HS, AHTN 2022, AND

COMMODITY CLASSIFICATION
A BSCA WAY OF LIFE
MICHAEL G. TEDE
17 DECEMBER 2022
Presented to the BSCA Students of
AKLAN STATE UNIVERSITY
 OBJECTIVES
The webinar discussion will enable participants to:

 Understand the Harmonized System and AHTN history and

structures.
 Know the proper tariff classification and it’s Rules
 Apply Best Practices of Customs Broker profession
 COURSE CONTENTS
The Harmonized System (HS)
The ASEAN Harmonized Tariff Nomenclature (AHTN)
Tariff Classification
General Interpretative Rules (GIRs)
The Role of Punctuations and “Other” within the Text of the
HS/AHTN
Tariff Classification: STRUCTURE AND NUMBERING SYSTEM
OF THE HS/AHTN
Key Takeaways
 THE
HARMONIZED SYSTEM
 PROCESS OF CUSTOMS COMPLIANCE

Compute
Identificatio Classificatio Record
Valuation and
n n Keeping
Lodgment
 HARMONIZED SYSTEM

Six (6) 1988 212 Five (5)

• Digit Product • Develop by the World • Used by Countries • Years of Review and
Nomenclature Customs Organization • For Custom Tariffs, Revisions
Trade Statistics, and • Current HS 2022
International Trade (AHTN 2022)
Negotiations
 What is HARMONIZED SYSTEM?
HARMONIZED SYSTEM
H.S. or Harmonized Commodity Description And
Coding System
A multipurpose product nomenclature whose
main purpose is to serve as an integrated
internationally-accepted coding system that will
standardize and facilitate the conduct of
international trade.
 SITC
CCCN
Rev. 4
 The Harmonized System (HS) is based on
the Customs Cooperation Council
Nomenclature (CCCN) H.S.
 Authored by the Customs Cooperation
Council (CCC) now known as the World
Customs Organization (WCO), and
 The Standard International Trade
Classification (SITC) Revision 4 drafted by
the United Nations.
 HS CONVENTION
The International Convention on the Harmonized Commodity
Description and Coding System (HS Convention) entered into
force on 1 January 1988.
The objectives of the HS Convention are
to facilitate international trade and the collection, comparison
and analysis of statistics by harmonizing the description,
classification and coding of goods in international trade;
to reduce the expenses related to international trade and (
to facilitate the standardization of trade documentation and the
transmission of data
 Important Uses of HARMONIZED SYSTEM?
As a basis for Customs tariffs;
As a basis for the collection of international trade statistics;
As a basis for rules of origin;
As a basis for the collection of internal taxes;
As a basis for trade negotiations (e.g., the WTO schedules of tariff concessions
and Free Trade Agreements);
As a basis for transport tariffs and statistics;
As a basis for the monitoring of controlled goods (e.g., wastes, narcotics,
chemical weapons, ozone layer depleting substances and endangered species);
As a vital element of core Customs process areas of Customs controls and
procedures, including risk assessment, information technology and compliance.
 HARMONIZED COMMODITY
DESCRIPTION AND CODING SYSTEM

21 Sections of Commodity Sectors 99 Chapters

(From Live Animals to Work of Art, (96 Functional Chapters; Chapter 77, 98,
Collector’s Piece and Antiques) & 99 Reserved for Possible Future Use)

HARMONIZED SYSTEM

1,228 Headings (In order of Degree of 11,414 Eight (8) Digits HS Codes in 2022
Processing)
 Legal Text or Structures of
HARMONIZED SYSTEM
General Interpretative Rules (GIRs)
Section Notes
Chapter Notes
Subheading Notes
Chapter
Headings
Subheadings
 Structures of HARMONIZED SYSTEM

Arrange in order of Degree of Processing of Manufacture

Semi-
Raw Unworked Finished
Finished
Materials Products Products
Products
Structures of HARMONIZED SYSTEM
 Significance of the H.S. to
the CMTA
 Section 105 – Effective Date of Rate of Import Duty
 Section 107 – Rights and Responsibilities of the Declarant
 Section 108 – Penalties for Error in Goods Declaration
 Section 413 – Description of Goods
 Section 414 – Commercial and Non-Commercial Invoice
 Section 421 & 424 – Duties of Customs Officer Tasked to Examine / Assess the Imported
Goods
 Section 500 – Export Declaration
 Section 1400 – Misdeclaration, Misclassification, and Undervaluation in Goods Declaration
 Section 1610 - The General Rules for the Interpretation of the Harmonized System;
 Section 1611 - The Tariff Nomenclature and Rates of Import Duty;
 THE
ASEAN HARMONIZED TARIFF
NOMENCLATURE (AHTN)
Myanmar Laos
ASEAN
Thailand Vietnam
Philippines
Cambodia

