TOPIC HS CODE DETERMINATION FOR LONGANS AND GASOLINE OF RON 90 AND ABOVE, BUT BELOW RON 97

VIET NAM GENERAL CONFEDERATION OF LABOR TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINITRATION CUSTOMS PROCEDURES TOPIC HS CODE DETERMINATION FOR LONGANS AND GASOLINE “OF RON 90 AND ABOVE, BUT BELOW RON 97” Group Nguyễn Thẩm Phương - 720K0560 Nguyễn Phú Khang - 720K0438 Nguyễn Thục Khanh - 720I0517 Đinh Nguyễn Gia Định - 720I0490 Trương Thùy Duyên - 720D0189 Class code: 706023 Class: 20K70601 Instructor: PhD TRAN NGUYEN CHAT Ho Chi Minh, November 2022 0 THANK YOU In the first place, in order to carry out and successfully complete the report of HS code determination for longans and gasoline “of RON 90 and above, but below RON 97”, our team has received a lot of help and facilitated advantage from Ton Duc Thang University In particular, we would like to express our sincere thanks to PhD Tran Nguyen Chat, our lecturer, who directly guided and accompanied our team throughout the process of completing this report Our report is made based on the efforts of our team members as well as the references and lessons learned from study materials, research works, and information from news sites Although we have tried our best, because of limited knowledge and lack of practical experience, it is challenging to avoid shortcomings in the implementation process Therefore, we are looking forward to receiving your comments on improving this report Finally, we wish you all good health and good work We sincerely thank you 0 COMMENTS FROM LECTURERS SIGNATURE 0 LIST OF MEMBERS No Full Name Student Content Reviews Nguyễn Phú Khang Nguyễn Thẩm Phương Nguyễn Thục Khanh Đinh Nguyễn Gia Định Trương Thùy Duyên ID 720K0438 720K0560 720I0517 720I0490 720D0189 implementation Chapter Chapter Chapter Chapter Chapter 100% 100% 100% 100% 100% 0 Table of Contents THANK YOU COMMENTS FROM LECTURERS LIST OF MEMBERS .4 TABLE OF FIGURES INTRODUCTION CHAP 1: BRIEF INTRODUCTION TO THE HARMONIZED SYSTEM AND VIETNAM’S PARTICIPATION .8 1.1 Introduction and definition of HS code .8 1.2 Harmonized System in Vietnam 1.3 HS convention that VN participates in 10 1.4 Review the six GIR applications .10 CHAP 2: ANALYSIS OF LONGANS AND GASOLINE “OF RON 90 AND ABOVE, BUT BELOW RON 97” AND THE PROCESS OF HS CODE DETERMINATION 12 2.1 How to apply GIRs 12 2.2 Export Longans 14 2.2.1 Overview of Longans 14 2.2.2 Analysis of how to determine HS code 16 2.3 Goods under HS 2710 20 2.3.1 Overview of Gasoline “Of RON 90 and above, but below RON 97” 20 2.3.2 Analysis how to determine HS code 22 2.4 Evaluate 30 CHAP 3: FINDINGS 31 3.1 Advantages 31 3.2 Disadvantages and common misunderstandings in researching .32 3.3 Experience gathering and lesson learned 33 CONCLUSION .35 BIBLIOGRAPHY 36 0 TABLE OF FIGUR Figure 1: Structure of an eight digits HS code .10 Figure 2: Diagram of applying GIRs to determine HS code 13 Figure 3: The situation of Vietnam's longanss export, in the first months of 2022 compared to the same period in 2021 (USD) (hvnclc.vn, 2022) 17 Figure 4: Import and Export Tariff 2022 19 Figure 5: Import and Export Tariff 2022 20 Figure 6: General Department of Customs .21 Figure 7: Import and Export Tariff 2022 24 Figure 8: Import and Export Tariff 2022 27 Figure 9: Import and Export Tariff 2022 28 Figure 10: Import and Export Tariff 2022 30 Figure 11: General Department of Customs 31 Y Picture 1: Hung Yen longans 14 Picture 2: RON 95 and RON 92 .21 Table 1: HS code of longans 20 Table 2: HS code of RON 90 30 0 INTRODUCTION Along with the development of the economy and human civilization, international trade has become more popular than ever Every day, millions of kinds of goods and services are being traded around the world Trading is not just about the movement of one’s products but it also illustrates the demand of people for a diversity of goods Consequently, a vast majority of products move from this country to another country has created the demand for customs This is to ensure the goods will be classified, declared and levied tax correctly A quality classification system like Harmonized System will be unified and beneficial to a country tremendously Therefore in this report, our team will briefly introduce this kind of system and take Longans and Gasoline “Of RON 90 and above, but below RON 97”as two examples of import and export products for further explanation To begin with, this report will have a glance on General Interpretative Rules (GIR), Harmonized Commodity Description and Coding System and the procedure of determining these codes for Longans and product under HS code 2710 (which is Gasoline “Of RON 90 and above, but below RON 97”) In each section, the authors will showcase one-by-one steps and explain how the authors will apply and eliminate the rules to the products Additionally, Longans is a local agricultural product of Vietnam and Gasoline “Of RON 90 and above, but below RON 97” is the critical natural resource that is used by most Vietnamese people Both products are prominently known and used so that having these as an example will somehow give the authors a better understanding in the Customs industry The structure of this report will be demonstrated further below:  Chapter 1: The brief introduction to harmonized systems and Vietnam’s participation  Chapter 2: Analysis of longans and Gasoline “Of RON 90 and above, but below RON 97” products and the