The classification of goods is not a simple process of finding a code that is close to or consistent with the name of the goods in the “Tariff of the People’s Republic of China”, but a process of information management and risk management based on certain classification skills.
(I) Obtaining complete and accurate commodity information
Mastering sufficient commodity information is the primary basis for commodity classification, which includes commodity information and auxiliary information required to be declared by the customs.
1. Commodity information required to be declared by the customs
The customs will have different filling specifications for the declaration of different commodities, such as product name, specification, model, use and function, composition and content, shape, material of metal products, molecular formula of chemical products, processing and production methods of food, power of machinery and equipment, etc. This information is the basic information for determining the classification of goods.
2. Auxiliary classification information
The commodity code of the exporting country (region), the original name of the commodity and its translation, the classification ruling officially issued by the Chinese Customs and other countries’ customs, and the declaration code of the same products in the industry are all auxiliary information for commodity classification.
(II) Make full use of the rules for pre-determination of goods
Article 43 of the Customs Law stipulates that the customs may make an administrative ruling on the pre-classification of the goods to be imported and exported upon application by the parties. Import and export enterprises can declare and determine the commodity code to the customs before the actual import and export of goods, which will facilitate the customs procedures of the import and export goods business units or their agents, facilitate legal import and export, and accelerate the customs clearance of goods.
(III) Make full use of the right to inspect goods in advance
Article 27 of the Customs Law stipulates that the parties are allowed to inspect the goods and extract samples before declaring them to the customs. Before declaring goods for import and export, enterprises must have a clear understanding and evaluation of the goods themselves.
(IV) Testing, declaration and supplementary declaration
Enterprises shall truthfully and accurately declare the commodity names, specifications, models, etc. of their import and export goods in accordance with the provisions of laws, administrative regulations and the requirements of the customs, and classify the imported and exported goods they declare.
If necessary, provide samples to the customs testing department or other professional testing departments to determine the composition, ingredients and functions of the goods. The test results are related to whether the declared product name and tariff number constitute false declaration. Goods in different packages, different organizations, different times, different technical conditions, etc. may produce different test results. If the enterprise disagrees with the test results, it can apply for re-testing.
Since the declaration content that can be filled in the customs declaration form itself is limited, for some more complex commodities that require more information to meet the classification needs, if necessary, a supplementary declaration can be made to ensure the completeness and accuracy of the classification declaration. Although the enterprise has fulfilled its prudent obligations to a certain extent and the classification errors are still required to pay the tax, the customs will generally determine that it is a declaration error and exempt from punishment.
(V) Review and self-inspection of classification
After the import and export declaration, the customs department, other internal audit and inspection departments or independent third parties can review and self-inspect the declared commodity codes. For example, through the cross-comparison method, it can be reviewed whether the codes of the same imported commodities in different periods have changed, whether the codes of the same imported commodities at different ports are consistent, whether the codes of the same imported commodities of companies in the same industry are consistent, etc.
If an enterprise makes a misclassification and proactively discloses it, it can strive to be exempted from punishment or have the punishment reduced. Different positioning requires different facts, evidence and legal focus. For example, no punishment and exemption from punishment, both mean no punishment, but the reasons are very different. The former is that the party does not constitute a violation of the law or constitutes a violation but there are statutory circumstances for non-punishment (such as the statute of limitations has passed two years) and no punishment is imposed; the latter is that the party constitutes a violation but is exempted from punishment in terms of the amount of punishment because the harm is minor or there are other statutory circumstances for exemption from punishment.
(VI) Auxiliary identification and agency declaration by third-party professional institutions
The socialization of commodity classification has been carried out. While intermediary institutions with professional qualifications conduct professional identification of commodity classification before declaration, some accounting firms, law firms, industry certification agencies, and even professionals from consulting companies can also provide consultation, identification and declaration on commodity classification.