HS Codes on US Export Invoices: Are They Necessary?
One of the most frequent questions we receive is whether tariff codes (aka HS codes) should be listed on the U.S. exporters invoice (for goods shipped from the U.S.).
While there is no hard rule or regulation from a U.S. perspective that states it should or should not be done there are certain considerations that should be factored in. This in turn may provide some useful insight as to the best way to proceed.
Let’s look at the advantages of adding the correct HS code to the export invoice:
- Provides clarity as to the goods being imported in the event import licenses, permits, etc. are needed
- Streamlines the customs clearance process at destination for your buyer
- Can speed up payment etc., for the seller
- If added – it is recommended only the first 6 digits should be included on the invoice since these are universal (the last 4 digits will vary country to country)
Now let’s look at the disadvantages:
- Incorrect codes could mean delays, additional charges, rejection of documents by customs etc.
- Payment can be held-up by the buyer if need be
- Opens up the possibility that the code is not agreeable by the buyer
- Encourages the buyer to “force” the seller to change the code that is not consistent with U.S. exporting reporting requirements (so the buyer can enjoy a lower duty rate on their side)
Let’s take a look at an example: adding the wrong HS code to the invoice due to pressure from the buyer (for the sole reason to reduce the duty tariff on their side) is not something you would want to partake in. For example If the tariff code on the U.S. export side for reporting purposes is 7511.19.000 and the buyer asks you to state 7112.12.0000 on the invoice then that should be an immediate flag. Either the classification on the export side is incorrect or the buyer’s code doesn’t match the product description. If one is to ship a pineapple it cannot be classified as an apple on the destination import side. Common sense is to prevail. Mis-declaration on the US export side — especially when knowingly filing a customs declaration with the wrong info — is essentially considered fraud.
To further complicate matters, some countries require the HS code to be listed on the invoice. Countries like Bangladesh, India, Pakistan etc. may require this and if so, the HS code to the first 6 digits should be listed to be on the safe side. We say this because if they ask you to list 10 digits those 10 digits may not be valid on the U.S. export side. Every country breaks down commodities differently for import tariff purposes after the first 6 digits and those last 4 digits may differ country to country – so if you are going to add a code to the invoice, it should just be to the first 6 as they are universal.
All in all there is no harm in adding the code to the export invoice from the U.S. if needed, but it should be to the first 6 digits only and it must be correct and agreed upon by the buyer. If the customer doesn’t ask for it I would not recommend adding. Many countries allow for clearance of the goods without the HS code on the invoice as the importer of record is responsible to provide their broker with the correct HS code for customs entry purposes. As long as the invoice is correct and the importer knows the item they are purchasing they should be able to determine the HS code in conjunction with their broker.
We hope this helps to shed some important light on this topic! If you have any additional questions on this topic, please feel free to reach out to Yateen Patel, Director of Export Compliance via email or by calling 800-493-9444.