On June 3, 2015, the General Administration of Customs (“GAC”) issued Announcement  No. 28 (“Announcement”), announcing its first ever classification ruling (“Classification Ruling”) since 2002, the year that GAC issued Order No. 92, under which, an importer/exporter may file a petition to GAC or its district office for ruling on the tariff classification of imported/exported goods with legal effect countrywide.
The announced Classification Ruling addresses a product named “POLARIZING FILM”, and the petition was filed by Shanghai Nitto Optical Co. Ltd., a company registered in the Shanghai Free Trade Zone (“Shanghai FTZ”). As far as we know, at this stage, GAC seems only to open this petition channel on a trial basis to those trading businesses registered in the Shanghai FTZ. To date, it is still not clear when GAC will issue further implementing rules and expand such practice to all the customs districts in the country.
Before the first Classification Ruling, in practice, to avoid or solve a classification dispute with the customs in China, the legal methods normally include the following:
Click here to view table.
GAC’s Classification Ruling seems to add another alternative on the above short list. However, per GAC’s Order No. 92, we advise the trade community to at least take the following into consideration before seeking such solution:
- An importer/exporter must file such petition prior to 3 months before the planned importation/exportation;
- If the instant goods have been clearly covered in the relevant customs classification rules, GAC or customs district office will reject such petition;
- Where GAC renders a classification ruling, such ruling will be deemed as GAC’s administrative regulation with legal effect among all the customs districts in China. So even if the petitioner disagrees, the administrative ruling at this level may not be appealed directly through administrative review or judicial review.
Therefore, HaoLiWen’s observation is that to seek a classification ruling might still be the last option for an importer/exporter to efficiently solve its classification dispute with the local customs. They need to explore more on other legal solutions as we addressed above. Should any classification dispute arise or be anticipated to arise, it is advisable to seek professional legal advice in advance on the following: (1) the most likely HS Code from the perspective of tariff classification; (2) whether the goods have been clearly addressed in the relevant classification rules, including the PRC Tariff Schedule, the relevant explanatory notes to headings and subheadings, and the relevant classification ruling or decision issued by GAC; and (3) any strategies in negotiation with the customs or any legal defense in front of customs’ allegation of misclassification. As such, importers/exporters may eventually minimize exposures to regulatory customs violations due to misclassification of imported/exported goods.