A Guide To Harmonized System (HS) Codes: Avoid Making Mistakes On Your Invoice

If you’re looking to trade internationally, Harmonized System (HS) codes are an indispensable tool. HS codes serve as a system for identifying products across international borders, and they are vital in customs clearance. When it comes to global health, a harmonized system is as important as it gets. However, finding the right HS code can be difficult. But if you want to know how to get it correct and avoid penalties, we've got answers.

What Are HS Codes?

HS code is an abbreviation for Harmonized System codes, which are used to classify goods according to their details and characteristics. The Harmonized System (HS) classification is a globally recognized classification system used in international trade. It was originally developed by World Customs Organization (WCO) and they function by providing identification to products using a unique code, thus harmonizing product descriptions globally. 180 countries use the HS code system currently, and they help manufacturers or sellers identify a product and its place in the supply chain.

Whenever you are trading or shipping internationally, it is important to have your code on your documents. A unique six digit code is assigned to each group of product, and this system is then used to identify the products entering a country at customs clearance.

There are three components to the six digit HS code:

• Chapters: The first two digits which group the goods into  broad categories.
• Headings: The following two digits (three and four), contain a more detailed classification within the chapters.
• Subheadings: The last two digits are the most specific classification and identify the precise nature of the goods.

Why Are HS Codes Important? 

HS Codes originate way back in 1980s, and have become integral in facilitating safe international trade. They are useful in their ability to provide an easier and quicker way to identify products and apply regulations, no matter where the product is coming from. HS codes simplify the export or import process, as they allow customs officials to identify products, and calculate tariffs or duties for the products. Classifying goods correctly ensures that the goods are not going to be misrepresented, so customs can always knows what is coming into the country.

HTS Codes

Different countries also have their own Harmonized Tariff Schedule (HTS), which is specific to the individual countries and usually can be up to 10 digits. HTS codes are used when calculating duties and taxes entering a specific country, and ensuring no illegal goods are entering. The difference between an HS and HTS code is that HTS codes are 7-10 digits and are country specific, while HS codes are 6 digits and are universal. 

HTS codes are used to assess duties on incoming goods by each individual country. Canada and the United States for instance, have their own HTS systems; for the U.S. its Harmonized Tariff Schedule of the United States (HTSUS) and in Canada it is the Canadian Customs Tariffs.

When it comes to the HTSUS code, usually the first few digits of the HTS code are universal HS code and the remaining four would be the HTS country specific code when importing to the US. In the US there is also a Schedule B code which Is used by exporters, when sending goods outside the US. The Schedule B number is the HS code and then the last four digits are specific to the product/export and are not the same as HTSUS. For Canada, importers would need to use a 10 digit classification while exporters use an 8 digit classification as well. 

A list of HTSUS Codes can be found on the US government website. 

Canadian Customs Tariff codes can be found on the CBSA website. 

Schedule B Codes can be found on the US Census Bureau website. 

What Happens If You Use The Wrong HS Code?

Getting your HS code wrong can have severe penalties at customs. Wrong classification is considered fraud, and you may be fined or face other penalties for the error. Since the tariff is used to calculate duties and taxes you need to pay to customs, getting the wrong code can be seen as avoiding your fees. If you make a simple error even once, it can make it difficult or import or export easily the next time, so it is important to get the right code the first time.

Using the accurate HS code does come with challenges for importers and exporters. The primary challenge is getting accurate classification, because there is a large amount of products and some of them are similar in their description or category. Codes also change with time or get updated, so it is important to keep up on any changes. 

Knowing what HS codes are and how to use them is essential for a business. To avoid making a mistake you can use the right technology to create your customs invoices. With Zipments, AI technology automatically generates the correct tariff for you, so that you do not need to worry about making mistakes.

Without a doubt, one of the most essential tasks for any business is to create invoices. Because of this, it is important to know what HS Codes can be used and how to use them. With Zipments, you do not need to be worried about making mistakes as we will do it for you automatically.

When using Zipments to create your customs invoices, technology can find the tariff for you, so that you can worry about your business. 

✔️ Avoid Missing Any Details With An Easy To Fill Out Template.

✔️ Transmit Your Customs Invoice To Carrier or Broker Easily

✔️ Avoid Mistakes With AI Generated HS Codes For Accuracy 

Don't let an invoice make you nervous. Zipments modern invoices use a real-time tariff creation tool that helps you to automate the process of creating your customs invoices. With our AI technology, you can generate the correct tariff for your business in advance so that you do not have to worry about making mistakes. Using the latest technology to create your custom invoices will save you time, money and stress while also increasing your business' profitability.