Harmonized System Nomenclature and Classification †Free Samples

Question: Discuss about the Harmonized System Nomenclature and Classification. Answer: Introduction Harmonized system is an international multipurpose product nomenclature that was developed by World Customs Organizations (WCO) to classify the traded goods (WCO, 2017). The parts and accessories are products of metallic in nature. For instance, when referring to automotives are the non-essential parts that add to the functionality of the automotive according to (World Customs Organization, 2017). Goods like the parts and accessories must always be classified under a specific tariff by choosing the item numbers that should be accompanied by language descriptions that are the most appropriate and more specific to that particular product. The item number that is selected gives the amount of the duty that is to be put on goods. Despite the fact that several merchandise descriptions are provided in the available tariff statutes disputes, do arise in the classification process management of goods (HS 2002 Classification by Section (Classifications, Commodity Codes, Commodity Description, HS 2002, HS code search), 2017). The conflicts do arise from three major issues that include the determination of the appropriate tariff term meaning, deciding on the classification of the article that is covered by several item numbers. These items are more than one, and the final problem that arises in the classification of goods is the classification of the new product that was initially not in existence now that tariff was adopted (What is a tariff code?: UPS, 2017). Incorrect classification usually results in the imposition of border penalties or the seizures and the non-compliance penalties. In the process of approaching the issues that make the classification of goods a head, tools have been provided to improve the data that exists in two major ways (Harmonized Commodity Description and Coding Systems (HS) (Classifications, Commodity Codes, Commodity Description, HS, HS code search, WCO), 2017). An algorithm which provides concordances between ten-digit Harmonized System codes that are used in the classification of goods in the international trade in the United States and SIC industry codes to classify the economic activities which are domestic. The other concordance is that between the HS codes and the SIC product or good used for the classification of United States manufacturing production management. Importance of the Harmonized system 200 countries and more as the basis for the customs tariffs and the purpose of collection of the international statistics of trade use the HS system, and more than 98% of the merchandise in the international trade uses the HS as the classification terms. The other benefit of the HS system is that it contributes positively to the harmonization of the customs and the trade procedure, as well as non-documentary trade interchange of data in connection with the procedures and therefore minimizing the costs that are related to the international trade (Harmonised System 2012, 2017). Harmonized systems are used by the private sector, international organizations and the government for the purposes that include trade policies, internal tax, origin rule, controlled goods monitoring, freight tariffs, price monitoring, transport statistics, economic research as well as analysis. Harmonized system classification is not always simple and easy, as it appears when people talk about it especially when it comes to the classification of the parts and accessories during the process (Memorandum D10-0-1 - Classification of Parts and Accessories in the Customs Tariff, 2017). The first challenge that is encountered in the classification is deciding on the classification of the article that is covered by several item numbers more than one. For instance, when it comes to the classification of the automotive parts, they are not classified under the 87.08 heading that provides for the parts and the accessories of most motor vehicles of 87.01 to 87.05 headings (Concepts and basics of Harmonised or HSN Codes for GST, 2017). The automotive parts are instead classified as furniture articles under the 94.01 headings that provides for the seats whether they are convertible to beds or not, and specifically, they are put under the 9401.20 subheading, which provides for the seats of that kind used for the motor vehicles. Because of this, the classification of parts and accessories becomes so challenging. The classification of the new product that was initially not in existence now the relevant tariff was adopted is another big issue that surrounds the classification process. This might be due to the inadequate description that is present on the invoice and the supporting information that can help in the whole process of the classification of the parts and accessories (HS 2002 Classification by Section (Classifications, Commodity Codes, Commodity Description, HS 2002, HS code search), 2017). Some resources might also be limited or unavailable for instance technical information, literature, as well as the classification data among others. Categorization of the relevant stock keeping units (SKUs) to facilitate the decision-making process with respect to forecasting and stock control and to help the managers to focus on important SKUs is yet another challenge. Despite the fact that this is a great challenge in the classification, it has been overlooked and it contributes significantly to the increase in the availability of the parts and accessories thus reducing the inventory costs (Harmonised System 2012, 2017).. The determination of the appropriate tariff term meaning is another big challenge that companies do face in during the classification of the parts and accessories because they need a specific tariff for the particular product by choosing the item number (World Customs Organization, 2017). The item number that is selected is the one that gives the amount of the duty that is to be put on goods. Conclusion Besides the customs tariff codes constituting the international trade language, they are used commonly for domestic taxes purposes like the sales and the consumption taxes of the company. In the current complex environment surrounding trade, classification of products remains to be a big challenge for majority of the companies, and this is because new products are being developed on a daily basis and their classification is becoming very difficult. Companies shouldlook out for new ways through which these challenges may be minimized to cut on the costs management. References Concepts and basics of Harmonised or HSN Codes for GST. (2017). Gst4u.in. Retrieved 6 October 2017, from https://www.gst4u.in/hsn Harmonised System 2012. (2017). Stats.govt.nz. Retrieved 6 October 2017, from https://www.stats.govt.nz/methods/classifications-and-standards/classification-related-stats-standards/harmonised-system-2012.aspx Harmonized Commodity Description and Coding Systems (HS) (Classifications, Commodity Codes, Commodity Description, HS, HS code search, WCO). (2017). Unstats.un.org. Retrieved 6 October 2017, from https://unstats.un.org/unsd/tradekb/Knowledgebase/Harmonized-Commodity-Description-and-Coding-Systems-HS?Keywords=HS%20code%20search HS 2002 Classification by Section (Classifications, Commodity Codes, Commodity Description, HS 2002, HS code search). (2017). Unstats.un.org. Retrieved 6 October 2017, from https://unstats.un.org/unsd/tradekb/Knowledgebase/50043/HS-2002-Classification-by-Section Memorandum D10-0-1 - Classification of Parts and Accessories in the Customs Tariff. (2017). Cbsa-asfc.gc.ca. Retrieved 6 October 2017, from https://www.cbsa-asfc.gc.ca/publications/dm-md/d10/d10-0-1-eng.html Rim, K., Kim, H., Chung, Y. (2013). Micronucleus Test for the Classification of Chemical Mutagenicity according to Globally Harmonized System. Journal Of Applied Biological Chemistry, 56(4), 191-197. https://dx.doi.org/10.3839/jabc.2013.031 What is a tariff code?: UPS. (2017). Ups.com. Retrieved 6 October 2017, from https://www.ups.com/us/en/help-center/sri/itl15.page World Customs Organization. (2017). Wcoomd.org. Retrieved 6 October 2017, from https://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs-nomenclature-2017-edition/hs-nomenclature-2017-edition.aspx