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Chapter 4: HS
CLASSIFICATI
ON

HS Classification- ©H.T.

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and Development Institute
 HS CLASSIFICATION
 The Harmonized System was introduced in
1988 and has been adopted by most of the
countries worldwide. It has undergone
several changes in the classification of
products. These changes are called revisions
and entered into force in 1996, 2002, 2007,
2012 and 2017.
 Information on Harmonized Commodity
Description and Coding Systems (HS) can be
found at the World Customs Organization
website at:
[Link]
HS [Link]
©H.T.
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 What is the
Harmonize
d System?

HS Classification- ©H.T.
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 Structure of the Harmonized System

HS Classification- ©H.T.
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 Structure of harmonised system

HS consists of 2 main parts:

Body and Annex

The Body consists of “Forewords”

and 20 articles.
The Annex consists of 6 rules of
goods classification, notes, codes
The Annex is usually referred to
HS Classification- ©H.T.
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  The goods in the HS are arranged in order
of their decree of manufacture. The same
order is arranged within each Chapter and
its headings.

HS Classification- ©H.T.
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 Process of Classification

HS Classification- ©H.T.
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 Process of Classification
 In every case, the goods must first be
classified in the appropriate 4-digit HS
heading, followed by the appropriate 1-
dash subheading, and the appropriate 2-
dash subheading and so on. We should
not proceed directly to the lower-level
subheadings without first determining
the appropriate heading.
 When classifying products, we need to
apply the
General Interpretative Rules (GIR) which
provide a step-by-step basis for the
classification of goods and to ensure
uniform interpretation of the Harmonized
System (HS) nomenclature. (Note: GIR
must be applied in sequential order).
HS Classification- ©H.T.
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  There are six General
Process of Rules used in interpreting
(applying) the Tariff.
Classificatio  These are known as the
n General Rules of
Interpretation (GIR) 1
through 6.
 Rules one to four are
related and must be
applied in sequence.
 Rules five and six stand on
their own to be applied as
needed
HS Classification- ©H.T.
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 6 General Rules must be
applied in consecutive order
GRI 1: classifying products GRI 2: classifying both GRI 3: classifying
at the 4-digit Heading incomplete and products that are,
level, based on the
wording of the headings
unassembled goods, prima facie,
and the relative HS Section and mixtures and classifiable under two
and Chapter Notes. combinations of goods. different HS headings.

GRI 4: classifying
products that cannot
GRI 5: GRI 6: classifying products
at the 6-digit subheading
level, based on the wording
be classified classifying of the subheadings and the
according to GRI’s 1, relative HS Section and
2, and 3. packaging. Chapter Notes

HS Classification- ©H.T.
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 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
HS Classification- ©H.T. headings or Notes do not
otherwise require, according ©to
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 Explanation
This is the first Rule to be considered in classifying any
product. Most products are classified according to this
rule
 For practical purposes, there are 2 parts:
o The words in the Section and Chapter titles are to be
used as guidelines ONLY to point the way to the area
of the Tariff in which the product to be classified is
likely to be found. Articles may be included in or
excluded from a Section or Chapter even though the
titles might lead one to believe otherwise.
o Classification is determined by the words (terms) in
the Headings (the first four numbers) and the
Section and Chapter Notes that apply to them unless
the terms of the heading and the notes say
otherwise. If the goods are covered by the words in
a heading and the Section and Chapter Notes do not
HS Classification- ©H.T.
exclude classification in that heading, the heading
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 So find a Heading that is
worded in such a way as to
include the product in question.
And carefully check the Section
and Chapter notes to see if the
product is mentioned
specifically as being included or
excluded.

Many goods should be correctly

classifiable by reference to Rule 1
alone. If the results of this process are
ambiguous and two or more Headings
appear to be applicable, then Rule 3
should be applied. When you read Rule
2 you will see why it would not be next
HS Classification- ©H.T. Rule in such cases.
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 Live poultry

HS Classification- ©H.T.
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 Live poultry

 Live poultry, that is to say, fowls of the species Gallus

domesticus, ducks, geese, turkeys and guinea fowls.
 0105

HS Classification- ©H.T.
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 Example:
HS for
Christma
s tree
candles?

HS Classification- ©H.T.
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 Example: HS for
Christmas tree candles?
 9505.10.00.90: Other, articles for
Christmas festivities?
 3406.00.00.00: Candles, tapers and the
like?

