ISO 9001:2008 CERTIFIED

INSTITUTE OF TAX ADMINISTRATION (ITA)

East African Customs and Freight Forwarding and Practising Certificate

FFCU 103: CUSTOMS TARIFF CLASSIFICATION

1. The concepts of tariff classification

1.1 Introduction

Customs duties on internationally traded goods are chargeable on the act of importation or on
some goods; customs duties are also charged on the act of exportation. The goods that enter
international trade are many and are charged at different rates of customs duty as per national
or economic union’s interest. For instance goods entering the East African Community (EAC)
generally are charged at Common External Tariffs of 0%, 10%, 25% or 35% (4 band tariff).

It is therefore required that such goods which enter the international trade are grouped into
exclusive similar categories / class of goods [e.g. natural goods, chemicals, metals, textiles,
machinery, etc.] and enumerated on the basis of well-defined criteria. The sub division and
enumeration of all goods entering International trade along with well-defined world rules of
interpretation, form what is normally termed as the nomenclature of goods. Currently, since
1988, the HS – Harmonized System – Harmonized Commodity Description and Coding System
is in use as standardized international goods / product nomenclature used for Customs and
other related purposes. Was developed and is maintained by the World Customs Organization
(WCO) and is used by all contracting parties and a few non-contracting parties. Countries /
governments utilise the nomenclature as the basis for prescribing appropriate duty rates on
goods imported / to be exported. The combination of goods nomenclature with duty rates is
called Customs Tariff.
WCO, for purposes of uniform interpretation of the HS, published detailed Explanatory notes
to various headings / subheadings explaining their scope of coverage. The WCO, in its various
committees discusses about the classification of individual products and gives classification
opinion on them. Such information, though not binding in nature provides a useful guideline for
classifying goods.

In the Tariff book, commodities are arranged in a fixed pattern with the duty rates specified
against each of them. The pattern of arrangement of goods in the Tariff is in the increasing
degree of manufacture involved as per the following sequence: Natural products, Raw
materials, Semi-finished goods and fully finished goods / article / machinery, etc. The legal text
of the Tariff consists of Sections, Chapters, Headings, Subheadings, subheading notes and
the General Interpretative Rules (GIR).

The process of arriving at a particular heading / Subheading code, either at four digit or six digit
level for a commodity in the Tariff book is called ‘classification’. Goods are classified taking into
consideration the scope of headings / subheadings, related General Interpretative Rules (GIR).
The GIR is a set of 6 rules for classification of goods in the Tariff book. Classifying goods is
how you select the right 'class' or commodity code in nomenclature.

If you classify your goods correctly, it will ensure that you:

• pay the correct amount of duty and VAT
• receive any export refund due on some agricultural goods, provided all other conditions
are satisfied
• contribute to the accuracy of import and export trade statistics and
• know if you need an import or export permit.

If you provide incorrect classification then:

• You have to pay any arrears plus interest, of duties and VAT which have occurred as a
result of incorrect classification of goods.
• Your goods may be delayed and/or seized.

An importer or exporter (customs agent), is legally responsible for the correct tariff classification
of goods. It must be noted that, customs goods declarant is responsible for accuracy of
declaration, authenticity of documents and obligations related to all customs formalities.
NOTE: To be able to classify goods correctly, it is essential to have an access to a copy
of the Tariff book and the WCO Explanatory notes.

1.2. Definitions

The Harmonized System

The harmonized system or simply HS “(its full description is “Harmonized Commodity

Description and Coding System”), is a goods nomenclature that is developed and maintained
by the World Customs Organization (WCO), and is governed by an international convention
(The HS Convention).
The WCO is the world / international Customs governing body i.e. the global centre of Customs
expertise; with competence in Customs matters.

The harmonized system: is loosely referred to as the “language of international trade”

Goods Nomenclature:

Goods Nomenclature refers to a systematic naming, or enumerating of all goods found in

international trade along with international rules and interpretations.

Customs Tariff Nomenclature:

Customs Tariff Nomenclature refers to a systematic classification of goods entering the

international trade along with world rules and interpretations for National interests together with
rates of duties.

Commodity Classification:

The term commodity classification means, a process of arriving at a particular heading or sub
heading of a commodity entering the international trade in accordance with the National
customs tariffs. In fact, the term classification refers to the process of finding the specific
description of goods in harmonized system customs nomenclature.

International trade:
The term refers to an exchange of goods between two or more countries.

