Customs procedures topic hs code determination for longans and gasoline of ron 90 and above but below ron 97

To begin with, this report will have a glance on 6 General Interpretative Rules GIR, Harmonized Commodity Description and Coding System and the procedure of determining these codes for L

VIET NAM GENERAL CONFEDERATION OF LABOR 5

TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINITRATION

ĐẠI HỌC TÔN ĐỨC THẮNG TON DUC THANG UNIVERSITY

CUSTOMS PROCEDURES

TOPIC

HS CODE DETERMINATION FOR LONGANS AND GASOLINE “OF

RON 90 AND ABOVE, BUT BELOW RON 97”

Group 7 Nguyễn Tham Phuong - 720K0560 Nguyễn Phú Khang - 720K0438 Nguyễn Thục Khanh - 72010517 Dinh Nguyễn Gia Dinh - 72010490 Truong Thuy Duyén - 720D0189

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

COMMENTS FROM LECTURERS

SIGNATURE

LIST OF MEMBERS

Table of Contents

1.2 Harmonized System ỉn Vietnaim << se S353 8SSSS55ES2E55E95185885555 55.04 9

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 GIs co Hà HH TH TH HÀ HH T0 0 004 8 K04 12

,/Ä N9) 1000 nan 14 2.2.2 Analysis of how to determine HS code 0 1 1222 se 16

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 L1 c2 HH He 22

3.1 AUDVANLAGES cccsccessscenssccsnnsccsnscssnsccssnscessscssesscsssaecsesacssenaesesanesesanesenanssenacesssaaseases 31 3.2 Disadvantages and common misunderstandings ín researching « 32 3.3 Experience øathering and lesson Ï€arned - s« co «s1 Y1 33

TABLE OF FIGUR

Figure l: Structfure oÊ an eight digtís HŠ codke c2 1 2211221221112 2 22 11k re 10 Figure 2: Diagram of applying GIRs to determine HS code - 2c ccc sec 13 Figure 3: The situation of Vietnam's longanss export, in the first 6 months of 2022 compared to the same per1od 1n 2021 (USD) (hvnele.vn, 2022) ó 222cc c2: 17 FIigure 4: Import and Export TarIff 222 it 201211111151 111 1111111111111 2111161111211 E 19 FIigure 5: Import and Export TarIff 222 c2 211211151151 111 1111111111111 2111161111611 xE 20 FIigure 6: General Department oỂ CustOI§ - c1 20120112212 11211121111 111211 1 11 81 kk2 21 Figure 7: Import and Export Tariff 2022 000.00 cccccecesecesceecesecsecnseeseeesesesseecnaeecaeeenaes 24 Figure §: Import and Export TarIff 222 c2 c1 11211111111 111 1111111111111 111121111611 xE 27 Figure 9: Import and Export TarIff 222 i2 c1 0121111115111 1 11111111111 1211 1121111611 xE 28 Figure 10: Import and Export Tar1ff 2022 - c1 0 1211211111111 1111111111111 1111161111211 E 30 Figure 11: General Department oÊ CusfOIms c2 2 12212 1125125115111 11 1112111 xk2 31

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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 6 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 2 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 gaming

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 moderizes 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 6 digits that can be broken down into three parts The first

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 6 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 6° March 1998, Vietnam became a member of the Harmonized System by president

No 49 / QD - CTN im the year of 1998 And on 1+ January 2000, Vietnam approved the 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

XX | XX | XX | XX

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 1*,1988

The target of the HS Convention is that harmonizing the description, classification, and coding of items im 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 1*, however, until 6" 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 1*, 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

(HS) for the right classification of goods 1s interpreted consistently Rules must be reviewed in order, if rule 1 is not applicable, the next rule will be applied Order of review of rules: Rules 1, 2(a), 2(b), 3(a), 3(b), 3(c), 4 In particular, rules 5 and 6 apply separately

Rule I:

Most commodities are categorized under Rule | It indicates that the terms of the headings and the relevant section or chapter notes serve as the primary determinants of classification

(c) is utilized when the commodities cannot be categorized using 3(a) or (b) The heading that follows last in numerical order among those that equally merit consideration will be used to classify such items

Rule 4:

Rarely used, usually in relation to new technologies According to Rule 4, the items must

be categorized under the heading that corresponds to the goods that they are most similar

to

CHAP 2: ANALYSIS OF LONGANS AND GASOLINE “OF RON

90 AND ABOVE, BUT BELOW RON 97” AND THE PROCESS OF

HS CODE DETERMINATION 2.1 How to apply GIRs

In this chapter, our group adopted textbook knowledge and the instructor's class lectures

to determine the HS code of exported fruits, namely longans, and goods under HS code

2710 To classify goods, we methodically applied theories based on the General Interpretative Rules (GIR) The diagram below depicts the specific process of determining the HS code using the six rules that we followed Rules that are not used are ignored by default

Figure 2: Diagram of applying GIkRs to determine HS code

Understanding the nature of the goods is a prerequisite according to these rules, and the rules will be applied in order from rule 1 to 5 to determine the first 4 digits of the 8-digit

HS code If any of the rules are not satisfied, the next rule in the sequence will be used until the first four digits are determined; the following rules will obviously be ignored Rule 6 is compulsory and must be followed when determining the HS code for any commodity The last 4 digits will be determined based on rule 6 After completing all eight digits, our group must decide whether to choose the HS code

Furthermore, the HS code search tool on the official website of Vietnam Customs (https://www.customs.gov.vn/) and the Vietnam Import and Export Tanff of 2022 (shorturl.at/bpUV6) are two simple, effective, and efficient methods that our team has used in the process of searching for HS codes, as well as recheck whether the selected HS codes are correct according to customs regulations

2.2 Export Longans

2.2.1 Overview of Longans

Longans's scientific name is Dimocarpus Longans (Vietnamese name is Dragon Eye) This is a typical fruit of the tropics and subtropics, widely grown in Vietnam, South China, and Indonesia, etc Longans 1s a close relative of lychee, but smaller (about 3 centimeters)

The longans shell has a light yellow color and is thin, so that it can be easily peeled by hand Inside is a layer of translucent longans rice that wraps the jet-black seeds Longans seeds have no nutritional value and have an intense bitter taste, making them inedible

Picture 1: Hung Yen longans

This is the most popular type of longans in Vietnam, originating from Hung Yen The name "longans cage" comes from the fact that farmers use bamboo cages to cover the bunch of longans to avoid birds and bats Hung Yen longans has large fruit, and thick yellow skin, quite different from other varieties of longans The taste 1s very sweet, the longans rice is thick and the seeds are small

Longans is a fruit that brings many health benefits to humans For example, preventing anemia and increasing awareness, boosting immunity, and good for the nervous system According to some reports, eating longans will help the body absorb iron—a major substance of red blood cells in the blood Thereby reducing the risk of anemia and mcreasing memory ability and alertness The high content of vitamin C in the longans helps to strengthen the resistance against common colds And the vitamin B in longans helps the nerves relax, reducing stress and fatigue It also helps to treat neurasthenia, insomnia, and depression In addition, consuming longans with a suitable quality can bring good benefits to the heart Longans contains a lot of potassium to help stabilize blood pressure, reduce cholesterol in the blood, and reduce cardiovascular diseases to help us have a healthy heart

Currently, Vietnamese longans are exported to many countries around the world, but most

of them are in China and the US market In the first half of 2022, Vietnam's longans export value dropped sharply compared to the same period last year, reaching only 550,000 USD Vietnam's main export market is China, estimated at only 138,000 USD compared to 4,300000 USD in 2021 (hvnelc.vn, 2022) In addition, China is applying strict measures on imported fresh fruit, so Vietnam faces many difficulties when exporting