HS Classification- ©H.T.
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 Example: HS for
Christmas tree candles?
 It would seem logical to classify
them with Classification
Number 9505.10.00.90: Other,
articles for Christmas festivities.
However, when reading the
Notes to Chapter 95, it clearly
states this Chapter does not
cover Christmas tree candles.
 In fact, we must classify them
with the Classification No
3406.00.00: Candles, tapers
and the like
HS Classification- ©H.T.
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 HS for Christmas tree candles:
3406.00.00.00

HS Classification- ©H.T.
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  Any reference in a heading to
an article shall be taken to
Rule 2a 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 failing to be classified as
complete or finished by virtue
of this Rule), presented
unassembled or disassembled
HS Classification- ©H.T.
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 Explanation
Rule 2 (a) deals with the
classification of unfinished,
incomplete, unassembled or
disassembled goods.
Unfinished and incomplete
goods can be classified under
the same goods in a finished
state provided that they have
the essential character.
Unassembled or disassembled
goods may also be classified
the same as the complete
finished product.
This rule does not apply if the
text of the Heading or the
relevant Legal Notes exclude
the unfinished or unassembled
HS Classification- ©H.T.
product in question
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 Explanation
 Rule 2 (a) deals with the classification
of unfinished, incomplete,
unassembled or disassembled goods.
 Unfinished and incomplete goods can
be classified under the same goods in
a finished state provided that they
have the essential character.
 Unassembled or disassembled goods
may also be classified the same as the
complete finished product.
 This rule does not apply if the text of
the Heading or the relevant Legal
Notes exclude the unfinished or
unassembled product in question
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 plastic bottle preforms

HS Classification- ©H.T.
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 Rule 2
(a)
unfinish
ed

HS Classification- ©H.T.
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 plastic Preform bottle –
Unfinished
bottle
preforms
Heading 39.23
covers plastic
bottles

(3923: Articles for the

conveyance or
packing of goods, of
plastics; stoppers,
lids, caps and other
closures, of plastics.)
HS Classification- ©H.T.
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 Wrist
watch
without
strap

HS Classification- ©H.T.
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 Rule 2a - Incomplete

 Wrist watch without

strap
 Incomplete (heading
91.02 covers
wristwatches)
 Wrist-watches,
pocket-watches and
other watches,
including stop-
watches, other than
those of heading
91.01.
HS Classification- ©H.T.
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 example

HS Classification- ©H.T.
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 example
An automobile missing only
its wheels would be classified
the same as if it were
complete

A car without wheels, is

considered as a complete car.

HS Classification- ©H.T.
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 example

HS Classification- ©H.T.
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 example

 CKD: Completely Knocked Down

 Unassembled car: rule 2a

HS Classification- ©H.T.
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 CKD

 “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.

HS Classification- ©H.T.
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 Rule 2b:
Mixtures or Any reference in a heading to a material or substance
shall be taken to include a reference to mixtures or

combinations
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
HS Classification- ©H.T.
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Salad from Carrots,
turnips, beetroot

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 Salad from Carrots, turnips, beetroot
 Salad from Carrots (07.06); turnips (07.06); salad
beetroot (07.06)
 => HS code for the Salad from Carrots, turnips,
beetroot 07.06

Phân loại hàng hóa - © Hồng Tuyên

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 Rule 3
 When by application of Rule 2 (b) or for any other reason, goods are,
prima facie, classifiable under two or more headings, classification shall
be effected as follows:
 (a) The heading which provides the most specific description shall be
preferred to headings providing a more general description. 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 of the goods.
 (b) Mixtures, composite goods consisting of different materials or made
up of different components, and goods put up in sets for retail sale,
which cannot be classified by reference to 3(a), shall be classified as if
they consisted of the material or component which gives them their
essential character, insofar as this criterion is applicable.
 (c) When goods cannot be classified by reference to 3(a) or 3(b), they
shall be classified under the heading which occurs last in numerical
order among those which equally merit consideration.
HS Classification- ©H.T.
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  When by application
of Rule 2 (b) or for
any other reason,
goods are, prima
facie, classifiable
under two or more
headings, Rule 3
classification shall be
effected as follows:
 3a
 3b
 3c
HS Classification- ©H.T.
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 Rule 3a:
Most
specific

