For the current development of production, business and import-export activities, in order to ensure consistency in management, classification and code application for import-export good
BRIEF INTRODUCTION TO THE HARMONIZED SYSTEM
DEFINITION AND STRUCTURE OF HARMONIZED SYSTEM 0.00000cccccecececeeeeeeeeee 7 1.2 THE SIGNIFICANCE AND OBIECTIVES OF HARMONIZED SYSTEM
The number of goods for import and export worldwide 1s so great that the World Customs Organization - WCO has created a standardized code for the purpose of classifying, managing and controlling the number of goods exported and imported on a global scale That type of code is called HS Code (Harmonized System Code) - this is the type of code that is commonly used during the export of goods and they are updated every 5 years
Nowadays, the Harmonized System (HS Code) consists of 8 digits, 10 digits or even 12 digits WCO has divided the HS Code structure based on a few basic factors so that each commodity has its own code such as chapters, headings, sub-headings, tariff lines, and national tariffs Our country is using an 8-digit HS Code Product classification is significant in calculating customs duties and tariffs, as tariffs and other exceptions will be based on the specifics of a product, which the HS Code itself will take care of taking that job
This system is used by more than 200 countries worldwide to collect international trade statistics, and most of goods in international trade are classified according to the HS Code (more than 98%) For a more detailed analysis of HS Code, they have 21 sections (such as animals, plants, stone products, jewelry, machinery, electrical equipment ), 97 chapters (2-digit), 1,222 headings (4-digits), 5,387 sub- headings (6-digits) The HS Code has a total of 99 chapters, but the first 77 chapters are intended for future use, and chapters 98-99 are intended for specific uses by signatories to the HS Convention Goods from chapters | to 83 are usually classified according to the material of manufacture, and chapters 84 to 97 are classified according to the function of that good HS Code classifies goods from raw materials to processed products, the first two characters (chapters) are a general description of the goods, and the next two characters (chapters) are used to classify commodity categories from simple to complex, followed by sub-headings divided into more generic groups from the group and the final Tariff line defined by different countries
41-43 Raw Hides, Skins, Leather, & Furs
Figure 1: The figure illustrates commodities in each chapter
1.2 The significance and objectives of Harmonized System
HS Code has actively contributed to customs procedures and international trade Many stakeholders that join in the process of importing and exporting goods nationwide will benefit from the declaration and proper use of HS codes for each type of good
For the government, the HS Code is a tool whose purpose is to identify the types of goods imported and exported to collect taxes, the amount of tax that the Customs authorities must collect for the import-export businesses and the customs authorities Other obligations are to contribute to the enforcement of domestic laws and international treaties, to assist in the analysis of micro and macro strategies and to negotiate international trade.
For businesses, the use of the HS Code will ensure that businesses comply with domestic and international laws, 1f an enterprise intentionally or unintentionally misclassifies HS Code, it will be an inevitable delay in the delivery process, and the goods inspection step will be more difficult, there is a risk of being sanctioned and as a result, causing an additional cost in the import and export of goods And vice versa, when an enterprise declares the correct classification of goods by HS Code, that business will enjoy many benefits from the Free Trade Area (FTA) in accordance with regulations
Analyzing more clearly the role of the HS Code, they help businesses classify goods for the purpose of determining the appropriate tax rate corresponding to that type of goods according to the regulations of the state so that businesses will be able to understand the taxes that they have to pay to avoid the situation that the business has to pay excess tax and have to go through the tax refund procedures, which will cause loss of time and effort for the business and related parties The early preparation of procedures and identification of the correct classification of goods with HS codes can help businesses create a good impression and reputation on the Customs authorities, helping the goods to be cleared faster Thus, HS is a standard economic language and code for products that are an essential factor for global trade.
A SUMMARY OF THE HS CONVENTION FORMATION PROCESS
The Harmonized System is abbreviated as HS Code and later known as the HS Convention with the official name called "International Convention on Harmonized Commodity Description and Coding Systems" - is the international code on the common global language for goods was adopted by the WCO (World Customs Organization) in Brussels (Belgium) in 1983 and come into effect on 1 January 1988 The HS Convention is considered a harmonized system of the product description, classification and coding According to research data, this is the result of an intellectual product that was researched by 60 customs organizations of member countries and 20 other international organizations for nearly ten years (1976 - 1983) the task of maintaining, selectively inheriting the results achieved so far and developing it.