Besides, the data of longans exports from Vietnam to international markets such as Australia, UAE, and the US all decreased sharply compared to the same period last year In the first two quarters of 2022, the export value of longans to the US reached 70,000 USD, down 70% As for Australia and the UAE, the export value decreased by 60%, at 150,000 USD and 68,000 USD respectively (hvnclc.vn, 2022)

It can be seen that the export value of longans has been on a downward trend in recent years There are many reasons for this, but it is mainly due to the high cost, which reduces the competitiveness of the product Vietnamese longans exports are mostly thin- skinned varieties Leading to export by sea will make the fruit easily perishable Therefore, transportation by air is the best solution, however, the product's

competitiveness is also significantly reduced compared to competitors, as well as becoming less attractive than substitutes

January February March April May June

Figure 3: The situation of Vietmam's longans export, in the first 6 months of 2022 compared to the same

period in 2021 (USD) (hynele.vn, 2022)

2.2.2 Analysis of how to determine HS code

The following are the steps required to determine and draw conclusions about the HS code of fresh longans:

Step 1: Type “longans” in the search box

Currently, the HS code of this product is still unknown, so we have downloaded the 2022 Import and Export Tariff for reference and will take note to determine its digits type Then use the keyword "Longans" to locate this item in the tariff nomenclature Here is some basic information about this product:

The product's full name: longans (fresh)

Produced: Hung Yen province, Viet Nam

Rich nutrition: In 100g longans include 0.03mg of vitamin B1, 0.14mg of vitamin B2, 58mg of vitamin C, 0.9¢ of protein, 10.9¢ of carbohydrates, 0.1g of lipids, 1.0g of fiber, 21mg of can xi, 0.4mg of iron,

After learning some background information, my team moved on to the important second step, which is to use the six GIRs learned to determine its HS code

Step 2: Determine the HS code for “longans" products by following GIRs

Chapter: Apply rule 1: "Notes and Chapter Identifiers”

Firstly, it is necessary to determine the first two digits of the HS code We use the import and export nomenclature 2022 to identify the chapter and title of the product Sections include Chapters within the Nomenclature, which were designed to gather together a variety of commodities with the same type, function, composition, effect, purpose, or usage Chapters are collections of commodities that are more closely related and include more thorough information A two-digit code (from 01 to 99) is used to identify the Chapter to which specific commodities are categorized

After a bit of searching, we found a suitable result for the keyword “longans” Our team discovered longans fulfill statements in "Chapter 8 - Edible fruits and nuts, peel of citrus fruit or melons.” As a result, we can deduce that the first two digits are 08

- Section 2: Vegetable products:

In this section, the term “pellets” means products that are bound by direct compression or by the addition of a binder in a content not exceeding 3% by weight

- Chapter 8: Edible fruits and nuts, peel of citrus fruit or melons:

1 This Chapter does not cover nuts or inedible fruit

2 Chilled fruit and nuts must be classified in the same heading as fresh fruit and

Figure 4: Import and Export Tariff 2022

Heading: Apply rule 1: "Notes and Chapter Identifiers"

Next, to find the heading for the product (which are the third and fourth digits), we continuously use the Import and Export Tanff 2022 and rule 1 Similarly, chapters include headings, which are a group of more closely related commodities that are redefined by double digits These Group digits range from 01 to 100, with 100 represented as 00

There are 14 headings (from 01 to 14) for the vegetarian products category We discovered that heading 10 (which is "other fruit, fresh") is the most appropriate based on the product's "fresh" attribute after reading the captions of each heading in sequence The description of the heading 08.10 is fresh fruit, so the exported longans is consistent with this title

As we already identified the chapter and heading (the first 4 digits) of the product, our group will ignore rules 3, 4, 5, and go straight to rule 6

Sub-heading and tariff line: Apply rule 6: “Explanatory notes”