Harmonised System of Nomenclature or simply Harmonised System
HS is Harmonised System. The Harmonised Commodity Description and Coding System is generally referred to as "Harmonised System" or "HS”.
HSN is Harmonised System of Nomenclature. It is a multipurpose international product nomenclature developed by the World Customs Organization (WCO).
It comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification.
The system is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. It is also extensively used by governments, international organizations and the private sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin etc.
The Harmonized System is governed by "The International Convention on the Harmonized Commodity Description and Coding System". The official interpretation of the HS is given in the Explanatory Notes (5 volumes in English and French) published by the WCO. The maintenance of the HS is a WCO priority. The HS Committee also prepares amendments updating the HS every 5 – 6 years.
As India is a member of WCO, HS is being used in India for Customs and Central Excise Classifications since 1985.
Now HSN Codes are to be used for classification purposes in the GST regime.
Structure of HS
- HSN code finder tells you all about the sections, chapters, headings involved in HS.
- HS has 21 Sections, 99 Chapters, 1244 Headings and 5224 Sub Headings.
- Chapter 77 is reserved for future use.
- Chapters 98 and 99 are reserved for National use.
- Each Section is divided into Chapters. Each Chapter is divided into Headings. Each Heading is divided into Sub Headings.
- Section and Chapter titles describe broad categories of goods, while headings and subheadings describe products in more detail.
- Generally, HS sections and chapters are arranged in order of a product’s degree of manufacture or in terms of its technological complexity. Natural commodities, such as live animals and vegetables, for example, are described in the early sections of the HS, whereas more evolved goods such as machinery and precision instruments are described in later sections. Chapters within the individual sections are also usually organized in order of complexity or degree of manufacture.
- The HS code consists of 6-digits. The first two digits designate the HS Chapter. The second two digits designate the HS heading. The third two digits designate the HS subheading. HS code 1006.30, for example, indicates Chapter 10 (Cereals), Heading 06 (Rice), and Subheading 30 (Semi-milled or wholly milled rice, whether or not polished or glazed). Search your goods by HSN
- HS Nomenclature beyond 6 digits is also allowed and some countries have extended Six Digit Code to Eight Digit Code and India is also one such country which use Eight Digit Code
- In the Eight Digit Code-First two digits represent the Chapter-Next two digits represent the Heading-Next two digits represent the Sub Heading (one-dash subheadings) and the last two digits represent the Sub Sub Heading (two-dash subheadings).
- Where the description of an article or group of articles under a heading is preceded by "-" (one dash), the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "--" (two dash), the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-". Where the description of an article or group of articles is preceded by "---" (three dash) or "----" (four dash), the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or "--".
- Heading 27.16 is the only optional heading in the harmonized system. Each country can put any commodity code in this heading. In India it is used for Electrical energy
Grouping of articles or items in the Harmonised System
Goods in the HS are grouped in two broad categories
- Goods which the earth is endowed with -e.g. Minerals, Animals, Plant Water etc. The first 24 chapter deal with agricultural products (Sec.1-1V)
- Goods which are man-made -e.g. TVs, Motor vehicles, the list is endless because of change in technologies
Goods in the HS are grouped in two broad type of classification-
- Goods under chapters 1 to 83 are generally classified according to material of manufacture
- under chapter 84 to 96 are generally classified according to function
- If you want to search your good quickly, you can use Quick HSN Finder.
Therefore Before classification-we have to consider the following-
- What is it?
- What material or substance is it made of?
- What are its functions or use?
- In what form is it usually supplied?
- Is this the only possible classification?
Let us see the classification of LAPTOP COMPUTER
Material: various (above chap.83)
Function: data processing
Possible: section XV1
Possible: Chapter 84
HS CODE: FOUR DIGIT CODE IS 8471
Now let us see the classification of Fork of wood
Identify: article of wood
Material: wood (below chap.83)
Possible: section IX
Possible: Chapter 44
HS CODE: FOUR DIGIT CODE IS 4419
Principles of HS classification
A commodity can be classified either by:
- Terms of heading
- Notes to sections, chapters or subheadings
- General Interpretative Rules (GIR)
Classification by the use of section, chapter and subheading notes.
