REPORT SUBJECT CUSTOMS PROCEDURE TOPIC DETERMINE THE HS CODE FOR DURIAN EXPORT AND PLASTIC IMPORT

Inthat context, customs authorities are an important force in contributing to themanagement of import and export activities, transit and exit of goods across borders.For the current deve

VIETNAM GENERAL CONFEDERATION OF LABOUR

TON DUC THANG UNIVERSITY

-o0o -REPORT

SUBJECT: CUSTOMS PROCEDURE

TOPIC: DETERMINE THE HS CODE FOR DURIAN EXPORT AND PLASTIC IMPORT

Group ID: 2

LECTURER: PhD.TRAN NGUYEN CHAT

Ho Chi Minh City, 25th October 2022

GROUP ASSESSMENT

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Table of Contents

GROUPASSESSMENT 2

TABLE OF CONTENTS 3

TABLE OF TABLE 4

TABLE OF FIGURE 5

CONTENT 6

INTRODUCTION 6

CHAPTER 1: BRIEF INTRODUCTION TO THE HARMONIZED SYSTEM 7

1.1 DEFINITION AND STRUCTURE OF HARMONIZED SYSTEM 7

1.2 THE SIGNIFICANCE AND OBJECTIVES OF HARMONIZED SYSTEM 8

1.3 A SUMMARY OF THE HS CONVENTION FORMATION PROCESS 9

1.4 REVIEW THE SIX HS CODE APPLICATIONS RULES: 11

CHAPTER 2: ANALYSIS OF HS CODE DETERMINATION FOR SELECTED PRODUCTS 15

2.1 BASIC INFORMATION ON FRESH DURIAN FROM NHP FOODS 16

2.1.1 Overview of Durian 16

2.1.2 Determination of Fresh Durian’s HS CODE 19

2.2 BASIC INFORMATION OF HDPE F00952 20

2.2.1 Overview of HDPE F00952 from Saudi Basic Industries Corporation 20

2.3 THE PROCEDURE FOR DETERMINING THE HS CODE 22

CHAPTER 3 FINDINGS 28

3.1 ADVANTAGES 28

3.2 DIFFICULTIES 28

3.3 EXPERIENCE GATHERING, RISK AND LESSONS LEARNED 29

3.3.1 Experience gathering 29

3.3.2 Risks 29

3.3.3 Lessons learned 30

CONCLUSION 31

APPENDIX 32

Table of table

Table 1: Fresh durian specification 18Table 2: Information of HDPE F00952 23Table 3: Characteristics of plastic 28

Table of figure

Figure 1: The figure illustrates commodities in each chapter 8

Figure 2 Specific order when identifying the HS code 11

Figure 3: Structure of the HS 12

Figure 4: Ngân Hoà Phát FOODS company logo 16

Figure 5: Ngân Hoà Phát FOODS Durian on Alibaba 17

Figure 6: SABIC logo 20

Figure 7 Top 100 Listed Companies in 2022 by Forbes Middle East 21

Figure 8: HDPE F00952 22

Figure 9: Outcomes of our group's search for "polyethylene" 24

Figure 10: Section VII: Plastics and Articles Thereof Rubber and Articles Thereof 25

Figure 11: Chapter 39: Plastics and articles thereof 25

Figure 12: Sub-chapter I 26

Figure 13: SubHeading 39.01 27

In the present trend of economic opening, the process of economic integrationnecessarily requires that our country grow and develop in line with the general trend ofthe times in order to gain knowledge from the outside Trade between countries isconstantly developing, in which import-export activities, cooperative trade activities,external economic expansion and economic cooperation are increasingly important Inthat context, customs authorities are an important force in contributing to themanagement of import and export activities, transit and exit of goods across borders.For the current development of production, business and import-export activities, inorder to ensure consistency in management, classification and code application forimport-export goods under the HS Convention (The International Convention on theHarmonized Commodity Description and Coding System), the role of the classificationanalysis of import-export goods is very important In addition to contributing toimproving the efficiency of state management of customs and preventing loss of budgetrevenue, the determination of HS codes of import-export goods also plays an importantrole in reforming administrative procedures in the field of the customs area, determiningthe tax code of the product accurately and conveniently during customs procedures.Because import-export goods are increasingly diverse and rich, giving accurate resultswill help create a consensus between Customs Procedures and Enterprises, avoidingdisagreements in classification, and applying codes to goods, thereby shortening thetime for completing procedures for import-export activities of enterprises

