Appendix ANNEX E.6 ANNEX CONCERNING TEMPORARY ADMISSION FOR INWARD PROCESSING

The national legislations of most countries contain provisions allowing conditional relief from import duties and taxes to be granted in respect of goods that are to be re-exported after having undergone specified manufacturing, processing or repair. The customs procedure which reflects these provisions is that of temporary admission for inward processing.

The main purpose of this customs procedure is to make-it possible for national enterprises to offer their products or services on foreign markets at competitive prices and thereby to help to provide more employment opportunities for national labour.

However, temporary admission for inward processing may be made subject to the condition that the proposed operations shall be beneficial to the national economy and shall not conflict with the interests of national producers of goods identical or similar to those in respect of which admission is requested.

As a general rule, temporary admission for inward processing involves total conditional relief from import duties and taxes. However, import duties and taxes may be charged on waste deriving from the processing or manufacturing of the goods.

National legislations usually require that the goods exported shall have been obtained from the goods imported.

In some cases, however, authority may be given for the utilization of goods equivalent to those temporarily admitted for inward processing (equivalents).

Within the context of temporary admission for inward processing, exemption from import duties and taxes may be granted in respect of goods used up during the production of the exported goods without actually being contained in them.

For the purposes of this Annex:

1. (a)

   the term ‘temporary admission for inward processing’ means the customs procedure under which certain goods can be brought into a customs territory conditionally relieved from payment of import duties and taxes; such goods must be intended for re-exportation within a specific period after having undergone manufacturing, processing or repair;

2. (b)

   the term ‘import duties and taxes’ means the customs duties and all other duties, taxes, fees or other charges which are collected on or in connection with the importation of goods, but not including fees and charges which are limited in amount to the approximate cost of services rendered;

3. (c)

   the term ‘compensating products’ means the products obtained during or as a result of the manufacturing, processing or repair of the goods temporarily admitted for inward processing;

4. (d)

   the term ‘customs control’ means the measures applied to ensure compliance with the laws and regulations which the customs are responsible for enforcing;

5. (e)

   the term ‘security’ means that which ensures to the satisfaction of the customs that an obligation to the customs will be fulfilled. Security is described as ‘general’ when it ensures that the obligations arising from several operations will be fulfilled;

6. (f)

   The term ‘person’ means both natural and legal persons, unless the context otherwise requires.

Temporary admission for inward processing shall be governed by the provisions of this Annex.

National legislation shall specify the circumstances in which temporary admission for inward processing may be granted and shall lay down the requirements which must be met.

The circumstances in which temporary admission for inward processing is allowed may be set out in general terms and/or in detail.

Exemption from import duties and taxes may be accorded in respect of goods such as catalysts and accelerators or retarders of chemical reactions which, on being used to obtain compensating products, disappear entirely or partially during such use without actually being contained in those products. The exemption may be granted only in so far as the compensating products obtained are exported. However, it does not normally extend to mere aids to manufacture, such as lubricants.

The right to import goods temporarily for inward processing may be made subject to the condition that the proposed processing operations are regarded by the competent authorities as beneficial to the national economy.

The right to import goods temporarily for inward processing may be reserved to persons established in the customs territory.

The main features of these arrangements may be:

• the requirements as to the location and layout of inward processing warehouses will be laid down by the competent authorities,

• declaration for home use of a specified proportion of the compensating products obtained is authorized,

• examination of the goods to be used, and of the compensating products to be removed from the warehouse, will generally be carried out in the warehouse.

Goods temporarily admitted for inward processing shall be afforded total conditional relief from import duties and taxes. However, import duties and taxes may be assessed on waste deriving from the processing or manufacturing of goods temporarily admitted for inward processing that is not re-exported or treated in such a way as to render it commercially valueless.

National legislation may provide that waste having commercial value shall be assessed either on the basis of its own tariff description or on the basis of the tariff description of the goods from which it is derived.

National legislation may provide that import duties and taxes shall not be charged on waste within certain percentage limits or on waste that is irrecoverable or unusable.

Temporary admission for inward processing shall not be limited to goods imported directly from abroad but shall also be granted for goods ex customs transit, ex customs warehouse or from a free port or a free zone.

Temporary admission for inward processing should not be refused solely on the grounds of the country of origin of the goods, the country whence consigned or the country of destination.

The right to import goods temporarily for inward processing shall not be limited to the owner of the imported goods.

When, in the execution of a contract entered into with a person established abroad, the goods to be used are supplied by that person, temporary admission for inward processing should not be made subject to the condition that goods equivalent to those to be imported are not available in the customs territory of importation.

The possibility of determining the presence of the imported goods in the compensating products should not be imposed as a necessary condition of temporary admission for inward processing when the identity of the goods can be established during the processing operations by customs control or when the procedure is terminated by the exportation of products obtained from the treatment of goods, identical in description, quality and technical characteristics to those temporarily admitted for inward processing.

National legislation shall specify the circumstances in which prior authority is required for temporary admission for inward processing and the authorities empowered to grant such authority.

Persons who carry on large-scale and continuous temporary admission for inward processing operations should be granted a general authorization covering such operations.

Where goods temporarily admitted for inward processing are to undergo manufacturing or processing, the competent authorities shall fix the rate of yield of the operation by reference to the actual conditions under which it is effected. The description, quality and quantity of the various compensating products shall be specified upon fixing that rate.

Where the inward processing operations:

• relate to goods whose characteristics remain reasonably constant,

• are customarily carried out under clearly defined technical conditions, and

• give compensating products of constant quality,

the competent authorities should lay down standard rates of yield applicable to the operations.

