HS 2022 - A New Edition of Harmonized System
- By Sneha Patil
- January 17, 2022
What is Harmonized System?
Harmonized System is used globally for the uniform classification of goods and serves as the basis for Customs tariffs and duties across the world. Harmonized System is used to facilitate international cross-border trade. HS reduces the expenses related to international trade.
When will the changes takes place?
The HS Codes are maintained by the World Customs Organisation (WCO). For smaller review, HS codes are revised twice every year and for the bigger review the HS codes are revised for every five years. The new HS is the seventh edition which shall enter from 1st January 2022.
Why are the changes made?
WCO updates the HS codes primarily to account for advance of technology, the development of new products that are not addressed in previous list. Some of the key reasons for the changes are low trade volume for goods, simplicity, new technology, compliance requirement.
What are the changes in HS 2022?
The new HS 2022 edition introduces some major changes with total 351 amendments covering a wide range of goods. Some of the key amendments in HS 2022 are Smartphones, Health and Safety Equipment’s, Unnamed aerial Vehicles (example Drone), Flat panel display modules. A new subheading has been added for dual usage goods, Electrical and Electronics waste (E-waste), major reconfigurations has undertaken for glass fibres and metal forming machinery. The amendments also include clarification of texts to ensure uniform application of nomenclature. New HS codes are also added for products that have reached a critical mass of trade volume, or which impact the environment in some significant way.
Impact on Business:
The change in HS Code could impact companies in many ways like it may lead of non-availability of exemption benefits currently enjoyed by company or it would be imperative for companies which are claiming FTA benefits, to re-examine the fulfilment of FTA conditions with shift in HS Code. The change could also impact the pending litigation with respect to classification of products and the company which are not complying with such change could result in heavy duties and penalties.
What Business should do?
Business will need to review their current customs classification policy and understand if any changes are needed based on HS 2022. In addition, they should review mapping and corelation table. There are three mappings that reflect the changes, those are One to One mapping, One to Many mappings and Many to One mapping.
The business should take all necessary steps to ensure timely process to the changes to avoid delays in trade activities and potential high tax action being taken by customs authorities.
In order to prepare for these upcoming HS changes, importers and exporters need to know which of their products are affected and have a plan for updating any new HS codes. They must also monitor customs communications for any additional changes that may arise.
How 4PL can help?
4PL Consultancy has a team of experts in Tariff classifications of wide variety of Product lines – Medical spares, Aerospace, Radiation Oncology machines & spares etc. 4PL Consultancy can help in reviewing the HS codes, provides services in the area of import and export compliance, allowing our clients to benefit from day-to-day management of import and export compliance programs.