4 CHAPTER 2: ANALYSIS OF HS CODE DETERMINATION FOR SELECTED PRODUCTS .... Global regulation of the World Customs Organization, this type of code helps us to know most of the goods infor
BRIEF INTRODUCTION OF THE HARMONIZED SYSTEM
Definition and structure of Harmonized System
The HS Code (Harmonized System Code) is a code used to identify imported and exported goods worldwide It is an internationally standardized system of names and codes used by the World Customs Organization - WCO to classify commodities on a global scale.
Basically, the Harmonized System (HS Code) structure includes several elements split from large to small as chapters, headings, sub-headings, tariff lines, and national tariffs Our country now uses an 8-digit HS code, although in some other countries, this number might be 10 or 12 digits long.
More specifically, there are 97 chapters in total, with chapters 98 and 99 being specific to each country, and the first two characters describing the general description of the commodities The next two letters are called Heading and are used to categorize products into common groups Sub-headings are grouped into more generic groups from the group, and each country determines the final Tariff line.
The significance and objectives of Harmonized System
Many stakeholders participating in the import and export process will profit from the proper use of HS codes for each type of commodity The most common role of the correct classification of HS codes for the management agency is to correctly identify the categories of goods, thereby providing how to apply taxes and the amount of tax that the Customs must collect import and export enterprises in order to contribute to the enforcement of domestic laws and international treaties; support for the analysis of micro, macro, and international trade negotiations
In detail, The HS code's role is to ensure that firms comply with domestic and international legislation To begin with, HS codes assist us in classifying goods and determining the appropriate tax rate in accordance with state regulations Furthermore, businesses will be aware of all taxes that must be paid, avoiding the situation in which businesses that have to pay a lot of tax frequently have to go through tax refund procedures, which takes a lot of time and effort for stakeholders Finally, businesses benefit from free trade agreements (FTAs) in accordance with regulations The early preparation of procedures and the correct identification of the HS code can assist firms in making a good impression and reputation for Customs authorities, resulting in faster customs clearance of goods.
A summary of the HS Convention formation process
The HS Convention, formally known as the "International Convention on Harmonized Commodity Description and Coding Systems," was adopted by the World Customs Organization in Brussels (Belgium) in 1983 and went into effect on January 1,
1988 It is a harmonized system of product description and coding According to research data, this is a reasonably good result of 60 founding member countries' customs organizations and 20 other international organizations studying for nearly ten years (1976
The HS convention is composed of 20 articles, some of which address the responsibilities of member nations, the application of HS independent territories, dispute resolution, and the work of the Customs Cooperation Council The HS Convention was established as the most effective legal mechanism for ensuring a harmonized product description and coding system, thereby establishing a global commodity categorization system Furthermore, this convention facilitates international trade negotiations, contributes to the reform of Customs administrative procedures, accelerates regional and global integration, and prevents smuggling and fraud in trade, thus protecting businesses' interests and assisting in the automation and modernization of customs procedures.
Vietnam joined the HS Convention on July 1, 1993, but it was not until March 6,
1998, that the President of Vietnam recognized it with Decision No 49/QD-CTN As a result, the HS Convention entered into force officially in Vietnam on January 1, 2000 This Convention currently applies to more than 98 percent of all goods commerce, and updates and additions to the substance have occurred in 1992, 1996, 2002, 2007, 2012, and 2017.
Review the six HS code applications rules
Rule 1: General rule of thumb.
The designations of Sections, Chapters, and Sub-Chapters are simply for reference; they are insufficient to classify items (determining HS codes).
- 2.2 Section and Chapter Notes (Explanations)
If it is not possible to categorize based on item 2 above, the following rules will be followed in order "Plastic and objects of plastic," for example, is the title of Chapter 39 Plastic children's toys, on the other hand, are dealt with in Chapter 95, not Chapter 39. Rule 2: In the same group, unfinished goods and compounds a) When a good is classified under a heading, the finished or unfinished product falls under that heading if it shares the same fundamental features as the dead or finished item The same classification applies to products in their complete or finished form or to goods in their finished or finished condition that have the essential feature of the good (or to be classified as finished or finished goods in accordance with the provisions of this Article) This rule must be followed), but not assembled or disassembled.