These are legal notes which appear in front of most sections and chapters. These are known as section notes and chapter notes Section X1 is the only section with ‘subheading notes' which refer to the interpretation of subheadings
Type of the Notes
Notes of exclusions- Example- Note 1 Chapter 45-CORK AND ARTICLES OF CORK
This chapter does not cover
- Foot or parts of footwear of chapter 64
- Headgear or parts of headgear of Chapter 65
- Articles of Chapter 95 (for example, toys games, Sport requisites)
- Notes for definitions-Example- Note 5 to section XV1 define the term ‘machine’- Note 1 to section 11 defines the term ‘pallet' mentioned in (chapter 7,11 and 12)
- Notes for classification provisions- These notes establish the classification of certain goods-Example- Note 4 to section XVII establishes the classification of “amphibious motor vehicles”
- Notes for limitation of scope- These notes limit the scope of goods to be classified in the section. For example Note 2 to section XVII limits the scope of the expressions “parts “and “parts and accessories”.
Classification by using General Interpretative Rules. (GIR)
GIR are designed to ensure that a given product is always classified in the same heading and subheading with the exclusion of any other heading meriting consideration. In fact, they illustrate and provide step-by-step basis for classification of goods in the harmonized system.
Classification of goods in this Schedule shall be governed by the following principles known as General Interpretative Rules (GIRs):
- The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions.
- Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.
- Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule
When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
- the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
- mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
- when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
- Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.
In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein:
- camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character;
- subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use.
- For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub-headings and any related sub-heading Notes and, mutatis mutandis, to the above rules, on the understanding that only sub-headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.
Sections in the Harmonised System
- Search your product by using HSN code finder for better result.
Sec 1(Chapter I to 5) covers live animals and animals product
Sec II( Chapter 6 to 14) covers vegetable products
Sec III (Chapter 15)(Single Chapter)covers animal or vegetable fats and oils
Section IV (Chapter 16 to 24) covers beverages spirits vinegar and Tobacco
Section V (Chapter 25 to 27) covers mineral products
Section VI (Chapter 28 to 38) covers Chemical and Para Chemical Products
Section VII (Chapter 39 to 40) covers Plastics and Articles thereof and Rubber and articles thereof
Section VIII (Chapter 41 to 43) covers certain animal products-Hides and Skin
Section IX (Chapter 44 to 46) covers group of vegetable products-Ch 44 (Wood) Ch 45 (Cork) Ch 46 (Basket ware)
Section X (Chapter 47 to 49) covers vegetable products-Pulp-Paper & Paperboard-Products of Printing Industry
Section XI (Chapter 50 to 63) covers vegetable Textile and Textile Articles
Section XII (Chapter 64 to 67) covers Miscellaneous Products-Prepared Feathers-Artificial Flowers-Articles of Human Hair
Section XIII (Chapter 68 to 70) covers Articles made of minerals-Stone plaster etc- Ceramic-Glass products
Section XIV (Chapter 71) covers Precious metals and stones
Section XV (Chapter 72 to 83) covers Base Metals and Articles of Base Metal
Section XVI (Chapter 84 to 85) covers Machinery and Mechanical Appliances
Section XVII (Chapter 86 to 89) covers Vehicles, Aircraft, Vessels and associated transport equipments
Section XVIII(Chapter 90 to 92) covers Apparatus and Equipment
Section XIX(Chapter 93) covers vegetable Arms and Amunitions
Section XX(Chapter 94 to 96) covers Miscellaneous Manufactured Articles
Section XXI (Chapter 97 to 98) covers Arts, Collector’s pieces and Antiques