As a toddler studying geometry, that idea actually confounded me. How might one belong to a different, but the inverse not be true? As my trainer defined, the distinction lies in specificity.
The identical logic applies to export classification codes.
In the event you’re new to exporting, the distinction between Harmonized System (HS) numbers and Schedule B codes could also be vexing. Are they the identical? Can they be used interchangeably? Which one do you have to be utilizing—and when?
In informal conversations, exporters have a tendency to make use of Schedule B code, HS code and HTS code interchangeably. In any case, they’re all used to classify merchandise for customs. However in observe, the variations matter. Right here’s how one can distinguish between HS numbers and Schedule B codes so you’ll be able to be sure you’re utilizing the correct code on the proper time.
What Are HS Numbers?
The Harmonized System classification is a six-digit customary, known as a subheading, for classifying traded merchandise. HS numbers (also referred to as HS codes) are utilized by customs authorities all over the world to determine merchandise for duties and taxes.
For exporters, HS numbers simplify worldwide commerce. As a substitute of studying lots of of various product classification methods, exporters can depend on this globally acknowledged six-digit code (upon which HTS codes and Schedule B codes are constructed) as the muse of customs documentation in practically each nation.
As a result of HS numbers are constant throughout borders, it is best to embody the six-digit HS code on any export paperwork which are utilized by each the exporter and the importer. That sometimes contains the proforma and business invoices and certificates of origin.
Right here’s a abstract of HS numbers:
- There are six digits in an HS quantity;
- HS numbers are uniform throughout the globe;
- HS numbers are administered by the World Customs Group and function the muse for the import and export classification methods utilized in america.
What Are Schedule B Codes?
The Schedule B code is a U.S.-specific coding system administered by the Worldwide Commerce Administration Division of the U.S. Census Bureau to observe U.S. exports. These codes take the identical kind as HS codes for the primary six digits, however embody 4 extra digits for a complete of 10 numbers. These extra numbers present a extra detailed product classification.
Whereas related in construction, Schedule B codes aren’t the identical as Harmonized Tariff Schedule (HTS) codes, that are used for imports. Exporters ought to prioritize figuring out the proper Schedule B code for his or her merchandise, and it’s the classification used for Digital Export Info (EEI) that you just undergo AESDirect.
Right here’s once you’re required to report a Schedule B code via AESDirect:
- When the worth of your items per Schedule B quantity exceeds $2,500
- When your product requires an export license
- When exporting a used automobile
- When exporting to China, Russia, or Venezuela, no matter worth (as of Sept. 27, 2020)
In the event you pay your freight forwarder or another third occasion to file in your behalf, it is best to embody the Schedule B code in your Shipper’s Letter of Instruction (SLI) that you just give them.
Right here’s a abstract of Schedule B codes:
- Comprise 10 digits
- Used solely in america and solely for exports
- Could differ from the HTS codes used for imports
Correctly Classifying Your Merchandise
Not solely is it vital to know when to make use of the six- or 10-digit classification in your export paperwork, it is vital to determine the proper classification of your items. Because the HS quantity is similar first six digits of the Schedule B code, you do not have to do a separate seek for each.
The Census Bureau supplies a Schedule B Search Engine that lets you seek for the right code utilizing a product description. As a result of the variations between classifications will be fairly technical, it is vital that somebody who understands the technical specs of your merchandise conducts the search.
Transport Options additionally affords a standalone Product Classification Software program device. It helps you shortly determine the proper Schedule B, HTS and ECCN codes to your merchandise. Join a free trial.
Discovering the Right Schedule B: An Instance
The Schedule B has three items of data that you just want: the quantity, the outline and the unit of amount (or unit of measure).
Under is a web page from Chapter 9 of the Schedule B. Whenever you have a look at the primary column, you’ll see examples of two-, four-, six- and 10-digit numbers. The 2-, four- and six-digit numbers are headings—not precise Schedule B codes.
So utilizing the instance, the primary Schedule B quantity that’s listed is 0901.11.0000. The 09 and 09.01 previous it are solely headings.
After you have discovered the proper Schedule B quantity, you have to determine what to make use of to your Commodity Description. You have to present a detailed-enough description of the merchandise being exported in order that the Schedule B quantity will be verified. Typically meaning you need to use the outline listed proper subsequent to the quantity.
