Goods Classification

Goods classification refers to assigning the right commodity code for your item. Many countries rely on the Harmonised System (HS) as a base, which uses a six-digit HS code as a classification, but there are others.

Countries using the HS code often extend it, such as the Combined Nomenclature (CN) in the EU, and can use different lengths for different circumstances. 

For example, the six-digit HS code could be used for an export declaration, but the same item may use a 10-digit code when being imported. 

Additional digits may be used for varieties of the same item, such as alcohol or sugar percentages for the same type of beverages.

Your goods classification is important because it outlines your tax, reporting, and other legal obligations for the product. It also dictates which preferential trade agreements or special procedures you can benefit from.

Misclassification can lead to penalties, delays, or legal issues, making it crucial for you to have accurate goods classification.

Customs Support Group provides goods classification services throughout Europe and beyond, helping you to understand your obligations around the globe.

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Misclassifying goods can result in underpayment or overpayment of duties, delays at the border, penalties, or even seizure of goods.

For your business, this can mean financial losses, disrupted supply chains, and reputational damage. Additionally, a misclassification can lead to legal liabilities if it results in non-compliance with import/export regulations or trade restrictions.

The severity of a misclassification depends on the goods, the country of misclassification, and how well you can defend the classification decision.

For example:
– A misclassification of a gold bracelet as an item of jewellery instead of an article of gold is not as serious as mis-declaring a piece of technology which should have attracted dual-use measures.
– In Germany, your misclassification is more likely to attract criminal proceedings than in some other EU countries – even for the same mistake.
– If you have full details of the product and a written process of how the code you used came to be used, then this will serve as evidence to customs that it is a mistake instead of fraudulent activity. It will also help them to help you understand what went wrong.

It also helps if you identify a misclassification and then report it to the authorities, instead of them finding the mistake during their audit.

If the misclassification has been consistent for a long period of time, such as over a few years, an unexpected demand for underpaid duty can be a severe financial hit. It can also cause financial issues if you are contracted to provide goods to your customer for a period of time, and it is now less viable because of increased taxes.

For these reasons, it can be best to seek Binding Tariff Information (BTI) – also called Advanced Tariff Ruling (ATaR) in the UK – as this is legal confirmation of your goods classification, which will protect your trade from misclassification claims.

Customs Support Group provides goods classification throughout Europe and beyond, helping businesses like yours understand their obligations and safeguard themselves from unexpected costs.

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A product should only have one commodity code, and it is clear in many cases which code it should be. However, different varieties of the same product or different intended uses can cause interpretation errors when deciding which commodity code is correct.

When there are many possibilities, it is important to document the reasoning for a code being chosen in case of an audit. This is because the same item may attract different tax rates or other obligations with the change of its classification.

Binding Tariff Information (BTI) is a useful tool for confirming your commodity code. It means that the classification of your goods has been signed off by the authorities, protecting you from penalties later.

Customs Support Group provides help with goods classification throughout Europe.

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Yes, customs authorities have the right to challenge a goods classification and can determine that it is incorrect. This can lead to penalties, a demand for underpaid duties, or additional audits of your processes if it is viewed as willful misclassification.

Obtaining Binding Tariff Information (BTI) can protect your organisation from claims of misclassification and provide peace of mind that your duty payments are correct.

Customs Support Group provides goods classification throughout Europe and beyond. Our experts will help you make a decision on your commodity codes and assist you with obtaining BTI if it is recommended.

Contact us today to get started on yours.

All of your obligations for paperwork, reporting, and taxes are related to your product classification. Therefore, sustainability regulations and requirements such as:

• Carbon Border Adjustment Mechanism (CBAM)
• EU Deforestation Regulations (EUDR)
• Illegal, Unreported, and Unregulated (IUU) Catch Certification
• Forest Law Enforcement, Government, and Trade (FLEGT)

are all dependent on your tariff code.

Furthermore, any exceptions to the regulations (if available) are dependent on your customs origin. This is why an accurate origin declaration is essential when it comes to regulated products.

At Customs Support Group, we help you stay compliant with your product classification by protecting your supply chain from every angle. Whether it’s the initial tariff code, customs origin, preferential origin, or other product-specific requirements, we help you to improve your compliance so that you can continue to trade globally with confidence.

Contact us today to find out more.

AI can be a fantastic tool, but it is not yet reliable when it comes to product classification.

At Customs Support Group, we use our own technical solutions, which make the goods classification process simpler. Instead of completely depending on AI, we use a combination of artificial and real intelligence (human input) to accurately classify goods quickly and at scale.

These solutions were designed and built with the help of customs classification experts and CSG’s customers – rigorously tested to prevent the kind of mistakes that AI is known for: assumptions, prioritising speed over accuracy, and making oversights which can only be corrected with real experience.

If you are looking to improve the efficiency within your supply chain, then there are better ways to do it. Goods classification is too important a task to be completely trusted to AI at the moment.

For help with safeguarding your business and saving money at the same time, contact Customs Support Group to see what we can do for you.