Tariff Classification

TARIFF
CLASSIFICATION
CB JAYVEE ANN M. VALDEZ,
MCA
AY 2018 - 2019
TARIFF
CLASSIFICATIO
N: Harmonized
Commodity
Description And
Coding System (HS)
HARMONIZED COMMODITY DESCRIPTION
AND CODING SYSTEM (HS)
 In international trade each product is assigned a particular classification code using
the Harmonized Commodity Description and Coding System or simply
Harmonized System (HS).
• The Harmonized Commodity Description and Coding System generally
referred to as "Harmonized System" or simply "HS" is a multipurpose
international product nomenclature developed by the World Customs
Organization (WCO).
• 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. Over 98 % of the merchandise in international trade is classified
in terms of the HS.
• It was developed and presently maintained by the World Customs

Organization (WCO) (formerly known as the Customs Cooperation
Council (CCC)) headquartered in Brussels, Belgium.
 The Harmonized System is governed by "The International Convention on the
Harmonized Commodity Description and Coding System".
• It was established in 1983 and entered into force in 1988. Under this
Convention, contracting parties are obligated to base their tariff schedules
on the HS nomenclature, although parties set their own rates of duty.
• Countries that have adopted the Harmonized System are not permitted to
alter in any way the descriptions associated to a heading or a subheading
nor can the numerical codes at the four or six digit levels be altered. This
is what keeps the Harmonized System harmonized.
• The Philippines began implementing the harmonized tariff coding

system back in 1989 - the 104th country to do so.
 USES
• Determination of customs tariffs (import duty)

• Collection of international trade statistics
• Rules of Origin
• Ascertain eligibility of a product under a Free Trade
Agreement
• Compliance with customs requirements
 STRUCTUR
E
SECTIONS OF COMMODITY SECTORS
CHAPTERS
HEADINGS
SUBHEADINGS
THE GENERAL INTERPRETATIVE

RULES
TARIFF
CLASSIFICATION
: The ASEAN
Harmonized Tariff
Nomenclature
(AHTN)
THE ASEAN HARMONIZED TARIFF
NOMENCLATURE (AHTN)
 The Association of Southeast Asian Nations (ASEAN) comprising of Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand
and Vietnam, agreed to adopt a common tariff nomenclature to facilitate the flow
of trade within the region.
• The AHTN is the harmonization of each ASEAN member country’s
customs nomenclature.
• The AHTN is based on the Harmonized System up to the 6-digit

subheadings. It is supplemented with the national requirements of each of
the 10 ASEAN member countries in the form of 8-digit subheadings.
• The Philippines began implementing the harmonized tariff coding

system back in 1989 - the 104th country to do so.
• Any amendments on the Harmonized System would also be reflected on

the AHTN.
NOMENCLATURE (AHTN)
 It was conceptualized by the Association of Southeast Asian Nations (ASEAN)
Member States (AMSs) in order to have a common tariff nomenclature to facilitate
trade within the region. The first AHTN Code was adopted in 2004, incorporating
products that are significantly traded by the AMSs. The AHTN is used as:
• a uniform tariff nomenclature within ASEAN;

• basis for preferential tariff purposes in the ASEAN Free Trade
Area (AFTA) and other Free Trade Areas; and
• basis for the collection of trade statistics.
THE AHTN PROTOCOL
• Defines the legal framework governing the

implementation of the AHTN and its implementing
rules and explanatory notes.
• Signed by the Governments of Brunei Darussalam, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore,
Thailand and Vietnam on August 07, 2003 in Manila.
• The Second Protocol to amend the Protocol Governing the

Implementation of the ASEAN Harmonized Tariff Nomenclature
was signed on April 08, 2010 in Vietnam.
INSTITUTIONAL ARRANGEMENTS of the
AHTN PROTOCOL
• The ASEAN Directors-General of Customs - responsible for
monitoring, reviewing, supervising all aspects relating to the
implementation of the AHTN Protocol.
• The ASEAN Finance Ministers Meeting - is the forum for all

decisions relating to the implementation of the AHTN Protocol.
• The ASEAN Secretariat - provides the necessary support for

supervising, coordinating and reviewing the implementation of the
AHTN Protocol and assists the ASEAN Directors-General of
Customs on matters relating thereto; responsible for assisting the
experts’ panel and AMSs in monitoring and reviewing the AHTN.
NOMENCLATURE (AHTN) STRUCTURE:
The AHTN 2017 version incorporates the HS 2017 amendments, as what

