CBSA HS Code, How to Find the Right One

How to Find the Right CBSA HS Code for Your International Shipments

If you are shipping goods across international borders, you need to know the CBSA HS code of your products. The CBSA HS code, or Harmonized System code, is a six-digit number that classifies the goods according to a global standard. The CBSA HS code determines the customs duties, taxes, and regulations that apply to your shipments.

But how do you find the right CBSA HS code for your products? And what are the benefits of using the correct code? In this article, we will answer these questions and provide some tips on how to use the CBSA HS code system effectively.

What is the CBSA HS Code?

The CBSA HS code is a part of the Harmonized Commodity Description and Coding System, or simply Harmonized System (HS). The HS is a universal system that assigns a unique code to every type of product that is traded internationally. The HS was developed by the World Customs Organization (WCO) and is used by more than 200 countries and territories.

The HS consists of 21 sections, 96 chapters, and thousands of headings and subheadings. Each section covers a broad category of goods, such as animals, vegetable products, textiles, metals, machinery, etc. Each chapter covers a specific group of goods within a section, such as live animals, meat, dairy products, etc. Each heading covers a sub-group of goods within a chapter, such as horses, bovine animals, sheep, etc. Each subheading covers a further subdivision of goods within a heading, such as live horses for racing, live bovine animals for breeding, live sheep for wool production, etc.

The HS code has six digits, with the first two digits representing the chapter, the next two digits representing the heading, and the last two digits representing the subheading. For example, the HS code for live horses for racing is 0101.21.

The HS code is also known as the tariff code or customs code in some countries. However, different countries may add extra digits to the HS code to create their own national tariff codes. For example, Canada adds four more digits to the HS code to create the 10-digit Canadian Tariff Code. The first six digits are the same as the HS code, while the last four digits are specific to Canada. For example, the Canadian Tariff Code for live horses for racing is 0101.21.10.

Why is the CBSA HS Code Important?

The CBSA HS code is important for several reasons:

It helps you determine the customs duties and taxes that apply to your shipments

Different products have different duty rates and tax rates depending on their origin and destination. By using the correct CBSA HS code, you can calculate the amount of duty and tax that you need to pay or collect from your customers.

It helps you comply with the customs regulations and requirements that apply to your shipments

Different products have different restrictions and conditions depending on their nature and purpose. By using the correct CBSA HS code, you can identify the documents and certificates that you need to provide or obtain from your suppliers or buyers.

It helps you avoid delays and penalties at the border

If you use an incorrect or incomplete CBSA HS code, your shipments may be held up or rejected by customs authorities. This can cause delays in delivery and additional costs for storage and inspection. You may also face fines or penalties for misdeclaring or underdeclaring your goods.

It helps you optimize your supply chain and logistics operations

By using the correct CBSA HS code, you can plan your shipments more efficiently and effectively. You can choose the best mode of transport, packaging, routing, and timing for your goods. You can also reduce your risks and costs by avoiding overpaying or underpaying duty and tax.

How to Find the Right CBSA HS Code for Your Products?

Finding the right CBSA HS code for your products can be challenging, especially if you have a large or diverse product range. However, there are some steps that you can follow to make the process easier:

Start with a clear and detailed description of your product. Include information such as its name, function, use, composition, ingredients, features, specifications, etc.
Consult the official sources of information on the CBSA HS code system. These include:
The WCO website (www.wcoomd.org), where you can find the full text of the Harmonized System Convention and its amendments.
The Canada Border Services Agency (CBSA) website (www.cbsa-asfc.gc.ca), where you can find the Customs Tariff Schedule (www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/menu-eng.html), which lists all the Canadian Tariff Codes and their corresponding duty rates and tax rates.
The Canadian International Trade Tribunal (CITT) website (www.citt-tcce.gc.ca), where you can find the Advance Rulings (www.citt-tcce.gc.ca/en/advance-rulings), which are official decisions by the CITT on the classification of specific products under the Customs Tariff Schedule.
The Canada Revenue Agency (CRA) website (www.canada.ca/en/revenue-agency.html), where you can find the Excise Tax Act (www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-excise-tax-act.html), which lists all the goods and services that are subject to the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST).
Compare your product description with the HS sections, chapters, headings, and subheadings. Try to find the most specific and appropriate code that matches your product. Use the explanatory notes, rules of interpretation, and other guidance provided by the WCO and the CBSA to help you.
Check if there are any national variations or additions to the HS code. For example, Canada may have different duty rates or tax rates for certain products, or may require additional digits to the HS code. Use the Customs Tariff Schedule and the Excise Tax Act to verify this.
Validate your CBSA HS code with a reliable source. You can do this by:
Requesting an advance ruling from the CITT. This is a binding decision by the CITT on the classification of your product under the Customs Tariff Schedule. You can apply for an advance ruling online (www.citt-tcce.gc.ca/en/advance-rulings/apply-online) or by mail (www.citt-tcce.gc.ca/en/advance-rulings/apply-mail). There is a fee of $200 CAD per product for this service.
Consulting a customs broker or a trade consultant. These are professionals who have expertise and experience in customs matters and can help you find and verify your CBSA HS code. You can find a list of licensed customs brokers on the CBSA website (www.cbsa-asfc.gc.ca/services/cb-cd/cb-cd-eng.html) or a list of trade consultants on the Canadian Society of Customs Brokers website (www.cscb.ca).

