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- HS CODE, short for Harmonized System Code, is called Harmonized Commodity Description and Coding System.
- HS CODE is an item classification code that categorizes foreign trade products (including electricity and gas) according to the Harmonized Commodity Description and Coding System adopted as an international agreement in 1998, and it refers to a system that assigns a serial number to all products in trade transactions between countries.
- HS CODE is to facilitate international trade and maintain consistency in the application of tariff rates. It is used for various purposes such as customs duties, trade statistics, transportation, and insurance. In addition, the HS CODE allows inquiry about customs duties, import/export volume and import/export amount.
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- HS CODE is composed of a code of 6 numbers for each item in accordance with international agreement.
- Up to 6 digits are codes commonly used internationally and are classified by 1~2, 3~4, 5~6 digits.
- From 7th digit onwards are numbers that are subdivided by each country and can be used up to the 10th digit.
- The Republic of Korea uses an HSK code with a total of 10 digits by adding 4 digits for specific product classification.
- The number to be added varies by country. (10 digits for the U.S., 8 digits for EU and China, 9 digits for Japan, etc.)
- The country that imports the products decides which code to assign to a specific product. Since the tariff rate varies depending on this code number, the exporting country assigns a code with a low tariff rate if possible, and the importing country assigns a code with a high possible tariff rate.
- ① Section
As a major category, generally following the type of industry, the title is typically categorized by product and article. It is not included in the HS CODE, and as of 2021, it is divided into a total of 26 sections.
- ② Chapter
As a middle category, it Refers to the first 2 digits that classify the product group.
- ③ Heading
As a sub-category, it Refers to a 4-digit number that divides the category by type and process criterion of items in the same chapter. (Heading includes chapter).
- ④ Subheading
As a sub-category, it refers to a 5 to 6-digit number that divides the classification according to the use and function of the items in the same heading. (Subheading includes heading).
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The HS CODE can be viewed in the World HS menu on the ‘Customs Law Information Portal’ site (https://unipass.customs.go.kr/clip/index.do)
As an example, this is how to inquire the HS CODE of ‘Shampoos.’
- ① Inquiry of Section List
- ② Inquiry of Chapter List
As shown below, the right category for the product can be found by looking at the table and searching for the point, where the vertical and horizontal numbers meet.
The HS CODE of ‘Shampoos’ can be seen in the Essential Oils and Resinoids (33), where number 30 (vertical) and number 3 (horizontal) meet. - ③ Inquiry of Heading List
The category of ‘Essential Oils and Resinoids’ is from 3301 to 3307, and the heading to which they belong can be found by checking the product name. If it is not clear, then refer to ‘Relation Information – Manual’ menu for more details.
The HS Code Heading of ‘Shampoos’ is Preparations for Use on the Hair (05). - ④ Inquiry of Subheading List
The category ‘Preparations for Use on the Hair’ is from 3305.10 to 3305.90. The subheading to which they belong can be found by checking the product name.
The HS CODE subheading of ‘Shampoos’ is Shampoos (10).
In the case of the Republic of Korea, the HSK code, which is a total of 10 digits, is used, and the last 4-digit code can also be checked.Therefore, the HS CODE of ‘Shampoos’ can be identified as 3305.10-0000.
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- ① Differences in HS CODE Composition by Major Countries
Taking the HS CODE of ‘Shampoos’ as an example, even for the same item, it can be checked that the EU has 6 to 8 digits, the U.S. has 10 digits, China has 8 digits, and Japan has 9 digits.
- ② Difference in Tariff Rates for the Same Item
In the case of HS CODE of ‘Coffee,’ the items are classified according to various categories depending on whether coffee is roasted and whether there is caffeine. It is important to check the HS CODE carefully because the basic rate and the flexible and concession rates also vary.
- Coffee, not roasted : 0901.1
- Coffee roasted : 0901.2
- Not Decaffeinated : 0901.11-0000
- Decaffeinated : 0901.12-0000
- ③ Item Classification Dispute Case
Disputes regarding the classification of items sometimes arise due to differences in HS CODEs between exporters and importers, exporters and importers and the authorities of other countries, and customs authorities of importing and exporting countries. These are some of the typical dispute cases of HS CODE item classification.
- Display Module (HS CODE 8524)
- Until now, there was no clear international standard for display modules, so different item standards for TV parts, mobile phone parts, and liquid crystal devices were applied in each country.
- Since 2013, the Korea Customs Service and the display industry have prepared and promoted a unified standard in preparation for HS disputes on display modules, which are the main export products.
- In March 2019, the World Customs Organization (WCO) Harmonized System Committee confirmed the international standards for display modules.
- Company A’s Smart Watch (HS CODE : 9102) VS Wireless Communication Device (HS CODE : 8517)
- Many countries did not impose tariffs according to the Information Technology Agreement (ITA), considering smart watches as wireless communication devices.
- However, India, Turkey, and Thailand classified smart watches as watches and imposed tariffs of 10%, 4%, and 6%, respectively, and Jordan classified them as other electronic devices and imposed a tariff of 30%.
- As a result of voting by the World Customs Organization (WCO) in 2015, it was concluded that the smart watch item was a ‘wireless communication device.’
- Display Module (HS CODE 8524)
- ① Differences in HS CODE Composition by Major Countries