HS Classification- ©H.T.
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 Chair/ladder

HS Classification- ©H.T.
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 Chair/
ladder

HS Classification- ©H.T.
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 A description by A description that
more clearly identifies

Relative
name is more
a product is more
specific than a specific than one
description by class. which is less complete.
Specificit
y the name “Wooden
chair” more clearly
identifies than
Therefore this
product is classified
as Wooden
“Other articles of
wood”
chair(HS9401)

HS Classification- ©H.T.
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 Steel
spoon

HS Classification- ©H.T.
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 Steel
spoon
Steel spoon is classified in HS82.15(Spoons)
and not in HS73.23(Steel Household)

HS Classification- ©H.T.
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 Seats for
motor
vehicles

HS Classification- ©H.T.
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 Seats for motor
vehicles
 Seats for motor vehicles are
classified in HS94.01 (Seats
for motor vehicles)
 not in HS 87.08 (Parts and
accessories of the motor
vehicles)

HS Classification- ©H.T.
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 Mint tea

HS Classification- ©H.T.
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 Mint tea

 Mint tea is not stated specifically, as a product, in the Tariff.

 Although the product descriptions available are mint and tea,
the importer must classify mint tea under the appropriate tea
Heading because it provides the most specific product
description and mint is only the flavour of the tea

HS Classification- ©H.T.
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 unframed safety
glass made of
toughened or
laminated glass
that is shaped
and identifiable
for use in
airplanes

HS Classification- ©H.T.
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  “unframed safety glass
made of toughened or
laminated glass that is
shaped and identifiable for
Safety use in airplanes” is more
glass clearly described by the
article description “safety
glass” of heading 7007
than by the article
description “parts of
goods of heading 8801 or
8802” (parts of aircraft
and spacecraft) of heading
8803
HS Classification- ©H.T.
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 Rule 3b: Essential character

 Mixtures, composite goods consisting of different materials

or made up of different components, and goods put up in
sets for retail sale, which cannot be classified by reference to 3
(a), shall be classified as if
they consisted of the material or component which gives them
their essential character, insofar as this criterion is
applicable.

HS Classification- ©H.T.
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  GRI 3 (b) deals with mixed
Rule 3b: goods, composite goods,
Essential and goods put up in sets
for retail
character sale as described above in
the second sentence to GRI 3
(a) (i.e., each of the goods is
potentially classifiable in
more than one heading
because each good consists
of two or
more different
ingredients, materials,
components or articles
and no heading provides for
the goods as a whole).
HS Classification- ©H.T.
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  By application of
Rule 3b: this criterion, such
goods are classified
Essential according to the
character ingredient, material,
component or article
that gives the
mixtures, composite
goods, or sets their
“essential
character”

HS Classification- ©H.T.
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 Mixture of
barley
(60%) of
HS10.03
and oats
(40%) of
HS10.04

HS Classification- ©H.T.
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 Mixture of barley (60%) and
oats (40%)
a mixture of barley of HS1003
(60%) and oats of HS1004 (40%)
in different amounts. In such an
instance, “barley” gives their
essential character.

Therefore the mixture is classified

as “barley (HS 1003)”

HS Classification- ©H.T.
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 liquor gift sets

HS Classification- ©H.T.
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 liquor gift sets

"liquor gift sets" (that include the

bottle of liquor and glasses) must
classify the goods under the
appropriate liquor Heading.

The essential character of the

item is the liquor itself and not
the glasses contained within the
set.
HS Classification- ©H.T.
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 Liquor-filled chocolates

HS Classification- ©H.T.
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 Liquor-filled
chocolates
 Liquor-filled chocolates are
classified in Heading 18.06
(Chocolate and other food
preparations containing cocoa)

HS Classification- ©H.T.
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 Rule 3c: Last in numerical order

 when goods cannot be classified by

reference to 3(a) or 3(b), they shall be
classified under the heading which occurs
last in numerical order among those
which equally merit consideration
 GRI 3 (c) states that goods should be
classified under the heading that occurs
last in numerical order from among
those that equally merit consideration if
the goods cannot be classified by
reference to GRIs 3 (a) or 3 (b).
HS Classification- ©H.T.
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 Rule 3c:
Last in  Rule 3 (c) is for use in cases in which a
numeric good seems to fit in more than one
Heading and the essential character
al order cannot be determined. In this case, the
product should be classified under the
Heading which occurs last in numerical
order.

