The digits in HS codes
HS codes consist of 6 digits. So why are almost all codes more than six digits? That’s because the universally agreed bit is only the first six digits after which countries are free to attach their own further modifications and clarifications to HS codes. We will come back to that but first let’s take a look HS codes themselves.
What does each digit in an HS code stand for?
The HS codes system has 21 sections covering 97 chapters. Each code consists of 3 pairs. The pairs are referred to as Chapter, Heading and Subheading respectively
The order of arrangement in based on their degree of manufacture. Within each chapter, the headings are also arranged based on the same principle.
Chapters are broad level categories which categorize products by type such as coffee, cocoa, tea or wine. Heading and Subheading provide further specifications of the product.
An illustrative example given by IMF clearly illustrates the complexity of the classification system. Deciding how to classify a drink that is marketed as wine colloquially but is actually a mixture of rum and grape juice (alcohol strength greater than 0.5% volume) involves multiple layers of complexity:
1) First, Chapter Note 3 to Chapter 22 determines what is an “alcoholic beverage” (i.e. a beverage of an alcohol strength by volume exceeding 0.5% vol), and under which headings alcoholic beverages must be classified, i.e. headings 22.03 to 22.06 and 22.08 as appropriate.
Okay! Seems simple enough, let’s dive in.
2) Heading 22.03 for “beer made of malt” can be disregarded;
3) Heading 22.04 covers inter alia “wine of fresh grapes, including fortified wines”. The Explanatory Notes hereto indicate that the term “wine” (cf. GRI 1) refers to a production process. This indicates that a mixture of rum and grape juice is not “wine” for HS classification purposes.
So not fermented means can’t be wine. Maybe the next section is where it’s at..
4) Heading 22.06 covering “other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included” can also be disregarded on the basis of GRI 1, i.e. the beverage at issue is not a fermented beverage, nor is it a mixture of fermented beverages or a mixture of a fermented beverage and a non-alcoholic beverage.
Right, so now that we have ruled out almost every drink that sounds remotely palatable, and continuing on with our method of elimination, we arrive at the last category:
5) Finally, that leaves heading 22.08, which is structured as follows: Undenatured ethyl alcohol of an alcoholic strength by volument of less than 80% vol.
Yum! Undenatured ethyl alcohol. Who wouldn’t want to drink that?!
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