1.3 Importance of classification.

Tariff classification is a very important process because it enables governments to:

• Identify goods imported into the country for purposes of duty and tax collection, (To levy
Customs duty and taxes on imported goods),
• Gather statistical information for economic planning and trade negotiation (To provide
reliable statistics on international trade),
• Enforce the national and international customs laws. (To monitor trade in controlled
goods e.g. Narcotics, ozone layer depleting chemicals, both endangered flora and fauna
and so on).
• Determine the origin of goods in international trade, (Due to change of tariff headings)

1.4. Important uses of the Harmonized System Nomenclature

Among the most important uses of the Harmonized system (HS) are the following:

• As a basis for customs tariffs,

• As a basis for collection of international trade statistics,

• As a basis for rules of origin,

• As a basis for collection of internal / domestic taxes,

• As a basis for trade negotiations (e.g. the WTO schedules of tariff concessions),

• As a basis for transport tariffs and statistics,

• As a basis for monitoring of controlled goods (eg wastes, narcotics, chemical

weapons, ozone layer depleting substances, endangered species.) and

• As a vital element of core customs processes related to customs controls;

customs clearance procedures including risk assessment; information
technology and compliance.
1.5. Users of the Harmonised System Nomenclature

• Customs
• Clearing and Forwarding Agents
• Importers/Exporters
• Manufacturers
• Bankers
• Trade statisticians
• Chambers of commerce
• Transporters

1.6. EAC-Common External Tariff:

The East African Community (EAC) established the Common External Tariff (CET) on imports
from the rest of the world which is categorized in four (4) tariff bands, that is: 0% tariff rate
charged on imported raw materials, 10% tariff rate charged on imported intermediate goods
and 25% tariff rate charged on imported finished goods and 35% on finished goods which
otherwise are abundantly available in the region (see schedule I of the CET).

Nonetheless, some commodities / tariff lines of sensitive items (products) such as those listed
below are charged at the rate higher than 35%; marked by SI (sensitive item) in the column of
tariffs in the first schedule of the Tariff book.

Sensitive list:

Sensitive goods / items (SI) (found in the second schedule of the Tariff book) with rates higher
than 35% include:

i) Milk – 60%
 ii) Maize (corn) – 50%

iii) Sugar – 100% or 460 $/MT whichever is higher

iv) Rice -75% or 345 $/MT whichever is higher

v) Wheat or meslin flour (11.01) –

vi) Cereal flours (11.02) –

vii) Woven fabrics of cotton (52.08 – 52.12) -

viii) Woven fabrics of synthetic staple fibre … (55.13 – 55.14) –

ix) Track suits, … 962.11) – 50%

x) Bed linen, table linen … (63.02) – 50%

Refer to Tariff Book (CET).

2. Structure of Harmonized System customs tariff

(As from July 2022 the EAC CET is based on the WCO HS 2022 Version)

A comprehensive harmonized system nomenclature provides a legal and logical structure

within which 1,228 headings and 5,612 subheadings that are grouped in 99 chapters and the
latter are arranged in 21 sections.

Out of 99 chapters, 96 chapters are in use, while Chapters 77, 98 and 99 are reserved for
future use. Chapter 77 is reserved for internationally possible future use; whereas chapters 98
and 99 are reserved for special use by any contracting nation for example Kenya uses chapter
99 for communication services, while Canada uses one of the headings in Chapter 98 for goods
declared by returning residents. In addition, the harmonized system consists of Legal Notes
and the General Interpretative Rules (GIR). These ensure accurate and uniform interpretation
and classification of goods.

2.1. Vertical arrangement of goods into sections, chapters, headings and dash-
subheadings - (hierarchical)
Sections are the first distinction of grouping in the HS covering a broad range of related goods
by common names in the titles of sections and being identified by capital Roman numbers like:
section I: Live animals, animal products; section V: Mineral products; section IX articles of
wood----- section XXI: Works of art, collectors’ pieces and antiques.

Chapters are the next level of subdivision (from sections) in the HS covering a narrow range of
related goods by common names in the title of chapters. Chapters are always written by using
Arabic numerals with two digits, for instance chapter 01: live animals, chapter 06: live tree and
other plants; chapter 10: cereals; ------ chapter 97: works of art, collectors’ pieces and antiques.

Headings are subdivision of chapters; they cover a specific group (family) of related goods by
specific descriptions (names) of the goods covered therein. Each heading is identified by 4-
digit code like 02.06; whereby the first two digits (02) indicate the chapter number and last two
digits (06) indicate the position of that heading within that chapter. Thus, heading number 02.06
is the sixth heading in chapter 2. A heading may further be subdivided into subheadings.

