What are HS codes (Term used commonly for Import and Export)

HS codes are an acronym for Harmonised System codes. These codes were first developed in 1988 by the World Customs Organisation (WCO). The HS codes are implemented all over the world in a standardised format for goods using for trading purposes- such as import and export. These codes are basically used to categorise  and classify goods so that different parties could understand the goods that are being traded. In this article, we would cover in depth as to what HS codes are all about. If you are in the business where you have to import or export goods, this article is just for you. Comment your thoughts below. For more article with regards to the logistics industry and Indonesia, click here.

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How the Classifications For HS Codes Work

The classification system for HS codes is labelled in an extremely systematic yet understandable format. Firstly there are twenty one sections. Each section describes a broad category of items. For instance,  animal products are classified as one section while furniture type of items are classified as another. The second classification is that there are 96 chapters. These chapters are a more specific description of the broad category.  For example, if the broad category is animal products, the chapters within it would be Bones, skins, human hair etc.

What you also have to know is that the 96 chapters are further divided into more 5000 different headings, with each heading being more niche and specific to the type of item that is being shipped.  For instance, if the sub chapter is on meat of sheep, then the headings are further divided into boneless meats, carcasses, chilled or frozen meat etc. This is to provide a greater detail as to the goods that are being exported or imported.

There are six digits in a HS code. The first two digits refer to the chapter, not section (so do take note).  The next to digits refer to the HS heading while the following two digits indicate the HS code’s subheading. So when all the six digits are put together, the reveal the chapter, heading as well as the subheading for a particular type of good. For instance, if the HS code is 040620, it refers to dairy produce, cheese of all types, grated or powdered. This is where o4  refers to dairy produce, 06 refers to cheese of all types, while 20 refers to grated and powdered types of cheese.

Who Uses the HS codes

The HS codes are relevant in the logistics industry. Today, there are about 180 different countries across the globe implementing it. HS codes are used by government regulatory bodies, customs, Import and export agencies, freight forwarders as well as logistics companies.

The HS code system is constantly being developed and revised to suit the needs of businesses all over the world. The latest revision to the HS code has been implemented on January 2017 ( Early this year)

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