Preface to HS Code for Automobile Industry
Accurate management of HS CODE is essential because the most frequently used standard for determining the origin of an FTA by automobile suppliers is the HS CODE change standard. However, due to the lack of understanding of the HS CODE system and regulations, many difficulties arise in item classification, and various potential risks derived from this are passed on to final exporters and producers.
Therefore, it is the automobile HS CODE manual that was made to guide automobile partners on how to classify HS CODE for each sector in an easy-to-understand manner.
Understanding HS CODE Regulations & Classification Methods
1. HS CODE
HS CODE is an abbreviation for ‘HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM’, and refers to the product classification CODE granted by the HS Convention for goods. Since up to 6 digits are commonly used between the international countries, the criteria for determining the country of origin in the FTA agreement are defined on the basis of 6 digits. From 7 digits, each country can be subdivided within the range of 6 units (SUB-HEADING) and used up to 10 digits. HS CODE is generally revised every 5 years, so continuous management is required.
2. HS Code Composition System
HS CODE consists of a system of SECTION, CHAPTER, SUB-CHAPTER, HEADING, and SUB-HEADING, and consists of NOTES indicating the classification scope and term definition of each department, classification, subparagraph, and general rules for item classification (GRI: GENERAL RULEES FOR INTERPRETATION NOMENCLATURE).
The class is a subdivision of SECTION and is expressed as a number of two units, and the section is subdivided only for limited categories such as 28th and 29th categories for convenience of reference. The issue is that the class is subdivided into 4 units according to the item, the first 2 units indicate the location of the item arrangement within the class. Subparagraph is the subdivision of the issue into 6 units, and is commonly used internationally up to 6 units of HS CODE. (Up to 6 units of HS are commonly used internationally, but the same product may be classified differently between countries depending on its judgment and interpretation.
Understanding HS CODE with Automobile Regulations
Automobiles are items of class 87 in Part 17 Transport aircraft, and classification regulations are defined in accordance with the main regulations of Part 17, the main regulations of Class 87, and the terms and explanations of each subparagraph. In the case of automobile parts, they are generally classified in Class 87, but there are parts that are specially excluded from other items in accordance with Part 17 Main regulations and Class 87 regulations. In the case of automobile parts, accurate item classification is possible only when various factors such as the purpose, function, material, and regulation of the relevant product are considered. The introduction of classification criteria and regulations will be explained by each sector.
Automobile Classification Method in HS Code Regulations
- Classification method standard
The principle of classification of automobile parts may be classified in each corresponding subparagraph in the following order.
① If a part is a finished product on HS CODE, it is classified as that finished product HS CODE
② In the case of universal parts, they are classified in Part 15 or 39 by each material
③ Parts (specialized HS CODE), such as PUMP and VALVE, are classified in each corresponding subparagraph
④ For parts that are used exclusively or primarily 2 for the relevant article, the part HS CODE is identified and classified
(Parties may be specified as specific HS CODE, but they may be classified as finished products.
– Examples of specific HS CODE parts: GASOLINE ENGINE No. 8407.34, Dedicated Part No. 8409.91
– Examples of the same HS CODE parts: TRANSMISSION No. 8708.40, Dedicated Parts No. 8708.40)
⑤ Other parts are classified in the applicable subparagraph in consideration of the material and characteristics of the relevant article
(e.g., HS CODE by other materials such as No. 3926.90, No. 4016.99, No. 7326.90, etc.)