How should the HS CODES for communication devices such as Galaxy smartphones and Galaxy Note, and tablet PC products such as Galaxy Tab, be classified respectively? Released

We will explain in detail the HS CODE classification for communication devices such as Galaxy smartphones and Galaxy Note, and tablet PC products such as Galaxy Tab. The internationally recognized HS CODE (Harmonized System Code, International Unified System for the Classification of Goods) assigns unique numbers to all goods traded internationally, serving as a standard for applying customs duties, statistics, and regulations.

1. Galaxy Smartphones and Galaxy Note (Communication Devices)

Galaxy smartphones and Galaxy Note series are fundamentally classified as communication devices that perform the essential functions of 'telephones'. Accordingly, they are classified under HS CODE Heading 8517. Specifically, in the HS revised in 2022 (HS2022), a dedicated subheading for smartphones was newly established, reflecting their technological advancements and market importance.

HS CODE: 8517.13-0000 (Smartphones)

Heading 8517 covers 'Telephones, including telephones for cellular networks or other wireless networks; other apparatus for the transmission or reception of voice, images or other data (including apparatus for communication in a wired or wireless network), etc.' Smartphones, based on cellular networks, perform complex functions such as voice calls, internet access via data communication, and various application uses. In the past, they were classified under a subheading encompassing mobile phones, but with distinct characteristics differing significantly from ordinary mobile phones, such as large touchscreen displays, high-performance operating systems (OS), and extensive app ecosystems, HS2022 established the subheading (8517.13) specifically for 'smartphones', enabling clearer classification. This is a result of international consensus aimed at ensuring the global dissemination of smartphones and the accuracy of trade statistics.

2. Galaxy Tab (Tablet PC)

Tablet PCs like the Galaxy Tab are classified as 'Automatic Data Processing Machines'. This is based on the provisions of Note 6 to Chapter 84.

HS CODE: 8471.30-0000 (Portable automatic data processing machines)

Heading 8471 includes 'Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, etc.' A tablet PC is a form of computer emphasizing portability, performing core functions of an automatic data processing machine such as running various software, processing and storing data, web browsing, and multimedia viewing, all based on an operating system (OS). Although it can connect to the internet via Wi-Fi or cellular data communication modules, and some models may support voice call functions (such as VoIP), these features are auxiliary, and the essential characteristic of the device lies in data processing and computation.

Specifically, Note 6 to Chapter 84 states the general principle that 'Machines consisting of two or more functional units which are capable of being classified in different headings are to be classified, unless the context otherwise requires, in the heading appropriate to that unit which performs the principal function.' This directs that the classification of automatic data processing machines like computers should be based on their principal function. In the case of tablet PCs, the information processing function is the primary role rather than the telephone communication function, thus classification under Heading 8471 is appropriate.

3. Importance and Considerations of HS CODE Classification

As such, despite their similar forms and some overlapping functions, smartphones and tablet PCs are classified under entirely different headings in the HS CODE. This is in accordance with the fundamental principle of the HS, which classifies products based on each device's 'Primary Function' and 'Essential Character'.

Accurate HS CODE classification is crucial in several aspects, as follows:

• Application of Customs Duties: Since customs duty rates vary for each HS CODE, incorrect classification may lead to paying unnecessary duties or the risk of additional tax imposition later.
• Import/Export Requirements and Regulations: Statutory obligations (e.g., KC certification, Radio Waves Act, etc.) differ by item, so accurate classification is a crucial first step for legal compliance.
• Utilization of Free Trade Agreements (FTA): The criteria for determining origin to receive FTA preferential tariffs vary by HS CODE, thus accurate classification must precede.
• Accuracy of Trade Statistics: Accurate classification contributes to public interest as it serves as foundational data necessary for national industrial policy formulation and trade trend analysis.

In addition to the product categories you inquired about, various types of electronic devices such as smartwatches, foldable phones, and hybrid notebooks have recently been released, making expert review of HS CODE classification even more crucial. It is important to meticulously analyze the essential functions and characteristics of a product to derive the correct HS CODE whenever a new product is launched or new features are added.

In conclusion, we inform you that Galaxy smartphones and Notes are classified as communication devices under subheading 8517.13-0000, and tablet PCs like the Galaxy Tab are classified as automatic data processing machines under subheading 8471.30-0000.