Customs authorities in most parts of the world require traders to classify their imports and exports according to the 6 rules of classification published by the World Customs Organization or WCO. These rules are referred to as the General Interpretative Rules of Classification. Individually, they can also be referred to as General Rules of Interpretation or GRIs. The first 4 GRIs must be applied in consecutive order while the last 2 GRIs apply throughout the classification process. After successfully using the rules to classify a product, the outcome is a HS code that identifies the type of product to Customs. To learn more about the HS classification in general, you can check out our article about the full process of HS code classification.
In this article we will explore GRI 1.
What is the General Rule of Interpretation 1?
The first rule of classification requires the classifier to be aware that in the tariff book the table of contents, section titles and chapter titles can only be used for reference. Moreover, the table of contents and alphabetical index can only be used as a guide. However, the descriptive terms of the Headings and any accompanying section or chapter notes have legal bearing and do not act as mere guidance or reference.
Hence, the trader must read all applicable Chapter and Section notes when classifying products. This is important, as exclusions, inclusions and definitions may be included in the notes. The notes may also specifically state that certain types of products need to be classified in other specific Chapters or Headings.
This rule must be used first when classifying products. You cannot skip to any other rule before attempting to classify using GRI 1. Only when the product cannot be classified using GRI 1, can the trader move to use GRI 2.
What about WCO Explanatory Notes?
This is often a point of contention. WCO’s explanatory notes for Headings are usually not freely available with the text of the tariff, unlike Chaper and Section notes. Yet, WCO’s explanatory notes provide extensive details and often very helpful information concerning the correct classification approach for imports. Customs in most countries also refer to these notes as if they are legal text.
What are WCO’s explanatory notes? These notes provide WCO’s interpretation of which Headings should apply to which products. They also provide additional information about inclusions and exclusions for each Heading. Many of these notes also provide technical definitions.
Hence, it does go without saying that in order to confidently assign a HS code to a product, a trader should invest in getting access to WCO’s Explanatory notes.
Examples of using General Interpretative Rule 1 (GRI 1):