Tips on How to Use the CBSA HS Code System Effectively

Here are some tips on how to use the CBSA HS code system effectively:

Keep your product descriptions accurate and consistent. Use the same terms and definitions that are used in the HS system. Avoid using vague or generic terms that may cause confusion or ambiguity.
Update your CBSA HS codes regularly. The HS system is revised every five years by the WCO to reflect changes in technology, trade patterns, and consumer preferences. The latest revision took effect on January 1, 2022. You should check if your products are affected by any changes and adjust your codes accordingly.
Keep records of your CBSA HS codes and supporting documents. You may need to provide proof of your codes and their basis to customs authorities or other parties. You should keep copies of your product descriptions, invoices, receipts, certificates, advance rulings, etc. for at least six years.

The CBSA HS code is a vital tool for international trade. It helps you classify your products according to a global standard and determine the customs duties, taxes, and regulations that apply to your shipments. It also helps you avoid delays and penalties at the border and optimize your supply chain and logistics operations.

To find the right CBSA HS code for your products, you need to start with a clear and detailed description of your product, consult the official sources of information on the HS system, compare your product description with the HS sections, chapters, headings, and subheadings, check if there are any national variations or additions to the HS code, and validate your CBSA HS code with a reliable source.

By following these steps and using these tips, you can use the CBSA HS code system effectively and benefit from its advantages.

The Impact of HS Code Changes on the Canadian Pet Toy Industry

The Harmonized System (HS) is a standardized system of names and codes for classifying goods in international trade. It is used by more than 200 countries and territories, including Canada, to determine customs duties, collect trade statistics, and implement trade agreements. The HS is updated every five years by the World Customs Organization (WCO) to reflect changes in technology, trade patterns, and product development.

The latest HS edition, HS 2022, came into effect on January 1, 2022, and introduced several changes to the classification of goods, including pet toys. Pet toys are not classified for customs purposes the same as human toys in Canada. Even though pet owners may be amused at their pets playing with their toys, the Canada Border Services Agency (CBSA) does not classify pet toys under HS Code 95.03 unless there is an identical toy for humans. Instead, pet toys are classified under various other HS codes depending on their material, shape, function, and intended use.

One of the main changes affecting the pet toy industry in Canada is the creation of a new subheading 4201.00 for articles of leather or of composition leather specially designed for animals. This subheading covers items such as collars, leashes, harnesses, muzzles, and saddlery for pets. Previously, these items were classified under different subheadings of chapter 42 depending on their type and use. The new subheading simplifies the classification of these items and provides a more specific statistical code for trade data analysis.

Another change affecting the pet toy industry is the deletion of subheading 3926.90 for other articles of plastics and articles of other materials of heading Nos. 39.01 to 39.14. This subheading was used to classify many types of plastic pet toys, such as balls, chew toys, squeaky toys, and frisbees. The deletion of this subheading means that these items will now be classified under subheading 3926.40 for tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics. This change may affect the customs duty rate applicable to these items, as well as the trade statistics collected by the CBSA.

The CBSA has provided a statistical concordance table at the 10-digit level in Microsoft Excel format, listing out all of the affected HS classification codes changes from 2021 to 2022 Customs Tariffs. The table also indicates whether the change is due to an amendment by the WCO or a national initiative by Canada. The table can help importers and exporters of pet toys to identify the correct tariff classification for their goods and ensure compliance with customs requirements.

The HS code changes are not only important for customs purposes, but also for market research and analysis. The HS code is a key indicator of the global demand and supply of goods in different industries and sectors. By tracking the changes in HS codes over time, one can gain insights into the trends and patterns of international trade and identify potential opportunities and challenges for business development.

For example, according to Statistics Canada, Canada imported $198.9 million worth of pet toys in 2020, an increase of 12.7% from 2019. The top five sources of pet toy imports were China ($152.4 million), Vietnam ($13 million), United States ($9.8 million), Thailand ($5 million), and Taiwan ($4 million). The top five destinations of pet toy exports were United States ($25.9 million), Japan ($1 million), France ($0.8 million), Germany ($0.7 million), and United Kingdom ($0.6 million). These data show that Canada has a trade deficit in pet toys and that there is a high demand for pet toys from Asian countries.

The HS code changes may affect the accuracy and comparability of these trade data in the future, as some pet toys may be classified under different codes or categories than before. Therefore, it is important for importers and exporters of pet toys to be aware of the HS code changes and update their records accordingly. By doing so, they can ensure that they pay the correct customs duties, comply with trade agreements, and access reliable trade statistics for their market research and analysis.

References:

http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx

http://www.wcoomd.org/en/about-us/wco-members/membership.aspx

https://www.science.org/doi/10.1126/science.aaa3141

https://en.wikipedia.org/wiki/World_Customs_Organization

https://doi.org/10.1126%2Fscience.aaa3141
https://www.canada-usblog.com/2016/01/19/pet-toys-are-not-classified-as-humans-toys-in-canada/
https://www.dbschenker.com/resource/blob/760988/b60ac3b6aeefe5bc28765ed7d4eb1d2d/2022-cbsa-customs-tariff-changes-effective-jan-1-2022-1–data.pdf
https://www5.statcan.gc.ca/cimt-cicm/topNCountryCommodities-marchandises?lang=eng&chapterId=95&sectionId=0&refMonth=12&refYr=2020&freq=12&countryId=999&usaState=0&provId=1&arrayId=9900000&commodityId=950300&commodityName=Tricycles%2C+scooters%2C+pedal+cars+and+similar+wheeled+toys%3B+dolls%27+carriages%3B+dolls%3B+other+toys%3B+reduced-size+%28%22scale%22%29+models+and+similar+recreational+models%2C+working+or+not%3B+puzzles+of+all+kinds.&topNDefault=10&tradeType=3

https://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs_convention.aspx

https://www.citt-tcce.gc.ca/en/advance-rulings