coils, Disassembled, incomplete)
2 Classification Techniques

I. Identification of the good

II. Tariff nomenclature familiarization

III. Legal notes: Section, Chapter and Subheading Notes

IV. Examine the Headings and Subheadings

2 Classification Techniques

II. Tariff nomenclature familiarization

1. Table of Contents (Titles of Sections and Chapters);

2. Chapters are grouped under 21 Sections;
Section 1 (live animals) to Section XXI (works of art and antiques)
3. Section notes, Chapter Notes, Subheading Notes. Descriptions of Headings and
Subheadings
4. Coding System utilized in the TCCP-AHTN (up to the 8-digit and alphanumeric
coding; and
5. Dash system.
2 Classification Techniques

The HS are generally arranged

according to a product’s degree of
processing.
Example:
Chapter 04 – Live Animals
Chapter 41 – Raw Hides and Skins and leather
Chapter 64 – Foot wear
2 Classification Techniques

I. Identification of the good

II. Tariff nomenclature familiarization

III. Legal notes: Section, Chapter and Subheading Notes

IV. Examine the Headings and Subheadings

2 Classification Techniques

III. Legal notes: Section, Chapter and Subheading Notes

The notes can be:

1. INCLUSION/COVERAGE- Enumerates goods that are included

2. EXCLUSION- Enumerates goods that are excluded.

3. DEFINITION- Provides a description for a particular good covered by the Section,

Chapter, or Subheading.
2 Classification Techniques

I. Identification of the good

II. Tariff nomenclature familiarization

III. Legal notes: Section, Chapter and Subheading Notes

IV. Examine the Headings and Subheadings

2 Classification Techniques

IV. Examine the Headings and Subheadings

The Structure of the Headings and Subheadings:

Punctuations

Number Coding

Dashes

Other Coverage
2 Classification Techniques

IV. Examine the Headings and Subheadings

The Structure of the Headings and Subheadings:

Punctuations

Number Coding

Dashes

Other Coverage
 2 Classification Techniques

Role of Punctuations withn the Text of AHTN

Comma (,)

1. Comma (,)
Semi-Colon (;) •Used to separate or list of goods described in the heading and
subheading texts;
•Used to separate a list of goods from the descriptor phrase or from a
Colon (:)
series of descriptors which the goods belong.

Period (.)
 2 Classification Techniques

Role of Punctuations withn the Text of AHTN

Comma (,)

2. Semi-Colon (;)
Semi-Colon (;) • It is used to indicate a full-stop and that a good or list of goods
separated by semi-colons must be treated as distinct and separate
from each other when considering tariff classification at the
Colon (:)
heading or subheading level.

Period (.)
 2 Classification Techniques

Role of Punctuations withn the Text of AHTN

Comma (,)

Semi-Colon (;) 3. Colon (:)

• It is used to indicate that further subdivisions will occur.
• The colors appear after the end of every subheading text which
Colon (:) has further breakdowns.

Period (.)
 2 Classification Techniques

Role of Punctuations withn the Text of AHTN

Comma (,)

Semi-Colon (;) 4. Period (.)

It is used to indicate a full stop in the heading text which means only
those products mentioned are included and nothing more.
Colon (:)

Period (.)
2 Classification Techniques

IV. Examine the Headings and Subheadings

The Structure of the Headings and Subheadings:

Punctuations

Number Coding

Dashes

Other Coverage
 2 Classification Techniques

Sections

 Sections are designated by Roman numerals, from “I” to “XXI”

Chapters

 The numbers/codes are laid down in an ascending manner

 The first Chapter is designated by the 2-digit number “01” (Ch. 1 – Live animals),
 The second Chapter (Ch. 2 – Meat and edible meat offal) is “02”
 The third Chapter (Ch. 3 – Fish and crustaceans, molluscs and other aquatic
invertebrates) is “03”
 The tenth Chapter (Ch. 10 - Cereals) is “10” and so on and so forth
2 Classification Techniques

Heading Numbers

 The numbering/coding pattern is followed in the headings and, if there are any, in
subheadings.
In a heading code, notice that a dot is added after the second digit of the
chapter number.
2 Classification Techniques

Subheading Numbers

 Subheading in the Harmonized System (HS) are up to 6-digits (e.g.., 0101.30);

 Subheadings in the AHTN are up to 8-digits (e.g.., 0101.30.10)
 HS subheadings in the AHTN that are not further divided are assigned “.00” after
6th digit (example: “1002.10.00”)
 Similarly, headings in the AHTN with no subheadings are assigned “.00.00” after the
4th digit (example: “0205.00.00”); and
 To incorporate tariff requirements unique to the Philippines, alphanumeric
subheadings are created and incorporated in the AHTN (example: “8413.91.90A”,
“0301.99.21B”
2 Classification Techniques

Subheading Numbers

Description with no subheadings??? For a

“Cleaner/uncluttered” heading structure, some subheading
codes are not shown. This is also to help the reader easily
distinguish the separation or where the heading/subheading is
divided.
2 Classification Techniques

The AHTN Structure

0 1 0 4. 2 0. 9 0 A
CHAPTER

HEADING

SUBHEADING

AHTN SUBHEADING

ALPHANUMERIC SUBHEADING
2 Classification Techniques

The AHTN Structure

0 1 0 4. 2 0. 9 0 A
CHAPTER

HEADING

SUBHEADING

AHTN SUBHEADING

ALPHANUMERIC SUBHEADING
2 Classification Techniques

The AHTN Structure

0 1 0 4. 2 0. 9 0 A
CHAPTER

HEADING

SUBHEADING

AHTN SUBHEADING

ALPHANUMERIC SUBHEADING
2 Classification Techniques

The AHTN Structure

0 1 0 4. 2 0. 9 0 A
CHAPTER

HEADING

SUBHEADING

AHTN SUBHEADING

ALPHANUMERIC SUBHEADING
2 Classification Techniques

The AHTN Structure

0 1 0 4. 2 0. 9 0 A
CHAPTER

HEADING

SUBHEADING

AHTN SUBHEADING

ALPHANUMERIC SUBHEADING
2 Classification Techniques

IV. Examine the Headings and Subheadings

The Structure of the Headings and Subheadings:

Punctuations

Number Coding

Dashes

Other Coverage
2 Classification Techniques

Dash System

 In the HS nomenclature, when a heading is divided into two or more 6-digit

subheadings, a one dash appears before the description of products to indicate the
first level of divisions.

 And when necessary, subheadings are further broken down into two or more 2-dash
subheading to indicate the second level of subdivisions.

 Dashes are laid down in an increasing manner. A one-dash is followed by two dashes,
two dashes by three, three dashes by four dashes, and so on.

NOTE that Only Subheading, with SAME dash level are comparable.
2 Classification Techniques

IV. Examine the Headings and Subheadings

The Structure of the Headings and Subheadings:

Punctuations

Number Coding

Dashes

Other Coverage
2 Classification Techniques

Other Coverage

 “OTHER” is the most recurring description found in almost all HS headings.

 “Other”, provides for a more general, widely-scoped, and sometimes vague coverage.

 When headings are further divided into subheadings, two major groups are generally
created:
1. Subheading/s with specific description
2. Subheading/s with the description “Other”
2 Classification Techniques

Other Coverage

Basic steps in describing “Other”:

1. Read the terms of the heading, i.e., the articles mentioned under the 4-digit
heading.

2. Take note of the dash level of subheadings.

3. “Other” covers articles not provided by subheading under the same dash level taking
into consideration the description of the preceding subheading with a lower dash count.