What if the HS code is incorrect or incomplete?
August 23, 2021
The Harmonized System (HS) are codes on physical products for international trade. Created by the World Customs Organization to facilitate global trade, HS codes are recognized in 98% of all international trade. It is a world-wide numerical language for product code when it comes to importing and exporting physical goods.
What are the main consequences of using an incorrect code?
First: It could expose your company to regulatory violations. Even if the product successfully enters the country once or twice with only the List B code, continued use of an incorrect code could result in a fine or a ban on exporting to that country in the future. In addition, a quota may be applied to the product in question. You could be creating serious problems in the future by not correctly classifying products covered by a quota.
The second possibility: Failure to use the correct code could result in the shipment being delayed until it is correctly classified. The repercussions don't end there and can extend to your customer. Delays can turn a happy customer into a dissatisfied one, and worse, the customer could receive an unexpected duty/tax bill to pay for their sorting error.
Last but not least, if the proper HS code is not used, Customs will likely classify the product in the "Other" category for duty and tax purposes. The "Other" category usually imposes the highest possible rates. Therefore, you - or your customer - will pay unexpected and excessive duties and taxes.
Crossborderit (CBIT) offers a SaaS classification platform. The solution allows you to upload your batch classifications and move away from spreadsheets. CBIT's classification solution allows you to share your database within your company ensuring that there is no additional work for other divisions.