HS Classification- ©H.T.
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 Mixture of
barley
(50%) of
HS10.03
and oats
(50%) of
HS10.04

HS Classification- ©H.T.
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 Mixture of barley (50%) of HS10.03
and oats (50%) of HS10.04

 ifneither the barley nor the oats is found to

impart the essential character to the
product, then by application of GRI 3(c) the
product would be classified in heading
1004 as if consisting solely of the oats.
 This is because the heading number for the
oats found in the mixture occurs last in
numerical order as between it and the
barley (i.e., 1003 for the barley and 1004
for the oats).
HS Classification- ©H.T.
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 Socks &
tie gift
set

HS Classification- ©H.T.
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 Socks & tie gift set

 A gift set which includes socks (Heading number 6115) and ties
(Heading number 6117) cannot be classified by the previous
rule since neither item gives the gift set its essential character.
 The gift set must be classified under the Heading number for
ties which is the Heading that occurs last in numerical order

HS Classification- ©H.T.
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 Electric
lamp
with an
alarm
clock

HS Classification- ©H.T.
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 Electric lamp
with an
alarm clock
Electric lamp (heading 94.05)
with an alarm clock (heading
91.05) is classified in 94.05

HS Classification- ©H.T.
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 Rule 4 Most akin

 If goods cannot be classified according to GRIs 1 to 3, then

resort must be made to GRI 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.

HS Classification- ©H.T.
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 Rule 4 Most akin
 GRI 4 requires that goods are to “be
classified under the heading appropriate to
the goods to which they are most akin.”
 This rule should be applied very infrequently
as GRIs 1 to 3 will cover the classification of
almost all goods.
 When attempting to apply this rule,
however, any determination regarding
“kinship” should depend on such factors as
description, character, purpose or intended
use, designation, production process and
the nature of the goods.
HS Classification- ©H.T.
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  Thisis essentially a bailout

Rule provision. In the very rare

cases where goods cannot

4
be classified by a Heading
or Subheading, then all
one can do is to find the
Most good that most closely
resembles the subject.
akin  Kinshipcan consist of
many factors, such as
description, character or
purpose.

HS Classification- ©H.T.
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 Exhaust Air Jack

HS Classification- ©H.T.
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 Exhaust
Air Jack

 Exhaust Air Jack is classified in

heading 84.25

HS Classification- ©H.T.
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 Rule 5 IN ADDITION TO THE
FOREGOING PROVISIONS,
THE FOLLOWING RULES
Containers SHALL APPLY IN RESPECT
OF THE GOODS REFERRED
TO THEREIN:

GRI 5 has two sections: GRI

5 (a) and GRI 5 (b).

These two sections deal

with various types of
containers presented with
the articles for which they
are intended.

HS Classification- ©H.T.
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 Rule 5
Contain IN ADDITION TO THE FOREGOING PROVISIONS,
THE FOLLOWING RULES SHALL APPLY IN RESPECT

ers OF THE GOODS REFERRED TO THEREIN:

GRI 5 has two sections:

GRI 5 (a) and GRI 5 (b).

These two sections deal with various

types of containers presented with the
articles for which they are intended.
HS Classification- ©H.T.
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  Camera cases, musical
instrument cases, gun cases,
Rule 5a: drawing instrument cases,
necklace cases and similar
Special containers, specially shaped
or fitted to contain a
contain specific article or set of
articles, suitable for longterm
ers use and entered 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
HS Classification- ©H.T.
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  Camera cases, musical instrument
cases, gun cases, drawing
instrument cases, necklace cases
Rule 5a: and similar containers, specially
Special shaped or fitted to contain a
containers specific article or set of articles,
suitable for longterm use and
entered 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
HS Classification- ©H.T.
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 Rule 5a:
Special
container
s

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 Rule 5a: Special containers
This rule, however, does not apply
to containers that give the
imported article its essential
character (e.g., a silver tray or dish
containing tea or a high-quality
ornamental ceramic bowl
containing candies or sweets).

Such merchandise is to be
classified under the heading
for the container.
HS Classification- ©H.T.
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 Violin(HS9202) with case(4202)

HS Classification- ©H.T.
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 Violin(HS9202) with case(4202)

Packing materials and packing

containers entered with the goods
therein shall be classified with the
goods if they are of a kind normally
used for packing such goods.

