Revised Kyoto Convention

Contracting Parties

Global list

POSITION AS REGARDS RATIFICATIONS AND ACCESSIONS
(as of 25 June 2010)

International Convention on the simplification and harmonization of Customs procedures (as amended)
(Revised Kyoto Convention)
(done at Kyoto on 18 May 1973, amended on 26 June 1999 and entered into force on 3 February 2006.)

CONTRACTING PARTIES	Dates of signature subject to ratification (1999-06-26 2000-06-30)	Dates of signature without reservation or of deposit of Instruments of ratification or accession
ALGERIA	-	26-06-1999
AUSTRALIA	18-04-2000	10-10-2000
AUSTRIA	-	30-04-2004
AZERBAIJAN	-	03-02-2006
BELGIUM	-	30-04-2004
BOTSWANA	-	26-06-2006
BULGARIA	-	17-03-2004
CANADA	-	09-11-2000
CHINA	-	15-06-2000
CONGO (Dem. Rep. of the)	15-06-2000	-
CROATIA	-	02-11-2005
CUBA	-	24-06-2009
CYPRUS	-	25-10-2004
CZECH REPUBLIC	30-06-2000	17-09-2001
DENMARK	-	30-04-2004
EGYPT	-	08-01-2008
ESTONIA	-	28-07-2006
EUROPEAN UNION	-	30-04-2004
FINLAND	-	30-04-2004
FIJI	-	26-01-2010
FRANCE	-	22-07-2004
GERMANY	-	30-04-2004
GREECE	-	30-04-2004
HUNGARY	-	29-04-2004
INDIA	-	03-11-2005
IRELAND	-	30-04-2004
ITALY	-	30-04-2004
JAPAN	-	26-06-2001
JORDAN	-	08-12-2006
KAZAKHSTAN	-	19-06-2009
KENYA	-	25-06-2010
KOREA	-	19-02-2003
LATVIA	15-06-2000	20-09-2001
LESOTHO	-	15-06-2000
LITHUANIA	-	27-04-2004
LUXEMBOURG	-	26-01-2006
MADAGASCAR	-	27-06-2007
MALAYSIA	-	30-06-2008
MALI	-	04-05-2010
MALTA	-	11-05-2010
MAURITIUS	-	24-09-2008
MONGOLIA	-	01-07-2006
MONTENEGRO	-	23-06-2008
MOROCCO	-	16-06-2000
NAMIBIA	-	03-02-2006
NETHERLANDS	-	30-04-2004
NEW ZEALAND	-	07-07-2000
NORWAY	-	09-01-2007
PAKISTAN	-	01-10-2004
PHILIPPINES	-	25-06-2010
POLAND	-	09-07-2004
PORTUGAL	-	15-04-2005
QATAR	-	13-07-2009
SENEGAL	-	21-03-2006
SERBIA	-	18-09-2007
SLOVAKIA	15-06-2000	19-09-2002
SLOVENIA	-	27-04-2004
SOUTH AFRICA	-	18-05-2004
SPAIN	-	30-04-2004
SRI LANKA	26-06-1999	26-06-2009
SUDAN	-	16-08-2009
SWEDEN	-	30-04-2004
SWITZERLAND	29-06-2000	26-06-2004
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA	-	28-07-2009
TURKEY	-	03-05-2006
UGANDA	-	27-06-2002
UNITED ARAB EMIRATES	-	31/05/2010
UNITED KINGDOM	-	30-04-2004
UNITED STATES	-	06-12-2005
VIETNAM	-	08-01-2008
ZAMBIA	26-06-1999	01-07-2006
ZIMBABWE	26-06-1999	10-02-2003

Number of Contracting Parties: 71

Listed by region

CONTRACTING PARTIES TO THE REVISED KYOTO CONVENTION

BY WCO REGION

EAST AND SOUTHERN AFRICA

Botswana
Kenya
Lesotho
Madagascar
Mauritius
Namibia
South Africa
Uganda
Zambia
Zimbabwe

10 out of 22 Members

EUROPE

Austria
Azerbaijan
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
European Union
Finland
Former Yugoslav Republic of Macedonia
France
Germany
Greece
Hungary
Ireland
Italy
Kazakhstan
Latvia
Lithuania
Luxembourg
Malta
Montenegro
Netherlands
Norway
Poland
Portugal
Serbia
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom

36 out of 51 Members + European Union

FAR EAST, SOUTH AND SOUTH EAST ASIA, AUSTRALASIA AND THE PACIFIC ISLANDS

Australia
China
Fiji
India
Japan
Korea
Malaysia
Mongolia
New Zealand
Pakistan
Philippines
Sri Lanka
Vietnam

