An simple way of classification of goods

1. Product Classification Procedures in IN environment
More India centric

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.

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.

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 http://www.cbec.gov.in/customs/cst-0708/cst-main.htm
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 or
Interpretative 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 the
sun.

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.

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”.

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
products
Example: -
 Garments – Garments has “fabric” as base material, and there
could be many different type of garments Men's / Women's 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.

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.

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

11. Step 3 – Classification
1. Read only single dashes descriptions first to find out the appropriate
classification once one single dash is finalized for classification refer to
two dots gathered under that single dash.
2. Continue doing the same to reach till the maximum dash 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: ~
{

12. QUESTIONS? TIME

13. THANK YOU
Enjoy classification
Vikas Singh Maini
Avanzar Logistic Solution Private Limited
website # www.alslogisol.com
Email : vsm@alslogisol.com
D-480, First Floor, Near Gas Agency,
Ramphal Chock, Sector 7, Dwarka
New Delhi – 110075
Mob # +91 971 140 4449
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