Malaysia
Brunei

Singapore
Indonesia
The ASEAN Harmonized Tariff Nomenclature
(AHTN)
The AHTN is an 8-digit commodity nomenclature based on the
Harmonized System (HS). It involves the alignment of the national
tariff requirements of each member country.
The AHTN is an essential component of the ASEAN Agreement on
Customs, which was signed on 01 March 1997.
Article four of this agreement stipulates the use of a common tariff
nomenclature to make it easier for traders operating in the region to
do business, through the adoption of an ASEAN Harmonized Tariff
Nomenclature.
 The Uses of the AHTN

As a uniform tariff nomenclature within ASEAN

As a base for preferential tariff purposes in AFTA
As a base for uniform data collection
 The Structure of the AHTN
The AHTN is comprised of the
General Rules for the interpretation of the System;
Section and Chapter Notes, including Subheading Notes, and
A list of headings arranged in systematic order and where
appropriate, subdivided into subheadings.
Adheres up to the 6-digit level of the HS, the seventh and eighth
digit codes are assigned to ASEAN subheadings.
In instances where national classifications of Member States are
not included in the AHTN, these shall be dealt with beyond the
eight-digit code or through domestic procedures
 The Structure of the AHTN
The AHTN is comprised of the
General Rules for the interpretation of the System;
Section and Chapter Notes, including Subheading Notes, and
A list of headings arranged in systematic order and where
appropriate, subdivided into subheadings.
Adheres up to the 6-digit level of the HS, the seventh and eighth
digit codes are assigned to ASEAN subheadings.
In instances where national classifications of Member States are
not included in the AHTN, these shall be dealt with beyond the
eight-digit code or through domestic procedures
Structures of AHTN
Structures of AHTN
1st Step
2nd Step

3rd Step

3rd Step
 The Supplementary Explanatory Notes (SEN)
 Intended to provide meaning/description of unfamiliar terms used in the AHTN
Example: Areca Nuts (betel nuts) used chiefly as a masticatory.
These are the dried seeds of the Areca Catechu palm normally
found in India, Indonesia, Malaysia, Myanmar and Thailand.
This slender palm, normally 30 metres tall has hard,
ovoid, red orange coloured fruits which possess a fibrous
mesocarp and a thin woody endocarp enveloping one seed each.

 To avoid overlapping between ASEAN subheadings

 Serves as reference material in identifying the nature of the goods
 The SEN Structure
0810.60.00 Durians

ASEAN Durian are spiny fruit containing creamy pulp with a

Subheading pungent smell and a distinctive agreeable taste.

Description of the Durian (Durio Zibethinus Murr) is green to brown in colour,

Goods as pendulous, round to oblong in shape and is completely
appearing in the covered with strong sharp thorns. It is a capsule which
AHTN splits into five parts when ripe and each segment
contains brown seeds covered with thick, firm, creamy,
Explanatory Notes yellow pulp with an overpowering aroma.
to the products

Pictures are
sometimes
provided for
clarity
 Comparison of HS vs AHTN
Harmonized System
Negotiated under WCO, implemented in 1988
Product nomenclature among WCO Contracting
Parties, applied universally
Harmonized application among contracting parties
within 6 digits
Provides MFN rates of duty, which is basically the
regular rate of duty
Publications supplemental to the HS- Explanatory
Notes, Alphabetical Index,
Correlation Table
AHTN
Negotiated under ASEAN, implemented in 2002
Product nomenclature among ASEAN Contracting
Parties who are also members of the WCO, applied
on regional basis
Patterned on the HS and harmonized application
among ASEAN counties within 8 digits and beyond
Provides CEPT-ATIGA preferential rates of duty
Publications supplemental to the AHTN-
Supplementary Explanatory Notes, Alphabetical
Index, Correlation Table
TARIFF CLASSIFICATION
 What is Tariff Classification?