13 out of 33 Members

NORTH OF AFRICA, NEAR AND MIDDLE EAST

Algeria
Egypt
Jordan
Morocco
Qatar
Sudan
United Arab Emirates

7 out of 17 Members

SOUTH AMERICA, NORTH AMERICA, CENTRAL AMERICA AND THE CARIBBEAN

Canada
Cuba
United States

3 out of 31 Members

WEST AND CENTRAL AFRICA

Mali
Senegal

2 out of 22 Members

Listed in graphical form

Instruments and Notifications

Body of the Convention

Preamble

PREAMBLE

The Contracting Parties to the present Convention established under the auspices of the Customs Co-operation Council,

ENDEAVOURING to eliminate divergence between the Customs procedures and practices of Contracting Parties that can hamper international trade and other international exchanges,

DESIRING to contribute effectively to the development of such trade and exchanges by simplifying and harmonizing Customs procedures and practices and by fostering international co-operation,

NOTING that the significant benefits of facilitation of international trade may be achieved without compromising appropriate standards of Customs control,

RECOGNIZING that such simplification and harmonization can be accomplished by applying, in particular, the following principles:

the implementation of programmes aimed at continuously modernizing Customs procedures and practices and thus enhancing efficiency and effectiveness,
the application of Customs procedures and practices in a predictable, consistent and transparent manner,
the provision to interested parties of all the necessary information regarding Customs laws, regulations, administrative guidelines, procedures and practices,
the adoption of modern techniques such as risk management and audit-based controls, and the maximum practicable use of information technology,
co-operation wherever appropriate with other national authorities, other Customs administrations and the trading communities,
the implementation of relevant international standards,
the provision to affected parties of easily accessible processes of administrative and judicial review,

CONVINCED that an international instrument incorporating the above objectives and principles that Contracting Parties undertake to apply would lead to the high degree of simplification and harmonization of Customs procedures and practices which is an essential aim of the Customs Co-operation Council, and so make a major contribution to facilitation of international trade,

Have agreed as follows:

Chapter I - Definitions

CHAPTER I

Article 1

Definitions

For the purposes of this Convention:

A. "Standard " means a provision the implementation of which is recognized as necessary for the achievement of harmonization and simplification of Customs procedures and practices;

B. "Transitional Standard " means a Standard in the General Annex for which a longer period for implementation is permitted;

C. "Recommended Practice " means a provision in a Specific Annex which is recognized as constituting progress towards the harmonization and the simplification of Customs procedures and practices, the widest possible application of which is considered to be desirable;

D. "National legislation " means laws, regulations and other measures imposed by a competent authority of a Contracting Party and applicable throughout the territory of the Contracting Party concerned, or treaties in force by which that Party is bound;

E. "General Annex " means the set of provisions applicable to all the Customs procedures and practices referred to in this Convention;

F. "Specific Annex " means a set of provisions applicable to one or more Customs procedures and practices referred to in this Convention;

G. "Guidelines " means a set of explanations of the provisions of the General Annex, Specific Annexes and Chapters therein which indicate some of the possible courses of action to be followed in applying the Standards, Transitional Standards and Recommended Practices, and in particular describing best practices and recommending examples of greater facilities;

H. "Permanent Technical Committee " means the Permanent Technical Committee of the Council;

I. "Council " means the Organization set up by the Convention establishing a Customs Co-operation Council, done at Brussels on 15 December 1950;

J. "Customs or Economic Union " means a Union constituted by, and composed of, States which has competence to adopt its own regulations that are binding on those States in respect of matters governed by this Convention, and has competence to decide, in accordance with its internal procedures, to sign, ratify or accede to this Convention.

Chapter II - Scope and Structure

CHAPTER II

SCOPE AND STRUCTURE

Article 2

Scope of the Convention

Each Contracting Party undertakes to promote the simplification and harmonization of Customs procedures and, to that end, to conform, in accordance with the provisions of this Convention, to the Standards, Transitional Standards and Recommended Practices in the Annexes to this Convention. However, nothing shall prevent a Contracting Party from granting facilities greater than those provided for therein, and each Contracting Party is recommended to grant such greater facilities as extensively as possible.

Article 3

The provisions of this Convention shall not preclude the application of national legislation with regard to either prohibitions or restrictions on goods which are subject to Customs control.

