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Training Slide Classification procedure


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A Simple & vast definition of product classification and method

A Simple & vast definition of product classification and method

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  • 1. Product Classification Procedures in IN environment More India centric M
  • 2. Introductory notes  World leaders in supply chain business extends the committed mode of transport to IN Exporters/Importers while assisting them to achieve new heights in Impex trade to/from India.  Fastest changing requirements for speed of transport had unfolded new scopes for both, but simultaneously has created a need for rapid / accurate product classification & translations.  Product classification plays a pivotal role in economy study of a countries & comparison of world trade statistics as required under the provision of GATT.  Arrant classification can not only assist the person involved for his daily clearance activities, can simply also enhances synergies with customs while working as a extended arm in-between authorities & customers for speedy clearances.  Classification being a vast subject hence demands clear guidelines, thus one common procedure were agreed by world customs organization (WCO) under the guidelines from world trade organization (WTO) for international trade called as Harmonized system (HS) to achieve international uniformity in the classification of goods. i
  • 3. Why classification is important???Importance of classification for IN industry  Classification for all products are mandatory so as to understand the flow of incoming / outgoing products & control the countries commerce.  Wrong classification can lead to confusion in countries statistics / stocks / funds or can result in severe black out of correct information.  Wrong classification can compromise government revenue which may result in short levy of import duties or over payment of export incentives.  Correct classification safeguard local industry from international price war.  Wrong classification can invite malpractices, which are detrimental to the countries’ interest. d
  • 4. Key Points  Customs tariff is divided into total 97 chapters compressed into XXI sections comprising specific type of goods into one section are further segregated into multiple headings / subheadings based on type / compositions / base / use of products. Chapter 98 is being specific for project imports which covers all chapter goods for project. URL Harmonized System Nomenclature (8 digit)  Preliminary 2 digits of classification are related to chapters  Next 4 digits adds headings & subheadings for specific classification  Last 2 digits elaborates classification to detailed description Legal notes are applicable for both headings and subheadings Rules for the classification of goods, called inter Interpretation Rules orInterpretative rules. WCO had come out with an exhaustive notes called explanatory notes,which are considered to be the bible for classification of all goods under thesun.s
  • 5. Basics of classification  Tariff / chapters / headings / subheadings always begins with most easygoing product, & becomes complicated when advances to further entries.  Products can be differentiated into two categories expressed as “MATERIALS” & “TYPE OF GOODS” based on which tariff can be divided into two parts chapter 01 – 63 & 67 – 83 “MATERIALS” and chapter 64 – 66 and 84 – 98 as “TYPE OF GOODS (specific descriptions)”.  Chapter headings / subheadings are described in compressed form by using comas (,) for “CONTINUATION OF PARA {AS OR}” & semicolons (;) as “PUNCTUATION MARK {TO READ THE NEXT SENTENCE SEPARATELY}” within the phrase.  For constructive method always read referred sections where and when referred to. a
  • 6. What is Type of Goods???Type This class of products may be referred to as “Type” or “Specific description” chapters, the products covered or mentioned in its own right within a particular chapter.Example : - − Machinery / Electronics – Since machinery / electronic goods are mix of different commodities and identical goods as a specific type of machinery or electronic goods, hence same will fall under “Type of Goods” category. − Bicycles – Product is of specific type and identical, hence will categorized as “Type of goods”. w
  • 7. What is Materials???Materials• This class of products relates to chapters deals with a particular material and its products, or related groups of materials or substances and their productsExample: - − Garments – Garments has “fabric” as base material, and there could be many different type of garments Mens / Womens with different fabrics used hence will be classified in Materials. − Books – Even though book itself is a finished product which can be easily identified as type of goods but since that is made of one base product and product name doesn’t specify the type specifically should be considered as Material “Paper” for purpose of classification. c
  • 8. Important Notes for definition of goods It is recognized classification practice to attempt, where possible, to get an answer within the “type” chapters before considering the “materials” chapters. It is known that classification practice to attempt to classify a product by what it is, rather then by what it is made of.For example: ~o Carbon electrodes are specifically mentioned in the terms of heading 85.45. they are classified within that heading rather than in the headings of chapters 68 or 25, which in part, cover the material that the electrodes are made of.o Another good example is fiber optic cable which will be classified essentially under 85.44 if the cables are individually insulated. However if it is not so it will get classified under 90.13. i
  • 9. First towards Classification 1. To start with firstly should comprehend the product and find out the goods falls under Material or Type of goods. 2. Now after identification of kind of product chapter / section list to identify a particular chapter. 3. Now once we manage to identify two chapters where the said product can have a possibility of classification we have to check chapter note 1 (Excludes) & chapter note 6 (includes) in all possible chapters to ascertain the appropriate chapter. 4. The next step is to locate the appropriate heading within that chapter, which can be easily done using the same method easy to difficult products and by reading the main headings of chapter & classifications. 5. Once manage to find appropriate classification heading step 1 of classification is over…… follow step… 2
  • 10. Step 2 – Classification 1. While reading subheadings uses dots for justification of exact classification c
  • 11. Step 3 – Classification 1. Read only single dots descriptions first to find out the appropriate classification once one single dot is finalized for classification refer to two dots gathered under that single dot. 2. Continue doing the same to reach till the maximum dots appear. 3. Once utilized the dots fully it’s time to readout the final description of classification with product. 4. In case product is not specific before finalizing classification under “other” refer to chapter note 4 for elaboration of product, chapter note 4 may provide more details on product with specifications. Example: ~{{
  • 13. THANK YOU Enjoy classification IRC Supply Chain Solutions LimitedIRC House, 846 Joshi Road Karol Bagh New Delhi – 110 005 Mobile # 9711404449 Email: Website: