How to challenge the HS code at customs

The HS code (Commodity nomenclature of foreign economic activity) plays a key role in determining customs duties, tariffs, benefits and restrictions. Incorrect classification of goods can lead to an increase in tax burden, delay of cargo or even administrative liability. If the customs does not agree with the HS code declared by you and classifies the goods differently, the foreign trade participant has the right to contest.

When does the need to challenge arise?

Grounds for dispute:

• The customs has changed the HS code you declared to be more “expensive” (with a higher duty rate)
• Non-tariff measures (licenses, prohibitions) applied in connection with another code
• Increased base for VAT and duties
• There is a refusal to release the goods

Legal framework

Dispute classification of goods is carried out on the basis of:

• EAEU Customs Code (TC EAEU)
• Decisions of the EEC Board No54 of 17.07.2018 (methodical recommendations for classification)
• Decisions of the Government of the Russian Federation
• Code of Civil Procedure (in case of judicial appeal)
• Federal Law No. 311 “On Customs Regulation”

Options for action: pre-trial and judicial arrangements

Ah. Pre-trial settlement

1. Submit an appeal to customs (complaint):
Within 3 months from the date of adoption of the appealed decision, you can send an official complaint to the same customs or to a higher authority (regional customs administration).

Documents:

• Letter of argument
• Copy of the declaration
• Expert opinion/technical documentation
• Catalogues, descriptions, photos
• Copy of the customs decision

Time limit for consideration of the complaint - to 1 month.

2. The customs office can change the decision on its own
If you quickly provide convincing evidence, it is possible that the decision will be changed at the registration stage.

B. Judicial challenge

If the pre-trial complaint is not satisfied, a lawsuit is filed in tribunal at the location of customs.

Term3 months from the date of refusal or receipt of a decision on the complaint.

What can be disputed:

• Decision on the classification of goods
• Decision on cost adjustment
• Assessment of duties and taxes
• Refusal to release goods

Documents:

• Statement of claim
• Customs documents
• Expert opinion
• Documents on payment of fees (or disputed amount)
• Copy of refusal or decision

Evidence and expertise

In the dispute about classification is important proof-baseIn particular:

• Technical documentation: instructions, composition, drawings
• Commercial offers, contracts
• Certificates of origin, ST-1, EAC
• Manufacturer directories and specifications
• Customs precedents (similar codes for other shipments)
• ECE decisions on disputed codes
• Independent expert opinion

If necessary, appointed customs or technical examinationwhich may be carried out:

• The FTS itself.
• Non-governmental expert organizations (by order of the participant of foreign economic activity)

Risks in a dispute with customs

Challenging the HS code is a legitimate action, but it carries risks:

• Delay in cargo Release may be suspended until a decision is made
• Penalty for non-payment of dutyif the classification is considered reasonable
• Requirement to ensure payment of fees - Guarantee obligations, deposit
• Confiscation or denial of releaseif the goods require a license

Council: It is better to ensure the release of goods under security, and then argue than to lose time and money for storage.

Successful practices and recommendations

Examples of successful challenge:

• The importer of children’s toys proved that its products are not electronics, but educational material, and achieved a reduction in duties from 10% to 0%.
• The company that imported the auto parts proved they were not "vehicle parts" but "mounting elements" - the rate was reduced.

Advice:

• Always keep it. comprehensive deliverable
• Do it. preclassification before importation (request to the FCS)
• Refer to decisions of FCS and EECIf there are similar codes,
• Use it. services of a customs representative or lawyerif the dispute is complex

How to avoid future disputes

1. Preliminary classification
   You can submit a request to the FCS before delivery and get an official opinion
2. Use ECE classification solutions
   The website of the Eurasian Economic Commission regularly publishes examples of classification by code
3. Consultations with the customs representative before filing DT
4. Submission of a full package of documents when declaring
   Not limited to the description, but to provide technical details, functions, method of application

Challenging the HS code is a difficult but feasible process if you properly prepare, collect documents and rely on legislation. It is not necessary to put up with inflated duties - the protection of the interests of a foreign trade participant is quite legal and possible both in administrative and judicial order.

Remember: Correct classification is the key to economy, transparency and reliability of supplies.