Bicycle without saddle, pedals (incomplete) still classed as a bicycle (87.12) For example, to make transporting the excavator easier, the parts are dismantled, and each machine part is assigned an HS code based on the vehicle.
For the purpose of its establishment, the HS Convention was born as the most effective legal tool to ensure a harmonized system of description and coding of goods, thereby becoming a global commodity classification system In addition, this convention creates favorable conditions in international trade negotiations, contributes to the reform of Customs administrative procedures, accelerates integration with the region and the world, and prevents smuggling And fraud in trade, protecting the interests of businesses and thereby helping to automate and modernize customs procedures. b) If a material or substance is categorized under one category, a mixture or compound of that material or substance with other materials or substances is classed under that heading as well Goods composed entirely of one material or substance must be classed together or part of that material or substance Rule 3 governs the classification of things made of two or more materials or substances.
Mixture A comprises two goods, Product 1 (06.07) and Product 2 (06.07) Mixture A's HS code will be applied to heading 06.07.
Rule 3: At first look, goods can be classified into a variety of categories.
When items can be categorized into two or more headings at first glance due to rule 2(b) or for any other reason, the classification shall be as follows: a) When classifying items, the groups with the most specific descriptions will take precedence over the groups with the most generic descriptions When two or more headings each referring to a part of the material or substance contained in a good is a mixture or compound, or to only a part of the good in the case of a good inset put up for retail sale, these headings are deemed to give an equal characterization of the said goods, even if one of the headings is a mixture or compound. b) Mixed goods consisting of different materials or goods made up of different components, and goods in the form of sets for retail sale, if not classified under Rule 3( a), are classified according to the material or component which confers their essential character. c) Where the goods cannot be classified according to rules 3(a) or 3(b) above, they shall be classified in the last heading in numerical order among the equivalent headings under consideration.
Rule 4: The most similar goods
Commodities that cannot be categorized according to the preceding rules are placed in the heading that corresponds to the most similar class of goods.
The provisions below apply to the commodities listed below. a) Camera and camcorder cases, musical instrument cases, pistol holsters, drawing tool cases, jewelry cases, and similar cases that are suitable or uniquely made for storing products or sets These products are grouped with certain commodities that can be used for a long period and that accompany the products when they are sold This notion, however, does not apply to packaging that is significantly superior to the goods it contains. b) In addition to rule 5(a), the packaging in which the good is included is classed with the good if the packing is of a type that is commonly used for the good This approach, however, does not apply to packages that are plainly designed to be reused.
Rule 6: Explain how to properly classify and compare
For the sake of legality, the classification of goods into the subheadings of a heading shall be determined in accordance with the content of each subheading, the relevant subheading notes, and the above rules with amendments detail as appropriate, provided that only subheadings of the same level can be compared Under this rule, the relevant section and chapter notes also apply unless the description in the subheading requires otherwise.
For example 1 brick compares to 1 tile, 2 tiles compares to 2 tiles& (the dash is a bullet point "-" before the item name in the description of the goods of the tariff). When looking up HS code, apply rule 01 and rule 06, then rule 2, Rule 3, Rule 4 or Rule
ANALYSIS OF HS CODE DETERMINATION FOR SELECTED
General introduction of selected products
2.1.1 Overview of TH True Milk Brand
TH True Milk is a brand under the management of TH Corporation and is known in full as Milk Corporation, and as the TH True Milk has since proven to be dominant in the market and known as the "dominant clean Milk market" in Vietnam Essentially, the TH was formed and developed based on "the true story of the TH" which utilized modern technology from completely fresh milk raw materials and has produced thousands of real milk products of high quality This fresh quality helps the brand create a bond with the consumer The TH True Milk sees strength as the foundation of brand quality products that must be coupled with the cost that satisfies consumer needs Due to its multi-dimensional power, high prestige and solid standing, the TH True Milk has built and communicated to consumers in a simple but genuine philosophy They carry a mission of distributing goods throughout the world, so TH has built a series of chain stores to supply enough and timely clean, safe, fresh and nutritious food products to reach their consumers' borders The success of this brand tells us that on every road, innovative people who "dare to think" in new directions, dare to make the impossible possible, even create a historic turning point.
