Customs Classification of Goods: How the Tariff Item Is Determined and How to Request Advance Classification Information

Customs classification of goods means assigning a product to a tariff item under the Customs Tariff Order. The tariff item determines the customs duty rate, purchase tax, and import surcharge. An importer or local manufacturer may request advance classification information (a pre-ruling, sometimes referred to in the market as a "preliminary decision") from the Customs Division before the import transaction is concluded. The service is provided free of charge, the response is sent within 45 days of completion of the required documents, and the classification issued is valid for one year.

Classification is determined under the Customs Tariff and Exemptions and Purchase Tax on Goods Order. The Order is based on the Harmonized System of the World Customs Organization and is divided into 22 sections and 97 chapters. At its end are supplements that apply only in Israel, such as import rules for new immigrants and returning residents and data on Israel's trade agreements.

A customs tariff item is an 8- or 10-digit number. The first two digits denote the chapter, and the first four digits denote the heading under the international classification. The Israel Tax Authority gives the example of a fresh nectarine, classified under heading 08.10.9030 in Chapter 8. Each tariff item is associated with the following data:

• The customs duty rate, which varies by country of manufacture and country of import due to trade agreements.

• The purchase tax rate.

• The import surcharge.

• The unit of measure, for example kilogram or liter.

Each section and chapter of the Order has its own definitions and rules, and sometimes they exclude a product from a group that would seem to fit it by name. Therefore, the product is examined against the wording of the tariff item and the chapter notes, and the commercial description provided by the supplier serves only as a starting point.

Classification also has non-tax implications. It determines whether the product requires approval from the Standards Institution of Israel or a government ministry, such as the Ministry of Health or the Ministry of Communications. The Israel Tax Authority clarifies that these requirements should be verified with the competent authority itself.

Who May Apply and When

An importer, local manufacturer, non-profit organization, or financial institution, before the import or manufacture takes place. An application may be submitted only when all of the following conditions are met:

1. The import transaction has not yet been concluded, and the goods have not been imported in the past.

2. There is no dispute with Customs regarding those goods.

3. No advance information has previously been issued for those goods, or the information previously issued is no longer valid.

Anyone already in a dispute with the Customs House over the classification of a particular product cannot use this track for that product.

What to Submit

An online form on the Israel Tax Authority website is completed, with only one item per application. A detailed letter describing the product is attached, along with catalogs and brochures containing the technical specifications. The assessor classifies based on the information provided, so the letter should detail what the product is made of, what it does, how it is used, and what components it contains, without leaving anything to guesswork. The Customs House may also request a product sample, laboratory tests, certifications from institutes or government ministries, and import licenses.

Who Reviews and How Long Does It Take

The application is forwarded to the Customs House responsible for the relevant chapter of the tariff. Chapter 84 (machinery and mechanical appliances) is handled by Ashdod Customs, and Chapter 85 (electrical machinery and equipment) by Ben Gurion Airport Customs. A customs assessor reviews the application and may request additional documents. The response is sent by email within 45 days from the date all required documents were received.

What You Receive and How Long It Is Valid

You receive only the customs tariff item. According to the Israel Tax Authority's information page on advance classification information, the classification is valid for one year from the date the information is issued, subject to changes in the law, and applies only to the applicant and to goods identical to those described in the application. The tax rates applicable to the tariff item and the legality of the import remain the importer's responsibility. The response can also be retrieved later through the Israel Tax Authority's online query system for advance classification information requests.

An advance classification request is worth the time when the classification is genuinely open to interpretation or when an error could prove costly. These are the situations where this typically arises:

• A product that combines multiple functions or materials — for example, a mechanical device with a wireless communication component — and could fit under more than one chapter.

• A new version of a product or a new supplier. Advance classification information applies only to goods identical to those described, so a change in specifications requires a fresh review.

• A classification that will determine whether approval from another authority is required. Checking before placing the order makes it possible to obtain the approval before the container arrives at the port.

• A response you received more than a year ago. Once the validity has expired, a new application may be submitted.

For example, an importer bringing in a product with a customs value of NIS 100,000 who classifies it under a duty-free tariff item, while the Customs House classifies it under an item carrying a 12% duty, will be required to pay an additional NIS 12,000 in customs duty on that single shipment — before purchase tax and import surcharge, if applicable. When the product is imported repeatedly, the difference accumulates with every shipment.

If the Customs House Classified Differently

If the Customs House has issued a classification you disagree with, you must first exhaust the proceedings with the Customs House and obtain a reasoned letter from the chief assessor. Only then may you file an online appeal with the Customs Administration; that letter is a mandatory document in the appeal. Importers, customs agents, and attorneys representing importers are entitled to file the appeal, at no charge. On our page about customs classification and customs valuation we detail how to proceed when the dispute also involves the value of the goods.

This area is handled at the firm by Adv. Udi Asa, who worked from 2011 to 2022 in the Legal Department of the Customs and VAT Division at the Israel Tax Authority headquarters.