was done in 2007 and 2012.
Adhering to the 6-digit level of the HS, the 7th and 8th digits of the
AHTN Code are assigned to ASEAN subheadings. The 8-digit
subheadings reflect the products of interest to the ten (10) AMSs.
However, national subheadings required by Member States that were not
included in the AHTN shall be dealt with beyond the 8-digit codes.
The total number of Philippine AHTN 2017 tariff lines (including the
alpha-numeric codes) is 11,058.
CHAPTERS (97)
SECTIONS (21)
SECTION
NOTES
CHAPTER NOTES
HEADING NUMBER 4 DIGITS
HEADING RATES OF
DESCRIPTIONS DUTY: MFN
ALPHA OR ATIGA
NUMERIC
SUBHEADIN
G:
PHILIPPINE
SUBHEADIN
G
HS
SUBHEADING:
6 DIGITS
AHTN SUBHEADING NUMBER: 8

DIGITS SUBHEADING
DESCRIPTIONS
TARIFF
CLASSIFICATION
: CLASSIFICATION
TECHNIQUES
FIRST TO DETERMINE:
IDENTIFICATION OF THE GOODS
What is the item?
What is its characteristics?
What is its function or intended purpose?
What is item’s condition upon importation?

CLASSIFY EFFECTIVELY:
TARIFF NOMENCLATURE
FAMILIARIZATION
TABLE OF CONTENTS
CHAPTERS ARE GROUPED UNDER

SECTIONS
SECTION NOTES, CHAPTER NOTES, SUBHEADING

NOTES, HEADING AND SUBHEADING
DESCRIPTIONS
CODING SYSTEM
DASH SYSTEM
CHAPTERS ARE GENERALLY ARRANGED
ACCORDING TO THE DEGREE OF
PROCESSING:
Chapter 49 - Printed books, newspapers
Chapter 06 - Live trees
Chapter 48 - Paper and paperboard
Chapter 44 - Wood and

Chapter 47 - Pulp of wood
articles of wood
AHTN STRUCTURE: CODING
SYSTEM
DON’T FORGET YOUR LEGAL NOTES:
SECTION, CHAPTER AND SUBHEADING
NOTES
THE NOTES CAN BE:
1. INCLUSION/COVERAGE
 Enumerates goods that are included.
2. EXCLUSION
 Enumerates goods that are excluded.
3. DEFINITION
 Provides a description for a particular good covered
by the Section, Chapter or Subheading
READY FOR CLASSIFICATION?
CHECK THE PUNCTUATIONS, DASHES AND
“OTHERS COVERAGE”
AHTN PUNCTUATION MARKS
COMMA
SEMI -
COLON
COLON
PERIOD
COMMA
 Used to separate items or list of goods described

in the heading and subheading texts.
 Used to separate the list of items from the

descriptor phrase or from a series of descriptors
to which the items belong.
SEMI -
COLON
 It is used to indicate a full-stop and that a good

or list of goods separated by semi-colons must
be treated as distinct and separate from each
other when considering tariff classification at
the heading or subheading level.
COLON
 It is used to indicate that further subdivisions

will occur.
 The colons appear after the end of every

subheading text which has further breakdowns.
PERIOD
 It is used to indicate a full stop in the heading

text which means only those products
mentioned are included and nothing more.
DASH SYSTEM
 In the Harmonized System (HS), when a Heading is divided into two or
more 6-digit subheadings, a single dash appears before the description of
products to indicate the first level of divisions.
 And when necessary, subheadings are broken down into two or more 2-
dash subheadings to indicate the second level of subdivisions.
 Dashes are laid down in an increasing manner. A one-dash is followed by

two dashes, two dashes by three dashes, three dashes by four dashes, and
so on.
DASH SYSTEM
PRIMARY DASH:
1ST LEVEL / ONE – DASH
2ND LEVEL OF
SUBDIVISION / TWO -
DASH
DASH SYSTEM
 PRINCIPLES:
1) Only compare one-dash subheadings that are under the same heading.
Choose the one-dash subheading that fits the description of the goods
being classified;
2) If the established one-dash subheading is further divided, compare all

two-dash subheadings that are under that one-dash subheading and
choose the two-dash subheading that fits the description of the goods
being classified; and, if applicable.
3) Compare all three-dash subheadings under the established two-dashed

and determine the correct three-dash subheading classification, and so
on.
OTHER
 DESCRIBING OTHERS:
 “Other” is the most recurring description found in almost all HS

headings.
 “Other”, provides for a more general, widelyscoped, and sometimes

vague coverage.
 When headings are further divided into subheadings, two major groups
are generally created:
1. Subheading/s with specific description

