If you want to know whether HS codes are important or not, then, this post is just for you. HS codes serve a purpose due to which they are extremely important. HS codes stand for Harmonized System codes. They are needed for government officers to effectively identify commodities that are exported and imported in order for them to properly calculate and collect taxes. Check out INSW HS code to learn more. Before goods can reach the final destination of the shipping process, they need to go through the HS classification codes. The HS codes are 6 to 10 digits long. They are Harmonized Tariff Codes and serve two main purposes and goals besides just helping the goods to pass through customs. These are mentioned below.
- They help categorize and classify products in the worldwide system as used by custom clearance authorities.
- They are used for the identification of products that are exported and imported from the country’s borders.
Importance of HS Codes
HS Codes play a vital role as they ensure that exporters and importers are able to properly classify their products according to the classification of goods. Thus, they are able to maintain their legal responsibility. The first and foremost step that is taken by shippers for exporting and importing goods is to determine the right HS code.
Exporters and importers commonly underestimate just how important are HS codes. Hence, they should learn more about them. It is quite common for suppliers to simply accept a purchase order of an importer and end up shipping their goods without knowing the right HS codes. Anyone that ships just about anything without assigning an HS code will end up having to face serious complications which prove harmful and costly for the parties involved. It is also bad for their reputation. Moreover, it is not considered a good business practice for companies to ship without assigning the HS code. Some of the issues that would occur if the HS codes have not been assigned are as below.
- Impact on Duty Rates: HS codes are closely involved in the calculation of duty rates. It is commercially risky if one does not assign an HS code or enters an incorrect HS code. Duty tariffs should be understood to ensure a smooth shipping process.
- Improper Security Filing: Companies are required to meet the requirements of Improper Security Filing as a failure to do so would result in non-compliance.
- Risk of Future Delays: When it comes to shipping, time plays a huge role. Thus, without proper understanding of HS codes, there would be significant delay which would also hurt business relationships.
- Regulatory Risks: There is always the risk of regulatory intervention. If the importer fails to assign the right HS code, it would lead to the importer having to paying more on duty or getting fined.
Conclusion
As every business is different and its products, it is important that the right HS codes are assigned. By entering the right HS codes, the legal responsibilities of importers and exporters will be fulfilled.