With the brand's development, TH True Milk has launched a wide range of new products Popular brands include dairy products with over 70 fresh milk-based products, such as pasteurized fresh milk, pasteurized yogurt, natural yogurt, and so on Each milk product of TH True Milk carries its own brand In addition to the TH generation of many different butter products, the format includes Mozzarella and laminar Other solds are also available for the use of TH True Milk Juice, TH True Milk Juice, Roasted RICE RICE, and especially the pure refreshments of the TH True Milk Ice cream products were also marketed as cinnamon cream, flavored cream, canned ice cream and finally Japonica FVF rice product with interest in TH True Milk.
In order to produce clean Milk, the TH True Milk company has invested heavily in the production and is divided into three main processes: First, the dairy process must be of a specific genetic heritage, with a clear pedigree, and avoid inbreeding with world- renowned dairy countries, such as New Zealand, the United States, Australia, Canada, and so on And then a dairy cow This was the key to creating the purest and fresh milk stream modern technology that put dairy cows' health first Using a closed milk vaccine process, the system will automatically refuse to receive fun nutritionally guaranteed milk The milk production process after the vaccine is cooled at 2-4 °C and is quickly transferred to a clean milk processing plant, TH, to maintain the complete quality, leaving the milk uncontaminated The TH True Milk, pure, delicious, nutritious, fresh milk from the ultimate technological base The division process of the TH True Mart system has been built to ensure that the TH product chain is in the safe condition through end-to-end delivery service.
2.1.2 Overview of Cengage VN, UEH University and Hong Duc Publishing House
A collaboration between Cengage VN, department of Economics at the Ho Chi Minh City University of Economics UEH and Hong Duc publishers access quickly knowledge to support the learning process as well as self-study by the students and minimize the cost of creating a new macroeconomics book This collaboration has resulted in the exchange of academic documents and information, exchange of instructors and researchers, student exchange, co-organizing symposia, scientific research cooperation and other collaborative activities with the aim of exchanging and supporting each other It is open to the possibility of developing the faculty for scientific research and to increase the number of scientific articles published in international journals in the near future.
N Gregory Mankiw, professor of economics at Harvard University, wrote many articles and was frequently involved in projects of economic and academic policy debate
As one of the world's 25 best-known economists, his economic work has been used by many universities around the world He is also the author of Worth Press In addition to teaching, research, and writing, Mankiw works as a researcher for the National Council of Economic Research, as a consultant to the Office of The Budget of Congress and the Federal Reserve Of Boston, and the Board of Development and Testing of Members of ETS in New York - a pre-university course in economics This is the first time that N Gregory Mankiw's economic work was translated into Vietnamese and published in Vietnam The text of the book contains the most general, broad explanations of economic concepts, macroeconomics, and economic governance mechanisms 16 textbooks give the reader comprehensive and intensive knowledge of economic principles such as classical theories; development theory: long-term economy; theories in economics: a short-term economy; Interpretation and assessment of science professor The definition of the concept in the book is clear, easy to grasp, easy to understand, there is a summary of the associated chapter that creates the best conditions for review, providing knowledge from the basics to the advanced, making it easier for students to supply lessons to lessons, how to handle situations in practice The University of Economics TP HCMC and other Vietnamese universities within the Economic and Administration have updated capabilities to match the curriculum of economics.
