How Classification Errors Lead to Customs Delays: A Guide for Importers
Picture a situation where two shipments carrying the same electronics are making their way to the same destination. One shipment reaches its final country right on time, and its content is breezing through customs without any hassle. While the other encounters a series of hurdles along the way, such as inspections, delays, and hefty penalties.
So, what makes these shipments different? It all comes down to a seemingly minute detail: their customs classification.
In international trade, customs classification plays a crucial role, influencing everything from import duties to regulatory compliance. A minor mishap can cause severe consequences.
This blog post will go through the complexities of customs classification and how you can avoid classification errors to minimise delays.
Understanding customs classification
Customs classification is a process of assigning classification codes to the goods imported into a country, specifying what is contained in the shipment. This code is known as the Harmonised System (HS) code, which is a 6-10 digit code.
The customs classification plays an important role in calculating how much import duties and tariffs businesses will have to pay. This also makes it easier to complete import or expert declarations and other necessary documents.
Proper customs classification is essential for multiple reasons:
Calculating accurate taxes and duties
To determine restrictions and quotas imposed on certain goods
To get the benefit of a trade agreement
Common classification errors for importers
Importers can come across several classification errors, including:
Incorrect HS code selection: Importers can often be confused by HS codes for goods that share similar materials and functions, leading to incorrect code assignments. They might also miss a product feature, resulting in an incorrect HS code.
Misinterpretation of product specifications: Understanding technical terms related to goods specifications can be challenging for importers, which leads to inaccurate HS code selection. For instance, some may find the distinction between “microfiber” and “polyester” unclear.
Lack of knowledge about updates to classification rules: HS codes and customs regulations are updated periodically, usually every five years, to align with the changes in the global trade landscape. Importers unaware of these updates might rely on outdated classification information, leading to wrong codes.
Incomplete or inaccurate goods description: Importers may provide missing or inaccurate information about the specifications of the goods, making it difficult for the authorities to classify the goods accurately. For instance, there could be a missing country of origin, or a product might be labelled “wooden” when it also has a metal part.
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How do classification errors cause customs delays while importing?
Classification errors can cause customs delays in the following ways:
Customs review and reclassification
Customs officials need to examine goods closely to ensure that they are classified accurately, which could include physical examination or reaching out to experts for consultation.
If they find any classification errors, they may require importers to submit additional documents, such as certificates of origin or technical documents. Additionally, importers will also have to reclassify their goods accurately.
Inspecting and reclassifying goods can take some time, which might result in customs delays. This process often requires back-and-forth communication between importers and customs authorities, further delaying the process.
Requirement of additional information
When it comes to verifying claims, customs authorities might ask for a bit more documentation to ensure everything aligns with the importer’s statements about the product’s features or how it’s meant to be used. This could include:
Invoices
Certificates
Packing lists
Collecting supporting documents and verifying the information can take time and may require communication with the manufacturers or suppliers, leading to customs delays.
Fines and penalties
The importers might encounter financial penalties if customs authorities find a classification error while inspecting. These penalties can vary in severity based on the type of error and the revenue the government lost due to this error.
Along with fines, authorities may also impose interest charges on any unpaid duties or taxes, adding to the overall importing costs.
Avoid hefty fines and penalties.
Ensure accurate classification and expedite your customs clearance.
Tips to avoid classification errors for importers
Conduct thorough research: Deeply research using reliable resources like the World Customs Organisation (WCO) or other government websites to find out the correct HS code for your goods.
Stay updated on classification changes: Follow any updates in the customs regulations and HS codes by subscribing to the newsletters and checking the customs website.
Maintain accurate documentation: Make sure to provide all the required documents to the customs officials, including packing lists, invoices, certificates of origins, and other relevant documents.
Consult with experts: To reduce costly errors, you can consult with customs specialists who could be customs brokers or trade consultants. They help you with the classification process, spot potential risks, and smoothly navigate any challenges that might come your way.
Use technological solutions: Innovative software such as iClassification by iCustoms is available to help you find the correct HS code based on the product description and specifications.
The bottom line
Importers may suffer considerable consequences from misclassification, including supply chain interruptions, fines, and delays. However, importers can reduce the possibility of classification errors and guarantee efficient customs clearance by being aware of the intricacies of customs classification, avoiding common blunders, and adopting preventative measures.
Want to get rid of classification errors and customs delays? Get help from the iCustoms AI-driven iClassification tool and ensure 99% accuracy!
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iCustoms is an all-in-one solution helping businesses automate customs processes more efficiently. With AI-powered and machine-learning capabilities, iCustoms is designed to streamline your all customs procedures in a few minutes, cut additional costs and save time.
Streamline Product Classification
Uncover iClassification for precise Global Trade, Delivering Time-Saving Accuracy.