Article 4

Structure of the Convention

1. The Convention comprises a Body, a General Annex and Specific Annexes.

2. The General Annex and each Specific Annex to this Convention consist, in principle, of Chapters which subdivide an Annex and comprise:

A.definitions; and

B. Standards, some of which in the General Annex are Transitional Standards.

3. Each Specific Annex also contains Recommended Practices.

4. Each Annex is accompanied by Guidelines, the texts of which are not binding upon Contracting Parties.

Article 5

For the purposes of this Convention, any Specific Annex(es) or Chapter(s) therein to which a Contracting Party is bound shall be construed to be an integral part of the Convention, and in relation to that Contracting Party any reference to the Convention shall be deemed to include a reference to such Annex(es) or Chapter(s).

Chapter III - Management of the Convention

CHAPTER III

MANAGEMENT OF THE CONVENTION

Article 6

Management Committee

1. There shall be established a Management Committee to consider the implementation of this Convention, any measures to secure uniformity in the interpretation and application thereof, and any amendments proposed thereto.

2. The Contracting Parties shall be members of the Management Committee.

3. The competent administration of any entity qualified to become a Contracting Party to this Convention under the provisions of Article 8 or of any Member of the World Trade Organization shall be entitled to attend the sessions of the Management Committee as an observer. The status and rights of such Observers shall be determined by a Council Decision. The aforementioned rights cannot be exercised before the entry into force of the Decision.

4. The Management Committee may invite the representatives of international governmental and non-governmental organizations to attend the sessions of the Management Committee as observers.

5. The Management Committee:

A. shall recommend to the Contracting Parties:

I. amendments to the Body of this Convention;

II. amendments to the General Annex, the Specific Annexes and Chapters therein and the incorporation of new Chapters to the General Annex;

III. the incorporation of new Specific Annexes and new Chapters to Specific Annexes;

B. may decide to amend Recommended Practices or to incorporate new Recommended Practices to Specific Annexes or Chapters therein in accordance with Article 16;

C. shall consider implementation of the provisions of this Convention in accordance with Article 13, paragraph 4;

D. shall review and update the Guidelines;

E. shall consider any other issues of relevance to this Convention that may be referred to it;

F. shall inform the Permanent Technical Committee and the Council of its decisions.

6. The competent administrations of the Contracting Parties shall communicate to the Secretary General of the Council proposals under paragraph 5 (a), (b), (c) or (d) of this Article and the reasons therefor, together with any requests for the inclusion of items on the Agenda of the sessions of the Management Committee. The Secretary General of the Council shall bring proposals to the attention of the competent administrations of the Contracting Parties and of the observers referred to in paragraphs 2, 3 and 4 of this Article.

7. The Management Committee shall meet at least once each year. It shall annually elect a Chairman and Vice-Chairman. The Secretary General of the Council shall circulate the invitation and the draft Agenda to the competent administrations of the Contracting Parties and to the observers referred to in paragraphs 2, 3 and 4 of this Article at least six weeks before the Management Committee meets.

8. Where a decision cannot be arrived at by consensus, matters before the Management Committee shall be decided by voting of the Contracting Parties present. Proposals under paragraph 5 (a), (b) or (c) of this Article shall be approved by a two-thirds majority of the votes cast. All other matters shall be decided by the Management Committee by a majority of the votes cast.

9. Where Article 8, paragraph 5 of this Convention applies, the Customs or Economic Unions which are Contracting Parties shall have, in case of voting, only a number of votes equal to the total votes allotted to their Members which are Contracting Parties.

10. Before the closure of its session, the Management Committee shall adopt a report. This report shall be transmitted to the Council and to the Contracting Parties and observers mentioned in paragraphs 2, 3 and 4.

11. In the absence of relevant provisions in this Article, the Rules of Procedure of the Council shall be applicable, unless the Management Committee decides otherwise.

Article 7

For the purpose of voting in the Management Committee, there shall be separate voting on each Specific Annex and each Chapter of a Specific Annex.

A. Each Contracting Party shall be entitled to vote on matters relating to the interpretation, application or amendment of the Body and General Annex of the Convention.

B. As regards matters concerning a Specific Annex or Chapter of a Specific Annex that is already in force, only those Contracting Parties that have accepted that Specific Annex or Chapter therein shall have the right to vote.

C. Each Contracting Party shall be entitled to vote on drafts of new Specific Annexes or new Chapters of a Specific Annex.

Chapter IV - Contracting Party

CHAPTER IV

CONTRACTING PARTY

Article 8

Ratification of the Convention

1. Any Member of the Council and any Member of the United Nations or its specialized agencies may become a Contracting Party to this Convention:by signing it without reservation of ratification;

A. by signing it without reservation of ratification;

B. by depositing an instrument of ratification after signing it subject to ratification; or

C. by acceding to it.

2. This Convention shall be open until 30th June 1974 for signature at the Headquarters of the Council in Brussels by the Members referred to in paragraph 1 of this Article. Thereafter, it shall be open for accession by such Members.