A subdivision of a heading is represented by one dash (-) subheading. A one dash denotes an
additional of one digit to 4 digits of the heading like 02.06 + 1digit= 0206.1(-) or 0208.3.
Subheadings are the fourth and last level of the classification of goods in the HS. They cover
the most specific commodity by specific description of individual class of the commodity.
The international system of classification (WCO convention) adopted 6 digits as a standard for
internationally traded goods’ classification, therefore when the heading is subdivided a zero is
added to the 5th digit to conform with a standard of 6 digits code numbers like 0206.10, the 6th
digit is zero.
The international 6 digit subheading is building block for national or economic unions to add
some digits for customs tariffs and trade statistical purposes. For example EAC classification
system is of 8 digit code numbers as explained below.

When the heading is subdivided into one dash level, two zeros are added to the 6th digit code
number and the 7th and 8th digits become zero like 0206.10.00 – edible meat offal of bovine
animals, fresh or chilled.
The added digit subheading can split to accommodate a detailed categorization of a product.
That is, a one dash splits into two dashes. If a one dash is to split, that dash is preceded by a
description with colon (: ) and thereafter a complete 6 digit subheading is formed and then
zeros are added to make 8digits HS codes as shown below.
 - edible meat offal of bovine animals, frozen:
0206.21.00 - - Tongues
0206.22.00 - - Livers
0206.29.00 - - others

When the heading is not further subdivided, four zeros are added to the four digits code to
make 8 digits national subheadings
Example:
0205.00.00 Meat of horses, asses, mules or hinnies, fresh, chilled or frozen
Other examples are:
2710.11.10 - - - motor spirit regular
2710.19.22 - - - - Illuminating kerosene (IK)
The system also has residual subheadings (“other”) which are identified by a figure “9” or “8”in
the 5th digit when figure 9 is set aside for “PARTS” to allow the possibility of inserting additional
subheadings in the future without changing the code numbers of the existing subheadings
Examples:
• 0709.90.00 – other

• 8417.80.00 – other

• 8417.90.00 –parts

Heading 27.16 is the only optional heading in the harmonized system. Each country can put
any commodity. In the East African case, this heading is used for Electrical energy.

Generally speaking, please take note that dashes are structured as follows:-

◼ A one dash (-) is a subdivision of the heading

◼ A two dash (--) is a subdivision of the one dash within the same heading.

◼ A three dash (---) is a subdivision of the two dash within the same heading

◼ A four dash(----) is a subdivision of the three dash within the same heading

[[NB: Unfamiliarity with this structure may indeed lead to the incorrect classification of goods.
It is therefore of vital importance that people dealing with HS classification are familiar with this
system]].
2.2 Structural Arrangement of goods in the HS: natural/unworked, semi-finished and
finished goods – (production progression / horizontal)

Through general observation, the grouping of goods in the HS is based on their nature, their
materials, their functions, their degree of manufacture (processing) and other miscellaneous
criteria.

Example:
Arrangement by Nature
Live animals, animal products……………….section I

Vegetable products…………section II

Minerals …...section V

Arrangement by related materials

Plastics/ Rubber and articles thereof ------ section VII

Wood and articles thereof ------ section IX

Textile and articles thereof ----- section XI

Arrangement by related functions

Machinery ------ section XVI

Transport equipment ----- section XVII

Arms and ammunitions ---- section XIX

Arrangement by degree of manufacture

Prepared edible animal or vegetable fats and oils ---- section III

Prepared food stuffs ----- section IV

Pulp of wood, papers and articles thereof - --- section X

The same logical arrangement is for chapters.

Headings

As for the headings, the HS Nomenclature group goods on the principles that non-processed
goods are given as low a heading number as possible. Processed goods, on the other hand,
normally have higher heading numbers. The greater the degree of processing of a commodity,
the higher the heading number.

For example rising degree of processing - within Chapters

Commodity description Heading Degree of manufacture

Unwrought lead 78.01 Raw materials

Lead waste 78.02 Unprocessed and scrap

Lead bars, rods, profiles and wire 78.03 semi-finished

Lead plates, sheets, strip and foil,

Lead powders and flakes 78.04 semi-finished

Lead tubes, pipes and tube ….. 7805 finished goods

Packaging tube 78.06 finished goods

(Further processed)

Rising degree of processing - between Chapters

This example shows how heading number rises as the degree of manufacture increases.

Commodity description Heading Degree of manufacture

Wood in the rough 44.03 Raw material

Chemical wood pulp 47.04 Unprocessed

Newsprint 48.01 semi-finished

Newspaper 49.02 Finished goods

Natural commodities - consecutive numbers

Not all heading numbers are arranged by the degree of processing, some heading numbers of
natural goods and therefore their headings vary according to species in a consecutive
arrangement. The following example shows how heading numbers are allotted to goods that
have not been industrially processed i.e. unworked products.

In chapter 01 they are divided by species as indicated below by the following illustration.