Since then, the goal of clarifying the content of using HS codes to classify goods

is regulated in accordance with the provisions of the Goods Classification Systemissued by WCO (the World Customs Organization), our team will apply 6 principles todetermine the HS code to analyze the HS code of two items, which are export (selloverseas/abroad) and import (buy from abroad) In terms of exports, our group chose akind of fruit that is quite new to Western European tourists, which is

durian The imported product is SABIC® HDPE F00952, which has been widely used

in the world for extrusion of blown film

With quite limited knowledge, especially the actual assessment experience is stillnot profound and complete in analyzing and determining HS codes of products.Therefore, in the report, errors are not avoided We would like to ask for yourcomments so that our team can improve on the following topics At last, our teamwould like to express our sincere thanks to you

CHAPTER 1: BRIEF INTRODUCTION TO THE HARMONIZED

SYSTEM

1.1 Definition and structure of Harmonized System

The number of goods for import and export worldwide is so great that the WorldCustoms Organization - WCO has created a standardized code for the purpose ofclassifying, managing and controlling the number of goods exported and imported on aglobal scale That type of code is called HS Code (Harmonized System Code) - this isthe type of code that is commonly used during the export of goods and they are updatedevery 5 years

Nowadays, the Harmonized System (HS Code) consists of 8 digits, 10 digits oreven 12 digits WCO has divided the HS Code structure based on a few basic factors sothat each commodity has its own code such as chapters, headings, sub-headings, tarifflines, and national tariffs Our country is using an 8-digit HS Code Productclassification is significant in calculating customs duties and tariffs, as tariffs and otherexceptions will be based on the specifics of a product, which the HS Code itself willtake care of taking that job

This system is used by more than 200 countries worldwide to collectinternational trade statistics, and most of goods in international trade are classifiedaccording to the HS Code (more than 98%) For a more detailed analysis of HS Code,they have 21 sections (such as animals, plants, stone products, jewelry, machinery,electrical equipment ), 97 chapters (2-digit), 1,222 headings (4-digits), 5,387 sub-headings (6-digits) The HS Code has a total of 99 chapters, but the first 77 chapters areintended for future use, and chapters 98-99 are intended for specific uses by

signatories to the HS Convention Goods from chapters 1 to 83 are usually classifiedaccording to the material of manufacture, and chapters 84 to 97 are classified according

to the function of that good HS Code classifies goods from raw materials to processedproducts, the first two characters (chapters) are a general description of the goods, andthe next two characters (chapters) are used to classify commodity categories fromsimple to complex, followed by sub-headings divided into more generic groups fromthe group and the final Tariff line defined by different countries

Figure 1: The figure illustrates commodities in each chapter

1.2 The significance and objectives of Harmonized System

HS Code has actively contributed to customs procedures and international trade.Many stakeholders that join in the process of importing and exporting goods nationwidewill benefit from the declaration and proper use of HS codes for each type of good

For the government, the HS Code is a tool whose purpose is to identify the types

of goods imported and exported to collect taxes, the amount of tax that the Customsauthorities must collect for the import-export businesses and the customs authorities.Other obligations are to contribute to the enforcement of domestic laws andinternational treaties, to assist in the analysis of micro and macro strategies and tonegotiate international trade

For businesses, the use of the HS Code will ensure that businesses comply withdomestic and international laws, if an enterprise intentionally or unintentionallymisclassifies HS Code, it will be an inevitable delay in the delivery process, and thegoods inspection step will be more difficult, there is a risk of being sanctioned and as aresult, causing an additional cost in the import and export of goods And vice versa,when an enterprise declares the correct classification of goods by HS Code, thatbusiness will enjoy many benefits from the Free Trade Area (FTA) in accordance withregulations.

Analyzing more clearly the role of the HS Code, they help businesses classifygoods for the purpose of determining the appropriate tax rate corresponding to that type

of goods according to the regulations of the state so that businesses will be able tounderstand the taxes that they have to pay to avoid the situation that the business has topay excess tax and have to go through the tax refund procedures, which will cause loss

of time and effort for the business and related parties The early preparation ofprocedures and identification of the correct classification of goods with HS codes canhelp businesses create a good impression and reputation on the Customs authorities,helping the goods to be cleared faster Thus, HS is a standard economic language andcode for products that are an essential factor for global trade

1.3 A summary of the HS Convention formation process

The Harmonized System is abbreviated as HS Code and later known as the HSConvention with the official name called "International Convention on HarmonizedCommodity Description and Coding Systems" - is the international code on thecommon global language for goods was adopted by the WCO (World Customs Organization) in Brussels (Belgium) in 1983 and come into effect on 1 January 1988.The HS Convention is considered a harmonized system of the product description,classification and coding According to research data, this is the result of an intellectualproduct that was researched by 60 customs organizations of member countries and 20other international organizations for nearly ten years (1976 - 1983) the task ofmaintaining, selectively inheriting the results achieved so far and developing it