The process of finding

the most specific
description (heading)
in the HS for the goods
to be classified.
TECHNIQUES on how to classify Commodities

Identify the goods – full and accurate description

Familiarize with the structure of the AHTN Code
 Look at the Table of Contents
 Chapters are grouped under 21 Sections – Section I
(live animals) to Section XXI (works of art and
antiques)
 Section 104 – contains Section Notes, Chapter Notes,
Headings and Subheadings and tariff rates
TECHNIQUES on how to classify Commodities

Chapters are Arranged According to the Degree of

Processing.
TECHNIQUES on how to classify Commodities

Read the Section Notes, Chapter Notes and Subheading

Notes. The Notes can be:
Inclusion/coverage – enumerates goods that are included
Exclusion – enumerates goods that are excluded
Definition – defines a particular good covered by the Section
or Chapter
Example: Note 1(o) to Chapter 72 – defines the term “wire” as “Cold-formed
products in coils, of any uniform solid cross-section along their whole length,
which do not conform to the definition of flat-rolled products”.
TECHNIQUES on how to classify Commodities

Examine the HEADINGS and SUBHEADINGS.

Go back to the identification if still in doubt.
Classify according to the Rules of Classification.
GENERAL INTERPRETATIVE
RULES (GIRs)
 The General Interpretative Rules (GIRs)

There are SIX (6) GENERAL RULES.

The first five (5) Rules relate to the 4-digit headings.
Rule 6 relates to classification in subheadings.
The Rules set out the principles for classification in the HS.
They provide a uniform application and interpretation of the
Nomenclature.
They are an integral part of the Nomenclature.
 The General Interpretative Rules (GRI)

RULE 1 • Titles of Sections, Chapters and Sub-Chapters

are provided for ease of reference only
(Heading • Classification shall be determined according to
, Section 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
Chapter provisions, i.e., GIRs 2 to 6
Notes)
The General Interpretative Rules (GRI), Rule 1

EXAMPLE 1: Under GRI 1, if a provision

specifically and completely describes a
product, then the product would be
classified in that provision (e.g., fresh
grapes are classified under heading
08.06 which provides for “grapes, fresh
or dried”).
The General Interpretative Rules (GRI), Rule 1

EXAMPLE 2: Live horses (heading 01.01)

EXAMPLE 3: Pharmaceutical goods per Note 4 to Chapter 30

(heading 30.06)
 The General Interpretative Rules (GRI)

RULE 2a • Incomplete or unfinished, provided

(Incomplete that, as presented, has the essential
or character of the complete or finished
Unfinished / article.
Unassemble • Complete or finished article presented
d or unassembled or disassembled.
disassemble
d)
 The General Interpretative Rules (GRI),
Rule 2a

EXAMPLE 1: Pre-formed bottle - unfinished (heading 39.23)

EXAMPLE 2: Cars without tires - incomplete (heading 87.03)
EXAMPLE 3: Unassembled stand fan (heading 84.14)
 The General Interpretative Rules (GRI)

• Any reference in a heading to a material

or substance shall be taken to include a
RULE 2b reference to mixtures or combinations
(Mixture or of that material or substance with other
Combination materials or substances.
)
 The General Interpretative Rules (GRI),
Rule 2b

SCOPE: - Rule for the classification of:

 Mixtures and combinations of materials or substances
 Goods consisting of two or more materials or substances
CONDITIONS FOR APPLICATION:
 This Rule applies only in the absence of specific provisions in
the Nomenclature
 The classification of goods consisting of more than one
material or substance must be determined according to the
principles laid down in General Rule 3
 The General Interpretative Rules (GRI)
RULE 3
• Rule 3a - Most specific description.
(For
• Rule 3b - Mixtures, composite goods,
goods and goods put up in sets for retail sale,
classifiabl shall be classified on the material or
e under component that gives the essential
character.
two or • Rule 3c - Classified under the heading
more which occurs last in numerical order.
headings)
 The General Interpretative Rules (GRI),
Rule 3a

EXAMPLE: Wooden ladder (heading 44.21 (Other articles of

wood)) and Wooden chair (heading 94.01 (Seats))
Note:
 A description by name is more
specific than a description by class
 A description that more clearly
identifies a product is more
specific than one which is less
complete
 The General Interpretative Rules (GRI),
Rule 3b
EXAMPLE 1: MIXTURE: Mixture of barley
(60%) of heading 10.03 and oats (40%) of
heading 10.04.
EXAMPLE 2: COMPOSITE GOODS: Combined
flashlight of heading 85.13 and radio of
heading 85.27 (both contained in the same
housing).
EXAMPLE 3: SET: Hairdressing kit consisting
of an electric hair clipper of heading 85.10, a
comb of heading 96.15, a pair of scissors of
heading 82.13, and a brush of heading 96.03.
 The General Interpretative Rules (GRI),
Rule 3b
WHAT IS THE ESSENTIAL CHARACTER OF A PRODUCTS?