Commodity description Heading

Live horses, asses, mules and hinnies 01.01

Live bovine animals 01.02

Live swine 01.03

Live sheep and goats 01.04

As a general rule/principle; natural/unprocessed goods in the Harmonized System of

Nomenclature are given as low heading, chapter and section number as possible.

GENERAL OBSERVATION,
Goods in the Nomenclature Harmonized system are grouped into two broad categories:
• Goods, which the earth is endowed with i.e are naturally found.
For example Minerals, Animals, Plants, water etc. The list is limited

• Goods, which are man, made.

For example TV, Motor vehicles, Computers etc, the list is endless because of
new technologies and wants.

N.B Goods in the 1st category are used as raw materials to manufacture goods of the second
category.”

Goods under chapters 1 to 83 are generally classified with reference to their material of
manufacture, while goods under chapters 84 to 96 are generally classified with reference to
their functions – As a general rule but subject to exceptions
3. General interpretative rules (GIR) of the harmonized system

There are six of these rules, known as the general rules for the interpretation, which are applied
in hierarchical fashion i.e rule 1 takes precedence over rule 2, rule 2 over rule 3, etc.

Rule 1

The titles of sections, chapters and sub-chapters are provided for ease of reference only; for
legal purposes, classification shall be determined according to 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 provisions.

Explanatory note:

(i) The Nomenclature sets out in systematic form the goods handled in international
trade. It groups these goods in Sections, Chapters and sub-Chapters which have
been given titles indicating as concisely as possible the categories or types of
goods they cover. In many cases, however, the variety and number of goods
classified in a Section or Chapter are such that it is impossible to cover them all
or to cite them specifically in the titles.

(ii) Rule I begin therefore by establishing that the titles are provided “for ease of
reference only”. They accordingly have no legal bearing on classification.

(iii) The second part of this Rule provides that classification shall be determined:

(a) According to the terms of the headings and any relative Section or chapter
Notes, and

(b) Where appropriate, provided the headings or Notes do not otherwise

require, according to the provisions of Rules 2, 3, 4, and 5.

(iv) Provision (III) (a) is self-evident, and many goods are classified in the
Nomenclature without recourse to any further consideration of the Interpretative
Rules (e.g., live horses (heading 01.01), pharmaceutical goods specified in Note
4 to Chapter 30 (heading 30.06)).
(v) In provision (III) (b), the expression “provided such headings or Notes do not
otherwise require” is intended to make it quite clear that the terms of the headings
and any relative Section or Chapter Notes are paramount, i.e., they are the first
consideration in determining classification. For example, in Chapter 31, the
Notes provide that certain headings relate only to particular goods.
Consequently those headings cannot be extended to include goods which
otherwise might fall there by reason of the operation of Rule 2 (b).

1.2 applications of legal Notes for good nomenclature and Tariff classification

In order to establish as precisely as possible the scope and limits of certain

headings and subheadings in the sections or chapters, some of the 21 sections
– that is sections I, II, IV, VI, XI, XV, XVI, and XVII are preceded by section and
chapter Notes. Section XI is the only section with “subheading notes” which refer
to the interpretation of subheadings categorized as follows:

Notes of Inclusion

They extend the coverage of a heading giving a list of related goods to be

classified in a particular heading:

Examples:

Note 4 to Chapter 30

Heading 30.06 applies only to the following, which are to be classified in that
heading and in no other heading of the Nomenclature:

Sterile surgical catgut, similar sterile suture materials (including sterile

absorbable surgical or dental yarns) and sterile tissue adhesives for surgical
wound closure

Note 4 to Chapter 87

Heading 87.12 includes all children’s bicycles.

Notes of exclusions

These notes list certain articles that must not be included. For example chapter
Note 1c to chapter 1 excludes the classification of live animals used for games in
 the heading (9508) or Note 1 to section XV exclude certain articles of base
metals used as furniture classified in chapter 94.

Notes for definitions

These notes establish the meaning of particular terms. For example Note 4 to
chapter 5 (defines the term horsehair to hair of the manes (male lion) or tails of
equine or bovine animals and Note 3 to section XV (defines the term “base metal”
to mean iron, steel, copper…)

Notes of instructions

These notes explain how to classify certain goods. For example Note 3 to section
VI (explains how to classify goods put up in sets consisting of two or more
separate constituents that should be classified in the heading appropriate to the
products provided that, they are presented together and there is no repacking).
In addition, chapter Note 1 to chapter 89 (explains how to classify of unfinished
or incomplete vessel, which does not have the essential character of a particular
kind that should be classified in heading “89.06”).

Rule 2
(a) Any reference in a heading to an article shall be taken to include a
reference to that article incomplete or unfinished, provided that, as
presented, the incomplete or unfinished article has the essential character
of the complete or finished article. it shall also be taken to include a
reference to that article complete or finished (or falling to be classified as
complete or finished by virtue of this rule), presented unassembled or
disassembled.