As one of the global common languages for goods, the HS Convention not onlyfacilitates international trade negotiations, promotes reforms related to administrativeprocedures, accelerates speed of integration with countries around the world, but alsocontribute to the fight against smuggling and trade fraud, protect the legitimate interests

of businesses and support the automation and modernization of customs procedures

The HS Convention was created with an extremely effective legal mechanism bycreating a coding system that aims to ensure the classification and description of goodsimported and exported on a global scale The HS Convention consists of a Preamble, 20articles and an Appendix The introduction will tell the reader why HS Code issupported by the international community On 20 articles dealing with the regulations,responsibilities and obligations of Member States, the role of the Council and theCommission, the Harmonized System, dispute settlement, work and revised proceduresbetween the Member States Contracting Party and of the Customs CooperationCouncil And finally, the Appendix is considered the nomenclature for the actualclassification of goods Countries that are parties to the HS Convention are obligated toensure that their tariffs and statistical lists on imported and exported goods are correctlydeclared and in accordance with the Harmonized System

After the Convention was implemented, they were widely spread with more than

200 countries and economies, customs and economic associations currently using andserving as the basis for their national Customs tariffs In addition to being used as thebasis for the tariff schedule, the HS Convention is also used for many other purposessuch as:

- A basis for rules of origin

- A basis for Customs tariffs

- For transport statistics and tariffs

- For the internal taxes collection

- A theoretical basis for trade negotiations, such as FTAs (Free Trade Agreements),and Goods Schedules (WTO schedules of concessions)

- This is also considered one of the core important factors in the management andcontrol of procedures in the field of Customs processes, including information technology,compliance, and risk assessment.

- For the monitoring of controlled goods (narcotics, wastes, ozone layer-depleting substances, endangered species, chemical weapons)

On July 1, 1993, Vietnam joined the HS Convention, but it was not until March

6, 1998, that the President of Vietnam recognized it by Decision No 49/QD-CTN.Therefore, the HS Convention officially came into effect in Vietnam on January 1,

2000, and is currently being applied to more than 98% of the total trade in goods inVietnam Amendments, updates and additions to the content of the HS Convention weremade in 1992, 1996, 2002, 2007, 2012, and 2017

1.4 Review the six HS code applications rules:

The General Interpretative Rules (GIR) will be used to categorize items Itenables the uniform application of the Harmonized System (HS) nomenclature andoffers a step-by-step basis for the classification of commodities

GIR needs to be used in a specific order:

Figure 2 Specific order when identifying the HS code

Structure of the HS:

Figure 3: Structure of the HS

Rule 1: General rule of thumb

The designations of Sections, Chapters, and Sub-Chapters are simply for

reference; they are insufficient to classify items (determining HS codes)

Important classifying factors include:

- 2.1 Each group's specific content

- 2.2 Section and Chapter Notes (Explanations)

In the event that item 2 above cannot be used to categorize, the following rulesshall be followed in the order listed Chapter 39, for example, is titled "Plastic andObjects of Plastic." On the other hand, Chapter 95—rather than Chapter 39—deals withplastic children's toys

Rule 2: In the same group, unfinished goods and compounds

a) If a product possesses the same fundamental characteristics as a finished ordead item, it will come under the same category when it is classed under that heading Thesame classification applies to things that have the essential quality of the good in theirfinished or finished condition, or in their finished or finished shape (or to be

classified as finished or finished goods in accordance with the provisions of thisArticle) This rule must be observed, but not put together or taken apart.

For example, a bicycle that is unfinished without a saddle and pedals isnonetheless considered to be a bicycle (87.12) For instance, the excavator's parts aredisassembled to facilitate shipment, and each piece is given an HS number based on thevehicle

The HS Convention was created as the most effective legal mechanism toguarantee a standardized system of good description and coding, becoming a globalcommodities classification system Additionally, this convention fosters favourableconditions for international trade discussions, helps to modernize the administrativeprocesses used by Customs, hastens regional and global integration, and deterssmuggling Additionally, trade fraud safeguards company interests while also assisting

in the modernization and automation of customs procedures

b) If a substance or material is classified under one category, a compound ormixture of that substance or material with other substances or materials is also categorizedunder that heading Products made entirely of one material or substance must be classifiedwith that material or substance or as a component of it The classification of objects made oftwo or more materials or substances is governed by Rule 3

For example, two products, Product 1 (06.07) and Product 2 are included inMixture A (06.07) The HS Code for Mixture A will be used with the heading 06.07

Rule 3: At first look, goods can be classified into a variety of categories.