process of HS code determination  Chapter 3: Findings and experience gaining 0 CHAP 1: BRIEF INTRODUCTION TO THE HARMONIZED SYSTEM AND VIETNAM’S PARTICIPATION 1.1 Introduction and definition of HS code A universal standard for identifying the kinds of goods transported is the Harmonized Commodity Description and Coding System (HS Code) This code must be used when declaring any goods exported or imported across international borders to customs As a result, the code aids in standardizing and identifying goods in a uniform manner so that they can be described accurately everywhere Basically, it is a common number system for categorizing commercial goods Customs officials use it all around the world to identify products when determining tariffs and taxes and to compile statistics Additionally, with HS, enterprises can use trade data, conduct market research, lower the price of international trade and complete a successful export transaction The Harmonized System, in particular, not only creates favorable conditions for trade negotiations, promotes administrative reform, accelerates the rate of integration with the region and the world, makes significant contributions to the process of improving the quality of goods and services, automates and modernizes customs procedures, but also contributes to the struggle against smuggling and trade fraud The Harmonized System is developed and maintained by the World Customs Organization (WCO) and is revised every five years It is considered the basis for the import and export operation and is used by several trading partners, especially the United States From 1976 to 1983, 60 founding member countries' customs associations and 20 additional international organizations summarized and judiciously inherited the previous results in order to develop the Harmonized System The Harmonized System, mandates that the HS code be recognized by a 6-digit code and have a distinct structure In addition, 99 chapters with 21 sections contain 5000 commodity categories The digits that can be broken down into three parts The first 0 two digits identify the chapter in which the goods are classified The next two digits identify headings within that chapter The last two digits identify the subheadings and are even more specific The first digits of HS codes are usually the same worldwide Theoretically, countries utilize HS codes to classify specific products under the same section, chapter, heading, and subheading, but in fact, discrepancies in the range of products and the customs regulations of each national customs authorities can cause disputes Countries can add additional numbers for their own purposes, those longer codes differ among nations Vietnam and India, for instance, use 8-digit HS codes, while Japan uses a 9-digit one China uses a 10-digit HS code, as does the EU, Canada, the US, and Korea A 12-digit HS code is used by Turkey 1.2 Harmonized System in Vietnam On March 1998, Vietnam became a member of the Harmonized System by president th No 49 / QD - CTN in the year of 1998 And on January 2000, Vietnam approved the st Convention The ASEAN Harmonized Tariff Nomenclature is the sole source of Vietnam's eight-digit HS nomenclature, which is used to classify tariffs (AHTN) Both Vietnamese and English are used for tariff nomenclature in Vietnam Vietnam's nomenclature is divided into 97 chapters and 21 sections (in which chapter 77 is used in the possible future) As was previously mentioned, the HS code used in customs declarations in Vietnam is the one that is listed in the most recent version of Vietnam's Nomenclature of Exports and Imports The HS code in Vietnam includes eight digits The first two digits identify the chapter in which the goods are classified The next two digits identify headings within that chapter The fifth and sixth digits identify the subheadings Finally, the last two digits indicate the precise categorization in Vietnam’s export and import nomenclature 0 Figure 1: Structure of an eight digits HS code 1.3 HS convention that VN participates in The International Convention on the Harmonized Commodity Description and Coding System controlled The Harmonized System It was approved in June 1983 and began to take effect on January ,1988 st The target of the HS Convention is that harmonizing the description, classification, and coding of items in international trade will promote trade and information exchange Customs duties and statistics on international trade are gathered using the HS Governments, international organizations, and the private sector all use it extensively for a variety of other things, including taxes, trade policies, controlling restricted goods, checking rules of origin, freight tariffs, monitoring prices, controlling quotas, and researching the economic situation In 1993, Vietnam took part in the HS Convention on July 1st, however, until 6th March 1998 that decision No 49/QD-CTN issued by the President of Vietnam acknowledged it Therefore, the HS Convention began to take effect in Vietnam on January st, 2000 This Convention currently applies to the substances that have occurred in 1992, 1996, 2007, 2012, and 2017 1.4 Review the six GIR applications General Interpretative Rules (GIR) are a set of six classification rules These regulations ensure that the legality of the Harmonized Commodity Description and Coding System 0 Figure 7: Import and Export Tariff 2022 