Appendix to Annex 1 Reservations entered by the Community in respect of Annex E.7 to the International Convention on the Simplification and Harmonization of Customs Procedures

Community legislation on inward processing covers most of the provisions of this Annex. However, in any areas not covered by Community legislation, Member States may, if necessary, enter their own reservations.

When import goods are entered under the inward processing arrangements in a Member State of the Community other than the one where the arrangement was authorized and the inward processing operations effected, this Standard may not be applied unless certain conditions laid down in the Community legislation governing inward processing arrangement are met.

Community legislation on value-added tax does not provide for a non-application in this case. However, the registered tax-payers concerned generally dispose of a right to complete deduction of the VAT due for the imported equivalent goods.

This arrangement is generally granted in the Community on the condition that the goods to be imported and the goods used in the manufacture of the exported product must fall within the same code of the Community customs tariff, be of the same commercial quality and have the same technical characteristics.

At present, Community legislation on inward processing includes standard rates of yield for certain products only.

Community legislation provides for issuing processing authorizations with retrospective effect in exceptional, duly documented cases only, and then only if the application was made prior to the export declaration in respect of the compensating products being accepted.

Under Community legislation there is no entitlement to duty-free replacement of goods for compensating products placed in free zones or warehouses until the products are actually exported.

Generally speaking, Community legislation allows six months from the expected date of exportation of compensating products (extendable by a further six months upon application by the holder of the authorization) to complete the importation of import goods. However, for certain categories of goods, the time limits are shorter and cannot be extended.

Community legislation on inward processing stipulates, for certain cases, that evidence has to be presented proving that the advantages of the processing operations are restricted to the holder of the authorization for inward processing.