Frequently Asked Questions

Harmonized System FAQ

Q: What is the HS?

A: HS stands for Harmonized Commodity Description and Coding System. The HS is the international standard for reporting goods to customs and other government agencies. It is a numeric language that is used by more than 180 countries worldwide, and almost 100% of international trade. The HS was created and is administered by the Brussels-based World Customs Organization (WCO).

Q: What are HS Codes?

A: HS codes are essentially the language of international trade. They are the numerical codes that describe "what" is being shipped to and from countries worldwide, and they form the basis upon which all modern customs management systems operate. The first 6 digits of the HS are used universally. Each country may then add to the original 6 to suit its own tariff and statistical needs, creating 8, 10, and sometimes 12 digit national codes.

Q: What is HS classification?

A: HS classification is the process of assigning numerical HS codes to products for import or export.

Q: Why is HS classification important?

A: Importers and exporters are legally required to declare their products to Customs by means of HS codes. HS classification determines a product's rate of duty, its import and export admissibility, and whether or not it should be physically examined. In some countries, importers are required to report HS codes to Customs before their products are loaded for export. In the United States, this mandatory advanced cargo reporting program is called "ISF", or "10+2" (an explanation of ISF / 10+2 is provided below).

Q: How do companies use HS codes?

A: HS codes are used by companies to comply with trade regulations, to calculate the true and total landed cost of imported articles and components, to identify selling and sourcing opportunities abroad, and to link the procurement and compliance elements of the supply chain.

Q: Is HS classification difficult?

A: HS classification is extremely difficult. Several government studies have shown that 30-50% of all Customs entries are misclassified (depending on the industry examined).

Q: Do HS codes ever change?

A: Yes, they can and do get revised. With the thousands of codes available staying on top of revisions is essential.

Q: What are the consequences of misclassification?

A: Improper classification can mean loss of profits, penalties, or worse. Most governments apply some form of monetary penalty for classification errors. In the United States, penalties are assessed based on Customs' determination of negligence, gross negligence or fraud. For the most benign kind of classification error, US Customs and Border Protection will assess a civil penalty amounting to either:

  • the lesser of -
    • the domestic value of the merchandise, or
    • two times the lawful duties, taxes, and fees of which the United States is or may be deprived, or
  • if the violation did not affect the assessment of duties, 20 percent of the dutiable value of the merchandise.

Q: Who is responsible for HS classification?

A: In most countries, the importer of record is solely responsible for the accuracy of the HS codes declared to customs. Many companies rely entirely on third party experts for HS classification, but this does not relieve them of liabilities associated with commodity reporting errors.

Q: Why is HS classification so difficult?

A: HS classification is difficult for two main reasons.

First, the HS itself is very complex. Product descriptions are distributed among more than 5,000 headings and subheadings. The HS also contains section and chapter notes, which must be consulted in order to assign a proper HS code. Finally, classification is governed by a strict set of rules called the "General Rules of Interpretation" (GRI). It is hardly surprising then, that the average national tariff schedule is more than 2,000 pages.

Second, product descriptions in the HS do not usually match everyday product descriptions. For example, in order to properly classify an "electric toothbrush", it must somehow be matched to "Electro-mechanical domestic appliances, with self-contained electric motor, other than vacuum cleaners of heading 85.08. Other."

ISF / 10+2 FAQ

Q: What is "10+2"?

A: "10 + 2", which is officially known as the Importer Security Filing, is a new mandatory reporting requirement by U.S. Customs and Border Protection (CBP). As of January 1, 2009, importers are required to report 10 new data elements to CBP prior to their shipments being loaded for export to the US.

Q: How does 10+2 work?

A: This requirement must be fulfilled and filed at least 24 hours prior to the loading of the goods on to the vessel at the foreign port of embarkation.

Q: What if the ISF / 10+2 was not completed or filed 24 hours prior to loading at the foreign port of debarkation?

A: Customs can deny loading of the shipment.

Q: Why do I need an HS code for the ISF / 10+2?

A: Under 10+2, importers are required to submit an HS code for every commodity they wish to import before it is loaded for export to the United States.

Q: Why was the 10+2 program created?

A: It was created so that Customs and Border Protection (CBP) can use enhanced electronic cargo data to assess risk and target cargo before it is shipped to the United States.

Q: Will my transmitted ISF / 10+2 data remain confidential?

A: Yes, it is treated as law enforcement sensitive, and will be protected under the Trade Secrets Act.

3CE FAQ

Q: What does 3CE mean?

A: 3CE stands for Commodity Code Classification Engine.

Q: When was 3CE created?

A: 3CE was created in 1999, and has been dedicated to delivering accurate HS codes for more than a decade.

Q: Why was 3CE created?

A: 3CE was created to fill a much needed demand for fast, easily accessible and accurate HS codes. It was designed to eliminate the complexities of customs compliance, and ensure that importers and exporters always pay the correct amount of duty.

Q: Is 3CE affiliated with any government agencies?

A: 3CE has been providing HS classification and HS audit solutions for over ten years as an independently owned and operated company. We are not affiliated with any government agencies, but we do have a number of government clients.

Q: What makes 3CE different from other HS code search engines?

A: 3CE is the only classification tool that understands and interprets common industry terminology - no matter how it expressed. What's more, unlike keyword tools, 3CE actually reasons its way through the HS classification process - interacting intelligently and intuitively with users to resolve critical deficiencies in product descriptions. Most importantly, despite being very easy to use, 3CE reliably delivers accurate results... period.

Q: How often is 3CE updated?

A: 3CE is constantly updated by a team of devoted software engineers and custom experts to ensure that ever-changing HS codes and regulations are up to date and accurate.

Q: Does 3CE provide duty and tariff information?

A: Yes, 3CE provides you with the latest available duty information (including preferential and special rates of duty) from the official tariff schedules of the world's most active trading nations.

Q: How long does an average search for an HS code take?

A: When products are described with enough detail, an HS code is delivered instantly. Otherwise, it usually takes about 15 seconds, as 3CE must ask specific questions about the product until a HS single code is reached.

Q: Who uses 3CE?

A: 3CE is a highly effective tool for anyone looking to classify goods that are being traded internationally. It is equally effective as an auditing tool for those looking to audit the accuracy of past transactions. Enterprise shippers, customs brokers, international logistics companies, and Government agencies are among the current roster of clients.

Q: Is it secure to use 3CE?

A: 3CE is incredibly secure, and uses advanced security software to protect the confidentiality of client's searches.

Q: How much does it cost to use 3CE?

A: Usage plans are individually catered for the specific needs of the client. The price per lookup ranges from about $0.10 to $0.60.

Q: How long does it take to get up and running on 3CE?

A: Our team of professionals can usually get clients up and running within a few days. Training is seldom required, as 3CE system is extremely easy to use.

Q: When can I use 3CE?

A: Once your account has been set up, you can use 3CE at any time.