As one of the global common languages for goods, the HS Convention not only facilitates international trade negotiations, promotes reforms related to administrative procedures, accelerates speed of integration with countries around the world, but also contribute to the fight against smuggling and trade fraud, protect the legitimate interests of businesses and support the automation and modernization of customs procedures
The HS Convention was created with an extremely effective legal mechanism by creating a coding system that aims to ensure the classification and description of goods imported and exported on a global scale The HS Convention consists of a Preamble, 20 articles and an Appendix The introduction will tell the reader why HS Code is supported by the international community On 20 articles dealing with the regulations, responsibilities and obligations of Member States, the role of the Council and the Commission, the Harmonized System, dispute settlement, work and revised procedures between the Member States Contracting Party and of the Customs Cooperation Council And finally, the Appendix is considered the nomenclature for the actual classification of goods Countries that are parties to the HS Convention are obligated to ensure that their tariffs and statistical lists on imported and exported goods are correctly declared and in accordance with the Harmonized System
After the Convention was implemented, they were widely spread with more than 200 countries and economies, customs and economic associations currently using and serving as the basis for their national Customs tariffs In addition to being used as the basis for the tariff schedule, the HS Convention is also used for many other purposes such as:
- Abasis for rules of origin
- For transport statistics and tariffs
- For the internal taxes collection
- A theoretical basis for trade negotiations, such as FTAs (Free Trade Agreements), and Goods Schedules (WTO schedules of concessions)
- This is also considered one of the core important factors in the management and control of procedures in the field of Customs processes, including information technology, compliance, and risk assessment
- For the monitoring of controlled goods (narcotics, wastes, ozone layer-depleting substances, endangered species, chemical weapons)
On July 1, 1993, Vietnam joined the HS Convention, but it was not until March
6, 1998, that the President of Vietnam recognized it by Decision No 49/QD-CTN Therefore, the HS Convention officially came into effect in Vietnam on January 1,
2000, and is currently being applied to more than 98% of the total trade in goods in Vietnam Amendments, updates and additions to the content of the HS Convention were made in 1992, 1996, 2002, 2007, 2012, and 2017.
REVIEW THE SIX HS CODE APPLICATIONS RULES: - LG SSSnSn se 11
The General Interpretattve Rules (GIR) will be used to categorize items It enables the uniform application of the Harmonized System (HS) nomenclature and offers a step-by-step basis for the classification of commodities
GIR needs to be used in a specific order:
Understand Apply the Apply the Apply the the product GIR1 GIR 2 to 5 GIR 6
Figure 2 Specific order when identifying the HS code
Figure 3: Structure of the HS
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)
In the event that item 2 above cannot be used to categorize, the following rules shall be followed in the order listed Chapter 39, for example, is titled "Plastic and Objects of Plastic." On the other hand, Chapter 95—1rather than Chapter 39—deals with plastic children's toys
Rule 2: In the same group, unfinished goods and compounds a) If a product possesses the same fundamental characteristics as a finished or dead item, it will come under the same category when it is classed under that heading The same classification applies to things that have the essential quality of the good in their finished or finished condition, or in their finished or finished shape (or to be
12 classified as finished or finished goods in accordance with the provisions of this Article) This rule must be observed, but not put together or taken apart
For example, a bicycle that is unfinished without a saddle and pedals is nonetheless considered to be a bicycle (87.12) For instance, the excavator's parts are disassembled to facilitate shipment, and each piece is given an HS number based on the vehicle
The HS Convention was created as the most effective legal mechanism to guarantee a standardized system of good description and coding, becoming a global commodities classification system Additionally, this convention fosters favourable conditions for international trade discussions, helps to modernize the administrative processes used by Customs, hastens regional and global integration, and deters smuggling Additionally, trade fraud safeguards company interests while also assisting in the modernization and automation of customs procedures b) If a substance or material is classified under one category, a compound or mixture of that substance or material with other substances or materials is also categorized under that heading Products made entirely of one material or substance must be classified with that material or substance or as a component of it The classification of objects made of two or more materials or substances is governed by Rule 3