3. Any Contracting Party shall, at the time of signing, ratifying or acceding to this Convention, specify which if any of the Specific Annexes or Chapters therein it accepts. It may subsequently notify the depositary that it accepts one or more Specific Annexes or Chapters therein.

4. Contracting Parties accepting any new Specific Annex or any new Chapter of a Specific Annex shall notify the depositary in accordance with paragraph 3 of this Article.

5. (a) Any Customs or Economic Union may become, in accordance with paragraphs 1, 2 and 3 of this Article, a Contracting Party to this Convention. Such Customs or Economic Union shall inform the depositary of its competence with respect to the matters governed by this Convention. Such Customs or Economic Union shall also inform the depositary of any substantial modification in the extent of its competence.

(b) A Customs or Economic Union which is a Contracting Party to this Convention shall, for the matters within its competence, exercise in its own name the rights, and fulfil the responsibilities, which the Convention confers on the Members of such a Union which are Contracting Parties to this Convention. In such a case, the Members of such a Union shall not be entitled to individually exercise these rights, including the right to vote.

Article 9

1. Any Contracting Party which ratifies this Convention or accedes thereto shall be bound by any amendments to this Convention, including the General Annex, which have entered into force at the date of deposit of its instrument of ratification or accession.

2. Any Contracting Party which accepts a Specific Annex or Chapter therein shall be bound by any amendments to the Standards contained in that Specific Annex or Chapter which have entered into force at the date on which it notifies its acceptance to the depositary. Any Contracting Party which accepts a Specific Annex or Chapter therein shall be bound by any amendments to the Recommended Practices contained therein, which have entered into force at the date on which it notifies its acceptance to the depositary, unless it enters reservations against one or more of those Recommended Practices in accordance with Article 12 of this Convention.

Article 10

Application of the Convention

1. Any Contracting Party may, at the time of signing this Convention without reservation of ratification or of depositing its instrument of ratification or accession, or at any time thereafter, declare by notification given to the depositary that this Convention shall extend to all or any of the territories for whose international relations it is responsible. Such notification shall take effect three months after the date of the receipt thereof by the depositary. However, this Convention shall not apply to the territories named in the notification before this Convention has entered into force for the Contracting Party concerned

2. Any Contracting Party which has made a notification under paragraph 1 of this Article extending this Convention to any territory for whose international relations it is responsible may notify the depositary, under the procedure of Article 19 of this Convention, that the territory in question will no longer apply this Convention.

Article 11

For the application of this Convention, a Customs or Economic Union that is a Contracting Party shall notify to the Secretary General of the Council the territories which form the Customs or Economic Union, and these territories are to be taken as a single territory.
Acceptance of the provisions and reservations

Article 12

Acceptance of the provisions and reservations

1. All Contracting Parties are hereby bound by the General Annex.

2. A Contracting Party may accept one or more of the Specific Annexes or one or more of the Chapters therein. A Contracting Party which accepts a Specific Annex or Chapter(s) therein shall be bound by all the Standards therein. A Contracting Party which accepts a Specific Annex or Chapter(s) therein shall be bound by all the Recommended Practices therein unless, at the time of acceptance or at any time thereafter, it notifies the depositary of the Recommended Practice(s) in respect of which it enters reservations, stating the differences existing between the provisions of its national legislation and those of the Recommended Practice(s) concerned. Any Contracting Party which has entered reservations may withdraw them, in whole or in part, at any time by notification to the depositary specifying the date on which such withdrawal takes effect.

3. Each Contracting Party bound by a Specific Annex or Chapter(s) therein shall examine the possibility of withdrawing any reservations to the Recommended Practices entered under the terms of paragraph 2 and notify the Secretary General of the Council of the results of that review at the end of every three-year period commencing from the date of the entry into force of this Convention for that Contracting Party, specifying the provisions of its national legislation which, in its opinion, are contrary to the withdrawal of the reservations.

Article 13

Implementation of the provisions

1. Each Contracting Party shall implement the Standards in the General Annex and in the Specific Annex(es) or Chapter(s) therein that it has accepted within 36 months after such Annex(es) or Chapter(s) have entered into force for that Contracting Party.

2. Each Contracting Party shall implement the Transitional Standards in the General Annex within 60 months of the date that the General Annex has entered into force for that Contracting Party.

3. Each Contracting Party shall implement the Recommended Practices in the Specific Annex(es) or Chapter(s) therein that it has accepted within 36 months after such Specific Annex(es) or Chapter(s) have entered into force for that Contracting Party, unless reservations have been entered as to one or more of those Recommended Practices.