The procedure for determining the HS code
After selecting products from the supermarket, team members had 1-2 days to self- study before we discussed the group online As a result, we agreed to choose two products from two distinct industry areas (F&B and education) to identify their HS codes. There are three ways to search for and recognize HS codes:
• Method 1: Look up the General Department of Vietnam Customs website at https://www.customs.gov.vn/ This webpage is exclusively used for reference purposes by my group
• Method 2: Research the program and the websites of firms that support it We did not choose this method since it is expensive, and we are worried about making mistakes the first time we try it
• Method 3: Examine the file Vietnam's import and export tax schedule 2021 - TTWTO VCCI - Biểu thuế xuất nhập khẩu Viòt Nam năm 2021 My group chose this third option to serve our complete analytical method because it is simple to detect and identify
The content and specific implementation, as well as the final results, occurred as follows, including general and specific processes below, based on the rules learned in class.
2.2.1 HS code for TH True Milk Blueberry yogurt
My group believes that the third rule of the six rules for establishing HS codes is the best fit for yogurt goods with these qualities Specifically, the following are the steps taken to determine and draw conclusions regarding its HS code:
Step 1: Type "yogurt" into the search box.
Because at that time, we did not know the HS code of yogurt, so my group made a note of some of its actual descriptive details in order to discover the matching HS code in this stage, after downloading the import-export tariff schedule 2021 to the computer In this section, we used the keyword "yogurt" to find out where their product is in the tariff There is also some basic information about this product, which is as follows:
• The product's full name: TH True Milk YOGURT Natural Blueberry Yogurt
• General information: TH True Milk YOGURT Natural Blueberry Yogurt is made from 100% pure fresh milk from TH farm that has been naturally fermented
• In 100g, the following nutrients are present: 95.3 kcal of energy; 14.5 g of carbohydrate; 2.8 g of protein; and 2.8 g of fat (2.9 g)
• Product ingredients: Blueberry fruit flavor and natural colors are employed in the product
• Goods can be used for a variety of purposes, including eating True Milk products are made on a contemporary production line using closed technology, preserving all of the natural nutrients found in clean, fresh milk There are approximately 1 billion
TH in one jar Acidophilus bacteria are good bacteria that help build resistance and produce antibiotics capable of destroying dangerous bacteria in the intestines
• Images of the goods can be found in the appendix
• See the list of sources for further information on the manufacturing process of goods
After learning some fundamental facts, my group proceeds to the crucial second stage, which is to use the six rules learned to calculate its HS code.
Step 2: Look for the HS code for the product "Natural Blueberry Yogurt TH true YOGURT."
1 Rule 1 - Chapter notes and identifiers:
In this first rule, my group used the import and export tariff 2021 to determine the section and chapter of yogurt In particular, my group discovered and determined the following:
• Section I: live animals; animal products
• Except where the context requires otherwise, any reference in this Section to a specific genus or species of an animal includes a reference to the young of that genus or species
• Unless otherwise specified, every reference to "dry" products throughout the Nomenclature includes products that have been dehydrated, evaporated, or freeze- dried
• Chapter 04: dairy products; birds' eggs; natural honey; edible animal items not otherwise specified or included
Figure 1 Results from the import and export tariff schedule 2021 Yogurt –
In addition to using the 2021 import and export tariff, my group also looked at the search results on another website, https://caselaw.vn/ The following are the results of my group's search for "yogurt”.
Figure 2 Search results from Case Law Yogurt –
However, based on this knowledge alone, my group is still unable to establish the
HS code of the product; according to the theory learned, the sections and chapters have no legal significance in the classification of commodities; they just provide a brief explanation of where this type of item might be found Because we cannot adequately define the product using only the section and chapter, we must rely on its glossary and subheading to obtain the true HS code As a result, my group continues to apply the second rule.