(b) Any reference in a heading to a material or substance shall be taken to

include a reference to mixtures or combinations of that material or
substance with other materials or substances, any reference to goods of
a given material or substance shall be taken to include a reference to
goods consisting wholly or partly of such material or substance. The
 classification of goods consisting of more than one material or substance
shall be according to the principles of rule 3.

Explanatory note
Rule 2 (a)

(Incomplete or unfinished articles)

(i) The first part of Rule 2 (a) extends the scope of any heading which refers to a
particular article to cover not only the complete article but also that article
incomplete or unfinished, provided that, as presented, it has the essential
character of the complete or finished article.

(ii) The provisions of this Rule also apply to blanks unless these are specified in a
particular heading. The term “blank” means an article, not ready for direct use,
having the approximate shape or outline of the finished article or part, and which
can only be used, other than in exceptional cases, for completion into the finished
article or part (e.g., bottle performs of plastics being intermediate products having
tubular shape, with one closed end and one open end threaded to secure a screw
type closure, the portion below the threaded end being intended to be expanded
to a desired size and shape).

Semi-manufactures not yet having the essential shape of the finished articles
(such as is generally the case with bars, discs, tubes, etc.) are not regarded as
“blanks”.

(iii) In view of the scope of the headings of Sections I to VI, this part of the Rules does
not normally apply to goods of these Sections.

(iv) Several cases covered by the Rule are cited in the General Explanatory Notes to
Sections or Chapters (e.g. Section XVI, and Chapters 61, 62, 86, 87 and 90).

Rule 2 (a) - (Articles presented unassembled or disassembled)

(i The second part of Rule 2 (a) provides that complete or finished articles
presented unassembled or disassembled are to be classified in the same heading
 as the assembled article. When goods are so presented, it is usually for reasons
such as requirements or convenience of packing, handling or transport.

(ii) This Rule also applies to incomplete or unfinished articles presented

unassembled or disassembled provided that they are to be treated as complete
or finished articles by virtue of the first part of this Rule.

(iii) For the purposes of this Rule, “articles presented unassembled or disassembled”
means articles the components of which are to be assembled either by means of
fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example,
provided only assembly operations are involved.

No account is to be taken in that regard of the complexity of the assembly method.

However, the components shall not be subjected to any further working operation
for completion into the finished state.

Unassembled components of an article which are in excess of the number

required for that article when complete are to be classified separately.

(iv) Cases covered by this Rule are cited in the General Explanatory Notes to
Sections or Chapters (e.g., Section XVI, and Chapters 44, 86, 87 and 89).

(v) In view of the scope of the headings of Sections I to VI, this part of the Rule does
not normally apply to goods of these Sections.

Rule 2 (b) - (Mixtures and combinations of materials or substances)

(i Rule 2 (b) concerns mixtures and combinations of materials or substances, and

goods consisting of two or more materials or substances. The headings to which
it refers are headings in which there is a reference to a material or substance
(e.g. heading 05.03 – horsehair), and headings in which there is a reference to
goods of a given material or substance (e.g., heading 45.03 – articles of natural
cork). It will be noted that the Rule applies only if the headings or the Section or
Chapter Notes do not otherwise require (e.g., heading 15.03 – lard oil, not …
mixed).

Mixtures being preparations described as such in a Section or Chapter Note or

in a heading text are to be classified under the provisions of Rule1.
 (ii) The effect of the Rule is to extend any heading referring to a material or
substance to include mixtures or combinations of that material or substance with
other materials or substances. The effect of the Rule is also to extend any
heading referring to goods of a given material or substance to include goods
consisting partly of that material or substance.

(iii) It does not, however, widen the heading so as to cover goods which cannot be
regarded, as required under Rule I, as answering the description in the heading;
this occurs where the addition of another material or substance deprives the
goods of the character of goods of the kind mentioned in the heading.

(iv) As a consequence of this Rule, mixtures and combinations of materials or

substances, and goods consisting of more than one material or substance, if
prima facie classifiable under two or more headings, must therefore be classified
according to the principles of Rule 3.

Rule 3

When by application of rule 2 (b) or for any other reason, goods are, prima facie,
Explanatory note

i. This Rule provides three methods of classifying goods which, prima facie, fall
under two or more headings, either under the terms of Rule 2 (b) or for any other
reason. These methods operate in the order in which they are set out in the Rule.
Thus Rule 3 (b) operates only if Rule 3 (a) fails in classification, and if both Rules
3 (a) and (b) fail, Rule 3 (c) will apply. The order of priority is therefore (a) specific
description; (b) essential character; (c) heading which occurs last in numerical
order.

ii. The Rule can only take effect provided the terms of headings or Section or
Chapter Notes do not otherwise require. For instance, Note 4 (b) to Chapter 97
requires that goods covered both by the description in one of the headings 97.01
to 97.05 and by the description in heading 97.06 shall be classified in one of the
former headings. Such goods are to be classified according to Note 4 (b) to
Chapter 97 and not according to this Rule.