2. Subheading/s with the description “Other”
OTHER
 Describing the coverage of “Other” is just like

answering a puzzle since it is sometimes difficult and
tricky.
 Extra care should be taken into consideration in

describing the coverage of “Other” especially when
there are too many subheadings involve.
OTHER
 STEPS IN DESCRIBING OTHER:
1. Read the terms of the heading, i.e., the articles mentioned under the 4-
digit heading.
2. Take note of the dash level of subheadings.
3. “Other” covers articles not provided by subheadings under the same

dash level taking into consideration the description of the preceding
subheading with a lower dash count.
TARIFF
CLASSIFICATION:
THE GENERAL
INTERPRETATIVE
RULES (GIRs)
THE GENERAL INTERPRETATIVE RULES
 There are SIX GENERAL RULES.

 The first five (5) Rules relate to classification in the 4-digit
headings.
 Rule 6 relates to classification in the subheading level.
 The Rules set out the principles for classification in the HS

nomenclature.
 They are an integral part of the Nomenclature, providing uniform

application and interpretation.
 The GIRs are incorporated in the CMTA, RA 10863: Section

1610.
 APPLICATION OF THE GIRs

 The application of the GIRs (1 – 4) should always be in
SEQUENTIAL ORDER:
Rule 1 is to be taken into consideration first. If classification is
not covered by the provisions of Rule 1, then apply Rule 2, and so
on.
 Goods must first be classified in the 4- digit HS heading

whose terms most specifically describe the goods (unless
otherwise required or directed by the GIRs); and
 Only 4-digit headings are comparable:

Do not compare a heading description with a subheading
description.
 Rule 1 Terms of the Headings, Section/Chapter

Notes
 Rule 2 (a) Incomplete or unfinished; Unassembled or
disassembled
 Rule 2 (b) Mixtures or combinations
 Rule 3 (a) Most specific
 Rule 3 (b) Essential character
 Rule 3 (c) Last in numerical order
 Rule 4 Most akin
 Rule 5 (a) Special containers
 Rule 5 (b) Packing materials & containers
 Rule 6 Subheading rule
RULE
1
TITLES OF SECTIONS, CHAPTERS AND SUB-CHAPTERS ARE
PROVIDED FOR EASE OF REFERENCE ONLY.
 Classification shall be determined according to the TERMS of the

HEADINGS and any relative SECTION or CHAPTER NOTES.
Provided such headings or Notes do not otherwise
require, according to the following provisions, i.e., GIRs 2 to 6.
 Most products are classified according to GIR 1. (90%)

RULE
CHRISTMAS TREE CANDLE
1
If you were importing Christmas
tree candles, it would seem logical
to classify them with Heading
Number 9505: Other, articles for
Christmas festivities. However,
when reading the Notes to Chapter
95, it clearly states this Chapter
does not cover Christmas tree
candles. In fact, we must classify
them with the Heading Number
3406: Candles, tapers and the like.
RULE
2
EXTENDS THE SCOPE OF CLASSIFICATION TO INCLUDE
GOODS IMPORTED IN A CONDITION NOT SPECIFICALLY
RECOGNISED IN THE TARIFF NOMENCLATURE.
 2 (a) “INCOMPLETE”, “UNFINISHED, UNASSEMBLED or

DISASSEMBLED GOODS.
An automobile missing only its wheels would be classified the same as if

it were complete.
Knock-down electric fan would be classified as if it were assembled.

RULE
2
SLIPPERS OR RUBBER ARTICLES?
SLIPPERS
RULE
2
EXTENDS THE SCOPE OF CLASSIFICATION TO INCLUDE
GOODS IMPORTED IN A CONDITION NOT SPECIFICALLY
RECOGNISED IN THE TARIFF NOMENCLATURE.
 2 (b) REFERENCE TO GOODS COMPRISED OF DIFFERENT

MATERIALS OR SUBSTANCES.
if you were importing dicalcium citrate, the Tariff does not specifically
state this compound. However, it is a compound containing more than
one material and its essential character is that of a salt of citric acid.
Therefore, dicalcium citrate qualifies as Heading Number 2918: Salts
and esters of citric acid, Other.
RULE
3
FOR GOODS CLASSIFIABLE UNDER TWO OR MORE
HEADINGS:
 3 (a) Most specific description.
 3 (b) Mixtures, composite goods, and goods put up in sets for retail
sale, shall be classified on the material or component that gives the
essential character.
 3 (c) Classified under the heading which occurs last in numerical order.
RULE
3
Rule 3(a): PRINCIPLES
 Relative Specificity
 A description by name is more specific than a description by class.
 A description that more clearly identifies a product is more

specific than one which is less complete.
RULE Dilmah Mint Flavored Ceylon Tea
3 Mint tea is not stated specifically, as

a product, in the Tariff. Although the
product descriptions available are
mint and tea, the importer must
classify mint tea under the
appropriate tea Heading because it
provides the most specific product
description and mint is only the
flavour of the tea.
RULE
3
Rule 3(b): ESSENTIAL CHARACTER
 The essential character of a product, may, for example, be determined

by:
 The nature of the material or component.