4. (a) Where the periods provided for in paragraph 1 or 2 of this Article would, in practice, be insufficient for any Contracting Party to implement the provisions of the General Annex, that Contracting Party may request the Management Committee, before the end of the period referred to in paragraph 1 or 2 of this Article, to provide an extension of that period. In making the request, the Contracting Party shall state the provision(s) of the General Annex with regard to which an extension of the period is required and the reasons for such request.

(b) In exceptional circumstances, the Management Committee may decide to grant such an extension. Any decision by the Management Committee granting such an extension shall state the exceptional circumstances justifying the decision and the extension shall in no case be more than one year. At the expiry of the period of extension, the Contracting Party shall notify the depositary of the implementation of the provisions with regard to which the extension was granted.

Article 14

Settlement of disputes

1. Any dispute between two or more Contracting Parties concerning the interpretation or application of this Convention shall so far as possible be settled by negotiation between them.

2. Any dispute which is not settled by negotiation shall be referred by the Contracting Parties in dispute to the Management Committee which shall thereupon consider the dispute and make recommendations for its settlement.

3. The Contracting Parties in dispute may agree in advance to accept the recommendations of the Management Committee as binding.

Article 15

Amendments to the Convention

1. The text of any amendment recommended to the Contracting Parties by the Management Committee in accordance with Article 6, paragraph 5 (a) (i) and (ii) shall be communicated by the Secretary General of the Council to all Contracting Parties and to those Members of the Council that are not Contracting Parties.

2. Amendments to the Body of the Convention shall enter into force for all Contracting Parties twelve months after deposit of the instruments of acceptance by those Contracting Parties present at the session of the Management Committee during which the amendments were recommended, provided that no objection is lodged by any of the Contracting Parties within a period of twelve months from the date of communication of such amendments.

3. Any recommended amendment to the General Annex or the Specific Annexes or Chapters therein shall be deemed to have been accepted six months after the date the recommended amendment was communicated to Contracting Parties, unless:

A. there has been an objection by a Contracting Party or, in the case of a Specific Annex or Chapter, by a Contracting Party bound by that Specific Annex or Chapter; or

B. a Contracting Party informs the Secretary General of the Council that, although it intends to accept the recommended amendment, the conditions necessary for such acceptance are not yet fulfilled.

4. If a Contracting Party sends the Secretary General of the Council a communication as provided for in paragraph 3 (b) of this Article, it may, so long as it has not notified the Secretary General of the Council of its acceptance of the recommended amendment, submit an objection to that amendment within a period of eighteen months following the expiry of the six-month period referred to in paragraph 3 of this Article.

5. If an objection to the recommended amendment is notified in accordance with the terms of paragraph 3 (a) or 4 of this Article, the amendment shall be deemed not to have been accepted and shall be of no effect.

6. If any Contracting Party has sent a communication in accordance with paragraph 3 (b) of this Article, the amendment shall be deemed to have been accepted on the earlier of the following two dates:

A. the date by which all the Contracting Parties which sent such communications have notified the Secretary General of the Council of their acceptance of the recommended amendment, provided that, if all the acceptances were notified before the expiry of the period of six months referred to in paragraph 3 of this Article, that date shall be taken to be the date of expiry of the said six-month period;

B. the date of expiry of the eighteen-month period referred to in paragraph 4 of this Article.

7. Any amendment to the General Annex or the Specific Annexes or Chapters therein deemed to be accepted shall enter into force either six months after the date on which it was deemed to be accepted or, if a different period is specified in the recommended amendment, on the expiry of that period after the date on which the amendment was deemed to be accepted.

8. The Secretary General of the Council shall, as soon as possible, notify the Contracting Parties to this Convention of any objection to the recommended amendment made in accordance with paragraph 3 (a), and of any communication received in accordance with paragraph 3 (b), of this Article. The Secretary General of the Council shall subsequently inform the Contracting Parties whether the Contracting Party or Parties which have sent such a communication raise an objection to the recommended amendment or accept it.

Article 16

1. Notwithstanding the amendment procedure laid down in Article 15 of this Convention, the Management Committee in accordance with Article 6 may decide to amend any Recommended Practice or to incorporate new Recommended Practices to any Specific Annex or Chapter therein. Each Contracting Party shall be invited by the Secretary General of the Council to participate in the deliberations of the Management Committee. The text of any such amendment or new Recommended Practice so decided upon shall be communicated by the Secretary General of the Council to the Contracting Parties and those Members of the Council that are not Contracting Parties to this Convention.