However, relying on the given title of section and chapter only allowed my team to position it in a general sense, namely, we determined that the chapter number is 27 but it not satisfy the criteria for Heading So we also count on more specific grouping to get specific HS codes, so my team decided to move to the next rule 0 Step 2: Define Heading Apply rule 2: Rule 2a: Incomplete or unfinised articles – Articles presented unassembled or disassembled Since rule 2a is used to classify incomplete products, it is reasonable to exclude it from the code determination process As gasoline of RON 90 and above, but below RON 97 is already ready for commercial sale to vehicles that use this gasoline Section (III) rule 2a, on the other hand, states that "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." Hence, the product belongs to section V cannot use rule 2a to be identified Rule 2b: Mixtures and combinations of materials or substance The rule of and is more specifically stated in the footnote to rule 2b, which states that mixtures and compounds of materials or substances, as well as goods made of two or more materials or substances that can be easily distinguished as belonging to two or more different groups at first glance, must be classified Rule 2b states that a title refers to a specific material or substance that is a mixture of that substance and another substance Therefore, based on the aforementioned theory, my group's product gasoline “of RON 90 and above, but below RON 97” not satisfy the requirements because it is a product with numerous ingredients It makes perfect sense to utilize rule number because the ingredients are so varied Apply rule 3: items appear to be divided into several categories at first glance Rule 3a: Goods are classified into groups based on specific descriptions, with the most basic characteristics Because gasoline "of RON 90 and above, but below RON 97" is a mixed product with many ingredients, this classification is inapplicable According to Rule 3a, the group with the most specific description takes precedence over the group with the most general description However, because its constituents form an integrated whole rather than a product of parts made of different substances, this product cannot be determined based on such an order of preference 0 Rule 3b: Mixed goods made of different materials or goods made up of different components, as well as goods in retail sets: They are classified based on the materials or components that make up their basic characteristics Similarly, separate footnotes in rule three indicate that if the same item is indicated in more than one group, the group with the most specific description will take precedence over those with a general description These separate footnotes feel acceptable after carefully reading section 3(b) and the subheading comments of rules and (Figure ) 0 Figure 8: Import and Export Tariff 2022 Regarding this criterion, the products in my group are typically labeled as "Of RON 90 and above, but below RON 97" on the packaging, which differs from the market in that there is a distinct distinction between include crude oil and exclude crude oil In the 0 import and export tariff, people are only interested in the most specific group, in my case, excluding crude oil As a result, my group has outlined its direction clearly; here are the results: Figure 9: Import and Export Tariff 2022 Because of this, my group's product gasoline “Of RON 90 and above, but below RON 97” were appropriately classed under heading 2710 (Petroleum and Bituminous materials, not crude oil) rather than 2709 (Petroleum and Bituminous minerals, crude oil) 0 So the third and fourth digit in the HS code of the product we need to find after going through three rules is 2710 To continue, my group will use rule before making a final choice because the preceding rule was satisfactory, thus there was no need to use rule and rule Step 3: Define sub-heading and tariff line Apply rule 6: “Explanatory notes" The last digits would be defined by this rule Given that only subheadings of the same level can be compared, and keeping in mind rule 6, the classification of goods into group subheadings must be determined in accordance with the content of each subheading, the necessary subheading notes, and the preceding rules with suitable changes of details The applicable section and chapter notes also apply, subject to these requirements, unless specifically noted in the subheading's description And here based on the import and export tariff, the subheading for "Of RON 90 and above, but below RON 97" is 27.10.12 and the tariff line is 27.10.12.12 To sum up, the group determined the HS code for RON 90 and above, but below RON 97 after reading together very carefully: 0 Figure 10: Import and Export Tariff 2022 It is clear from Figure 4- the region marked in yellow - that this commodity's subheading is 271012 Since it is a Light Oils and Preparations product, the tariff line for gasoline "Of RON 90 and above, but below RON 97" is 27.10.12.12 Step 4: Recheck the HS code The same with longans products, we use the website General Department of Customs to recheck the results After a few operations, it shows that the HS code is similar to the result we have determined when using the import and export tariff 0 Figure 11: General Department of Customs Finally, an outline of my group's HS code structure