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EU Publishes 2017 Version of Combined Nomenclature; Harmonises Classification of Electronic Control Units and Power Distribution Units

On 28 October 2016, the European Commission published the 2017 version of the Combined Nomenclature (CN) by means of Commission Implementing Regulation 2016/1821. This new Regulation amends Annex I to Council Regulation 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff. The updated CN is important for Hong Kong exporters to know about as it will form the basis for the customs classification of goods exported to the EU as of 1 January 2017.

The CN is updated on a yearly basis in order to take account of changes in requirements relating to statistics and to commercial policy, technological and commercial developments. This year, an update of the CN was also needed to implement the entry into force of the Union Customs Code on 1 May 2016.

The 2017 CN amendments are also important as they reflect the changes made to the Harmonized System (HS) Nomenclature by the World Customs Organization (WCO). Such update is carried out by the WCO every five years. The WCO’s HS 2017 amendments also enter into force on 1 January 2017 and encompass 233 sets of amendments relating to a wide range of products.

Amongst others, the amendments relate to fish and fishery products, forestry products, antimalarial products, substances controlled under the Chemical Weapons Convention, hazardous chemicals controlled under the Rotterdam Convention, persistent organic pollutants controlled under the Stockholm Convention, ceramic tiles, newsprint, light-emitting diode lamps, monopods, bipods, and tripods, multi-component integrated circuits, and hybrid, plug-in hybrid, and all-electric vehicles.

In addition, on 9 November 2016, the European Commission published two regulations concerning the classification of goods in the CN. These goods consist of power suppliers to xenon highlights of motor vehicles and electricity suppliers to various components in a cabinet. The customs classification of these articles is likely to be of relevance to Hong Kong and mainland Chinese exporters to the EU of electrical and electronic components.

Commission Implementing Regulation 2016/1957 concerns power suppliers to xenon highlights of motor vehicles made out of electronic components. More precisely, the article comprises of a starter, an actuator, a regulator and a stop unit (so-called ‘electronic control unit (ECU)’) contained in a rectangular housing of aluminium. When the headlights are turned on, the article first converts direct current (DC) 12 V from the on-board electrical system into 1 200 V DC and transmits it to the igniter. Second, the article converts the DC into alternating current (AC) to light the lamps and continuously generates the voltage required (85 V) to keep the lights burning sufficiently. The classification of the article as a control unit under heading 8537 is excluded, as the article is designed to convert current from DC 12 V into DC 1 200 V and to convert DC 12 V into AC 85 V, which are functions covered by heading 8504.

Due to the fact that neither of the functions is considered to be the principal function of the apparatus, it is – within the meaning of note 3 to section XVI – to be classified under the subheading that occurs last in numerical order. As a result, the article is to be classified under CN code 8504 40 90 as other static converters.

Commission Implementing Regulation 2016/1958 concerns an article used for supplying electricity of 230 V to various rack-mounted components in a cabinet. The article consists of 27 sockets in a housing (a so-called ‘power distribution unit’). The housing is fitted with an electrical cable and a plug for connection to an electrical power mains socket. The article logs and transmits internal data (such as electricity, voltage, output and usage) and alarm messages (if values go above or below certain thresholds) via the included communication card. The classification of the article under heading 8544 as a cable fitted with connectors is excluded, as the article is designed to function as an apparatus for the distribution of electricity. As the article consists of several sockets, a cable and a device to communicate, it is to be classified under CN code 8537 10 99 as other boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536 for the distribution of electricity.

Hong Kong traders should take note that for each of the two new regulations mentioned immediately above, the date of entry into force is the twentieth day following their publication. Furthermore, for each regulation, binding tariff information which does not conform to the harmonised classifications may continue to be invoked for a period of three months from the date of entry into force.

Content provided by Picture: HKTDC Research
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