2 Rule 2 - unfinished items and compounds in the same category
Rule two only applies to unfinished or unfinished articles, unassembled or deconstructed articles, and mixtures or compounds of elements, materials, or substances, according to the footnotes More specifically, the rule of three is stated in the footnote to rule 2b that mixtures and compounds of materials or substances, as well as goods composed of two or more materials or substances that are distinguishably classified into two or more different groups at first glance, shall be classified.
Hence, according to the preceding hypothesis, my group's yogurt product did not meet the standards because it is a finished product with a lot of ingredients Because the ingredients are diverse, it makes perfect sense to apply the rule of three.
3 Rule 3 - items appear to be divided into several categories at first glance.
Similarly, there are separate annotations in rule three, but when the group carefully reads item 3a, it feels pretty acceptable, this part indicating that if the same item is specified in more than one group, the group with the most specific description takes precedence over those with a general description.
Considering this criterion, the product of my group is generally described on the packaging as TH true YOGURT Natural Blueberry, which differs from the market in that there is a clear distinction between eating yogurt and drinking yogurt., in the import and export tariff, people are only interested in the most specific group, which in the case of my group is yogurt As a result of this, my team has clearly determined its direction; here are the results:
Figure 3 Search results from Case Law Yogurt –
As a result, the yogurt items in my group were correctly classified in heading 0403 rather than 0401 (Milk and cream that are not condensed and do not have added sugar or other sweeteners) or 0402 (Concentrated milk and cream, as well as milk and cream containing added sugar or other sweetening substance).
Because my group was satisfied with the preceding rule, rules four and five do not need to be applied, so my group will go to rule six before making a final decision
Remembering rule 6, the classification of goods into group subheadings must be established in accordance with the content of each subheading, the necessary subheading notes, and the preceding rules with suitable changes of details, given that only subheadings of the same level can be compared Subject to these criteria, the applicable section and chapter notes also apply, unless the description in the subheading specifies otherwise.
To summarize, after reading and learning together rather attentively, the group has calculated the HS code of yogurt as:
Figure 4 HS code results of TH True Milk Blueberry yogurt
FINDINGS
Advantages
During the process of looking up the HS code, my group tried their best to learn about how to apply the six rules of applying the HS code that she taught in class in combination with lecture slides as well as some information online Widely shared by vocational training centers or businesses on YouTube, websites, and blogs It is because of such abundant and detailed resources that the group can easily identify the HS codes of the two goods that they have chosen
In addition, as far as I can see, currently, our import and export tariff schedules are constantly updated every year, which helps the search process to be more accurate because it can If there is a change from year to year, assuming that the information is not clearly updated or not widely shared on the forums, my group s practice may face some ’ disadvantages
Finally, it is impossible not to mention the smooth coordination between my team members Thanks to the initiative, active cooperation, and knowledge exchange among members, this exercise of my group was completed despite still learning online due to the COVID-19 epidemic In the process of group discussion, each member complements each other’s knowledge, so although it is quite difficult for the first time, in general, my group has passed, maybe the analysis process in chapter two may not be accurate In the use of the rule, but my group has tried their best and we also look forward to your comments and suggestions so that the gaps in knowledge of the group can be improved.
Difficulties
In terms of difficulty, the first two times my group applied the wrong code to the two goods that my group chose, specifically the chapter and group, we could easily find it, but when it came to the subheading part, it was because people divided it The categories of goods are so detailed that we don t know which category to use and this takes a long ’ time to find
Besides, along with the strong development of technology, there are many items that are integrated with many uses, many components, etc., leading to difficulty in determining the HS code of the product Next, learning the theory and then applying the rules was also difficult because we just learned it for the first time and didn t have certain ’ practical experience, so maybe the second part of the group will make mistakes because It’s also pretty much based on emotions And as mentioned above, currently in some areas,
Finally, there are still cases of inconsistent use of HS codes for the same item, so it is difficult for groups of children to agree with each other Another difficulty that the group predicts in the future is that when doing procedures at the customs office, there may be many cases at the same branch, the same type of goods, but two different receiving officers They will guide to applying different HS codes leading to different tax rates There are goods that enterprises apply HS codes according to the instructions of customs officers when doing customs clearance procedures (for declarations of yellow channels and red channels) but then they are rejected by customs officers of the Customs Sub-department Other agencies check after customs clearance Although this is just a prediction, my team thinks this is a very likely case in the process of determining HS codes of businesses.