For example, two products, Product | (06.07) and Product 2 are included in Mixture A (06.07) The HS Code for Mixture A will be used with the heading 06.07 Rule 3: At first look, goods can be classified into a variety of categories
Due to rule 2(b) or for any other reason, when objects can initially be divided into two or more headings, the categorization shall be as follows: a) When categorizing objects, groupings with more detailed descriptions will be given preference over those with more general ones When two or more heads, each referring to a portion of the material or substance contained in a good, are considered to characterize the goods equally, even if one of the headings is a combination or
13 compound, or only a portion of the good in the case of a good inset put up for retail sale b) If not categorized under Rule 3(a), mixed goods made up of various materials or goods composed of various components, as well as goods packaged in sets for retail sale, are classified in accordance with the substance or component that bestows their basic character c) In the event that the ttems cannot be categorized in accordance with rules 3(a) or 3(b) above, they must be categorized in the final heading in numerical order among the equivalent headings being taken into account
Rule 4: The most similar goods
Commodities that cannot be classed using the aforementioned guidelines are listed under the topic that corresponds to the category of goods that they are the most related to
The commodities listed below are covered by the provisions below a) Cases manufactured specifically for storing objects or sets, such as those made for storing cameras, camcorders, musical instruments, pistols, sketching tools, jewels, and similar items These items are bundled with a few durable goods that go with the items when they are sold and can be utilized for extended periods of time However, this idea does not hold true for packaging that is vastly superior to the goods it holds b) In addition to ruling 5(a), if the packaging is of a type that is typically used for the good, the packaging in which the good is included is also classified with the good However, this strategy does not apply to packages that are obviously made to be reused
Rule 6: Explain how to properly classify and compare
For the purpose of legality, items must be classified into a heading's subheadings in accordance with the text of each subheading, any applicable subheading comments, and the aforementioned regulations with any necessary modifications, as long as only subheadings of the same level can be compared This rule states that, unless the subheading specifies otherwise, the pertinent section and chapter notes also apply
For instance, | brick is equivalent to 1 tile, and 2 tiles are equivalent to 2 tiles (In the tariffs description of products, the dash is a bullet point "-" before the item name.) Apply rules 01 and 06, then rules 2, 3, 4, or 5 when looking up an HS code, as appropriate.
ANALYSIS OF HS CODE DETERMINATION FOR SELECTED
After choosing Durian and Polymers of ethylene (in primary form) from the selected list for our report, all the team members had one day to search for information about 2 kinds of products Here are our results:
There are three methods for looking up and identifying HS codes:
Method 1: Search for this link: https://(www.customs.gov.vn/ This is the General Department of Vietnam Customs website, and we use it for reference purposes We also search for statistics on importing and exporting products on this website
Method 2: Using this website: https://www.vietnamtrades.com We can use this website for searching HS codes, however, most information requires a fee It is expensive and we are worried about making mistakes because of a lack of knowledge of this website
Method 3: We use this website Import and Export Tariff Schedule of Vietnam in_2022 to serve our complete analytical method because of its convenience and information
The content and specific implementation, as well as the outputs, occurred as follows, including the general and special processes below, based on the rules given in class (which were rewritten in section 1.4)
2.1 Basic information on Fresh Durian from NHP FOODS
Durian originally comes from Southeast Asia, also referred to as the King of Fruit in some regions is a well-known and well-liked native fruit It is regarded as being incredibly delicious and has a distinguished odour The fruit can grow up to | foot (30 cm) long and 6 inches (15 cm) wide A typical durian fruit has about 2 cups (486 grams) of edible pulp It has a hard external husk, covered with spines and contains several compartments, each filled with a cream-coloured pulp in which are embedded with chestnut-sized seeds
Durian is a climacteric fruit with a brief shelf life at room temperature because of the quick post-harvest alterations it experiences These adjustments are necessary for a high-quality product for consumption Although the fruit is typically eaten fresh, it can also be processed into other goods Due to the success of novel ways to consume fruit, both fresh and processed durian have recently grown in popularity in the local and international markets Additionally, a sizable amount of unusable husk residue has generated biomass, which can be turned into a variety of inventive products
NHP Foods is a part of Ngan Hoa Phat Trading Service Co., Ltd It’s a wholesale company
