HS Code versus Reality
HS Code versus Reality
The Harmonized Commodity Description and Coding System (HS) of tariff nomenclature is the standard by which International trade is classified. All existing products can be classified with an HS code by utilizing the General Rules of Interpretation. This is the idea anyway.
It doesn't take long to find weaknesses in the system. Some of the most basic products can elicit confusion when trying to assign an HS code.
What's a tomato?
Let’s take the example of the humble tomato. The tomato is a fruit. Period. According to the dictionary, a fruit is "the sweet and fleshy product of a tree or other plant that contains seed and can be eaten as food." Now there may be disagreements about whether a tomato is "sweet" but anyone that has had homegrown garden tomatoes know the truth about the sweetness of tomatoes.
However, when you try to assign an HS code to tomatoes, you will soon find that the dictionary definition doesn't apply. At the highest level of the HTS, edible vegetables are under "07" and fruits are under "08". Where does the tomato fall? According to the HTS, Fresh or chilled tomatoes' four digit HS code is 0702. Notice the first two numbers?
According to the US Supreme Court
It gets better. Back in 1893, there was a decision by the Supreme Court of the United States that affirmed that the tomato should be classified as a vegetable. http://en.wikipedia.org/wiki/Nix_v._Hedden
While this is a pretty mundane issue, it is a funny inconsistency to point out. When I posed the question of whether tomatoes are classified as fruit or vegetable to trade groups in Linkedin, the responses weren't uniformly unanimous.
Linkedin Group Responses
| Group Name |
Fruit |
Vegetable |
|
Customs Compliance*
|
9 (52%)
|
8 (47%)
|
|
Customs Law Group*
|
8 (38%)
|
13 (61%)
|
|
Customs Specialists
|
3 (15%)
|
17 (85%)
|
|
Global Trade Compliance Management
|
3 (37%)
|
5 (62%)
|
|
Global Trade Compliance Professionals
|
1 (14%)
|
6 (85%)
|
|
US Customs Compliance Professionals
|
2 (16%)
|
10 (63%)
|
| Total |
26 (31%) |
59 (69%) |
| *the wording of the survey was slightly different in these groups. It referred specifically to how the Supreme Court classified tomatoes and not the US HTS. |
The survey was not to insult the intelligence of trade professionals or even to test their knowledge. It was just to point out the importance of proper HS classification and how easy it is to get tripped up in the language. In this case it isn't that big of a deal since the duty is the same for chapter 7 and 8.
I guess the old adage applies, “Knowledge is knowing a tomato is a fruit; Wisdom is not putting it in a fruit salad.” Happy HS Coding!