CBAM Product Classification: Which HS Codes Are Covered, What Is Excluded, and the Common Errors Indian Exporters Make
It's a common misconception that CBAM covers all steel, aluminium, or fertilisers. In reality, it only applies to specific goods listed under strictly defined EU Combined Nomenclature codes in Annex I of the CBAM Regulation. Getting this wrong can lead to unnecessary compliance costs or serious regulatory violations. Here is the practical classification guide every CBAM compliance officer needs before filing their very first declaration.
Key Takeaways
- CBAM specifically covers goods listed in Annex I of Regulation (EU) 2023/956, which are defined by EU Combined Nomenclature (CN) codes. These CN codes represent the EU's 8-digit tariff classification system, built directly upon the international Harmonised System (HS) at the 6-digit level. Indian exporters must carefully match their ITC (HS) codes, India's own export classification system, against the EU's CN codes to determine whether CBAM applies to their shipments. Both systems mirror each other exactly at the first 6 digits but often diverge at the 7 or 8-digit level for more specific product sub-categories.
- For steel items outlined in Annex I, Section 1, CBAM covers iron and steel products under HS Chapter 72. This broad category includes pig iron, ferroalloys, iron and non-alloy steel in primary forms, flat-rolled products, bars and rods, wire, and tubes and pipes. Crucially, stainless steel found in most sub-headings of 7219 through 7222 is also included. However, it specifically excludes downstream fabricated products like steel structures, bolts, screws, fasteners found in Chapter 73, hand tools from Chapter 82, and industrial machinery containing steel components. While the 2028 downstream review may eventually pull Chapter 73 products into the mix, they firmly remain outside the current Annex I scope today.
- For aluminium products in Annex I, Section 3, the regulation covers unwrought aluminium, powders and flakes, bars and rods, wire, plates and strips, foil, and tubes and pipes. The covered CN codes span 7601, 7603, 7604, 7605, 7606, 7607, 7608, 7609, 7610, 7611, 7612, 7613, 7614, and 7616. It specifically excludes aluminium articles classified in Chapter 76 sub-headings above 7616, such as industrial aluminium reservoirs over 300 litres in capacity, numerous fabricated products in Chapters 83 and 84, and aluminium-containing items in other HS chapters, like aluminium wire used in electrical cables found in Chapter 85.
- When dealing with fertilisers under Annex I, Section 4, CBAM encompasses nitric acid and sulphonitric acids (2808), anhydrous or aqueous ammonia (2814), nitrous oxide (2811), and specific nitrogenous fertilisers under Chapter 31. These include ammonium nitrate (3102 30), mixtures of ammonium nitrate with calcium carbonate (3102 40), urea (3102 10), and mixed nitrogen-phosphorus-potassium fertilisers found under various sub-headings of 3105. Keep in mind that not all of Chapter 31 is covered. Many phosphatic and potassic fertilisers are entirely excluded, as are potassium chloride (3104) and single superphosphate (3103).
- The most common classification error Indian steel exporters make is needlessly including Chapter 73 products, such as steel structures, storage tanks, pipes and fittings, chains, and hand tools, in their CBAM compliance programme when these are simply not in Annex I. The second most common error involves excluding stainless steel flat products (7219 through 7222) from CBAM monitoring entirely, driven by the false assumption that "stainless steel" is somehow treated differently from carbon steel. It isn't; stainless steel is fully included in Annex I. The third most frequent error is confusing product classification with the underlying emission methodology. Successfully identifying the correct CN code does not automatically determine the precise calculation methodology required for calculating those embedded emissions.
- The 2028 downstream expansion review, firmly mandated in Article 30 of the CBAM Regulation, will seriously evaluate expanding CBAM to cover downstream steel products in Chapter 73, including bolts, screws, structural steel components, and potentially mechanical auto components. Forward-thinking Indian exporters of fasteners, structural steel, and auto components should begin their emissions data collection now as if CBAM already applied. The 2028 review timeline means those products could easily be covered by 2030, and establishing the MRV infrastructure in 2026 is far cheaper and less disruptive than scrambling to put it together in 2029.
