Welcome to this e-Manual on Tariff Classification!

While tariff commodity classification is a highly technical task, this e-Manual attempts to guide the beginner through the classification process.

For the advanced user, there are green boxes you can click on to access additional information.

Let’s begin.....

TCCP

All products can be classified in the Tariff and Customs Code of the Philippines (TCCP).

The TCCP, specifically Section 104 entitled “Rates of Import Duty”, lists all products and their corresponding tariff rates. Tariffs are the taxes applied on imported goods.

Knowing the correct classification of products is essential if you intend to engage in trade and would like to know the applicable import duty on your product of interest.

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Importance

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Section 104

What tariff classification system does the Philippines use?

The Philippines uses the ASEAN Harmonized Tariff Nomenclature, or AHTN. The AHTN is based on the Harmonized Commodity Classification and Coding System, or HS in short.

Tariff and Customs Code of the Philippines (TCCP) is based on the HS-AHTN.

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HS & AHTN

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The HS is composed of 21 Sections, with each Section referring to a specific product group.

Each Section is further divided into Chapters. There are 97 HS Chapters.

Each Chapter in turn is divided into tariff headings and tariff subheadings.

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Code Structure

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Table of Contents

Let’s assume that we are interested in the classification of live horses.

The first step would be to browse through the Table of Contents of the TCCP, which lists the 21 Sections and 97 Chapters of the HS.

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The product coverage of a Section and Chapter can be discerned from their titles.

In addition, there are (a) Section Notes and (b) Chapter Notes, found at the beginning of each Section or Chapter, which provide further information on product coverage. These Notes may contain definitions, products that are covered, as well as products that are excluded.

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Notes

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Section 1

Going back to our example, we find that live horses are most likely to be classified in Section I which is entitled “Live Animals; Animal Products”.

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Chapter 1

The next step would be to determine the specific Chapter under Section I which would likely cover live horses.

Section I has 5 Chapters. Among these Chapters, live horses would most likely be classifiable in Chapter 1 entitled “Live Animals”.

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Having determined the Section and Chapter under which live horses would likely be covered, we need to read the Section and Chapter Notes.

The Section I Notes reference two items, i.e., the inclusion of young animals and the definition of “dried” products.

The Chapter 1 Notes identify the specific live animals excluded from said Chapter.

Nothing in the Notes indicate that live horses are not covered in Chapter 1.

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Section Notes

Chapter Notes

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And so we proceed and take a look at the tariff headings described in Chapter 1.

The HS is hierarchical in structure. This means that product descriptions become more specific as you move from the tariff heading level to the tariff subheading levels.

This also means that classification of goods begins first with identifying the correct tariff heading.

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Chapter 1

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A tariff heading is indicated by a 4-digit Code.

In Chapter 1, there are 6 tariff headings: 01.01; 01.02; 01.03; 01.04; 01.05; and 01.06. Each tariff heading refers to a specific animal group.

Live horses fall under tariff heading “01.01” because its product description reads “Live horses, asses, mules and hinnies.”

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Heading

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Having determined that live horses are covered in tariff heading “01.01”, the tariff subheading level is considered next.

Tariff subheadings are indicated by dashes and 6- to 8-digits Code.

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Subheading

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Under tariff heading “01.01”, the first one-dash subheading reads “Horses”.

Under this one-dash subheading are two more subheadings: 01.01 Live horses, asses, mules and hinnies. - Horses0101.21.00 - - Pure-bred breeding animals0101.29.00 - - Other

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Subheading and Dashes

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Hence live horses are classified under:

(1)0101.21.00, if pure-bred for breeding, or

(2)0101.29.00, if other than pure-bred for breeding

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SEN

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Having determined the AHTN Codes for live horses, the applicable tariff rates can be determined using the Philippine Tariff Finder (PTF).

The PTF collects the 8 existing tariff schedules of the Philippines.

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PTF

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There are 6 General Rules for the Interpretation (GIR) of the HS.