Violin with a case would be

classified as Violin(HS9202) if the
items satisfie Rule 5(a).
HS Classification- ©H.T.
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 Gumball with toy packaging

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 Gumball with toy packaging

 It seems that it satisfies Rule 5(a) but in this situation Gumball and
toy packaging should be classified separately because of Rule 5(a)
states that, THIS RULE DOES NOT, HOWEVER, APPLY TO
CONTAINERS WHICH GIVE THE WHOLE ITS ESSENTIAL
CHARACTER;
 Toy packaging gives the whole it’s an essential character.
 Therefore Gumballs are classified HS1704 The toy packaging is
classified HS9503 as Toy.

HS Classification- ©H.T.
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 Gumball with toy packaging

 It seems that it satisfies Rule 5(a) but in this situation Gumball and
toy packaging should be classified separately because of Rule 5(a)
states that, THIS RULE DOES NOT, HOWEVER, APPLY TO
CONTAINERS WHICH GIVE THE WHOLE ITS ESSENTIAL
CHARACTER;
 Toy packaging gives the whole it’s an essential character.
 Therefore Gumballs are classified HS1704 The toy packaging is
classified HS9503 as Toy.

HS Classification- ©H.T.
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 Rule 5
(b) Subject to the provisions of rule 5(a) above,
packing materials and packing containers
entered with the goods therein shall be
Packing classified with the goods if they are of a kind
normally used for packing such goods.
material
s&
However, this provision is not
containe binding when such packing
rs materials or packing
containers are clearly suitable
for repetitive use.
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 Rule 5 (b) Packing materials & containers
 Subject to the provisions of rule
5(a) above, packing materials and
packing containers entered 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.

HS Classification- ©H.T.
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  GRI 5 (b) states that packaging
containers and materials not
normally intended to be reused
Rule 5 are classified with the articles in
which they are presented or
(b) imported (e.g., cardboard boxes
or containers containing food
Packing products).

material  This rule, however, does not

apply to packaging materials or
s& packing containers clearly
suitable for repetitive use
(e.g., certain metal drums or
contain containers of iron or steel for
compressed or liquefied gas).
ers  Such containers are to be
classified separately from the
HS Classification- ©H.T. materials that they hold.
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 Gumball dispensing machine

 Gumball dispensing machine

(predominantly of zinc alloy)
imported with gumballs.
 It is designed to accept a coin
and release a candy.

HS Classification- ©H.T.
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 Gumball dispensing machine
 Itseems that it satisfies Rule 5(b), but in
this situation Gumball and dispensing
machine
should be classified separately because of
Rule 5(b) states that, HOWEVER, THIS
PROVISION IS NOT BINDING WHEN
SUCH
PACKING MATERIALS OR PACKING
CONTAINERS ARE CLEARLY SUITABLE
FOR REPETITIVE USE.
 Dispensing machine is considered as a
container
HS Classification- ©H.T. which suitable for repetitive use.
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Therefore Gumballs are classified HS1704. and Development Institute
 Rule 6
Subheading rule
 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
HS Classification- ©H.T.
context otherwise requires © Copyright 2021, Vietnam Logistics Research
and Development Institute
  For legal purposes, the
classification of goods in the
Rule 6 subheadings of a heading
shall be determined according
Subheadi to the terms of those
ng rule 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
HS Classification- ©H.T. requires
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 Rule 6  Once goods have been
classified to the
Subheadi Heading level by the
use of international
ng rule Rules 1 to 5, then
classification to the
Subheading level can
now take place by
repeating international
Rules 1 to 5 and taking
into account any related
Legal Notes

HS Classification- ©H.T.
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 A framed glass mirror

HS Classification- ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute
 A framed glass mirror

A framed glass mirror is found to be

classified in heading 7009.