Risks, experience gathering, and lessons learned
In terms of experience, there are now a number of popular Websites that can help you look up HS codes quickly such as the General Department of Customs, website bieuthue.net, or you can look up HS codes based on the import tariff schedule If the inspection is also fast and effective, you should use the parent file and the import tax schedule soft file that allows you to find the HS code However, the weakness of this method is that the excel file must be used to remove excel s search, by searching by ’ pressing ctrl + f and entering the desired keyword The downside of this method is that excel searches are based on the exact phrase and not on a single word in the phrase
Tax determination is also one of the important issues that businesses need to pay attention to and often make mistakes Businesses that try to apply the wrong HS code lead to the wrong tax rate, so determining the correct tax rate to avoid delays in tax payment and the delivery process will also be affected
The simplest thing may be to ask the brothers and sisters in the industry Students themselves cannot know everything in the same industry and look up tax codes easily Some of you will know about these items, others will know about other items, but surely you won t be able to know and remember them all Therefore, exchange and research ’ together is also a way to be able to look up HS codes It will help increase efficiency when working with brothers and sisters in the profession for a long time
This can be one of the effective ways to look up, we just need to find the right code and apply the correct code, then all the following procedures will be easier for us, check carefully not to be careless because this is also a work of patience.
Through the process of looking up the HS code, my team partly understood the work of Customs officers, and practiced to help us better understand its importance As a tool to help identify import and export goods for tax collection and law enforcement in the international environment, besides helping us analyze micro and macro strategies and serve as a basis for negotiation International commerce Thanks to the HS code, compliance with domestic and international laws is more focused It is also the basis to penalize businesses, avoiding the case that they are delayed in the delivery process, HS introduces strict laws that businesses must follow, 1 is that they must be fined when they do not comply, 2 is they will receive benefits when the classification is correct
1 CASELAW VIịT NAM – Hò thòng văn bÁn phỏp luật, BÁn ỏn – Hÿp đỏng mẫu – Tra cứu mã HS và Biểu thuế nhập khẩu, Thủ tāc thông quan (https://caselaw.vn/)
2 HÁi Quan Viòt Nam – General Department of Vietnam Customs
(https://www.customs.gov.vn/)
3 TTWTO VCCI – Biểu thuế xuất nhập khẩu Viòt Nam năm 2021
( https://trungtamwto.vn/thong-ke/17056-bieu-thue-xuat-nhap-khau-viet-nam- nam-2021)
4 CĀC HÀI QUAN THÀNH PHị Hà CHÍ MINH (http://hqhcm.gov.vn/)
5 Thư viòn Văn bÁn quy ph¿m phỏp luật
(https://customs.gov.vn/Lists/VanBanPhapLuat/Default.aspx)
6 TH true MILK True Happiness– ( https://www.thmilk.vn/)
7 Cengage Asia: Higher Education, Digital Learning, Chinese Learning
8 [FULL] Sỏu (6) quy tắc tổng quỏt giÁi thớch viòc phõn lo¿i hàng hóa https://www.eximshark.com/full-sau-6-quy-tac-tong-quat-giai-thich-viec- ( phan-loai-hang-hoa/)
9 Harmonized commodity description and coding system - WCO - 1996 & 2002
10 The Harmonized System Commodity DataBase 1996 & 2000
11 Cụng ước HS (Harmonized system) là gỡ? Cụng ước HS đòi với cỏc nước đang phát triển