2. Any amendment or incorporation of new Recommended Practices decided upon under paragraph 1 of this Article shall enter into force six months after their communication by the Secretary General of the Council. Each Contracting Party bound by a Specific Annex or Chapter therein forming the subject of such amendments or incorporation of new Recommended Practices shall be deemed to have accepted those amendments or new Recommended Practices unless it enters a reservation under the procedure of Article 12 of this Convention.

Article 17

Duration of accession

1. This Convention is of unlimited duration but any Contracting Party may denounce it at any time after the date of its entry into force under Article 18 thereof.

2. The denunciation shall be notified by an instrument in writing, deposited with the depositary.

3. The denunciation shall take effect six months after the receipt of the instrument of denunciation by the depositary.

4. The provisions of paragraphs 2 and 3 of this Article shall also apply in respect of the Specific Annexes or Chapters therein, for which any Contracting Party may withdraw its acceptance at any time after the date of the entry into force.

5. Any Contracting Party which withdraws its acceptance of the General Annex shall be deemed to have denounced the Convention. In this case, the provisions of paragraphs 2 and 3 also apply.

Chapter V - Final provisions

CHAPTER V

FINAL PROVISIONS

Article 18

Entry into force of the Convention

1. This Convention shall enter into force three months after five of the entities referred to in paragraphs 1 and 5 of Article 8 thereof have signed the Convention without reservation of ratification or have deposited their instruments of ratification or accession.

2. This Convention shall enter into force for any Contracting Party three months after it has become a Contracting Party in accordance with the provisions of Article 8.

3. Any Specific Annex or Chapter therein to this Convention shall enter into force three months after five Contracting Parties have accepted that Specific Annex or that Chapter.

4. After any Specific Annex or Chapter therein has entered into force in accordance with paragraph 3 of this Article, that Specific Annex or Chapter therein shall enter into force for any Contracting Party three months after it has notified its acceptance. No Specific Annex or Chapter therein shall, however, enter into force for a Contracting Party before this Convention has entered into force for that Contracting Party.

Article 19

Depositary of the Convention

1. This Convention, all signatures with or without reservation of ratification and all instruments of ratification or accession shall be deposited with the Secretary General of the Council.

2. The depositary shall:

A. receive and keep custody of the original texts of this Convention;

B. prepare certified copies of the original texts of this Convention and transmit them to the Contracting Parties and those Members of the Council that are not Contracting Parties and the Secretary General of the United Nations;

C. receive any signature with or without reservation of ratification, ratification or accession to this Convention and receive and keep custody of any instruments, notifications and communications relating to it;

D. examine whether the signature or any instrument, notification or communication relating to this Convention is in due and proper form and, if need be, bring the matter to the attention of the Contracting Party in question;

E. notify the Contracting Parties, those Members of the Council that are not Contracting Parties, and the Secretary General of the United Nations of:

signatures, ratifications, accessions and acceptances of Annexes and Chapters under Article 8 of this Convention;
new Chapters of the General Annex and new Specific Annexes or Chapters therein which the Management Committee decides to recommend to incorporate in this Convention;
the date of entry into force of this Convention, of the General Annex and of each Specific Annex or Chapter therein in accordance with Article 18 of this Convention;
notifications received in accordance with Articles 8, 10, 11,12 and 13 of this Convention; 14.
withdrawals of acceptances of Annexes/Chapters by Contracting Parties;
denunciations under Article 17 of this Convention; and
any amendment accepted in accordance with Article 15 of this Convention and the date of its entry into force.

3. In the event of any difference appearing between a Contracting Party and the depositary as to the performance of the latter's functions, the depositary or that Contracting Party shall bring the question to the attention of the other Contracting Parties and the signatories or, as the case may be, the Management Committee or the Council.

Article 20

Registration and authentic texts

In accordance with Article 102 of the Charter of the United Nations, this Convention shall be registered with the Secretariat of the United Nations at the request of the Secretary General of the Council.

In witness whereof the undersigned, being duly authorized thereto, have signed this Convention.

Done at Kyoto, this eighteenth day of May nineteen hundred and seventy-three in the English and French languages, both texts being equally authentic, in a single original which shall be deposited with the Secretary General of the Council who shall transmit certified copies to all the entities referred to in paragraph 1 of Article 8 of this Convention.

General Annex

Chapter 1 - General Principles

CHAPTER 1

GENERAL PRINCIPLES

Legal Text

1.1. Standard

The Definitions, Standards and Transitional Standards in this Annex shall apply to Customs procedures and practices specified in this Annex and, insofar as applicable, to procedures and practices in the Specific Annexes.