The essential character of a product, may, for example, be determined by:

 The nature of the material or component
 Its bulk Note: The essential character
 Its quality must be determined on a case-
 Its weight to-case basis.
 Its value
 Role of the constituent material in relation to the use of the goods
 Other factors
 The General Interpretative Rules (GRI),
Rule 3c

EXAMPLE: Chandeliers (heading 94.05) with electric fan (heading

84.14)
The General Interpretative Rules (GRI)

RULE • Goods which cannot be

classified in accordance with
4 the above Rules shall be
classified under the heading
(Most appropriate to the goods to
Akin) which they are most akin.
The General Interpretative Rules (GRI), Rule 4

EXAMPLE: Plastic air bag (heading 84.25)

The General Interpretative Rules (GRI), Rule 4

KINSHIP SHOULD DEPEND ON SUCH FACTORS AS:

 Description
 Character
 Purpose or intended use
 Designation
 Production process
 Nature of the goods
 The General Interpretative Rules (GRI)

RULE 5 • Rule 5a - Cases and containers

presented normally with the articles
(Cases shall be classified under the heading
and where the article is classified.
Cacking • Rule 5b - Packing materials or
containers suitable for repetitive use
Materials
)
The General Interpretative Rules (GRI), Rule
5

EXAMPLE: 5a - Gun case with

pistols (heading 93.02)

EXAMPLE: 5b - LPG (heading 27.11)

and LPG tanks (heading 73.11)
 The General Interpretative Rules (GRI)

• Classification of goods in the

subheadings of a heading shall be
RULE 6 determined according to the terms of
those subheadings and any related
(Subheading Subheading Notes.
)
The General Interpretative Rules (GRI), Rule 6
The General Interpretative Rules (GRI),
Exercises:
Tool set, for retail sale, consisting of:
Which Rule?
1 pc. Hacksaw
1 pc. Hammer
5 pc. Screwdrivers
2 pc. Pliers

Under 82.06
Heading 82.06 covers “Tools of two
or more of the headings 82.02 to
82.05, put up in sets for retail sale.”
The Role of Punctuations and
“Other” within the Text of the
HS/AHTN
 The Punctuations

COMMA (,)
SEMI- COLON (;)
COLON (:)
PERIOD (.)
 Punctuations play important roles
within the texts of the HS

COMMA (,)

 Used to separate items or list of goods described in the

heading and subheading texts.

 Used to separate the list of items from the descriptor phrase or

from a series of descriptors to which the items belong.
 Punctuations play important roles
within the texts of the HS

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 heading or subheading level.
 Punctuations play important roles
within the texts of the HS

Colon (:)

 It is used to indicate that the further subdivisions will occur.

 The colons appear after the end of every subheading text which
has further breakdowns.
 Punctuations play important roles
within the texts of the HS

Period (.)

 It is used to indicate a full stop in the heading text which

means only those products mentioned are included and can be
classified under the term of that heading.
 Punctuations play important roles
within the texts of the HS

Example: COMMAS (,)

 96.09 Pencils (other than pencils of heading 96.08),

crayons pencil leads, pastels, drawing charcoals,
writing or drawing chalks and tailor’s chalks.
 Punctuations play important roles
within the texts of the HS

Example: SEMI-COLONS (;)

 83.06 Bells, gongs and the like, non-electric of base

metal; statuettes and other ornaments, of base
metal; photograph, picture or similar frames, of base
metal; mirrors of base metal.
 Punctuations play important roles
within the texts of the HS
Example: COLONS (:)

 05.07 Ivory, tortoise- shell, whalebone and whalebone hair, horns, antlers, hooves,
nails, craws and beaks, unworked or simply prepared but not cut to shape;
powder and waste of these products.

0507.10 - Ivory; ivory powder and waste:

0507.10.10 - - Rhinoceros horns; ivory powder and waste
0507.10.90 - -Other
0507. 90 - Other:
0507.90.10 - - Horns, antlers, hooves, nails, claws and beaks
0507.90.20 - - Tortoise – shell
0507.90.90 -- Other
 Tariff Classification: OTHER
FACTS:
 “Other” is the most recurring description found in almost all HS headings
(abt. 2500 lines).
 “Other”, provides for a more general, widely-scoped, and sometimes vague
coverage.
 The number of subheadings described specially and subheadings with
“Other” as description under a heading vary depending on the levels of
subdivisions.
 When headings are further subdivided into subheadings, two major groups
are created:
 Subheading /s with specific description
 Subheading /s with the description “Other”
 Tariff Classification: OTHER

