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HOW TO DETERMINE THE UKT ZED CODE FOR YOUR PRODUCT?

The second article in a series of publications "Classification of goods from A to Z".

In the previous one articles we talked about what is UKT FEA, its structure and what is affected by the classification of goods under a particular code. Now let's try to understand how to find the code for your product in the slums of UKT FEA.

Who classifies goods?

The code of the goods according to UKT FEA is determined by the declarant in the customs declaration. The person who filled in and signed the customs declaration is also responsible for the correct classification.

After filing the declaration, the customs authorities check the product code determined by the declarant and have the right to change it. Only the customs is the only body that has the right to decide on the classification of goods. Therefore, the conclusions of any other bodies, enterprises or individual experts are for reference only.

Three questions

Before you start picking up the code you need to describe the product. For the correct classification, the product description must answer three main questions:

  • What is this product?

  • From what and how was it made or obtained?

  • What is its main purpose?

Once you have clarified all the information about the product, you can proceed to search for the code.

Where to look for your product code?

We suggest you start searching for code from analytical resources like md office and qd professional.

Don't stop at one code. Pick a few and gradually discard the ones that are least relevant to your product.

After analytical sites, go to the official documents:

  1. This is the Ukrainian classification of goods of foreign economic activity (UKT FEA), which is approved by the Law of Ukraine "About the Customs Tariff of Ukraine»№584-VII from 09/19/2017.

  2. Explanation to UKT FEA (order of the Ministry of Revenue №15 dated 14.01.2014).

  3. Methodical recommendations on the classification of goods according to the requirements of UKT FEA (letter of the Ministry of Revenue from 26.03.2014 № 6983/7 / 99-99-24-02-03-17).

It is also necessary to take into account the classification decisions that customs have already made in relation to identical or similar goods. The SFS of Ukraine periodically publishes such decisions on its website (List of goods for which classification decisions have been made, Register of previous decisions). If the customs has already made a classification decision for a product that is identical to yours, you should not expect that you will be assigned a different code.

Do not forget about the various letters of explanation, which are periodically issued by the SFS (Ministry of Revenue, SCSU). In some cases, it is even advisable to read the case law, as it may turn out that one of the importers of similar goods has already sued customs for the code for their goods.

Classification rules

UKT FEA contains 6 rules for classification of goods. Their official name is "Basic rules of interpretation of UKT FEA". Let's look at each of these rules in detail.

It should be noted at once that we do not cite the original text of these rules, but a simplified version with explanations and examples.


Rule 1

The names of sections, groups and subgroups are given only for the convenience of using UKT FEA. Classification of goods in the UKT FEA is based on the names of product items and relevant notes to sections or groups. And only if these names of positions and notes do not say otherwise, then the basic rules of interpretation of UKT FEA from 2 to 5 are used for classification.

The first rule of classificationOne example of the application of this rule is the classification of window washers. Washers with certain characteristics are classified in Section IV “Prepared foods; alcoholic and soft drinks and vinegar; tobacco and its substitutes ”in Group 22“ Alcoholic and non-alcoholic beverages and vinegar ”. This classification is due to the fact that some washers are made on the basis of ethyl alcohol. Although even in this case, the "drink" washer exactly no one will call. Therefore, it should be remembered that the name of the section or group does not always correctly reflect the entire list of goods that are included there.

Also, this rule prefers notes to sections and groups before the following basic rules of interpretation of UKT FEA. This can be seen in the example of rule 2 (b), which allows the content of commodity items to be expanded by goods made from mixtures (details below). Instead, notes to some groups, on the other hand, narrow the content of certain headings, as in the case of footnote 5 to heading 34, which limits the range of goods which may be classified under heading 3404 "Artificial and finished waxes". In this case, the relevant note should be followed and not rule 2 (b).


Rule 2

This rule is divided into two corrections. One of them - 2 (a), for incomplete, incomplete or disassembled products, and the other - 2 (b), is used to classify mixtures and compounds of different goods.

