Classification, Valuation and Origin of Goods
Domain scope
Classification, Valuation and Origin decides three questions: what the goods are, what they are worth, and where they come from. Each has its own legal instrument, and each must be evidenced at declaration.
Core rules
- Classification follows the HS General Rules in order: GRI 1 (headings and section/chapter notes), GRI 2 for incomplete or unassembled goods and mixtures, GRI 3 for competing headings (specificity, essential character, last in numerical order), then GRI 4-6.
- Customs valuation normally starts with transaction value: the price actually paid or payable, adjusted for assists, selling commissions, royalties or licence fees that are a condition of sale, packing, and transport and insurance to the place of importation on a CIF basis. Buying commissions are excluded.
- Related-party prices may be accepted only if the relationship did not influence the price.
- Origin is either non-preferential (trade statistics, anti-dumping, marking) or preferential (FTA). Preferential origin needs a qualifying rule - wholly obtained, change of tariff classification, regional value content or specific process - plus direct consignment and a valid proof of origin.
Worked example
A retail set contains a cordless drill (heading 8467), two batteries (8507) and a charger (8504) in a plastic case. GRI 1 cannot resolve the set because the components fall in different headings. The set is put up for retail sale to meet a particular need, so GRI 3(b) applies. Essential character comes from the drill, which performs the function; classify the set in 8467. Reasoning: do not classify by the most expensive item, and do not apply GRI 3 before checking GRI 1.
Traps
- Skipping GRI order and jumping to essential character.
- Adding buying commission or domestic freight to the customs value.
- Assuming a company's nationality proves origin.
- Accepting a certificate of origin without checking direct consignment.