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The diversification of commodities has grown increasingly complex over the years. As globalization weaved its’ way into global supply chains, there was a need to classify all these categories in a uniform and standard manner that was recognized by governing bodies and businesses all over the world.
The Harmonized Systems code was designed to label all existing commodities in elaborate detail so it would be easier to identify products internationally.
The Harmonized System (HS) code is a categorization system created, developed, and maintained by the World Customs Organisation (WCO).
Every commodity is tagged to an HS code, and the code assigned to it is internationally recognised in almost every country and is commonly used in customs to clear shipments.
As customs and government bodies now have a common point of reference to instill regulations based on HS classes, they are able to create a standard to approach each HS category the same way. This in turn creates a more organised importing/exporting structure and a good guideline for countries wanting to implement new regulations.
The structure of each Harmonised System comprises of six digits. The first two digits identify the chapter of which the HS code falls under. There are a total of 21 chapters, each chapter provides a description to generalise the category. The next 4 digits comprise of the heading and sub-heading within the chapter.
ASEAN countries follow the ASEAN Harmonised Tariff Nomenclature (AHTN) – where the first six digits still take reference from the international HS codes, but there is an additional two digits at the end that further breaks down the sub-headings. Commodities shipped within ASEAN normally use the eight digit AHTN classification, but the 6 digit HS codes are also considered valid.
Here are some examples of HS codes for everyday items:
You can visit http://tariff.customs.gov.my/ and search for any of your commodity.
Businesses are encouraged to indicate the HS code in their shipping documents, to ensure a uniform mode of clearance every time. The responsibility of providing the HS code to use is always done by the shipper to avoid misclassification on HS Code.
If you took the time to browse through the TradeNet portal, you will see that not only are there thousands of different HS codes, but each commodity is further dissected into very specific descriptions.
In the example listed above, there is a category for men’s shirts made out of cotton, there is also another category for men’s shirts made of synthetic fibers and men’s shirts made out of other textiles – the list goes on, totaling to about 10 different codes for the item ‘shirt’.
In some instances, certain commodities may contain overlapping codes, where two or more codes apply. In such cases, the shipper only needs to select one – usually the closest possible match to the actual item.
The customs department of almost every country would have already defined different regulations based on different classifications. When you include the incorrect code, there might be a risk of unintended duties and taxes, higher restrictions on importing or in the worst-case scenario, rejection of entry into the destination country.
While it is not necessary to indicate your product’s HS code in any of the documents, it is always recommended to indicate it on your invoice to give a clear and accurate representation of the contents of your shipment, especially if the item you are shipping is very technical. To know more about HS codes, learn the top 5 unanswered questions on HS Code where every importer and exporter should know.
Let’s use the example of “Television Parts” as a description on your invoice. Although the term to explain the product is straightforward, Television Parts can be further broken down into many different categories, and in each category it may be further broken down to the technicalities of the component. To truly define exactly which part you are shipping would require a HS code to clearly label the item.
DHL Express, the leading express courier delivery in Malaysia, handles thousands of documents, parcels, and cargoes every single day. Our global network sees and processes these high volumes of shipments while ensuring that they transit smoothly through international borders. Speed is a core focus within our operations as it enables us to not only satisfy our customers but also pave the way to handle larger volumes of shipments with better turnarounds.
The challenge then falls to our customs teams around the world. Aside from adopting the best practices, our clearance agents have to be very well-versed in customs regulations and HS code variations so that our network can continue to benefit without having to worry about the uncertainty of customs.
Whether you are importing or exporting, DHL Express offers a comprehensive service, covering all the nitty-gritty details so you don’t have to worry.