Rule 3 (a)
 The first method of classification is provided in Rule 3 (a), under which the
heading which provides the most specific description of the goods is to be
preferred to a heading which provides a more general description.

It is not practicable to lay down hard and fast rules by which to determine whether
one heading more specifically describes the goods than another, but in general
it may be said that:

a. A description by name is more specific than a description by class (e.g., shavers

and hair clippers, with self-contained electric motor, are classified in heading
85.10 and not in heading 84.67 as tools for working in the hand with self-
contained electric motor or in heading 85.09 as electro-mechanical domestic
appliances with self-contained electric motor).

If the goods answer to a description which more clearly identifies them, that
description is more specific than one where identification is less Examples of the
latter category of goods are:

1. Tufted textile carpets, identifiable for use in motorcars, which are to be

classified not as accessories of motorcars in heading 87.08 but in heading
57.03, where they are more specifically described as carpets.

2. Unframed safety glass consisting of toughened or laminated glass, shaped

and identifiable for use in aero planes, which is to be classified not in
heading 88.03 as parts of goods in heading 88.01 or 88.02 but in heading
70.07, where it is more specifically described as safety glass.

However, when two or more headings each refer to part only of the materials or
substances contained in mixed or composite goods or to part only of the items in
a set put up for retail sale, those headings are to be regarded as equally specific
in relation to those goods, even if one of them gives a more complete or precise
description than the others. In such cases, the classification of the goods shall
be determined by Rule 3 (b) or 3 (c).
Rule 3 (b)

This second method relates only to:

(i) Mixtures.

(ii) Composite goods consisting of different materials.

(iii) Composite goods consisting of different components.

(iv) Goods put up in sets for retail sales.

It applies only if Rule 3 (a) fails

In all these case the goods are to be classified as if they consisted of the material or
component which gives them their essential character, insofar as this criterion is
applicable.

The factor which determines essential character will vary as between different kinds of
goods. It may, for example, be determined by the nature of the material or component,
its bulk, quantity, weight or value, or by the role of a constituent material in relation to
the use of the goods.

For the purposes of this Rule, composite goods made up of different components shall
be taken to mean not only those in which the components are attached to each other to
form a practically inseparable whole but also those with separable components,
provided these components are adapted one to the other and are mutually
complementary and that together they form a whole which would not normally be offered
for sale in separate parts.

Examples of the latter category of goods are:

1. Ashtrays consisting of a stand incorporating a removable ash bowl.
2. Household spice racks consisting of a specially designed frame (usually of
wood) and an appropriate number of empty spice jars of suitable shape and
size.

As a general rule, the components of these composite goods are put up in a common
packing.
 For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be
taken to mean goods which:

(a) Consist of at least two different articles which are, prima facie, classifiable in
different headings. Therefore, for example, six fondue forks cannot be regarded
as a set within the meaning of this Rule;

(b) consist of products or articles put up together to meet a particular need or carry
out a specific activity; and

(c) Are put up in a manner suitable for sale directly to users without repacking (e.g.,
in boxes or cases or on boards).

The term therefore covers sets consisting, for example, of different foodstuffs intended to be
used together in the preparation of a ready-to-eat dish or meal.

Examples of sets which can be classified by reference to Rule 3(b) are:

1. Sets, the components of which are intended to be used together in the preparation of a
spaghetti meal, consisting of a packet of uncooked spaghetti (heading 19.02), a sachet of
grated cheese (heading 04.06) and a small tin of tomato sauce *heading 21.03), put up in a
carton: Classified in heading 19.02

[Link] dressing sets consisting of a pair of electric hair clippers (heading 85.10), a comb
(heading 96.15), a pair of scissors (heading 82.13), a brush (heading 96.03) and a towel of
textile material (heading 63.02), put up in a leather case (heading 42.02):Classified in heading
85.10.

[Link] kits comprising a ruler (heading 90.17), a disc calculator (heading 90.17), a drawing
compass (heading 90.17), a pencil (heading 96.09) and a pencil-sharpener (heading 82.14),
put up in a case of plastic sheeting (heading 42.02):Classified in heading 90.17

Rule 3 (c)
When goods cannot be classified by reference to Rule 3 (a) or 3 (b), they are to
be classified in the heading which occurs last in numerical order among those
which equally merit consideration in determining their classification.
For the sets mentioned above, the classification is made according to the component,
or components taken together, which can be regarded as conferring on the set as a
whole its essential character.

