HS Code Compliance in Focus: EU Updates Codes as India Grapples with Massive Litigation Backlog

The critical importance of accurate Harmonized System (HS) code classification is being highlighted in early 2026, as the European Union implements technical updates to its tariff codes while India considers measures to resolve a massive backlog of customs-related legal disputes, many stemming from classification disagreements.

Effective January 1, 2026, the European Union has introduced changes to its Combined Nomenclature (CN) tariff codes, according to a Trade Compliance report. Since the first six digits of HS codes are harmonized globally by the World Customs Organization, these updates affect the seventh and eighth digits for a range of specific products. Notable goods impacted by the reclassifications include lithium nickel manganese cobalt oxides (new code 2841.94.00), certain types of artificial graphite (3801.10.10), photovoltaic wafers (3818.00.11), and components for wind turbines. These changes require businesses trading with the EU to meticulously update their classification databases to ensure compliance and avoid incorrect duty payments.

Meanwhile, the consequences of classification ambiguity are starkly evident in India, where there is a growing call for a dedicated Customs Amnesty Scheme to clear a significant number of legacy legal cases, as reported by The Economic Times. Many of these disputes are rooted in genuine disagreements over HS code classification, procedural issues, or differing interpretations of customs law, rather than intentional fraud. As of August 2025, over 61,000 customs tax arrears cases were pending, involving an estimated duty amount of ₹2.07 lakh crore. The need for an amnesty program has been amplified by the 2025 discontinuation of the Settlement Commission under the Customs Act, which has left a void in alternative dispute resolution mechanisms.