Subheading 8546.90.00 covers- Electrical insulators of any material, other than

of glass or ceramics
 Tariff Classification: OTHER
Subheading 9601.90.99 covers
– Worked bone, horn, antlers,
coral and other Animal carving
materials, and articles of these
materials (including articles
Obtained by moulding), other
than those of worked ivory,
mother-of- pearl or
tortoise-shell and articles of
these materials
 Tariff Classification
STRUCTURE AND NUMBERING
SYSTEM OF THE HS/AHTN
 Tariff Classification: EXCLUSION
Exclusion – Enumerates
goods that are excluded.
Note 1 (d) to chapter 93 (Arms
and ammunition; parts and
accessories thereof) states that
this Chapter does not cover: “
Telescopic sights or other
optical devices suitable for use
with arms, unless mounted on a
firearms or presented with the
firearms with the firearm on
which they are designed to be
mounted (Chapter 90);”
 Tariff Classification: DEFINITION
Definition – Defines a particular good covered by the Section or Chapter or a
Subheading.
Example: Subheading Note1 to Chapter 88 (Aircraft, spacecraft and parts thereof) states that “For the
purposes of subheadings 8802.11 to 8802.40, the expression “unladed weight” means the weight of the
machine in normal flying order, excluding the weight of the crew and of fuel and equipment other than
permanently fitted items of equipment”.
 Tariff Classification: DEFINITION
Definition – Defines a particular good covered by the Section or Chapter or a
Subheading.
Example: Note 4 to Chapter 94 (…;prefabricated buildings) states that “For the purposes of heading
94.06, the expression “prefabricated buildings” means buildings which are finished in the factory or put
up as elements, presented together, to be assembled on site, such as housing or worksite
accommodation, offices schools, shops, sheds, garages or similar buildings.”
 Tariff Classification: DASH SYSTEM

FACTS:
 When an HS Heading is further subdivided into two or more 6- digit
subheadings a one dash appears before the description of products
to indicate the first level of subdivisions.
 When necessary, subheadings are broken down into two or more 2-
dash subheadings to indicate the second level of subdivisions.
 Dashes are laid down in increasing manner. One dash in followed by
two dashes, two dashes by three dashes, three dashes, three
dashes, by four dashes…
1st Step
2nd Step

3rd Step

3rd Step
 Tariff Classification: DASH SYSTEM

When classifying goods, compare only subheadings at the same level.

 Compare only a one-dash subheading with another one dash subheading
that fits the description of the goods to be classified.
 Compare only a two-dash subheading with another two –dash subheading
under the same one-dash subheading that fits the description of the
goods to be classified.
 Compare only a three-dash subheading with another three-dash
subheading under the same two-dash subheading. Choose the three-
dash subheading that fits the description of the goods to be classified.
 Tariff Classification: HEADING NUMBERS

The numbers are laid down in an ascending manner.

Example 1:
 The first Chapter is designated by the 2-digit number 01 (Chapter 01- Live
animals),
 The second Chapter (Chapter 2-Meat and edible meat offal) is 02,
 The third (Chapter 3-fish and crustaceans, mollusks and other aquatic
invertebrates) is 03,
 The tenth Chapter (Chapter 10-Cereals) is 10 and so on and so forth.
 Tariff Classification: HEADING NUMBERS

The numbering pattern is followed in the headings and if there are any, in
subheadings.

Example 2: Chapter 10 (8 headings)

The first heading is assigned with the numbers “10.01” the second with “10.02”.
Then “10.03” and the last “10.08”.

10.01 Wheat and meslin.

10.02 Rye
10.03 Barley.
A decimal is added after the second digit of the chapter number.
 Tariff Classification: SUBHEADING NUMBERS

HS Headings without HS and AHTN subheadings

 Tariff Classification: SUBHEADING NUMBERS

HS Heading with HS Subheadings and AHTN Subheadings

 Tariff Classification: SUBHEADING NUMBERS

AHTN Subheading with National Subheading

EXERCISES: Provide the AHTN Code
EXERCISES: Provide appropriate dash
 Key Takeaways
 Know and understand the Imported Products
 Declared Specific Description in the Goods Declaration
 Validate with Supplementary Explanatory Notes
 Classify according to the General Interpretative Rules
 Practice classification anytime, anywhere
 MARAMING SALAMAT PO
MICHAEL G. TEDE
17 DECEMBER 2022
Presented to the BSCA Students of
AKLAN STATE UNIVERSITY

Contact: tedbits2005@gmail.com; FB Mike Tedbits