CBAM applies to highly specific goods imported into the European Union rather than broad commodity categories. The precision of this product coverage remains one of the most practically important but least well-understood aspects of CBAM compliance for Indian exporters today. An Indian steel company exporting fifty different product categories to the EU may surprisingly find that twenty of them fall squarely within Annex I of the CBAM Regulation, while thirty do not. Getting this classification right at the individual product level, rather than the broad sector level, serves as the absolute starting point for any successful CBAM compliance programme.
India's export classification system, the ITC (HS) Schedule, uses the exact same 6-digit HS code structure as the EU's Combined Nomenclature at the heading level. For most CBAM-relevant product categories, the ITC-HS code and the CN code remain perfectly equivalent through the first 6 digits. The key differences only begin to appear at the 7th and 8th digit, where the EU's specific tariff classification introduces nuanced additional sub-categories. The practical exercise for Indian compliance officers involves mapping each export product code straight from the Indian customs entry against the Annex I CN code list. For products falling in the 6-digit HS range covered by Annex I, they must verify whether the specific 8-digit CN sub-heading is formally included or excluded.
Steel: the Annex I coverage in detail
| HS Chapter/Heading | Product Description | CBAM Status | Indian Export Relevance |
|---|---|---|---|
| 7201 | Pig iron and spiegeleisen in pigs, blocks or other primary forms | Covered | RINL and SAIL pig iron exports |
| 7202 | Ferro-alloys (ferro-manganese, ferro-silicon, ferro-chromium etc.) | Covered | IMFA and Tata Steel ferro-alloys |
| 7206 to 7207 | Iron and non-alloy steel in ingots and semi-finished forms (billets, blooms, slabs) | Covered | JSW, SAIL, and Tata Steel slab/billet exports |
| 7208 to 7212 | Flat-rolled products of iron or non-alloy steel (HRC, CRC, coated) | Covered | JSW and SAIL HRC/CRC representing major CBAM exposure |
| 7213 to 7215 | Bars and rods of iron or non-alloy steel | Covered | TMT bars and wire rods for construction steel exports |
| 7216 | Angles, shapes and sections of iron or non-alloy steel | Covered | Structural sections |
| 7217 | Wire of iron or non-alloy steel | Covered | Wire products |
| 7219 to 7222 | Flat-rolled, bars and rods of stainless steel | Covered | Jindal Stainless and Chromeni stainless exports |
| 7228 | Other bars and rods of alloy steel; hollow drill bars | Covered | Alloy steel bars |
| 7301 to 7326 (Chapter 73) | Articles of iron and steel, such as structures, tanks, barbed wire, chain, bolts, screws, springs | Excluded from Phase 1 | Major Indian fastener and structure exporters should watch the 2028 review carefully |
| 7304 to 7306 | Tubes and pipes of iron or steel | Covered (selected CN codes) | JSSL and Tata Steel tubes |
The three most common classification errors
The first major error is unnecessarily including Chapter 73 fabricated steel products in CBAM compliance efforts. The most common misunderstanding among Indian exporters is the persistent assumption that if a product contains steel, it is automatically covered by CBAM. This is incorrect. CBAM treats steel as a raw material, targeting the intermediate and primary products of steel manufacturing listed directly in Annex I. It does not cover finished products manufactured from steel, such as bolts, screws, locks, hinges, springs, structural steel assemblies, storage tanks, and hand tools that classify neatly in Chapter 73. An Indian fastener exporter sending bolts under CN code 7318 to the EU has absolutely no CBAM obligation under current Phase 1 rules. Including those products in a CBAM compliance programme wastes time, creates unnecessary costs, and may trigger incorrect declarations. While the 2028 downstream review may change this landscape entirely, the current position remains unambiguous.
The second error revolves around deliberately excluding stainless steel from CBAM monitoring. Several Indian CBAM compliance programmes reviewed recently by trade consultants have incorrectly treated stainless steel as a completely separate product category sitting outside the CBAM perimeter. This stems from the flawed assumption that CBAM only targets high-carbon production and that stainless steel's different process chemistry exempts it. This is completely incorrect. Annex I explicitly includes flat-rolled products, bars, rods, and wire of stainless steel under CN headings 7219 through 7222. Stainless steel producers face genuine CBAM obligations on their EU exports, and their embedded emission calculations must rigorously cover chromium and nickel inputs as precursor materials alongside standard iron and steel emissions. Although the emission intensity of stainless steel EAF production is generally lower than traditional BF-BOF carbon steel, it is definitely not excluded.
