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

In the previous one articles we talked about how customs can help a company classify goods. Now let's find out how the customs checks the product code, which the declarant has determined independently for his goods.

How does customs control the correct classification of goods?

There are two separate divisions at the customs, which can check the correct classification of goods. One of them is the customs clearance department, which conducts a full inspection of the declaration and its customs clearance. The second is the customs payments department. It is specialized and has broader powers to control the correct classification of goods compared to the customs clearance department.

Regardless of who checks the correctness of the classification, this procedure ends either by confirming the code identified by the declarant or by changing this code. Usually the code is changed to the one corresponding to a higher rate of duty to increase the amount of customs duties. If the inspector decides to change the product code declared by the declarant, he decides to determine the product code. Such solutions are also called "classification solutions" or simply CT.

Here is a simplified algorithm for controlling the correctness of classification. You can get acquainted with the detailed procedure in the order of the Ministry of Finance № 650 dated 30.05.2012.

Audit happens in several stages. Some of them are optional and depend on the specific classification cases. At each stage of the inspection, the inspector may confirm the code declared by the declarant.

Stage 1: product description.

First, the inspector checks whether the description of the goods meets the requirements of the law (the three issues we mentioned in the previous article) and the accompanying documents.

If there are no discrepancies and the product is quite simple, the inspector can confirm the code without further verification.

Stage 2: search for classification solutions.

Then the inspector in the database of classification decisions looks for decisions that were made according to the code stated by the declarant. After that, the inspector compares the goods in the classification decisions from the database with the goods declared by the enterprise. If these goods are identical, the inspector confirms the code declared by the declarant.

In addition to comparing identical goods, the inspector also takes into account decisions for similar goods - those that have similar characteristics and / or consist of similar components and perform the same functions. The inspector finds out which characteristics of similar goods have become decisive for their classification and compares them with the characteristics of the goods declared by the enterprise. If the characteristics match, the inspector also confirms the declared code.

This process can be explained by the example of a bath mat made of natural cork and a kitchen stand made of natural cork. These goods are not identical, but have the same characteristics, which is decisive for their classification. This characteristic is the material from which they are made. Subject to Rule 2 (b) of the Basic Rules for the Interpretation of UKT FEA, such goods are classified in one heading 4503.

Stage 3: requesting additional documents (optional).

The inspector may ask the declarant for any additional information about the goods if he considers that the information and documents provided are insufficient to verify the correctness of the classification. To do this, the inspector sends the declarant an electronic or written request. The company has ten days to provide the required documents.

If the declarant provides documents, the customs must either complete customs clearance within 4 working hours after receipt of the documents, or decide to determine the product code, if it does not agree with the classification of the declarant. At the same time, the customs has 10 working days to make a decision.

In case the declarant refuses to provide the required documents, the customs checks the classification on the basis of the information provided by the enterprise. Such an inspection is likely to end either simply by refusing customs clearance or by changing the product code.

Stage 4: examination (optional).

Customs also has the right to involve an expert organization to assist in resolving certain issues that arise in the process of checking the product code. The inspector may take samples of the goods for transfer to a specialized laboratory. If the customs involves an expert organization, the period for making a decision on determining the product code is increased from 10 to 30 calendar days.

Stage 5: appeal to the SFS (optional).

Some classification cases are so complex that even specialized customs departments cannot determine the product code. Although sometimes they just do not want to take responsibility for the classification decision. Then the customs payments department has the right to make a request to the State Fiscal Service of Ukraine, which must provide clarification on the classification of such goods.

Each of these steps can end with either confirmation of the code declared by the declarant, or change of this code. Also the inspector can use only the right to demand additional documents and not to carry out examination, and can also demand documents and appoint examination. The verification procedure depends on each individual case of classification.

We have shown a slightly simplified procedure in the diagram below:

What happens to the product while the question of its classification is being resolved?

As we can see, the procedure for classifying goods in some cases can take a month from the date of filing the customs declaration. What to do to the enterprise with the goods which all this time can be in a car body? Who will pay for a simple transport? What to do if the imported goods are urgently needed for production?

The company has the right to release the goods for free circulation before the customs decides to determine the code of the goods. To do this, you need to apply to the customs with a statement, pay customs duties at the highest rate of duty, which can get this product, and submit a temporary customs declaration. After the customs has finally determined the classification of this product, the company must submit an additional customs declaration with the code specified by the customs. If this code corresponds to a lower rate of duty than that specified by the declarant in the interim declaration, the declarant has the right to reimburse the difference in customs duties.

In the next article we will find out what are the consequences of changing the product code and how to protect your code in a dispute with customs.

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

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If you have problems with the classification of goods, or your goods were detained by customs, you can always contact us for help


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