Thereafter, it would have to be

classified within the subheading
structure of that heading by
application of GRIs 1 to 5 pursuant to
GRI 6

HS Classification- ©H.T.
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and Development Institute
 A framed glass mirror

HS Classification- ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute
 A framed glass mirror

 Initially, a determination would need to be

made as to whether the framed glass mirror is
classified at the 5-digit (or “one-dash”)
subheading level in 5-digit subheading 7009.1
(“rear-view mirrors for vehicles”) or in 5-digit
subheading 7009.9 (“other”).
 If the product is found to be classified in 5-
digit subheading 7009.1 (as a rear-view mirror
for a vehicle), then the classification analysis
would end there and the product would be
classified in subheading 7009.10 (as 5-digit
subheading 7009.1 is not further subdivided).
HS Classification- ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute
 A framed glass mirror

In the instant case, the framed

glass mirror does not satisfy
the article description for 5-
digit subheading 7009.1.

Therefore, the product would be

classified at the 5-digit subheading
level in 5-digit subheading 7009.9
(as a glass mirror other than a rear-
view mirror for a vehicle).
HS Classification- ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute
 A framed glass mirror

 Next, a determination would have to be made

as to whether the product is classified at the
6-digit (or “two-dash”) subheading level
within 5-digit subheading 7009.9 in 6-digit
subheading 7009.91 (as an unframed glass
mirror other than a rear-view mirror for a
vehicle) or in 6-digit subheading 7009.92 (as
a framed glass mirror other than a rear-view
mirror for a vehicle).
 The framed glass mirror would be classified in
subheading 7009.92 by application of GRI 1
pursuant to GRI 6
HS Classification- ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute
INTERNATIONAL
VIEWPOINTS
 Definition:
 Value of imported goods as appraised by the
customs and used as the basis for assessing
the amount of import duty and other taxes. It
may be computed in several ways, but the
most-preferred method is transaction-value
which (in addition to the price paid by a buyer
to a seller) includes other costs incurred by the
buyer, such as packing costs, license fee or
royalty, and any other sum(s) that accrue to
the seller. It is the customs officer (and not the
importer, exporter, or customs broker) who has
the final say in assigning this value. Also called
customs import value.
 [Link]
.html
Customs values - ©H.T.

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and Development Institute
How is the customs
value determined?
 The customs value is determined according to
international trade regulations which include the GATT,
the General Agreement on Tariffs and Trade. The aim of
such regulations is to ensure correct valuation. Various
different valuation methods can be used:
 The transaction value is the most common
method used. When the transaction value cannot
be determined, the following secondary methods
can be applied, by order of priority:
 The transaction value of identical goods.
 The transaction value of similar goods.
 The selling price of the goods.
 A procedure based on the production cost of the
goods.
 Reasonably adapting one of the previous methods
to fit unusual circumstances.

Customs values - ©H.T.

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and Development Institute
 6 Methods For Customs Valuation Of Imported
Goods
Article 5 circular 39/2015

Transacti Transacti Transacti Deducti Comput Deductiv

on value on value on value ble ed value e
of of of value method
importe identical similar
d goods importe importe
d goods d goods
Customs values - ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute
 The transaction value of identical goods method

 “Identical imported goods” means exported goods that

are similar to each other in every respect, including:
 Physical characteristics including the surface of product,
materials, manufacturing methods, functions, uses and
mechanical, physical and chemical properties, having the
same code in the List of Vietnam’s imports and exports
 Product quality
 Brand
 Being made in the same country by the same manufacturer
or by an authorized manufacturer or franchisee
Customs values - ©H.T.

© Copyright 2021, Vietnam Logistics Research

and Development Institute
 The transaction value of similar goods method
 “Similar imported goods” means goods which are not alike
in every respect but have the same substantial
characteristics, including:
 Made of equivalent materials or by the same manufacturing
method
 Having the same functions and uses
 Having similar quality
 Commercially interchangeable, for example, the buyer
accepts goods in substitution for similar goods
 Made in the same country, by the same manufacturer or by
an authorized manufacturer or franchisee, imported into
Vietnam
Customs values - ©H.T.