The third common error is confusing simple product classification with the complex emission calculation methodology. Establishing the correct CN code for a product only determines whether CBAM applies; it does not automatically determine the correct methodology for actually calculating those embedded emissions. Some Indian exporters have mistakenly used the CN code determination as the final step in their CBAM classification exercise, assuming that the default emission value published by the European Commission for that specific product category applies automatically and permanently. While default values were legally permissible during the transitional period (which largely ended in December 2024 for most products), they cannot be used during the definitive period for the annual CBAM declaration due in September 2027. The definitive period strictly requires actual, verified embedded emissions derived directly from plant-level monitoring data, which is a completely separate and far more demanding exercise than product classification alone.
The 2028 downstream review and why Indian fastener exporters should prepare now.
India is the world's largest exporter of fasteners like bolts, screws, and similar articles classified in HS 7318. Total Indian fastener exports to the EU sit comfortably around $800 million to $1 billion per year. Under current CBAM Phase 1 rules covering Annex I, these fasteners are excluded simply because they fall in Chapter 73 rather than Chapter 72. However, Article 30 of the CBAM Regulation clearly mandates a formal Commission review aimed at expanding the scope to downstream products, including Chapter 73, by 2028, with a potential extension of coverage rolling out by 2030. If Chapter 73 gets included from 2030 onwards, Indian fastener exporters will face CBAM liability retroactively timed to exactly when their EU customers begin their declaration cycles. Establishing proper MRV infrastructure for tracking the embedded steel emission content of fasteners right now, even while it is technically not required, reduces the overall compliance implementation cost by approximately 60 percent when the obligation finally arrives.
Frequently Asked Questions
Where can Indian exporters find the official list of CBAM-covered CN codes?
Annex I of Regulation (EU) 2023/956, also known as the CBAM Regulation, contains the definitive list of covered goods by EU Combined Nomenclature code. The official text of the regulation is publicly accessible on the EU's EUR-Lex database at eur-lex.europa.eu. Additionally, the European Commission maintains a helpful CBAM product scope guidance document that maps CN codes directly to the relevant product categories alongside explanatory notes. Furthermore, the CBAM Registry portal at cbam.ec.europa.eu actively requires authorised declarants to select the correct CN code for each shipment when filing their CBAM reports.
How do Indian ITC-HS codes map to EU CN codes for CBAM purposes?
Both ITC-HS codes and EU CN codes are derived straight from the international Harmonised System and remain identical at the first 6 digits, representing the HS heading and sub-heading levels. However, CBAM's Annex I lists 8-digit CN codes, which incorporate the EU's additional 2-digit national classification level. For most CBAM-relevant steel and aluminium products, the 6-digit HS match proves sufficient to determine CBAM applicability because the core product descriptions at that level align well. For fertilisers and certain specialty steel products, the 8-digit CN classification may differ significantly from the 8-digit ITC-HS, so exporters should diligently verify with both their Indian customs broker and their EU customer's customs broker to ensure the correct CN code is used in the final CBAM declaration.
Do re-exported goods, such as Indian steel processed in a third country before reaching the EU, attract CBAM?
CBAM strictly applies at the exact point of import into the EU customs territory. The truly relevant question is whether the goods entering the EU are classified within Annex I at the time of their EU import. If Indian steel is exported to a third country, processed significantly enough to change its HS classification (for example, transforming from billets into tubes), and then exported to the EU, CBAM's applicability depends solely on the classification of the final product entering the EU rather than the original Indian steel classification. If the processing creates a product that still falls within Annex I, CBAM applies. Conversely, if the processing creates a product in Chapter 73 or another completely non-covered chapter, CBAM does not apply under current rules. This is exactly the "substantial transformation" scenario that CBAM implementing regulations address through the established rules of origin framework.
- European Commission, Regulation (EU) 2023/956 outlining the CBAM Regulation including the Annex I product list
- European Commission, CBAM product scope guidance featuring CN code classification notes
- CBAM Registry, EU CBAM declarant portal showing CN code selection and declaration framework
- Directorate General of Foreign Trade, ITC-HS Schedule detailing India's export classification system
- European Commission, CBAM Implementing Regulation 2023/1773 covering definitional phase guidance on embedded emissions methodology
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