HTS Codes for Apparel & Textiles: Everything You Need to Know

Accurate product classification in the buying and selling of clothing and fabric in the world market is very necessary. The HTS codes on the apparel and textile industry are the basis of calculating the import duties, eligibility to benefit of export benefits, and hassle-free customs clearance. Any misclassification can result in fines, delays during shipment, or issues with refunds.

In this blog, we will discuss what HTS codes are, why they are important to textile exporters, and how they can be correctly classified to have an impact on refunds and compliance.

What Are HTS Codes in the Apparel & Textile Industry?

The Harmonized Tariff Schedule (HTS) is an international framework that is applied in the classification of traded goods such as textiles, garments, and fabric materials. Every product is given a numerical designation, usually of between six to ten digits, specifying what that product is like, and what its intended purpose.

As far as the apparel and textile is concerned, Chapters 50 to 63 of the international tariff schedule are broad, and the HTS Codes of the textiles and apparel include:

• Chapters 50-60: Fibres of textiles, yarns and fabrics.
• Chapters 61, 62: Clothing accessories and clothing (knitted and non-knitted).
• Chapter 63: Other manufactured textile (home furnishings, etc.).

An illustration is that cotton T-shirts are classified under HTS code 6109, and woven shirts are classified under HTS code 6205. These codes assist the customs authorities in determining the type of products and imposing the right duty in the importation and exportation of goods.

The Importance of Accurate HTS Classification

Proper classification according to the harmonized tariff schedule of Textiles is important for several reasons:

Correct Duty Assessment: Incorrect classification may cause overpayment or underpayment of customs duties. Both of them may result in financial or legal problems.

Duty Drawback and Export Refunds: Eligibility: Through schemes like duty drawback or Export GST Refund, exporters can claim payment of the customs or GST duties paid on imported inputs. Nevertheless, improper HTS coding may lead to the inconvenience of matching items in the refund applications, which postpones or disqualifies the claims.

Try our HSN Code Finder tool to find the current HSN code for your product or service.

Compliance and Risk Management: HTS data is utilized in the audits and verifications of trade by the customs department. The similarity between the proclaimed textile product HTS code and product specifications helps to avoid unnecessary examination and fines.

Trade Data Accuracy: With HTS codes that are accurate, there is greater reporting and transparency of the data about the trade, which is significant in keeping records of the government and the exporter.

Key Criteria for Classifying Apparel & Textiles under HTS

Exporters need to take into account: when deciding the appropriate textile apparel HTS code.

• Composition of Material: Cotton, wool, silk, synthetic fibres, or blends.
• Fabric Type: Knitted, woven, crocheted, or non-woven.
• Garment Function: upper body wear or lower body wear, or accessories.
• Gender and Size: Men's, women and children's clothes.
• Construction and Finishing: whether the fabric is dyed, printed, or embroidered.

For instance:

• Knitted cotton shirts: 6105
• Woven cotton trousers: 6203
• Synthetic fibre dresses: 6204
• Bed linens and home textiles: 6302

These differences might not be significant in theory, but they directly influence the rate of duty and the right of refund. The slightest error in the sorting of mixed fabrics or semi-finished materials may cause a conflict with customs.

Common Challenges Exporters Face with HTS Codes

Classifying textiles and apparel under the correct HTS code can be complicated. Common issues include:

Blended Fabrics: In cases of mixed materials (such as 60% cotton and 40% polyester), the exporters should work under the rule of the predominant material; that is, the fabric is defined according to the fibre that provides it with its fundamental quality.

Frequent Revisions: The Harmonized Tariff Schedule is updated. Exporters that use the old codes run the risk of incompatibilities in the shipping documents or refund requests.

Ambiguity in Garment Type: The same-looking items, such as jackets and cardigans, may be of different chapters (61 vs. 62). The incorrect HTS code of apparel and textile may be obtained because of the misidentification of the type.

Refund Delays: Wrong HTS entries may slow down the notification of the IGST Refund status because non-comparable information in export invoices and shipping bills prevents automatic refunds.

Best Practices: Accurate Classification of HTS Code.

Exporters are encouraged to take the following best practices to make sure they get paid and avoid incurring losses as a result of the refund:
See the official Tariff schedule:

Product codes should not be finalized without checking the latest published version of the government or customs version of the Harmonized Tariff Schedule of Textiles.

Keep Good Product descriptions: Provide content, construction, and application in any invoice and export document. This simplifies the process of classification and avoids controversies.

Apply Professional or Automated Tools: The error can be minimised by the use of tools that check and propose the correct textile apparel HTS code based on product descriptions.

Regular Reconciliation: Incorporate export invoices as well as shipping bills and GST returns to ensure that all these have been reconciled with the HTS codes, value declaration, and GST returns.

The inverted Duty Refund Awareness: In many cases, there is an inverted duty system on the part of the textile exporters, i.e., the duty charged on the inputs (say on yarn or dyes) is a higher one compared to the duty charged on the finished product. Refund of input tax credit in such cases may be availed by the businesses as an Inverted Duty Refund in accordance with Section 54(3) of the CGST Act, 2017. By properly classifying in terms of HTS, this process can be made easier, and one will not encounter rejection because of a poor description of the products.

Conclusion

Correct HTS classification is critical for successful customs clearance, accurate duty assessment, and timely refunds on exports. Compliance also helps apparel and textile exporters evade expensive delays and receive refunds under various programs, such as inverted duty programs and GST refunds.

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Frequently Asked Questions

1. How does Chapter 61 of the HTS codes differ from Chapter 62?
Chapter 61 discusses knotted or crocheted clothing (such as T-shirts and sweaters), whereas Chapter 62 concerns woven clothing (like trousers, coats, and shirts).

2. What are the effects of blended fabrics on the classification of apparel?
Blended fabrics are categorized according to the fibre that provides the fabric with its core nature - typically the one of better proportion or practical use.

3. Are incorrect HTS codes used to slow down refunds of GST?
Yes, inappropriate classification may cause inconsistencies between export returns and GST returns, which will delay the approval of refunds or a change in the status of the IGST refund.

4. How can MYGST Refund assist exporters in the HTS IDS Refund in textile manufacturing? 
MYGST Refund makes the filing of refund simple and allows exporters to receive correct Inverted Duty Refunds and GST refunds without any errors due to the wrong classification of goods according to HTS or document mismatches.