XYZ is a global leader in international engineering and services business dealing in manufacturing of elevators. XYZ HQ exports electronics goods and parts thereof to XYZ UAE, which are classified under specific HS tariff code. XYZ UAE operates under a valid trade license. The commercial register of XYZ UAE covers only two HS codes:

Heading 8428 of the UAE tariff - for elevators

Heading 843131 of the UAE tariff for elevators parts

The spare parts portfolio of XYZ UAE covers various types of products and therefore are classified in different HS tariff codes, apart from the HS tariff codes 8428 and 843131. Based on the WCO HS rules, various elevators parts, even if manufactured solely or principally for the elevators are not classified under the HS code 843131. XYZ HQ found that commercial register of XYZ UAE covers only aforementioned HS codes and therefore, they asked XYZ UAE to manually modify the documentation, which consequently may impact the customs duty percentage. XYZ UAE refused to make any changes to their existing process and emphasized to classify the goods according to already practiced two HS codes.

1) Please analyze the below situation and convince XYZ UAE for the significance of using correct HS code from a future perspective whilst highlighting any risks arising from incorrect tariff classification of goods from the UAE customs standpoint.