Case Study

*HS classification can be easier with ImageSearch on world customs ruling database
The method is described in "ImageSearch for HS classification"

Case study of “CTC” & “VA” method combined pattern(Letter boxes)

2019-12-24 By Taichi Kawazoe

Here is a case study of “CTC” & “VA” method combined pattern.

Company A manufactures Letter boxes of copper plate (HS Heading 74.19)

Letter boxes of heading 74.19 are manufactured from the
following non-originating materials:

Final product	non-originating materials	HS code	Value
Letterboxes HS:74.19 EXW € 6.-	Copperplate	74.09	€ 1.80.-
	Rivets	74.15	€ 0.12.-
	Soldering material	83.11	€ 0.12.-
	Insert of plastics	39.26	€ 0.60.-
	Box of paperboard	48.19	€ 0.15.-

The origin rule for letter boxes of heading 74.19 is covered by “ex Chapter
74 – copper and articles thereof; except for: …”. Since heading 74.19 does
not appear in the list of exceptions, it is the specific rule for Chapter 74
which must be fulfilled:

Example PSR for goods of heading 74.19(Letterboxes ) is:

“Manufacture:
• from materials of any heading, except that of the product, and
• in which the value of all the materials used does not exceed 50 % of
the ex-works price of the product”.

*This rule (PSR) varies depending on the agreement

The rule contains two conditions. Both of them must be fulfilled. If not, the
product does not acquire originating status.

The first condition (CTC)

As the letterboxes are classified in heading 74.19 and none of the
materials used are classified in that heading, the first condition is satisfied.

The second condition (VA)

Since the total value of the non-originating material used (€ 2.79) is less
than 50 % of the ex-works price (€ 6.-), the second condition is also satisfied
and the boxes can be regarded as originating products.

Case study of Value Added method(VA) e.g.”Nitrobenzoyl chloride”

2019-12-23 By Taichi Kawazoe

Here is a case study of Value Added (VA) method.

Company A manufactures Nitrobenzoyl chloride (HS Heading 2916)

Nitrobenzoyl chloride of Heading 2916 are manufactured from the
following non-originating materials:

Final product	non-originating materials	HS code	Value
Nitrobenzoyl chloride HS:2916 EXW € 100.-	Benzoic acid	29.16	€ 17.-
	Hydrochloric acid	28.06	€ 23.-
	Nitric acid	28.08	€ 2.-

The final product of heading 29.16 is covered by the list rule of “ex Chapter 29
– organic chemicals, except for:…”

the following Example PSR rules in columns 3 and 4 will be applied for goods
of heading 29.16(Nitrobenzoyl chloride)

*This rule (PSR) varies depending on the agreement

The rules in column 4

The rules in column 4 stipulate that the working or processing that needs to be
carried out on non-originating material is the following: “Manufacture in which
the value of all the materials used does not exceed 40 % of the ex-works price of
the product”.
The condition in this rule is not fulfilled as the total value of the non-originating
The materials used are 42 %.

The rules in column 3

The rule in column 3 consists of 2 requirements:
(i) “Manufacture from materials of any heading, except that of the product”.
The hydrochloric acid and the nitric acid are classified in headings 28.06 and 28.08
(other than the nitrobenzoyl chloride of heading 29.16) and therefore fulfill the
change of heading requirement. The benzoic acid, on the contrary, is classified as nitrobenzoyl chloride of heading 29.16 and does not comply with the tariff shift rule.

(ii) The second requirement, however, stipulates that : “However, materials of the
same heading as the product may be used, provided that their total value does not
exceed 20 % of the ex-works price of the product”.
As the value of the benzoic acid (17€) is only 17 % of the ex-works price of the
nitrobenzoyl chloride (100 €) the requirement of column 3 is fulfilled.
As it is sufficient that the requirement of either column 3 or column 4 is fulfilled,
the nitrobenzoyl chloride can be regarded as an originating product.

Case study of Change in classification(CTC) e.g.”– Steel wire”

2019-12-20 By Taichi Kawazoe

Here is a case study of Change in classification(CTC) method.

Company A manufactures Steel wire (HS Heading 72.17)

The Steel wire is manufactured from non-originating bars of steel
of heading 72.13.

From a bar of steel of a value of € 24, steel wire for € 40 is manufactured.

Example PSR for goods of heading 72.17(Steel wire) is:

“Manufacture from semi-finished materials of heading 72.07”.
*This rule (PSR) varies depending on the agreement

As less working or processing than required is carried out when the
manufacture process is done from bars classified in heading 72.13,
the wire does not obtain originating status.