1.2. Standard

The conditions to be fulfilled and Customs formalities to be accomplished for procedures and practices in this Annex and in the Specific Annexes shall be specified in national legislation and shall be as simple as possible.

1.3. Standard

The Customs shall institute and maintain formal consultative relationships with the trade to increase co-operation and facilitate participation in establishing the most effective methods of working commensurate with national provisions and international agreements.

Guidelines to Chapter 1

Guidelines to the legal text

Chapter 1

GENERAL PRINCIPLES

There are Guidelines to all Chapters of the General Annex, except Chapter 2, “Definitions”, and for all the Chapters of the Specific Annexes in the revised Kyoto Convention. These Guidelines are not part of the legal text of the Convention and entail no legal obligations. They contain explanations of the provisions of the Convention and give examples of best practice or methods of application and future developments. They illustrate what Customs administrations can achieve and how various initiatives work. Customs administrations may adopt and implement those best practices that are most suited to their particular environment. If that practice is more liberal than required by a particular provision or procedure, such an application can be regarded as granting a greater facility in accordance with Article 2 of the Convention.

1. Introduction

Customs Services play an integral role in world commerce. They have the essential task of enforcing the law, collecting duties and taxes, providing prompt clearance of goods and ensuring compliance. The manner in which Customs conducts its business has an impact on the movement of persons and goods in international trade. To reduce the Customs intervention in the international flow of goods to a minimum, modern Customs administrations must develop comprehensive and transparent Customs legislation.

The objective of this Convention is not only to meet the needs of the trading community to facilitate the movements of goods but also to improve the effectiveness and efficiency of compliance with Customs law and Customs control. Rapid changes in international trade, globalization and information technology make it necessary for Customs administrations to modify their procedures and practices to take account of these new developments.

There are several international conventions and other instruments designed to harmonize and simplify Customs procedures. This Convention, which contains the basic principles for all Customs procedures and practices, is one of them. The Recommendations of the UNCTAD Columbus Declaration give a broader view of Customs involvement in international trade. The International Customs Guidelines of the International Chamber of Commerce provide another model for an effective and efficient Customs administration. Other Conventions address specific means of transport or specific Customs procedures, such as the Convention on Facilitation of International Maritime Traffic, the Facilitation Annex (9) to the Convention on International Civil Aviation, the Istanbul Convention on the Temporary Admission and the TIR Convention on the International Transport of Goods.

This Convention provides the underlying conditions and instruments to help the Contracting Parties to achieve a modern Customs administration and to adapt their national legislation, without prejudice to effective control methods, to meet the requirements of a simpler, harmonized and more flexible approach. This will also allow international business to meet its Customs obligations as efficiently as possible.

2. Structure of the Convention

Standard 1.1

The amended Kyoto Convention contains a General Annex and a number of Specific Annexes to make its structure more logical. The General Annex deals with the core principles for all procedures and practices to ensure that these are uniformly applied by Customs administrations. The Specific Annexes cover the individual Customs procedures and practices. The provisions of the General Annex also apply to the procedures and practices set out in the Specific Annexes. The Convention covers not only Customs procedures relating to import, export, transit, processing, etc., but also Customs practices concerning rules that are not necessarily applicable to goods but are required to regulate other matters such as Customs control, the application of information technology, appeals, offences or relations with the business community.

2.1. Acceptance of Annexes

The Body of the Convention and the General Annex are obligatory for accession to the Convention. A Contracting Party is free, however, to accept all the Specific Annexes or only a number of Specific Annexes or Chapters dependent upon their specific requirements. It is recommended that at least the Specific Annexes on home use and export are accepted, as well as those concerning the formalities prior to the lodgement of the Goods declaration and those for warehouses, transit and processing. Acceptance of these basic procedures which are implemented by most Customs administrations will provide the first level of simplification and harmonization of Customs procedures across different administrations.

2.2. Reservations

In order to achieve a greater level of harmonization of Customs legislation worldwide, no reservations are allowed to the definitions or other provisions of the General Annex or to the definitions and Standards in the Specific Annexes which a Contracting Party has accepted.

2.3. General Annex

The General Annex reflects the main Customs functions in its Definitions, Standards and Transitional Standards which all have the same legal value. The application of the Standards and Transitional Standards is considered necessary to achieve harmonization and simplification of the Customs procedure or practice concerned. The difference between a Standard and a Transitional Standard is the longer period for implementation for the Transitional Standard. A Standard has to be implemented within 36 months. A Transitional Standard on the other hand has 60 months for implementation. This transitional period is to facilitate Contracting Parties in their acceptance of or accession to this Convention and to provide for the time required to adapt their procedures and practices to the objectives of the Convention.