This Rule does not apply to goods consisting of separately packed constituents put up
together, whether or not in a common packing, in fixed proportions for the industrial
manufacture of, for example, beverages.

In the case of this example and similar selections of products, each item is to be
classified separately in its own appropriate heading.

Rule 4

Goods which cannot be classified in accordance with the above rules shall be classified under
the heading appropriate to the goods to which they are most akin.
Explanatory note

(I) This Rule relates to goods which cannot be classified in accordance with Rules
1 to 3. It provides that such goods shall be classified under the heading
appropriate to the goods to which they are most akin.

(II) In classifying in accordance with Rule 4, it is necessary to compare the presented

goods with similar goods in order to determine the goods to which the presented
goods are most akin.

(III) Kinship can, of course, depend on many factors, such as description, character,
purpose.

Rule 5
In addition to the foregoing provisions, the following rules shall apply in respect of the goods
referred to therein:
(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases,
necklace cases and similar containers, specially shaped or fitted to contain a
 specific article or specially shaped or fitted to contain a specific article or set of
articles, suitable for long-term use and presented with the articles for which they
are intended, shall be classified with such articles when of a kind normally sold
therewith. this rule does not, however, apply to containers which give the whole
its essential character.

(b) Subject to the provisions of rule 5 (a) above, packing materials and packing
containers presented with the goods therein shall be classified with the goods if
they are of a kind normally used for packing such goods. however, this provision
is not binding when such packing materials or packing containers are clearly
suitable for repetitive use.

Explanatory note

Rule 5 (a) - (Cases, boxes and similar containers)

This Rule shall be taken to cover only those containers which:
• Are specially shaped or fitted to contain a specific article or set of articles, i.e.,
they are designed specifically to accommodate the article for which they are
intended. Some containers are shaped in the form of the article they contain;

• Are suitable for long-term use, i.e., the are designed to have a durability
comparable to that of the articles for which they are intended. These containers
also serve to protect the articles for which they are intended. These containers
also serve to protect the article when not in use (during transport or storage, for
example). These criteria enable them to be distinguished from simple pickings;

• Are presented with the articles for which they are intended, whether or not the
articles are packed separately for convenience of transport. Presented
separately the containers are classified in their appropriate headings;

• Are of a kind normally sold with such articles; and

• Do not give the whole its essential character.

Examples of containers, presented with the articles for which they are intended, which are to
be classified by reference to this rule are:
1) Jewellery boxes and cases (heading 71.13);
2) Electric shaver cases (heading 85.10);

3) Binocular cases, telescope cases (heading 90.05);

4) Musical instrument cases, boxes and bags (e.g., heading 92.02);

5) Gun cases (e.g., heading 93.03).

Examples of containers not covered by this Rule are containers; such as:
1) A silver caddy containing tea,

2) An ornamental ceramic bowl containing sweets.

Rule 5 (b) - (Packing materials and packing containers)

(i) This Rule governs the classification of packing materials and packing containers
of a kind normally used for packing the goods to which they relate. However, this
provision is not binding when such packing materials or packing containers are
clearly suitable for repetitive use, for example, certain metal drums or containers
of iron or steel for compressed or liquefied gas.

(ii) This Rule is subject to Rule 5 (a) and, therefore, the classification of cases, boxes
and similar containers of the kind mentioned in Rule 5 (a) shall be determined by
the application of that Rule.

Rule 6
For legal purposes, the classification of goods in the subheadings of a heading shall be
determined according to the terms of those subheadings and any related subheading notes
and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the
same level are comparable, for the purposes of this rule the relative section and chapter notes
also apply, unless the context otherwise requires.

Explanatory note
(i) Rules 1 to 5 above govern, mutatis mutandis, classification at subheading levels
within the same heading.

(ii) For the purposes of Rule 6, the following expressions have the meanings hereby
assigned to them:
 A “subheading at the same level” one-dash subheadings (level 1) or two-dash subheadings
(level 2).
Thus, when considering the relative merits of two or more one-dash subheadings within a single
heading in the context of Rule 3 (a), their specificity or kinship in relation to a given article is to
be assessed solely on the basis of the texts of the competing one-dash subheadings. When
the one-dash subheading that is most specific has been chosen and when that subheading is
itself subdivided, then, and only then, shall the texts of the two-dash subheadings be taken into
consideration for determining which two-dash subheading should be selected, “unless the
context otherwise requires” : except where Section or Chapter Notes are incompatible with
subheading texts or Subheading Notes.