National legislation shall specify the conditions under which goods temporarily admitted for inward processing shall be produced at the competent customs office and a goods declaration shall be lodged.

The national forms used on temporary admission for inward processing should be harmonized with those used for the goods declaration for home use.

The forms in which security is to be provided on temporary admission for inward processing shall be laid down in national legislation or determined by the customs authorities in accordance with national legislation.

The choice between the various acceptable forms of security should be left to the declarant.

The customs authorities shall, in accordance with national legislation, determine the amount in which security is to be provided when goods are temporarily admitted for inward processing.

The amount of the security to be provided when goods are temporarily admitted for inward processing should not exceed the amount of the import duties and taxes from which the goods are conditionally relieved.

Persons who regularly use the temporary admission for inward processing procedure at one or more customs offices in a given customs territory shall be authorized to provide general security.

Customs authorities should waive the requirement for security where they are satisfied that payment of any sums that might fall due can be ensured by other means.

At the request of the importer, and for reasons deemed valid by the customs authorities, the latter should, so far as possible, allow goods that are to be temporarily admitted for inward processing to be examined on private premises, the expenses entailed by such examination being borne by the importer.

The requirements relating to the identification of goods temporarily admitted for inward processing shall be laid down by the customs authorities, due account being taken of the nature of the goods, of the operation to be carried out and of the magnitude of the interests involved.

The time limit for temporary admission for inward processing shall be fixed, in each case, by reference to the time necessary to complete the processing operations, up to the maximum period, if any, laid down in national legislation.

At the request of the person concerned, and for reasons deemed valid by the customs authorities, the latter should extend the period initially fixed.

At the request of the customs authorities, the persons concerned shall keep records from which the use of the goods temporarily admitted for inward processing can be checked.

The customs authorities shall have the right to require that any person accorded the benefit of this procedure shall allow them to check on his premises, at any time, the goods temporarily admitted for inward processing and also the compensating products.

The competent authorities should allow part of the processing operations provided for to be carried out by a person other than the person accorded temporary admission for inward processing facilities, without the latter having to transfer ownership of the goods temporarily admitted for inward processing but on condition that, for the entire duration of the operations, he remain responsible to the customs for compliance with the conditions under which processing facilities were allowed

Provision should be made for continuing temporary admission for inward processing in the event of transfer of ownership of the imported goods and the compensation products to a third person, provided that that person assumes the obligations of the importer.

National legislation shall specify the conditions under which the compensating products shall be produced at the competent customs office and a goods declaration shall be lodged.

Provision shall be made to permit compensating goods to be exported through a customs office other than that through which the goods temporarily admitted for inward processing were imported.

Provision shall be made to permit temporary admission for inward processing to be terminated by exportation of the compensating products in one or more consignments.

At the request of the exporter, and for reasons deemed valid by the customs authorities, the latter should, so far as possible, allow compensating products for re-exportation to be examined on private premises, the expenses entailed by such examination being borne by the exporter.

Upon request by the person concerned the competent authorities shall authorize the re-exportation of the goods in the same state as imported, with termination of temporary admission for inward processing.

Provision shall be made for terminating temporary admission for inward processing by placing the compensating products in a free port or free zone.

Provision should be made for terminating temporary admission for inward processing by placing the compensating products in a customs warehouse with a view to subsequent exportation or other authorized disposal.

Provisions should be made for terminating temporary admission for inward processing by placing the goods under a customs transit procedure with a view to their subsequent exportation or other authorized disposal.

Provision shall be made for terminating temporary admission for inward processing by declaring the imported goods or the compensating products for home use, subject to compliance with the conditions and formalities applicable in such case.

National legislation shall specify the point in time to be taken into consideration for the purpose of determining the value and quantity of goods declared for home use and also the rates of the import duties and taxes applicable to them.

National legislation should provide that the amount of import duties and taxes applicable in the case where the compensating products are not exported shall not exceed the amount of import duties and taxes applicable to the goods temporarily admitted for inward processing.

Provision should be made for terminating temporary admission for inward processing in respect of goods lost as a consequence of the nature of the goods, in so far as the compensating products are exported, provided that such loss is duly established to the satisfaction of the customs authorities.

Provision shall be made for temporary admission for inward processing to be terminated where, at the request of the person concerned, the goods temporarily admitted for inward processing or the compensating products are abandoned to the revenue or destroyed or rendered commercially valueless under customs control, as the customs authorities may decide. Such abandonment or destruction shall not entail any cost to the revenue.

Any waste or scrap remaining after destruction shall be liable, if taken into home use, to the import duties and taxes that would be applicable to such waste or scrap imported in that state.

Goods temporarily admitted for inward processing, and compensating products, which are destroyed or irrecoverably lost by accident or force majeure shall not be subjected to import duties and taxes, provided that such destruction or loss is duly established to the satisfaction of the customs authorities.

Any waste or scrap remaining after destruction shall be liable, if taken into home use, to the import duties and taxes that would be applicable to such waste or scrap imported in that state.

The products obtained from the treatment of imported or domestic goods identical in description, quality and technical characteristics to those temporarily admitted for inward processing should be deemed to be compensating products for the purposes of this Annex (setting-off with equivalent goods).

Any security furnished shall be discharged as soon as possible after temporary admission for inward processing has been terminated.

The customs authorities shall ensure that all relevant information regarding temporary admission for inward processing is readily available to any person interested.