13.13. General Rules for the Interpretation. The Harmonized System incorporates a series of preliminary provisions codifying the principles on which the HS is based and laying down general rules for ensuring uniform legal interpretation. There are six of these rules, known as the General Rules for the Interpretation of the Harmonized System, also known as the General Interpretative Rules (or GIRs), which are applied in hierarchical fashion, i.e., Rule 1 takes precedence over Rule 2, Rule 2 over Rule 3, etc. Compilers should apply these rules when classifying goods not classified by customs. An overview of these rules and the classification issues to which they apply are provided in the boxes below.
13.14. The Rules establish classification principles that, unless the texts of headings, subheadings or Section or Chapter Notes otherwise require, are applicable throughout the HS Nomenclature. Moreover, the Rules clearly provide a step-by-step basis for the classification of goods within the HS, so that in every case a product must first be classified in its appropriate 4-digit heading, then in its appropriate one-dash subdivision within that heading, and only thereafter in its appropriate two-dash subheading within the predetermined one-dash subdivision; at each step, no account is taken of the terms of any lower-level subdivisions. This principle applies without exception throughout the HS.
13.15. Settlement of classification disputes. Where a dispute arises between two or more contracting parties regarding the interpretation or application of the HS, the parties concerned should, in the first instance, endeavour to reach agreement among themselves. However, classification disputes that cannot be settled by direct negotiation are referred through the WCO Secretariat to the Harmonized System Committee (HSC) which, after examination, makes appropriate recommendations for their solution. If the Committee is unable to settle a dispute, it refers the issue to the WCO Council for a recommendation on the question. In either event, the parties to a dispute may agree in advance to accept the recommendation of the Committee or the Council as binding.
13.16. Use of HS Chapters 98 and 99. The HS considers Chapters 98 and 99 to be reserved for special use by contracting parties. In practice, there is a tendency for countries to reserve Chapter 98 for goods that can be classified at the Chapter level of the HS and to use Chapter 99 for recording special transactions and commodity categories not classified according to the HS (e.g., postal packages not classified according to kind). It is advisable that this practice be followed by all countries. Compilers are encouraged to code items attributed to Chapters 98 and 99 by applying the formats "98hh" (where “hh” is the code of the HS chapter where goods could have been classified) and "99xxxx" (where “xxxx” is a sequence of digits chosen by a country to code a particular transaction). In general, it is good practice to limit the use of these Chapters as much as possible, since the groupings used by countries in these Chapters are usually not internationally comparable.