MERCOSUR Common Nomenclature (MCN) are codes designated for each product that represent the goods in countries that are part of MERCOSUR (Southern Common Market).
The purpose of using NCMs is to determine taxes, statistical control of products and for the purposes of special customs procedures, administrative treatment and consent.
The NCM is based on the Harmonized Commodity Description and Coding System, developed by the World Customs Organization (WCO) and known in Foreign Trade as the HS Code. Therefore, the first six digits of an NCM are the same as the HS Code.
In foreign trade, the 8-digit CNM code is used, which must be classified in Chapter, Heading, Subheading, Item and Sub-item.
From the moment of the quotation until the arrival of the cargo at the destination it is necessary to know the classification of the product, because it will be necessary at different times of the Foreign Trade operation. Its revision brings conformity in the customs process and eventual gains avoiding fines, costs and delays for incorrect classification.
Based on NCMs, the government defines trade defense policies and determines the incidence of taxes, so it is ideal that the taxpayer knows the nomenclature, to obtain tax security when collecting taxes.
It is through the analysis of the NCM that it will be defined whether or not the goods need permits, permissions, certificates or other relevant documents to enter or leave the country. The tax benefits or special regimes that can be applied, EX-tarifários, for example, also require prior analysis of the NCM. If the goods are wrongly classified these benefits may not be perceived, the cargo may arrive in Brazil without the necessary licenses, causing several onerous consequences to the process.
If there are errors in the documentation, fines will be applied by the Federal Revenue Service, which stipulated a penalty of 1% of the customs value, being R$ 500.00 the minimum and 10% of the value of the Import Declaration the maximum (Art. 711, I, of the Customs Regulation).
The first four digits of the NCM are required when the merchant EC is issued, so they must be posted in the system at least 48 hours before the vessel docks at the port of destination.
If the shipowner does not post the correct NCMs to the CE Master there is a need to rectify it for the CE House to issue. In case of wrong NCMs in the CE House, there will be problems to issue the Import Declaration or to make the Customs Transit Declaration. In these cases the CE Merchant must be rectified, delaying the process, bringing more costs and in some cases even the collection of storage.
The Mercosur Common Nomenclature is necessary at different stages of Foreign Trade and important for all players in the area, there are several consequences if it is wrongly classified among them, fines, fees for rectification, delays and losses of tax benefits.