What is GRI and How It Can Affect Your HS Classification
What Is the General Rules of Interpretation (GRI)?
The GRI are a set of 6 rules used to identify products. To
ensure a uniform legal understanding of the HS Nomenclature, these rules need
to be applied in sequential order.
For example: If GRI Rule 1 cannot be applied to the
classification of a product, only then we move on to GRI Rule 2, then if GRI
Rule 2 cannot be applied we will move on to GRI Rule 3, etc.
GRI Rule 1
Rule 1 states that "Classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes". Table of contents index, titles of sections and chapters are for ease of reference only.
Example of Section
Notes & Chapter Notes from Singapore Trade Classification, Customs And
Excise Duties 2018
For more information on HS Codes, click here to read our article on HS Codes.
You must only compare headings to headings and not headings to sub-headings. For example, classification for an electronic toothbrush:
Sub-heading
8509.80 using CALISTA Intelligent Agent (CIA)
Sub-heading
9603.21 using CIA
Even though sub-heading 9603.21 describes "Tooth
brushes", classification is more appropriate under a more specific heading
which is "8509".
If the goods cannot be classified when applying GRI Rule 1,
apply the next following GRI Rules orderly.
GRI Rule 2
a) This rule states that "Any reference in a heading to
an article shall be taken to include a reference to that article incomplete or
unfinished, provided that, as presented, the incomplete or unfinished article
has the essential character of the complete or finished article". It
should be taken.
Essential character basically looks to the nature and
intended use of an article.
Here are some factors for determining "essential
character":
- the
nature of the material or component
- the
function of the component materials for the use of goods
- quantity,
weight, and value.
- the
attribute which strongly marks or serves to distinguish the goods.
Examples:
- a
bicycle that is shipped unassembled should be classified as a finished
bicycle and not bicycle parts.
- the
same bicycle can also be classified as a bicycle even if it is shipped
without some minor components (e.g. rubber tires), as long as the
“essential character” of the bicycle is apparent.
b) Headings which include mixtures or combinations as well
as goods consisting wholly or partly of substances. Goods consisting of more
than one material are classified according to GRI Rule 3.
GRI Rule 3
This rule states that "When by application of Rule 2 or
for any other reason, goods are, prima facie, classifiable under
two or more headings, classification shall be effected as follows". Prima
facie basically means on the face of the item or on the first
impression.
a) The heading which provides the most specific description
shall be the preferred headings choice compared to a more generic description.
Unless it refers to only part of the mixed substances or part of the items put
up for retail sale.
For example, classifying a Steel Spoon:
SG HS
Classification for Steel Spoon using CIA
Steel spoon is classified under the heading 8215 instead of
7323. Generally, we follow the "rule of specificity" the more
specific heading is preferred as it can describe the goods with a greater
degree of accuracy.
b) If the goods cannot be classified using 3 (a), "it
shall be classified as if they consisted of the material or component which
gives them the essential character".
Example of a Liquor-filled chocolate:
SG HS Classification
for liquor-filled chocolate using CIA
The chocolate component would be considered as an
"essential character", therefore even if it contains Liquor, it
should still be classified under the 1806 heading.
c) When the goods cannot be classified using rule 3(a) or
3(b), they shall be classified under the heading which occurs last in the HS
tariff system.
Examples of classifying a fishing rod and reel set put up for retail sale:
SG HS
Classification for fishing rod and reel using CIA"
Classification of the fishing rod and reel set should be under 95073000 instead of 95073000 because, in customs evaluation of the rod and the reel, there is no essential character between the rod and the reel. Therefore, it should be classified based on which one is last on the HS tariff system.
GRI Rule 4
Goods that cannot be classified according to GRI 1 – 3 are
to be classified in the heading applicable to the goods "to which they are
most akin".
GRI Rule 5
a) This rule mainly focuses on cases such as camera cases,
musical instrument cases, gun cases, etc. Goods that are suitable for long term
use and are presented with the goods for which they are intended shall be
classified with the goods themselves. This rule however does not include
containers that give the whole its essential character.
b) Packing materials and packing containers will be
classified with the goods that they are packing if they are the kind that is
normally used for packing such goods. This does not apply if the packing
materials or packing containers are clearly suitable for repetitive use. E.g.
Fruits with plastic/Styrofoam packaging will be classified as fruits.
GRI Rule 6
This rule is used to classify products using subheading
descriptions and any related subheading notes:
- you
must only compare subheadings to subheadings that are on the same level
- the
section and chapter notes will still apply for this rule.
Conclusion
You have learned the following things about GRI in this
article:
- what
is GRI and what it is used for
- how
to classify goods by following the GRI Rules.
Generally, most goods should be able to be classified by
utilizing GRI Rule 1-3 as it covers a wide range of descriptions. However, GRI
rule 4 has slowly started to become more popular due to the speed of
technological enhancement and the lack of speed on the updating of the HS
System. Technologies that tend to blend multiple machines, manufacturing, and
materials are starting to become more and more difficult to classify.
Ultimately, understanding what the GRI rules are and when to
apply them will greatly increase the likelihood of correctly classifying your
goods to the correct HS Code.
CALISTA Intelligent Advisory (CIA) GRI functionality has
been released for beta testing with a selected user group. This new
implementation aims to further enhance the accuracy of out HS Classification
engine where the users are guided in a step-by-step approach to find the
required HS Codes. Through this step-by-step process, our AI-powered HS
Classification engine is able to recommend the best results at each level of
the HS Code (Chapter/Heading/Sub-Heading/Dutiable HS Code), making it easier
and more accurate for every user.