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and Development Institute
 Conditions of time of
exportation:
• be exported to Vietnam on the
same day or within 60 days before
or after the date of exportation.
CustomsConditions of trading:
• Conditions of commercial level and
valuationquantity: shall be at the same
of commercial level and in the same
quantity as the ones of the
identical imported goods
imported • Conditions of the distance and
modes of transport and insurance:
goods shall have or be adjusted to the
Article 8 & 9 same distance and mode of
circular transport as the imported goods.
39/2015 • The significant difference in
insurance cost shall be adjusted to
Customs values - ©H.T. the same insurance condition as
the imported goods © Copyright 2021, Vietnam Logistics Research
and Development Institute
 if there is not any similar imported goods made by
the same manufacturer, goods made by another
Other manufacturer with the same origin may be
considered.
conditions
for
If multiple transaction values of similar
Customs imported goods are determined by using such
valuationmethod, the lowest transaction value after
adjusting to the same trading condition with
of identical
the goods receiving customs valuation shall be
the customs value.
imported
goods
If the information is not sufficient, the customs
Article 8 & 9
valuation of identical / similar goods shall be
circular 39/2015
skipped.

Customs values - ©H.T.

© Copyright 2021, Vietnam Logistics Research
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 DEDUCTIVE VALUE-BASED METHOD
article 10 circular 39/2015

According to the selling unit price of imported goods, identical imported

goods or similar imported goods on Vietnam’s inland market after deducting
the reasonable expenses and profits obtained from selling the imported
goods.

The goods are not available on

This method is Vietnam’s inland market or the
trade of goods has not been
not applicable in recorded as prescribe in Vietnam’s
law on accounting
any of the The goods are related to aid
following cases: provided by any entities

Customs values - ©H.T.

© Copyright 2021, Vietnam Logistics Research
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 Rules for the selling prices of imported goods
on Vietnam’s market
article 10 circular 39/2015
 Are the actual selling price of such goods on
Vietnam’s market.
 The importer and the inland buyer do not have a
special relationship
 The selling price level shall be determined
according to the highest sales.
 Goods shall be saled on the earliest day after the
importation and within 90 days (calendar days)
after imported date. (at least equivalent to 10% of
the number of imported goods).

Customs values - ©H.T.

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 Deductions
Incurred during the
transportation from the
first border gate to the
warehouse of the
Costs of transport and insurance and
importer or to the place
expenses for other activities relating of delivery in inland area
to the transport of goods after their
Related to the
importation:
transportation of goods
from the warehouse to
the place of sale, in case
the importer bears such
costs and expenses.
Taxes, charges and fees payable in Vietnam upon the importation and
sale on Vietnam’s inland market

expenses for marketing goods, storage

Commissions or general expenses and preservation of goods before sale,
and profits relating to sale: management of the importation and sale
of goods

Customs values - ©H.T.

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 COMPUTED VALUE-BASED METHOD
article 11, circular 39/2015

The computed value of imported

goods includes:
General expenses and the
The direct expense profits from the sale of
for producing the goods of the same class or
imported goods: category and made in the
The cost of transport, cost
exporting country for selling
• The of insurance and the costs
sale to Vietnam. General
relating to the transport
commission costs, expenses include all direct
and indirect expenses for
the brokerage fees the manufacture and sale
• Costs of packing for exportation of goods.
associated with
imported goods
• The packaging
costs
Customs values - ©H.T.
© Copyright 2021, Vietnam Logistics Research
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 DEDUCTIVE METHOD
Article 12 circular 39/2015 and point 7 article 1
circular 60/2019

APPLICABLE CASES:
• If the customs value could not be determined by
using previous methods, the customs value of the
imported goods shall be determined by the
deductive method according to the documents
and data available at the time of customs
valuation.
• The deductive method means the customs value
determined by applying successively the
methods for customs valuation until the customs
Customs values - value
©H.T. is determined
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and Development Institute
 The customs value is determined
based on the identical goods that have
The
already been determined according to
the deductible value or computed
value.
deductive
The customs value is determined
method
based on the similar goods that have
already been determined according to may be
the deductible value or computed
value.
used for
In case the customs value could not be customs
determined, the methods for customs
valuation shall be applied based on
the customs value database. valuation
as follows
Customs values - ©H.T.
© Copyright 2021, Vietnam Logistics Research
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 The residual basis of valuation may be
The determined by applying, in a flexible manner,
fallback whichever of the previous valuation methods
value most readily enables calculation of the Customs
method value.

In determining the Customs value under this

residual method, no arbitrary, fictitious or
prohibited methods of valuation are to be used.
The Customs value should be fair, reasonable,
uniform and neutral, and should reflect
commercial reality to the extent possible.

Customs values - ©H.T.

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and Development Institute
Customs values - ©H.T.
© Copyright 2021, Vietnam Logistics Research
and Development Institute