Due to rule 2(b) or for any other reason, when objects can initially be divided into two or more headings, the categorization shall be as follows:

a) When categorizing objects, groupings with more detailed descriptions will begiven preference over those with more general ones When two or more heads, each referring

to a portion of the material or substance contained in a good, are considered to characterizethe goods equally, even if one of the headings is a combination or

compound, or only a portion of the good in the case of a good inset put up for retail sale.

b) If not categorized under Rule 3(a), mixed goods made up of various materials

or goods composed of various components, as well as goods packaged in sets for retail sale,are classified in accordance with the substance or component that bestows their basiccharacter

c) In the event that the items cannot be categorized in accordance with rules 3(a)

or 3(b) above, they must be categorized in the final heading in numerical order among theequivalent headings being taken into account

Rule 4: The most similar goods

Commodities that cannot be classed using the aforementioned guidelines arelisted under the topic that corresponds to the category of goods that they are the mostrelated to

Rule 5: Packaging and containers

The commodities listed below are covered by the provisions below

a) Cases manufactured specifically for storing objects or sets, such as those madefor storing cameras, camcorders, musical instruments, pistols, sketching tools, jewels, andsimilar items These items are bundled with a few durable goods that go with the items whenthey are sold and can be utilized for extended periods of time However, this idea does nothold true for packaging that is vastly superior to the goods it holds

b) In addition to ruling 5(a), if the packaging is of a type that is typically used forthe good, the packaging in which the good is included is also classified with the good.However, this strategy does not apply to packages that are obviously made to be reused

Rule 6: Explain how to properly classify and compare

For the purpose of legality, items must be classified into a heading's subheadings

in accordance with the text of each subheading, any applicable subheading comments,and the aforementioned regulations with any necessary modifications, as long as onlysubheadings of the same level can be compared This rule states that, unless thesubheading specifies otherwise, the pertinent section and chapter notes also apply

For instance, 1 brick is equivalent to 1 tile, and 2 tiles are equivalent to 2 tiles.(In the tariff's description of products, the dash is a bullet point "-" before the itemname.) Apply rules 01 and 06, then rules 2, 3, 4, or 5 when looking up an HS code, asappropriate

CHAPTER 2: ANALYSIS OF HS CODE DETERMINATION FOR

SELECTED PRODUCTS

After choosing Durian and Polymers of ethylene (in primary form) from theselected list for our report, all the team members had one day to search for informationabout 2 kinds of products Here are our results:

There are three methods for looking up and identifying HS codes:

Method 1: Search for this link: https://www.customs.gov.vn/ This is theGeneral Department of Vietnam Customs website, and we use it for reference purposes

We also search for statistics on importing and exporting products on this website

Method 2: Using this website: https://www.vietnamtrades.com We can use thiswebsite for searching HS codes, however, most information requires a fee It isexpensive and we are worried about making mistakes because of a lack of knowledge ofthis website

Method 3: We use this website Import and Export Tariff Schedule of Vietnam in

2022 to serve our complete analytical method because of its convenience andinformation

The content and specific implementation, as well as the outputs, occurred asfollows, including the general and special processes below, based on the rules given inclass (which were rewritten in section 1.4)

2.1 Basic information on Fresh Durian from NHP FOODS

2.1.1 Overview of Durian

Durian originally comes from Southeast Asia, also referred to as the King ofFruit in some regions is a well-known and well-liked native fruit It is regarded as beingincredibly delicious and has a distinguished odour The fruit can grow up to 1 foot (30cm) long and 6 inches (15 cm) wide A typical durian fruit has about 2 cups (486grams) of edible pulp It has a hard external husk, covered with spines and containsseveral compartments, each filled with a cream-coloured pulp in which are embeddedwith chestnut-sized seeds

Durian is a climacteric fruit with a brief shelf life at room temperature because ofthe quick post-harvest alterations it experiences These adjustments are necessary for ahigh-quality product for consumption Although the fruit is typically eaten fresh, it canalso be processed into other goods Due to the success of novel ways to consume fruit,both fresh and processed durian have recently grown in popularity in the local andinternational markets Additionally, a sizable amount of unusable husk residue hasgenerated biomass, which can be turned into a variety of inventive products

2.1.1.1 Overview of NHP FOODS

2.1.1.1.1 About NHP FOODS:

NHP Foods is a part of Ngan Hoa Phat Trading Service Co., Ltd It’s a wholesale company