2 (a) Any reference in the heading to any product also applies to an incomplete or incomplete product, provided that it has the essential characteristics of a complete or finished product. This also applies to unassembled or disassembled products.

Classification of partsThis rule allows to include in the relevant headings not only finished goods, but also incomplete or incomplete products, but only if such products have the basic properties of the finished product. It is with the application of Rule 2 (a) that car bodies that are equipped with certain auto parts, such as engines and suspensions, are often classified.

Some goods are not convenient to transport in assembled form. This usually applies to certain equipment. Rule 2 (a) allows such disassembled equipment to be classified as a single item and not as a separate item. But here you need to be very careful, because rule 2 (a) applies only to those parts that are necessary for the assembly of a particular product, and all the extra parts must be classified separately as independent goods.

2 (b) Any reference in the heading of a heading to any material or substance shall also apply to mixtures or compounds of that material or substance with other materials or substances. Any reference to an article of a particular material or substance shall be construed as a reference to an article consisting wholly or partly of that material or substance.

However, be sure to note the notes to these headings, which may prohibit the inclusion of mixtures in these headings (for example, see Additional Note 1 to Chapter 23). This rule applies to those headings in the name of which the material, substance or specific product is indicated. It actually allows to expand the content of such headings by means of mixes with the goods from these headings. An example of the application of this rule is the classification of cork products under heading 4503.

For the classification of some ready-mixes, separate headings are assigned as for a mixture of condiments (heading 2103).

Also, if after the addition of a certain commodity item of another substance to the product, such product loses its defining properties, such mixtures are already classified according to rule 3.


Rule 3

This Rule provides for three methods of classification of goods, which for any reason can be attributed to two or more headings. In this case:

3 (a) preference is given to that heading which describes the goods more specifically than the names of the headings which give a more general description.

Car interior textile mats are not to be classified as car parts and accessories of heading 8708 but of heading 5703, where they are more accurately described as carpets.

However, if two or more headings mention only part of the materials or substances in mixtures or multi-constituent articles, or only part of the articles in the retail set, these headings should be considered equivalent, even if one of them gives more complete and specific description than others. In such cases, rule 3 (b) or 3 (c) must be applied for classification.

3 (b) mixtures, multi-component products consisting of different materials or made of different components, and goods sold in retail sets, for the classification of which rule 3 (a) cannot be applied, are classified according to the material or components which determine the main nature of these goods, provided that this criterion can be applied.

If we have a product that actually consists of two or more independent products, then to classify it, we need to determine which of the components in this mixture plays a decisive role in the characteristics of the finished product. Such a distinguishing feature (criterion) can be determined by various factors depending on the type of product. It can be determined by the nature of the material or component, its volume, quantity, weight, value or the role that this material or component plays in the use of the product.

Consider this rule for a specific product and everything will be clear. Take a hairdresser's chair with a sink.

This product actually consists of two components (components) - a ceramic sink on a stand (heading 6910) and a hairdressing chair (heading 9402). There is no heading in the UKT FEA to describe such a product, so rule 1 and rule 3 (a) cannot be applied. Let's try to use rule 3 (b) for its classification. According to the explanatory notes to heading 9402, it includes hairdressing chairs with rotating and tilting and lifting devices. If such a chair is combined with a sink, the defining component in such a product will be the sink and such goods must be classified in heading 6910. However, if the chair is not connected to the sink structurally, the sink must be classified in heading 6910 and the chair in commodity heading 9401 or 9402.

Not in all cases it is possible to establish unambiguously which feature in a multicomponent product is decisive. Such goods must then be classified in accordance with rule 3 (c).

3 (c) goods which cannot be classified under rule 3 (a) or 3 (b) must be classified in the heading with the largest serial number among the headings of the headings considered for its classification.