Figure 4: Ngan Hoa Phat FOODS company logo that mainly provides products including fresh, frozen and dried fruits from Vietnam since
2017 Their strength is all about their supply chain optimization from various factory and local agent, which allow them to offer their customer special demand, price and standards
NHP FOODS are an innovative local company that purchases fruit from farmers for distribution to nearby shops and markets After two years, they began selling our goods internationally At first, they marketed regional goods like passion fruit, sweet potatoes, avocados, and bananas They are currently adding the national specialties of mango and dragon fruit to our range of products They are aware that delivering high-quality products is crucial to keeping clients happy Because of this, they focus on ensuring that the best quality is chosen for export and work closely with farmers to guarantee that the greatest agricultural farming methods are used
2.1.1.1.2 About NHP FOODS product (mainly in 3 types):
- Fresh fruits (direct from the farm)
- Frozen fruits (95% fresh by using IQF technology)
- Dried fruits (soft dried, heat dried, dry dried)
Needless to say, durian from NHP FOODS is 100% original from Vietnam with a careful selection like durian ripe well, intact, still stalked, not deformed, not rotten, fermented, musty, and pests to be qualified for export
Danh myc S4n sang van chuyén ThiétbibdohOcanhan Trung tâm Người mua Ban trén Alibaba 19 giup
Viét Nam Tuoi Sau Riéng Xuat Khau Voi Chat Luong Tiêu Chuan, Đóng Gói Cần Thận Và Giả Tốt Nhất Vận Chuyển Đến Thị Trường EU, Mỹ, Châu Á )B Tham Khao ( Nb
Thời gian ước tính (ngày) 15 Cân thương lượng
Figure 5: Ngan Hoa Phat FOODS Durian on Alibaba
Product Type Tropical & Sub-Tropical Fruit
Place of Origin Vietnam, Dak Lak
Fresh Durian Fruits Eat Fresh Durian
Shelf Life 14-15 days after loading
Product Name Vietnam Fresh durian
2.1.2 Determination of Fresh Durian’s HS CODE
Based on what we learnt from the 6 HS code assignment rules here is the way to determine fresh durian HS code
Step 1: First we need to find which section fresh durian belongs in according to Rule 1
Rule 1: The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions
=> Because fresh durian belongs to the fruit and vegetable category, we know it is in section II
Step 2: Still applying rule 1, now we need to find the heading (first 4 digits) and subheadings (full 6 digits) for fresh durian in Section IT
There is only chapter 8 which contain fruit related product => the first 2 digits are “08”
In chapter 8 there is a subheading called “Other fruit, fresh “and im the subheading, we can see durians in there => the rest of the digits are “106000 “ Conclusion the HS code for fresh durian 1s “08106000”
This is chapter 8 main content: Edible fruit and nuts, peel of citrus fruit or melons
1 This Chapter excludes inedible nuts and fruits
2 Cold fruits and nuts should be classed under the same categories as fresh fruits and nuts
3 This Chapter's dried fruit or dry nuts may be partly rehydrated or handled for the following purposes:
For improved preservation or stability (for example, by moderate heat treatment, sulphuring, or the addition of sorbic acid or potassium sorbate),
To improve or preserve their look (for example, by adding vegetable oil or modest amounts of glucose syrup), as long as the dried fruit or dry nuts keep their character 2.2 Basic information of HDPE F00952
2.2.1 Overview of HDPE F00952 from Saudi Basic Industries Corporation 2.2.1.1 Overview of Saudi Basic Industries Corporation
Saudi Basic Industries Corporation, also known as 4t-(SABIC), is a production company of chemicals In addition to industrial polymers, it is engaged in chemicals, petrochemicals, metals, and fertilizers It is one of the largest publicly traded companies in the Middle East, just behind Saudi Aramco, according to its Forbes Middle East listing (2022)
Figure 7 Top 100 Listed Companies in 2022 by Forbes Middle East
By royal decree, in 1976, SABIC was established to transform oil waste into usable chemicals, polymers, and fertilizers Ghazi Abdul Rahman Al Gosaibi, the minister of industry and electricity, served as the company's first chairman, and Abdul Aziz Bin Abdullah Al Zamil was its first CEO
With the arrival of SABIC, the sleepy fishing communities of Jubail on the Persian Gulf and Yanbu (Red Sea) were transformed into thriving, contemporary industrial metropolises Production peaked in 1985 at 6.5 million tones, then increased significantly over the next five years to 13 million tones, 42 million tones, and ultimately over 60 million tones by 2012 SABIC has 60 production and compounding sites spread across more than 40 countries and has more than 40,000 employees around the world
- In the markets for key products including polyethylene, methanol, ethylene glycol, engineered plastics, ethylene, and MTBE, SABIC 1s a market leader
- The majority of the overall production of SABIC is accounted for by its largest strategic business segment, petrochemicals
- One of the largest fully integrated steel companies in the world is the Saudi Iron and Steel Company (Hadeed), which is situated in Al-Jubail
- The fertilizers made by SABIC Agri-Nutrients Company range from general to highly specialized
- With its distinctive chemistry and capacity for developing new formulations and applications, Specialties adds value for customers
2.2.1.4 Overview of HDPE F00952 (high density polyethylene)