This occurs, for example, in Chapter 71 where the scope assigned to the term “platinum “ in
Chapter Note 4 (b) differs from that assigned to “platinum “ in Subheading Note 2. For the
purpose of interpreting subheadings 7110.11 and 7110.19, therefore, Subheading Note 2
applies and Chapter Note 4 (b) is to be disregarded.

The scope of a two-dash subheading shall not extend beyond that of the one-dash subheading
to which the two-dash subheading belongs; and the scope of a one-dash subheading shall not
extend beyond that of the heading to which the one-dash subheading belongs.

4. CLASSIFICATION OF GOODS

Classification of goods in the Harmonised System Nomenclature

The titles of Sections refer usually to a very broad range of goods, whereas the texts of
subheading describe the goods in the most detailed way.

Sections > Chapters > Headings > Subheadings

(Broad) (Detailed)

Example:
Classification of edible offal of bovine animals (fresh or chilled)
Section I Live animals and animal products
Chapter 2 Meat and edible meat offal
 Heading 02.06 Edible offal of bovine animals, swine, sheep, goats,--
Subheading 0206.10.00 - of bovine animals, fresh or chilled

This layout tells us that:

• The meat offal are categorised in Section I as animal products.
• More detailed, edible meat offal is classified in Chapter 2 as edible meat offal
• Further detailed, edible meat offal is in heading 02.06 as edible offal of bovine animals,
swine, sheep, goats, horses etc.
• Most detailed in subheading 0206.10 as edible meat offal of bovine animals.
•

Classification procedures (Process)

Classification of goods starts by identification of a commodity to be classified. This is

achieved by answering the following five questions:
1. What is the commodity?
2. What is it made of? (materials)
3. What is its usage/function?
4. At what stage/degree of manufacture it is?
5. In which group does it belong?

After having identified the commodity;

• Look for possible section which covers the group of goods in relation to a particular
commodity to be classified;
• Look for a possible chapter in which the commodity is grouped;
• Consult legal notes and find specific heading and subheading in which the commodity
is classified.

Example
Systematically classify clothes hangers of wood
• Identification: clothes hangers -article of wood

• Possible section IX

• Possible chapters 44

• Heading 44.21 (GIR – terms of the heading)

• Subheading: 4421.10.00 ( –) clothes hangers (GIR 6 terms of subheading)

SELF TEST QUESTIONS
(A.) “The Nomenclature sets out in systematic form the goods handled in international trade. It
groups these goods in sections, chapters, and sub-chapters, which have been given titles
indicating as concisely as possible the categories or types of goods they cover. In many cases,
however, the variety and number of goods classified in a section or chapter are such that it is
impossible to cover them all or to cite them specifically in the titles.”

Required:
1. Define all important terms in the Customs Nomenclature
2. Explain the reasons for National Nomenclature standardization
3. Explain the objectives of Harmonized System Nomenclature
4. What are uses/users of the Harmonized System Nomenclature
5. Explain the CET bands
6. describe the structure of the Harmonized System Nomenclature
7. Outline the functions of Legal Note
8. Explain the proper structure of the heading in the Harmonised System.
9. Which General Interpretative Rule is applicable to classify goods presented incomplete
or disassembled?
10. Which General Interpretative Rule is to classify goods classifiable in more than two
headings, put up in sets for retail sale.
11. Explain the roles played by Sections, Chapters, and Subheading Notes as related to
classification of goods in the Harmonized System.

(B). Determine the HS code for the following commodities.

1. Pure-bred breeding bull cow

2. Ornamental fish

3. Meat of dolphin

4. Frozen prawns

5. Natural butter derived from milk

6. Monkey’s teeth

7. Hair from the neck of a male lion

 8. Fresh Mushrooms

9. Mango tree

10. Pears

11. Cinnamon

12. Bamboo

13. Cereal flours

14. Rice in paddy

15. Ginger

16. Vanilla

17. Apricot

18. Preserved meat

19. Chemical sugar

20. Brandy

21. Whiskies

22. Mangoes juice

23. Tomato sauce

24. Soya beans oilcake for animal feed

25. Used saloon cars

26. Crane Lories

27. Buses designed to carry more than 35 passengers (petrol engine)

(C) .Case study: Apply GIRs to classify the following commodities:

Systematically and logically, classify the following up to 8-digit code.
A printed woven fabric consisting of;

• 55% by weight of cotton

• 25% by weight of artificial staple fibre

• 20% by weight of synthetic filaments

An Unbleached woven fabric consisting of:

• 40% by weight of synthetic staple fibres

• 35% by weight of combed wool

• 25% by weight of jute

• Elephant of travelling circuses

• Whale

• Rhinoceros horns

• A day old chick

• Plastic sports bags,

• Wooden suitcase

• Disassembled bicycles

• Guitars presented with their cases

• Television sets in a 40ft container