Cargo Movement and HSN Number
Daily, if I am very precise, every minute we need some article, to consume, to use, to wear, and for many of the purposes. We need water, milk, candies, fish, coconut, cement, cakes, medicines, BP apparatus, etc., etc. The list is endless. We need clothes to wear, to attract opposite sex, to get respect from others. School children need abacus, calculators, books, blank note books, etc.
At any point of time, most of us, have not thought about the origin of these goods. We will better call them as cargo instead of goods or articles. How does these cargos originate? No. I don’t know. This will be the answer from many. I conducted a poll with this question. Many argued that it is the duty of Governments. O! My God! Governments are made of people. Without people’s effort, how the cargo will originate? How the hospitals, schools, etc. will run?
From our birth, even in the womb of mother, we need articles. (Better known as cargo, in international trade)
If these cargos were manufactured or cultivated in our own country, there is no need for cross country movement of goods. But, the cargo is manufactured or cultivated or mined throughout the world. So, these cargos are moved by traders from the place of origin to place of need. Cargos move through oceans or through air or through land. But, it must cross many countries’ boundaries. In every country, in every border, there is their own border security. It is of two types: Immigration and Customs. The Immigration is meant for people’s movement across borders. The customs is meant for cargos movement across boundaries.
I will tell one example of importance of Customs. A book was published in a European country. That book contained unjustifiable criticism about a religious leader. In large quantities, that book was shipped to another country. The other country thought that if that book was sold in their country, the communal disharmony would arise. Then, how that book could be prevented from entering the country, without jeopardizing the trade relations with that of exporting country? The book was banned from import through an order issued under their country’s own customs law. Customs law is the people friendly law for their country people. It prohibits arms movement and narcotics movement. Thus, it helps a country’s subjects to live in peace.
Every country’s Customs Law revolves around classification of cargo. All the cargos were given a number by the World Customs Organisation. (It is headquartered at Brussels.). That number is called “Harmonised System of Nomenclature” (HSN).
This HSN number is organised either in the ascending order of economic activity or of component material.
Method of grouping cargo under HSN number system
The cargo is grouped into 96 chapters. Every chapter is further subdivided into headings and subheadings. There are around 5000 headings and subheadings. HSN number allots first two digits for chapter number and next two digits for cargo heading and next two digits for sub-heading of cargo.
International classification of cargo is six digits only. According to their need, every country can sub divide it into 8 digits or 10 digits.
I am going to explain the first four digits of classification, which is the mother of all sub classifications. Understanding this, will drive even the laymen into the legitimate international business. That is the motive of my writings. (For further understanding and for verification before diving into economic decisions, you must verify with official documentation of “world customs organisation” or with your own country’s Customs offices.). One more extra benefit of understanding these classification: GST Tax system of many countries’, use these methods of classification to impose tax on their domestic trade and service.
Note: Dear Readers: your criticism and appreciations are most welcome.