may be found below: Chapter 27 Heading 2710 Subheading 271012 Tariff line 27101212 Table 2: HS code of RON 90 2.4 Evaluate The process of determining HS codes for the two items mentioned above is based on the theory of how to apply the GIRs that has been learned In general, the method for determining our group's HS code is clearly presented, and the professional content is based on the knowledge of the group members In terms of fresh longans, this is a apparent-nature fruit product This is a significant advantage in determining HS codes because the titles clearly show its nature as well as the outstanding features, here is the freshness of the product, so there are no gaps in 0 determining HS code One of the proofs is that the first four digits (chapter and heading) are all easily found by using only rule In contrast, the gasoline product "Of RON 90 and above, but below RON 97" has a more complicated nature because we must understand the technical characteristics of the product; additionally, it is a product composed of many products containing different substances, necessitating more attention Understanding the physicochemical properties as well as the percentage of substances, such as the origin of the substance, is critical for accurately determining the HS code of the product After conducting the report, our team discovered that, in practice, most import-export personnel only consult the import-export tariff and online tools as reliable as the General Department of Vietnam Customs to determine the HS code for a specific item Although this appears to be disorganized and incorrect at first glance, it saves a significant amount of time They are able to so because they have a wealth of practical experience, which will assist the import-export specialist in avoiding mistakes CHAP 3: FINDINGS 3.1 Advantages In order to provide a concise report of HS code determination, the authors have to search for documentaries and information in the customs sector However, this turns into an advantage since it provides the authors with a deeper and clearer understanding in determining the HS code for the chosen products Thanks to the materials and lectures given by PhD Tran Nguyen Chat and reliable references on the Internet have given the authors an opportunity to acknowledge the procedure of determining HS code for the chosen products Technically, the authors have used the GIRs consecutively in order to settle down a HS code By using the import and export tariff nomenclature of 2022, we are able to identify the chapter, subheading, heading and national tariff of one’s products effortlessly Not to mention this document has been very helpful since it provides us with the most necessary information 0 and explanations Along with the rapid development of the internet, we can review and re-check our HS codes in some of the most legitimate websites such as customs.gov.vn which partially contribute to the accuracy of our determinations Beside the specialized expertise, the implementation in background information does offer the authors wider understandings not only in Customs perspective but also in reality The report could not be done without the hard work of team members and the desire of fully understanding this subject Despite the knowledge gap and not knowing each other from the very beginning, the authors all tried their best in order to support each other in the learning process and be able to close that gap After all of the thick and thin that we have been through in the period of working together that have built us a concrete foundation of this subject and partially made us become more confident when it comes to customs procedure Last but not least, thanks to the smooth working process of each member and the support from our team leader has contributed to most parts of the success of this report 3.2 Disadvantages and common misunderstandings in researching Initially, the authors’ knowledge was gained towards theoretical classes and reading only, therefore when it comes to practical exercises, we did not know where to begin with and easily got lost with the abundant source of information When it comes to disadvantages, seeking relevant data and reliable figures showcase to be our first obstacles since we have to provide up-to-date numbers and suitable exhibits Consequently, these findings can contribute to the authenticity and cogent to this report Due to the lack of exporting or importing statistics which have consumed a lot of our time just to find appropriate data Additionally, since the chosen products were endemic and regional thus most of the documentation is in Vietnamese Therefore that reason has caused the inference in translating and the incomprehensible data demonstration Second of all, the report comprises the HS code analyses of different products Each product was done solitarily so that when giving out the evaluation and comparison between each GIR has caused difficulties in gathering and integrating the criteria 0 Thirdly, our team members once had misunderstandings in the sub-heading part and tariffs line part of Longans and “Gasoline Of RON 90 and above, but below RON 97” This is because of the lack of information of the precise sorting procedure of these products and misunderstandings in the GIRs Hence, the authors’ analyses of those products’ HS code were incorrect and did not match with the one that was