For instance, the outline, “Espresso husks and skins,” is adequate for Schedule B quantity 0901.90.1000. Nonetheless, the outline subsequent to Schedule B quantity 0901.11.0000, which is “Not decaffeinated,” shouldn’t be a clear-enough description. So as a substitute, you possibly can construct an outline utilizing the heading description plus the quantity description reminiscent of, “Espresso, not roasted, not decaffeinated.”
The subsequent column is Unit of Amount, which additionally means unit of measure. Whenever you submit your EEI submitting via AESDirect or full an SLI to your freight forwarder to allow them to file in your behalf, you have to report the amount for this product utilizing this unit of measure. This can be a special unit of measure than the way you promote the product and the way you embody it in your business bill.
For instance, you may promote your espresso by the can. Or, as a result of you’re a profitable wholesaler, by the gross (144 cans). You’ll be able to, and will, record your product this fashion in your business bill. If I purchase 10 gross of espresso from you, the bill amount is 10 and the unit of measure is gross.
Nonetheless, the Census Bureau doesn’t care concerning the variety of cans you’re exporting. Based mostly in your Schedule B quantity—0901.11.0000—your EEI submitting must report the amount in kilograms. If every of your cans accommodates one pound of espresso, the amount to report is 65.3 kilograms.
However you is probably not achieved but. The ultimate column within the Schedule B chart proven above is known as Second Amount.
Beneath the Schedule B, the Census Bureau someday requires that you just report two portions and two models of measure to your product. The instance above doesn’t present any of these gadgets, however for those who look in Chapter 32, you will notice that sure sorts of paint have to be reported in liters and kgs (see Schedule B quantity 3208.10.0000).
Whether or not there are one or two portions of measure listed, this AES reporting requirement journeys up manner too many exporters who default to utilizing the identical unit of measure as they use on their bill whether or not or not it’s applicable for his or her Schedule B code. This could trigger an instantaneous downside by delaying their present cargo or extra severe considerations sooner or later if an audit reveals a sample of incorrect filings.
Adjustments to Classification Codes
Simply since you’ve discovered the proper Schedule B or HTS code as we speak doesn’t imply it can keep the identical perpetually.
Each the Schedule B and Harmonized Tariff Schedule (HTS) are up to date recurrently, sometimes:
- Initially of every calendar 12 months
- Often mid-year, relying on regulatory adjustments
Whereas many of those updates are minor, they’ll have an effect on your product classification—and subsequently your export documentation and compliance obligations. That’s why it’s vital to evaluation your codes not less than yearly to verify your filings stay correct.
The World Customs Group (WCO) updates the worldwide Harmonized System (HS) each 5 to 6 years. These are main structural adjustments that affect the worldwide classification of products and trickle down into each the Schedule B and HTS codes. When these updates happen, exporters and importers ought to anticipate extra substantial revisions that will require reclassifying a number of merchandise.
Correctly Making ready Your Export Paperwork
As you’ve got seen, there are a variety of variables to account for when making ready your export paperwork. Here is a abstract of what exporters want to bear in mind:
- First, you have to correctly classify your merchandise utilizing their 10-digit Schedule B code and perceive the right unit of measure.
- Then, ensure that the six-digit HS code is included in your paperwork shared by each the exporter and the importer (as a result of the HS code would be the similar for each).
- Embody the total Schedule B code on your EEI submitting via AESDirect or in your SLI in case your forwarder is submitting in your behalf.
- And remember: whereas your proforma and business invoices could use one set of portions and models of measure, your EEI and SLI may have a special set.
Whew—that’s so much to trace!
An Simpler Solution to Handle It All
That is the place Transport Options export documentation software program may help.
With Transport Options, you’ll be able to:
- Retailer product knowledge—together with Schedule B codes, costs, and proper models of measure
- Routinely generate export kinds like business invoices, SLIs, and certificates of origin
- Keep away from redundant knowledge entry by deciding on merchandise from a dropdown record and getting into cargo portions
- Submit your Digital Export Info (EEI) on to AESDirect on the ACE platform—no have to pay a forwarder or third occasion
Transport Options helps you keep compliant and work sooner, with out the stress of managing all of it manually.
To be taught extra, watch this fast Getting Began video:
Or join a free on-line demo to see the way it works in motion.
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This text was first printed in January 2015 and has been up to date to incorporate present info, hyperlinks and formatting.