These principles of classification, which can be found in Section 103 of the TCCP, provide for uniform application and interpretation of the HS among HS-using countries.

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Section 103

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Each GIR needs to be considered in sequence.

This means that products are first classified using Rule 1. If Rule 1 cannot provide the correct classification of a product, Rule 2 is used. If product classification cannot be determined using Rule 2, then Rule 3 is considered, and so on until Rule 6.

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GIR

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Rule 1 states that classification of products shall be based on the terms of the tariff headings and the relevant Section and Chapter Notes.

“Terms of the tariff headings” simply means the “scope as described” of the tariff headings.

In our earlier example of live horses, we used Rule 1.

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Rule 1

Example

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Rule 2 extends the scope of any heading to cover:

(i)the same product presented unassembled or disassembled, (ii)the same product incomplete or unfinished,

provided that this product, as presented has its essential character.

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Rule 2

Example

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Rule 2(b) provides that any reference in a tariff heading to a material or substance shall be taken as a reference also to mixtures or combinations of that material or substance with other materials or substances.

The application of Rule 2(b) may lead to a product being classifiable under 2 or more tariff headings. In such cases, rule 3 will apply

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Rule 2

Example

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Rule 3 provides that when mixtures and composite goods are classifiable under two or more headings, classification shall be effected as follows:

(a) under the tariff heading which provides the most specific description.

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Rule 3

Example

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(b) under the tariff heading of the material or component which gives the product its essential character.

(c) under the tariff heading which occurs last in numerical order.

Note: These rules should be applied in hierarchical order Home

Rule 3

Example

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If a product cannot be classified using Rules 1 to 3, Rule 4 provides that said product shall be classified under the tariff heading appropriate to the goods to which said product is most akin.

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Rule 4

Example

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Under Rule 5(a), cases and containers normally presented with a product, and suitable for long-term use, shall be classified in the same tariff heading as said product.

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Rule 5

Example

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However, Rule 5(b) clarifies that Rule 5(a) does not apply in determining the classification of packing materials and containers that are clearly suitable for repetitive use.

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Rule 5

Example

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The final Rule 6 provides that the classification of products in a tariff subheading shall be based on the terms of said subheading and any related Subheading Notes.

After which, Rules 1 to 5 should be applied to determine the specific tariff line under which a product is classified.

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Rule 6

Example

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1. Use the PTF to find tariff rates.

2. Tariff classification becomes necessary when the exact wording of the headings and subheadings do not specifically match your product of interest.

3. Familiarity with the structure of the HS is essential (Sections, Chapters, tariff headings, tariff subheadings, dashes).

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PTF

Structure

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4. The HS is hierarchical in structure.Product descriptions move from broad to specific. Classification should consider comparing headings before the subheadings

5. Products are arranged by degree of processing, i.e., from raw materials, to intermediate products, to finished goods.

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PTF

Arrangement

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6. Know your product. At times it is necessary to know a product’s technical specifications, material and chemical composition, manufacturing process, and functions, in order to correctly classify said product.

7. The final product classification is always at the tariff subheading level.

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Product Requirements

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TOBACCO AND RELATED PRODUCTS

TOYS, GAMES AND OTHER SPORTS REQUISITES

ELECTRIC LAMPS

HERBAL MEDICINES AND RELATED PRODUCTS

PHARMACEUTICAL PRODUCTS

PLASTICS AND ARTICLES MADE FROM PLASTICS

RICE AND RELATED PRODUCTS 

MOTOR VEHICLE AND TRANSPORT EQUIPMENTS

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Upon request, the Tariff Commission issues Tariff Commodity Classification (TCC) Rulings pursuant to Section 1313a of the TCCP.

Section 1313a provides that when a product imported or intended to be imported is not specifically classified in the TCCP, an interested party may request the Commission in writing to indicate the heading number under which the product is or shall be dutiable.

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Section 1313a

Procedure

Forms