Another way of saying: The Steel wire has to be manufactured at least
from Semi-finished products of iron or non-alloy steel(Heading 72.07) if
non-originating material is to be used in the manufacturing process.

This is in accordance with the Introductory Notes 3.2 to the working or processing list:

The rule in the list represents the minimum amount of working or processing
required and the carrying out of more working or processing also confers
originating status; conversely, the carrying out of less working or processing cannot
confer originating status. Thus if a rule provides that non-originating material at a
certain level of manufacture may be used, the use of such material at an earlier
stage of manufacture is allowed and the use of such material at a later stage is not.

Moreover, the “general tolerance rule” cannot help to confer origin as the value of
the bar used (€ 24) is higher than 10 % of the ex-works price of the steel wire made
from that bar (€ 40.-).

Retrieved from:WCO document

Case study of Change in classification(CTC) and DMI e.g.”– Door locks”

2019-12-15 By Taichi Kawazoe

Here is a case study of Change in classification(CTC) and DMI method.

Company A manufactures Door locks (HS Heading 8301)

Retrieved from:CCI du Luxembourg belge

Door locks of Heading 8301 are manufactured from the following non-originating materials:

Final product	non-originating materials	HS code	Value
Door locks HS:8301 EXW € 20.-	Steel plate	72.19	€ 0.20
	Rivets	73.18	€ 0.10
	Screws	73.18	€ 0.11
	Nuts	73.18	€ 0.13
	Steel bar	72.15	€ 0.30
	Varnish	32.08	€ 0.02
	Lock mechanism	83.01	€ 1.50

The specific origin rule for door locks of heading 83.01 is found in
“ex Chapter 83 – miscellaneous articles of base metal; except for : ….”

Example PSR for goods of heading 8301(Door locks) is:

“Manufacture from materials of any heading, except that of the product”.
*This rule (PSR) varies depending on the agreement

Using steel plates, rivets, screws, nuts and varnish which are classified within
headings other than heading 83.01, the tariff shift rule would be fulfilled.

Another way of saying: “Change of Tariff Heading” (CTH)
A product is considered to be sufficiently worked or processed when it is classified in a
4-digit level of the Harmonized System, i.e. heading, which is different from those in
which all the non-originating materials used in its manufacture are classified.

However, lock mechanisms of heading 83.01 are also used in the manufacture
of the locks, so for that material the change of tariff heading is not fulfilled.

Retrieved from:CCI du Luxembourg belge

According to the “De Minimis/tolerance(DMI) rule” the use of non-originating
materials may however be allowed when the value of these does not exceed
10 % of the ex-works
*This rule (DMI) varies depending on the agreement

price of the product. The value of the lock mechanisms (€ 1.50) is only 7,5 % of
the exworks price of the lock (€ 20.-).
Thus, the use of the lock mechanisms does not prevent the final product from
acquiring originating status.

Consequently, the locks can be regarded as originating products.

Case study of Change in classification(CTC) e.g.”– Wheels for toy tricycles”

2019-12-07 By Taichi Kawazoe

Here is a case study of Change in classification(CTC) method.

Company A manufactures Wheels for toy tricycles (HS Heading 9503)

Wheels for toy tricycles of Heading 9503 are manufactured from
the following non-originating materials:

Item name	HS code
Iron plate	7209
Steel strip	7212
Bushing	3926
Solid tyres	4012
Varnish	3208

The list rule(PSR) for heading 9503 requires the following working or processing to
be carried out on non-originating material:

“Manufacture from materials of any heading, except that of the product”.

The wheels are classified in heading 95.03 and none of the materials used are
classified in heading 95.03.
Therefore, the conditions to acquire originating status are fulfilled and the
products can be regarded as originating.

Case study of Change in classification(CTC) e.g.”Iron nails”

2019-12-03 By Taichi Kawazoe

Here is a case study of Change in classification method.

Company A manufactures ”Iron nails”(HS heading 7317)

from Non-originating iron wire (HS heading 7217).

Non-originating iron wires are imported from country B where
is not a Party of the FTA;

Example PSR for goods of heading 7317(Iron nails) is:

“Manufacture from materials of any heading, except that of the product”.

Iron wire is classified in heading 72.17 which is a heading other than that of iron
nails (heading 73.17). Therefore, the conditions to acquire originating status are
fulfilled.

The nails can be regarded as originating products.