Its bulk
Its quality
Its weight
Its value
 Role of the constituent material in relation to the use of the goods.
 Other factors
RULE
3
An importer bringing in "liquor gift sets" (that include the bottle of
liquor and glasses) must classify the goods under the appropriate liquor
Heading. The essential character of the item is the liquor itself and not
the glasses contained within the set.
LIQUOR GIFT SET

RULE
3
Rule 3(c): LAST IN NUMERICAL ORDER
 When goods cannot be classified by reference to 3(a) or 3(b), they shall

be classified under the heading which occurs last in numerical order
among those which equally merit consideration.
A gift set which includes socks
(Heading number 6115) and
ties (Heading number 6117)
cannot be classified by the
previous rule since neither
item gives the gift set its
essential character. The gift
set must be classified under
the Heading number for ties
which is the Heading that
occurs last in numerical order.
RULE
MOST AKIN or the “last resort rule” .
 most often used with new products
4
Most akin to umbrella
RULE
5
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 Rule 5(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 is not binding when such packing materials or
packing containers are clearly suitable for repetitive use.
RULE
6The only subheading rule.
For legal purposes, the classification of goods in the subheadings of a

heading shall be determined according to the terms of those
subheadings and any related Subheading Notes and, mutatis mutandis,
to the above Rules, on the understanding that only subheadings 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.

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TARIFF

• It was developed and presently maintained by the World Customs

• The Philippines began implementing the harmonized tariff coding

• Determination of customs tariffs (import duty)

THE GENERAL INTERPRETATIVE

• The AHTN is based on the Harmonized System up to the 6-digit

• The Philippines began implementing the harmonized tariff coding

• Any amendments on the Harmonized System would also be reflected on

• a uniform tariff nomenclature within ASEAN;

• Defines the legal framework governing the

• The Second Protocol to amend the Protocol Governing the

• The ASEAN Finance Ministers Meeting - is the forum for all

• The ASEAN Secretariat - provides the necessary support for

The AHTN 2017 version incorporates the HS 2017 amendments, as what

AHTN SUBHEADING NUMBER: 8

What is the item?

What is its characteristics?

What is its function or intended purpose?

What is item’s condition upon importation?

CHAPTERS ARE GROUPED UNDER

SECTION NOTES, CHAPTER NOTES, SUBHEADING

Chapter 49 - Printed books, newspapers

Chapter 06 - Live trees

Chapter 48 - Paper and paperboard

Chapter 44 - Wood and

THE NOTES CAN BE:

AHTN PUNCTUATION MARKS

AHTN PUNCTUATION MARKS

 Used to separate items or list of goods described

 Used to separate the list of items from the

AHTN PUNCTUATION MARKS

 It is used to indicate a full-stop and that a good

AHTN PUNCTUATION MARKS

 It is used to indicate that further subdivisions

 The colons appear after the end of every

AHTN PUNCTUATION MARKS

 It is used to indicate a full stop in the heading

 Dashes are laid down in an increasing manner. A one-dash is followed by

2) If the established one-dash subheading is further divided, compare all

3) Compare all three-dash subheadings under the established two-dashed

 “Other” is the most recurring description found in almost all HS

 “Other”, provides for a more general, widelyscoped, and sometimes

1. Subheading/s with specific description

 Describing the coverage of “Other” is just like

 Extra care should be taken into consideration in

2. Take note of the dash level of subheadings.

3. “Other” covers articles not provided by subheadings under the same

 There are SIX GENERAL RULES.

 The Rules set out the principles for classification in the HS

 They are an integral part of the Nomenclature, providing uniform

 The GIRs are incorporated in the CMTA, RA 10863: Section

 APPLICATION OF THE GIRs

 Goods must first be classified in the 4- digit HS heading

 Only 4-digit headings are comparable:

 Rule 1 Terms of the Headings, Section/Chapter

 Classification shall be determined according to the TERMS of the

 Most products are classified according to GIR 1. (90%)

 2 (a) “INCOMPLETE”, “UNFINISHED, UNASSEMBLED or

An automobile missing only its wheels would be classified the same as if