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2.2 Tariff Classification

The importer is legally responsible for the correct tariff classification of the goods at the time of importation. This responsibility arises even if the importer employs an agent to handle the customs declarations on his behalf.

The Harmonised Commodity System adopted by the World Customs Organisation[8] determines the commodity codes at the level of 6 digits. That is the basis for the adoption of the European Common Customs Tariff or Combined Nomenclature which is divided at the level of 8 digits. Importers must classify their goods under the Combined Nomenclature which contains sub-divisions to the level of the eight digit code. The Community Customs tariff is published at the end of each year and it will be applicable in the following calendar year.[9]

Importers should also take into account the TARIC nomenclature which includes sub-divisions up to ten digit codes. The TARIC is necessary for the imposition of additional measures different from import duties, which require additional codes. The Commission has decided not to publish the TARIC on paper any more.[10] It can be consulted via electronic format at the Commission’s website.[11]

TARIC, which stands for the integrated tariff of the European Communities, is designed to show the various rules applying to specific products when imported into the customs territory of the EU (or sometimes exported from it). As a large number of EU measures are in force which apply to certain specific goods, the TARIC provides a full, structured nomenclature which identifies such goods with precision.

Thus, TARIC incorporates the Harmonised System, the provisions of the Combined Nomenclature (the CN codes), and one or more of, among others, the following: tariff suspensions, tariff quotas, tariff preferences (GSP), anti-dumping and countervailing duties, import surveillance, and import prohibitions or restrictions (e.g., under CITES, of endangered species).

Thus, the tariff classification consists in determining the relevant code within the Combined Nomenclature, and if necessary within the TARIC, which will then be used for the application of the Community Tariff measures. These can include the tariff suspensions, tariff preferences, anti-dumping duties or the application of non-tariff measures such as import quotas, or export refunds.

The correct tariff classification of goods is therefore important, not just for the determination of the relevant import duties.

The general principle is that goods must be classified according to their objective characteristics and properties at the time of their presentation for customs clearance. However, there are other elements that may be taken into account such as, for example, the intended use of the product when this can be assessed on the basis of the objective characteristics of the goods. A case by case analysis will need to be made.

Classifying goods within the Combined Nomenclature is not always obvious. Importers should take into account additional instruments adopted by the World Customs Organisation and the EU. These measures contribute to clarify the correct classification of goods and ensure the uniform application of the Harmonised System and the Community Customs Tariff.

The World Customs Organisation adopts Classification Opinions that determine the classification of specific goods under a certain sub-heading. It also adopts Explanatory Notes that contribute to clarify the interpretation of the relevant Headings and sub-headings. These measures are not binding on the EU Member States, but they are an important tool of interpretation taken into account by the EU Member States’ customs authorities and national tribunals. It is only in exceptional circumstances that these Explanatory Notes or Opinions will be disregarded.

The European Commission regularly adopts Classification Regulations that determine the classification of goods in the Combined Nomenclature. In addition, the European Commission also regularly adopts Explanatory Notes that contribute to clarify the classification of goods in the Combined Nomenclature. Importers must also take into account the case law of the Court of Justice of the European Union.

Importers can also rely on a number of General Rules for the Interpretation (GRI) of the Combined Nomenclature which help to determine the correct classification of goods. These rules can be found under the Community Customs Tariff.

According to GRI 1, importers must look first at the terms of the heading and any relative section or chapter notes. If classification according to those criteria cannot be determined, importers must look at the other GRI. Some of the criteria contained in those GRI are outlined below.

According to GRI 2(a), a product which is imported incomplete or unfinished will be classified under the heading applicable to the finished or complete product, provided that, as presented, it has the essential character of the complete or finished product. Similarly, a product which is imported unassembled or disassembled will be classified under the heading applicable to the finished product.

GRI 3 applies in cases when several headings are prima facie applicable. GRI 3(a) requires classification according to the heading with the most specific description. If the previous GRI is not applicable, GRI 3(b) clarifies that mixtures, composite goods consisting of different material or made up of different components, and goods put up in sets for retail sale will be classified according to the material or components which give them their essential character. Finally, if the previous GRI is not applicable, GRI 3(c) states that goods will be classified under the heading which occurs last in numerical order among those which equally merit considerations for the classification of goods that can be a priori classifiable under two or more headings.

Importers can obtain certainty on the tariff classification of goods by requesting, from the customs authority of a Member State, a Binding Tariff Information.[12] The classification determined in the Binding Tariff Information will be binding against its holder on all customs administration within the EU for a maximum period of 6 years. However, Binding Tariff Information can otherwise be revoked under certain conditions specified in the Community Customs Code and the case law of the Court of Justice of the European Union. For instance, when a classification regulation is adopted and the BTI is no longer compatible with the law laid down in it. Revocation will, however, generally take place only in respect of the future. A Binding Tariff Information can only be requested when imports are envisaged and it cannot be issued with retroactive effect. Importers can also consult Binding Tariff Information issued to other importers in any of the 27 EU Member States on the Commission’s website. The Binding Tariff Information is available in a non-confidential version.[13]

[8] http://www.wcoomd.org

[9] For instance, the Community Customs Tariff applicable in 2011 was published on 29 October 2010: OJ [2010] L284/01.

[10] OJ L [2004] C258/18.

[11] See http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp

[12] The list of Customs Authorities competent to receive applications for, or to issue, Binding Tariff Information is published in the Official Journal of the EU: last publication at OJ [2009] C230/11 and OJ [2010] C20/38.

[13] See http://ec.europa.eu/taxation_customs/dds/ebticau_en.htm

Content provided by Hong Kong Trade Development Council
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