Importance of Commodity Code Classification

The world of international commerce can be difficult and intricate to navigate, irrespective of whether you are an importer or an exporter. The ability to comprehend and appropriately use commodity codes is one of the most crucial components of this method.


Commodity codes, often called Harmonised System (HS) codes, are an important component of international commerce. These numbers make it easier to identify and categorise different types of items.


In this extensive tutorial, we will discuss the significance of commodity codes, their structure, and how to estimate them and make optimal use of them accurately.

What is a commodity code?

Harmonised System (HS) commodity codes describe commodities sold worldwide. The WCO’s Harmonised System includes them. Customs officials and merchants worldwide use commodity codes to communicate.


Commodity codes are a string of numbers that give extra product details. Hierarchically, the first six numbers are the worldwide HS code. Each number gives more particular information, enabling exact product categorization. The literal definition of commodity codes states that;


A series of well-defined numbers mostly contains 10 digits to determine the codes of the goods to be imported or exported around the world. These coding methods are called commodity code and are used worldwide.


Commodity codes aid in customs clearance and trade data collection. These codes define customs charges, levies, and rules for certain commodities. Importers and exporters use commodity codes to comply with trade restrictions, permit correct customs assessments, and provide trustworthy trade data.

Why are HMRC commodity codes used?

The commodity code HMRC is a national platform that provides the codes, including the VAT percentage, for almost every product. The tariff is the name of the platform that provides the codes. Hence, it offers several benefits that make it useful, such as:


  • Customs declarations: 


HMRC commodity codes govern customs declaration categorization. Customs paperwork must include the correct commodity code for imports and exports. The code helps customs officials determine customs duties, taxes, and rules for traded commodities.


  • Trade Data: 


UK trade figures depend on HMRC commodity codes. The codes standardise import and export data collection. Monitoring trade flows, market trends, and trade policy needs this data.


  • Tariffs and Trade:


Tariffs and trade policies employ the UK commodity code. These codes classify items to calculate tariffs, duty exemptions, and preferential trade agreements. HMRC enforces trade restrictions and trade agreements using commodity codes.


  • Risk and compliance: 


HMRC evaluates import/export risk using HS commodity codes. Some goods are regulated, licenced, or banned. HMRC may focus on inspections, identify high-risk shipments, and enforce trade compliance by precisely identifying products.


  • International Standards Harmonisation: 


HS codes match HMRC commodity codes. The HS standardises product categorization worldwide. HMRC harmonises and standardises international trade practises using HS-based commodity codes, making trade and data sharing easier.


Overall, customs declarations, trade data, tariff administration, risk assessment, and compliance employ HMRC commodity codes. They offer a standardised categorization system for accurate customs duty assessment, trade policy execution, and UK trade statistics.

Why are commodity codes important?

There are various reasons why the commodity codes are important, like the fact that they standardise international commerce. Commodity codes identify and categorise a wide range of items traded internationally. This categorization standardises customs processes, paperwork, and trade data globally.


Second, customs commodity codes determine duties, taxes, and fees. Customs officials can precisely evaluate taxes and duties by coding goods. This promotes fair commerce and government income by ensuring importers and exporters follow customs procedures and pays the right tariffs and taxes.


Customs commodity codes also aid trade data analysis. These codes provide complete and accurate information on international trade flows to governments and organisations. Commodity code data allows the examination of trade patterns, market trends, and industry or product economic effects. This data aids policymaking, strategic planning, and trade opportunity identification.


Customs commodities codes improve trade compliance and risk management. Import, export, licencing, and health and safety standards may apply to certain items. Customs officials can detect and handle product hazards by appropriately categorising commodities with the right commodity code. This improves border security, regulatory compliance, and public safety.


Finally, customs commodity codes harmonise commerce and improve discussions. Globally, commodity codes are based on the Harmonised System (HS). Classifying and codifying products simplifies trade processes, promotes transparency, and facilitates trade talks and agreements between nations.

Finding a commodity code for a product

There are numerous ways through which the commodity code of a product is obtained, but the HMRC tariff system is the ultimate one. Now, the part of the question that asks about how to get a code is very simple. Search for the keyword of the product type on the Tariff UK website and match your product with the specifications provided there. That’s how you can acquire the most appropriate and suitable code for it. 


These commodity codes UK have accurate results for the utmost of 8 digits. Usually, the 6 digits are the same worldwide, and the rest of the 4 digits are country specific. On the contrary, the companies that provide customs declaration services to the customer also offer the commodity code checker and commodity codes lookup.


Moreover, another question that appears is how to check a commodity code. If you are using the CDS software, you can always re-check the commodity codes of the goods through HMRC. But now HS- code lookup is a feature that gives the advantage of obtaining commodity codes directly. As soon as the file containing the product information is uploaded, the smart AI software obtains the codes.

iCustoms commodity code features

As we mentioned earlier, many firms are providing the CDS facility. Here, we are mentioning iCustoms and whether its commodity lookup is reliable or not. iCustoms ensures that the codes provided are 100 percent accurate and efficient. It gives commodity code features like HS commodity classification, HS code lookup, and HS code classification. 


That effectively works in alignment to give the best results using its highly anticipated AI technology. Not only this, but it also provides a complete AI advanced package for stress-free customs declaration. Take a moment to learn about the iCustoms services and plan to streamline your customs operations.


It would be impossible to conduct international commerce without commodity codes. Importers and exporters may successfully use trade agreements, collect reliable trade data, and streamline customs procedures by using the relevant codes. Finding the right commodity code for your product requires an understanding of its structure.


Additionally, the significance of commodity codes, extensive study, and the use of available resources. Global commerce may be optimised, and the dangers associated with improper categorization may be reduced if enterprises adhere to best practises and keep up with legislation.

What is commodity code & HS code?

For customs clearance, trade statistics, and regulatory compliance, a commodity code, sometimes called a tariff code or classification code, categorises items or products numerically. HS stands for Harmonised System Code. The WCO's Harmonised System classifies items worldwide

What is an 8-digit commodity code?

An 8-digit commodity code extends the 6-digit Harmonised System (HS) code to classify commodities more precisely.

Is the HS-lookup tool in iCustoms easy to use?

Indeed, iCustoms software is user-friendly, reliable, AI-based and easy to operate. Furthermore, its HS lookup tool correctly identifies the commodity code when the goods files are uploaded.

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