Commodity Classification Rules

We bring to your attention an article posted in the thematic printed edition Association of European Businesses (AEB).

The Unified Foreign Economic Activity Commodity Nomenclature of the Customs Union (UFEA CN CU) in force since 2010 is used for implementation of customs and tariff regulation measures as well as non-tariff regulation measures in the area of foreign economic activity (FEA) and for maintenance of the customs statistics.

FEA CN is a classifier developed on the basis of the Harmonized System. It includes a systemized commodity description list with numerical codes, measurement units, notes and six basic interpretation rules (BIR), which are applied consistently.

Rule 1 states that a commodity item shall be specified in accordance with the relevant commodity item text (and not according to the names of sections and groups), notes to the FEA CN sections and groups and to other BIR if they are applicable to the commodity. For example, fresh apples are included in commodity item 0808, and note 2 to group 08 establishes that chilled fruits are classified as fresh ones.

According to

Rule 2, goods supplied in incomplete or unfinished form are classified as finished and complete commodities if in this form they have the main properties of a finished product. An unassembled or dismantled commodity is considered to be assembled for classification purposes. For example, a set of parts for assembly of a wardrobe are classified as an assembled and complete wardrobe according to commodity item 9403 (other furniture and parts thereof), even if the elements needed to fasten such parts to each other are missing.

Besides, any reference to any material or substance in the commodity item text also applies to mixtures or compounds of such material or substance. Classification of commodities consisting of more than one material or substance is performed in accordance with provisions of Rule 3.

Rule 3 includes three consistently applied subparagraphs:

3a) a more precise commodity description compared to a general description;

3b) the main property of a commodity given to it by any of its components;

3c) a commodity item which is the last one in the ascending order of possible codes.

A commodity is related to the commodity item which describes it in the most precise manner. For example, electric shavers are described very precisely under commodity item 8510, compared to item 8509, which includes electromechanical domestic appliances with built-in electric motor.

A commodity item selected for a multi-component commodity shall be the one describing a specific component of such commodity (a substance or material within a mix or a compound within a retail sale kit), which gives the commodity its main property. If an electric shaver is sold in a kit with moustache scissors, it is the shaver that delivers the main property to the kit, as it is used more frequently and is the most sophisticated and expensive component of the kit.

If the aforementioned provisions of Rule 3 could not be applied, then the commodity must be referred to the last item in the ascending order of codes in the row of commodity items of equal applicability.

Rule 4 establishes the classification procedure for commodities not described in the FEA CN, and for which the code cannot be established using the preceding rules. Such commodities will be classified under the commodity item describing the goods most similar to the ones in question.

Rule 5 concerns classification of commodity containers and packing moved together with the commodities. Containers specially made for long-term storage and transportation of a commodity is classified together with such commodity, e.g., a violin in a case. If it is the container that gives the main property to the commodity, the container code will be used instead of its contents code. Thus, for example, the code of a silver powder case filled with powder is 7114 (an article made by silversmith), and powder in a plastic case corresponds to commodity item 3304 (make-up).

If a commodity is delivered in a suitable disposable container (crate, box, bottle, sack, etc.), such a container is not given a separate code, and is declared under the code of the main commodity together with the same. If packaging or containers may be reused after extraction of commodity therefrom, they are classified as commodity items separate from the contents. For example, a disposable spray bottle filled with paint will be classified as paint (3208), and a large capacity reusable steel bottle filled with propane is regarded as two commodities according to commodity items 731100 (vessels for compressed and liquefied gases) and 2711 (gaseous hydrocarbons).

In any case, containers or packaging delivered separately from their contents shall be classified under their own commodity item, usually according to material they are made of.

Rule 6 describes the algorithm which is employed for establishing of sub-items according to the sub-item text and notes to sub-items, and which makes it possible to use all abovementioned rules and notes applicable to sections and groups. However, comparison of potentially applicable sub-items is only possible within the scope of one commodity item established earlier, and only at one level, i.e. with the same number of hyphens before the sub-item name.

In addition to the BIR, clarifications and other regulatory documents of customs authorities applicable to commodity classification must be taken into account.

In most difficult cases it is recommended to apply to the RF Federal Customs Service for a preliminary decision on commodity classification as per FEA CN CU, which will be valid for 3 years from the date of issue. This is a public service rendered free of charge, as a rule, within 90 days from the time of application.

In any case, commodity classification is a difficult task, which can be handled in a fast and correct way only by professionals having the relevant knowledge and experience.