predetermined by the government In order to re-analyze the right ones, we have to spend a lot of time on further reading and consulting from our instructors Although being explained and instructed by Mrs Chat, there are still some uncertainties regarding the lack of practical experience 3.3 Experience gathering and lesson learned The first result of completing this assignment is that our group now knows how to methodically determine the HS code The correct identification of the HS code is a precondition for determining the dutiable value of such goods and whether they are eligible for preferential treatment when imported or exported under any bilateral or multilateral trade agreements Having done this report, the authors realized that a firm or a business can easily dictate the wrong HS code which leads to wrong tax calculation Wrong HS code declaration has serious consequences, such as being sanctioned for tax evasion or tax fraud under Article 13 of Decree No 45/2016/NĐ-CP, or lowering business reputation, causing difficulties in subsequent import and export operations When businesses can pay penalty fees, these issues are sometimes just a matter of money, but in some cases, they will have to trade off more things but not money However, thanks to the government that has established several websites for easier tax calculation and HS code determination This plays a very important and essential role for a Vietnamese enterprise when exporting or importing products Although there are multiple searching tools from the internet, it is an undeniable truth to have a brief understanding about the procedure and how it works Therefore if one’s product was wrongly determined, we can acknowledge, fix it or request to fix it 0 Last but not least, it is necessary to consult the experts in the industry since the information we have gathered was only a few and obviously we are lacking experience when it comes to reality One said learning is a treasure, therefore not only asking someone who has more experience in the industry performs as a great way to learn and grow but also a simplest way to minimize the risks 0 CONCLUSION To sum up, the authors’ report mainly focuses on products which are Longans and “Gasoline Of RON 90 and above, but below RON 97” Specifically, after a period of researching and determining the HS codes for products, our team finally ended up with the results 08.10.90.10 and 27.10.12.11 for Longans and “Gasoline Of RON 90 and above, but below RON 97” respectively In order to ensure the results of our determination, the authors have double checked the products on the authorized website which is customs.gov.vn Besides the final results, this report has given the authors the opportunity to acknowledge each GIR precisely and get to know the international Customs procedure Technically, the HS Convention aims to facilitate commerce and information sharing by unifying the description, categorization, and coding of goods in international trade As a result, the HS code is used to monitor international trade statistics and collect customs duties It is widely used by governments, international organizations, and the commercial sector for a range of additional purposes, including taxes, trade policies, controlling restricted items, checking rules of origin, freight tariffs, monitoring pricing, controlling quotas, and studying the economic situation The most important thing is that our team members have learnt to cooperate and find the solutions for the obstacles After all, the knowledge that we gained is very precious which could benefit our future career 0 BIBLIOGRAPHY Thủy, T T (2021, July 26) What is Longan? Trái Cây Tươi Nhập Khẩu Retrieved October 25, 2022, from https://traicaytuoinhapkhau.net/qua-nhan-la-gi/ Longans Vietnamonline.com (n.d.) Retrieved October 25, 2022, from https://www.vietnamonline.com/entry/longans.html#benefits-of-longan Longan and Export potential Moit.gov.vn (n.d.) Retrieved October 25, 2022, from https://moit.gov.vn/tin-tuc/thi-truong-nuoc-ngoai/qua-nhan-va-tiem-nangxuat-khau-sang-thi-truong-nhat-ban.html Bản Tin xuất trái Cây Quý II Năm 2022 HVNCLC (2022, August 16) Retrieved October 25, 2022, from https://hvnclc.vn/ban-tin-xuat-khau-trai-cayquy-ii-nam-2022/ Lợi ích nhãn sức khỏe vinmec.com (n.d.) Retrieved October 25, 2022, from https://www.vinmec.com/vi/tin-tuc/thong-tin-suc-khoe/dinh-duong/loiich-suc-khoe-cua-qua-nhan/ RON 92 & 95 (n.d.) Retrieved October 25, 2022, from https://vinfastauto.com/vn_vi/xang-92-va-95 Baodautu.vn (n.d.) Việt Nam Chi 6,8 tỷ USD nhập Xăng Dầu baodautu Retrieved October 25, 2022, from https://baodautu.vn/viet-nam-da-chi-68-ty-usdnhap-xang-dau-d175307.html HS code Tìm hiểu HS Code (n.d.) Retrieved October 30, 2022, from https://vntr.moit.gov.vn/vi/what-is-hscode 0 0 ... to carry out and successfully complete the report of HS code determination for longans and gasoline ? ?of RON 90 and above, but below RON 97? ??, our team has received a lot of help and facilitated... systems and Vietnam’s participation  Chapter 2: Analysis of longans and Gasoline ? ?Of RON 90 and above, but below RON 97? ?? products and the process of HS code determination  Chapter 3: Findings and. .. RON 90 and above, but below RON 97? ?? is a heavily imported item Therefore, our group chose Gasoline ? ?Of RON 90 and above, but below RON 97? ?? as an imported product Petroleum is the source of gasoline,