For example, consider the classification process of a combined shower, which consists of a shower and a bathroom. There is no commodity item in the UKT FEA in which this product would be described. There are separate items for baths and showers. Also in this case it is not possible to establish which product is decisive for classification. Therefore, it is necessary to determine which of the product items bath or shower has a higher serial number. It depends on the material from which they are made. It is in the product position with the largest serial number and you need to classify such a combined shower.

All rules for the classification of heterogeneous goods should be applied sequentially from 2 (b) to 3 (c).


Rule 4

If rules 1-3 cannot be applied to the classification of your product, then it must be classified in the heading that corresponds to the product that most closely resembles your product.

Therefore, if your product is not described in any of the product items, is not mentioned in any of the notes to sections or groups, then look in the UKT FEA descriptions of those products that are most similar to yours. Go back to the description of your product, make sure you answered all the questions when describing it. Browse the database of classification decisions of customs. It is not superfluous to pay attention to the classification decisions of the EU and CIS countries and the explanations and recommendations of the Harmonized System Committee. The similarity of goods may depend on many factors, such as type, purpose, composition, features of manufacture.


Rule 5

This rule determines the order of classification of cases, packaging materials and containers. Therefore, it can be used alone or in combination with other rules.

5 (a) cases for cameras, musical instruments, weapons, drawing accessories, ornaments and similar articles are classified together with the products packed in them if the following packaging materials:

  • have a special shape or are adapted to contain a specific product or set of products, ie they are designed specifically for a specific type of product;

  • suitable for long-term use and also used to store products when not in use;

  • presented together with the products for which they are intended, regardless of the fact that the products themselves can be packed separately for ease of transportation;

  • are typical for this type of product;

  • do not add basic properties to the whole product.

You need to be very careful about the classification of containers and other packaging in which the goods are delivered. If such packaging is not typical for a particular type of product, it must be classified separately. One example of such an atypical packaging may be a silver teapot with tea.

5 (b) Rule 5 (a) is not mandatory for containers (packaging) that are reusable.

This rule allows you to classify as a separate product the packaging that can be reused. Periodically, disputes over the classification of this type of packaging arise in importers of pesticides and other chemicals that are supplied in plastic tank containers. Customs officials believe that because such tank containers can be reused, they should be classified separately from the contents.


Rule 6

Rule 6 regulates the procedure for assigning goods to product subheadings, categories and subcategories.

According to this rule goods are classified in subheadings, categories and subcategories according to the names of the latter and the notes relating to them and subject to rules 1-5. Only the names of one level of detail can be compared.

How this rule works will be considered in the process of classification of boilers for central heating.

First we apply rule 1 and find the commodity position to which such boilers can be attributed - this is commodity position 8403. Next we use rule 6 and compare the descriptions of commodity subheadings 8403 10 (boilers) and 8403 90 (parts). Here you definitely need to choose 8403 10. After that we compare product categories 8403 10 10 (cast iron boilers) and 8403 10 90 (other boilers). If the boiler is made of cast iron, it is classified under code 8403 10 10 00, if of another material, it must be classified in product category 8403 10 90.

Rule 6 also regulates competition between notes to groups and subheadings. If a note to a section or group contradicts a note to a subheading, the note to subheading should prevail. This can be seen in the example of the classification of platinum. Note 4 (b) to Chapter 71 states that the term "platinum" means platinum, iridium, osmium, palladium, rhodium and ruthenium. Instead, sub-note 2 to subheadings 7110 11 and 7110 19 states that, notwithstanding the provisions of note 4 (b) of group 71, in subheadings 7110 11 and 7110 19 the term "platinum" does not include iridium, osmium, palladium, rhodium or ruthenium.

In the following articles we will find out: what to do if after applying all the rules of classification you still have doubts about the correctness of the classification; how the customs checks the correctness of the classification; how to protect your code in a dispute with customs; as well as answer other interesting classification questions.

The original article is published in the online edition Logist.FM

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