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How to properly classify commodities for quick customs clearance

Apr. 27 2023

When it comes to international shipping, accurate product classification is essential for smooth and efficient customs clearance. Product classification refers to the process of identifying and categorizing goods based on their nature, composition, and intended use. This information is then used to determine the appropriate customs duties and taxes that need to be paid, as well as any trade regulations or restrictions that may apply.

One of the most important reasons why accurate product classification is crucial for international shipping is compliance with customs regulations. Each country has its own set of rules and regulations governing the import and export of goods, and these rules can vary widely depending on the product being shipped. If a shipment is incorrectly classified, it may be held up at customs or even rejected, leading to costly delays and potential fines.

In addition to compliance with customs regulations, accurate product classification can also help e-commerce merchants save money on duties and taxes. Customs duties and taxes are based on the value of the goods being shipped, as well as their classification and country of manufacture. If a product is misclassified, it may be subject to higher duties and taxes than necessary, resulting in unnecessary costs for the merchant.

There are plenty of free HS code tools available online. For example, Canada, the UK, and the EU all offer free product classification resources at the related links.  However, accuracy is key, and these tools may not provide the level of detail necessary for accurate classification. Product categories like footwear and apparel are notoriously challenging to get right, as are special circumstances like multiple products that are sold as a kit or bundle.  These situations require considering additional guidance like the General Rules of Interpretation (GRI) and binding customs rulings. 

When the free tools are not enough, it can be expensive to get expert help with your classifications. In fact, many customs brokers and carriers charge upwards of $35 per SKU per destination country to properly classify your products. One reason for the high cost is that not just anyone can classify your products. US Customs and Border Protection (CBP) recently clarified in this CBP ruling issued in September 2022 that only licensed customs brokers (LCB) may classify products beyond the universal six-digit level. 

How Passport Can Help

At Passport, we offer commodity classification as a complimentary service to help brands determine the correct HS code for their products. Our team of licensed customs brokers can classify your brand's product database as a bulk upload or transactionally for specific products. 

 

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