Origin and HS classification
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Overview
Origin and HS classifications are, along with customs valuation, the main items of a review in a customs audit and must be reviewed and confirmed prior to a trade transaction. Depending on the HS classification, customs tariff rates and clearance requirements for imported goods are determined; origin is a standard that determines whether or not FTA preferential duties apply and is a precondition for appropriate markings of origin.
Origin determination
Origin refers to the country where imported/exported goods are produced or manufactured. Under customs laws and free trade agreements, import/export may be prohibited or customs tariffs may apply differently according to the origin of imported/exported goods. Accordingly, a process for verifying origin is necessary in the course of clearance procedures. Raw materials from various countries are used in the production of imported/exported goods due to the consolidation of global markets and the development of transportations, and the production process is often carried out in more than two countries, which is why the determination of origin becomes more difficult and international/domestic disputes related have increased.
HS classification
HS classification means systematically classifying imported/exported goods according to the HS Convention and tariff schedule. The customs tariff of the relevant imported goods and import/export clearance requirements are determined based on the HS classification, so the HS classification is a crucial element to any trade transaction. At the same time, the complexity around classification gives rise to civil complaints and legal disputes.