The General Annex applies to all the Customs procedures and practices as well as to those contained in the Specific Annexes and their Chapters. This method of application of the provisions of the General Annex ensures that all core provisions of a general nature are applied in all Customs procedures and practices without it being necessary to repeat them in all those individual procedures and practices. This also prevents conflicting provisions concerning core provisions in the different Annexes or Chapters of the Convention.

Thus all the definitions of terms necessary for the interpretation of more than one Annex to the Convention are contained in the General Annex. The definitions of terms applicable to only one Specific Annex or Chapter therein are contained only in that Specific Annex or Chapter.

2.4. Specific Annexes and Chapters

Each Specific Annex or Chapter deals with a particular Customs procedure or practice covering, for example, import, export, transit, warehousing and processing, or a Customs practice, such as origin, Customs offences, treatment of travellers and postal formalities.

In a Specific Annex only those provisions that are applicable to the particular Customs procedure or practice are incorporated.

2.5. Guidelines

There are Guidelines to all the Chapters of the General Annex, except Chapter 2, “Definitions”, and for all the Specific Annexes and their Chapters. The Guidelines are not part of the legal text of the Convention and entail no legal obligations. They contain explanations of the provisions of the Convention and give examples of best practice or methods of application and future developments. They also reflect measures adopted by the WCO to secure and facilitate the international supply chain. They illustrate what Customs administrations can achieve, and how various initiatives can work. Customs administrations may adopt and implement those best practices that are most suited to their particular environment. If that best practice is more liberal than required by a particular provision or procedure, such an application can be regarded as granting a greater facility in accordance with Article 2 of the Convention.

3. Implementation of the provisions

Standard 1.2

Contracting Parties have to bring the Standards and Recommended Practices which they have accepted into force nationally. Their national legislation must therefore include at least the basic rules from the General Annex, together with detailed regulations for their implementation. These regulations will not necessarily be confined to Customs legislation and may apply to such instruments as official notifications, charters or ministerial decrees according to each Contracting Party's administrative system.

For the purpose of this Convention the concept of “national legislation” includes domestic legislation in situations where national legislation is not appropriate or applicable.

The basic rules covered in national legislation must include the conditions under which a Customs procedure is to be accomplished. In order to secure maximum compliance from national and international businesses, Customs administrations must ensure that their legislation and regulations are transparent, predictable, consistent and reliable. Information must therefore be provided to all parties involved in Customs transactions and must be easily accessible.

In addition to legislative measures for implementation of the provisions of this Convention, Contracting Parties must also provide for facilities, personnel and equipment to give actual effect to the objectives of the Convention. Such support is indispensable especially in light of new developments in the use of information technology, risk-management and audit-based controls.

4. Co-operation with the Trade

Standard 1.3

To address the rapidly growing volume of international trade, active co-operation and intensive communication between Customs and the trade are essential to complement each other’s objectives and responsibilities. Since Customs are an important element in international trade procedures, it is important that Customs administrations make use of modern working methods to administer their operations and that they strive to facilitate trade to the maximum extent possible.

In an ever-changing trading environment, where speed means a trader’s livelihood, Customs and the trade have to develop modern methods together. To achieve this a consultative relationship is indispensable and the use of modern information technology essential for the efficient and fast exchange of information. Before Customs implement changes or introduces new procedures or automated systems, Customs should consult with appropriate representatives of the trade so that both can gear their activities in consideration of each other’s needs. In this connection, reference is made to the Customs-Business partnership arrangements outlined in the SAFE Framework of Standards to Secure and Facilitate Global Trade.

In order to develop instruments for co-operation and consultation, Customs has to establish formal consultative relationships with the different national trade associations. Co-operation between Customs and the trade can result in formal Memoranda of Understanding which serve to benefit the accomplishment of both parties’ objectives and responsibilities. Further information on such Memoranda of Understanding can be found in the Guidelines to Chapter 6 of the General Annex on Customs control.

Chapter 2 - Definitions

CHAPTER 2

DEFINITIONS

Legal Text

For the purposes of the Annexes to this Convention:

E1./ F23.

“appeal ” means the act by which a person who is directly affected by a decision or omission of the Customs and who considers himself to be aggrieved thereby seeks redress before a competent authority;

E2./ F19.

“assessment of duties and taxes ” means the determination of the amount of duties and taxes payable;

E3./ F4.

“audit-based control ” means measures by which the Customs satisfy themselves as to the accuracy and authenticity of declarations through the examination of the relevant books, records, business systems and commercial data held by persons concerned;

E4./ F15.

“checking the Goods declaration ” means the action taken by the Customs to satisfy themselves that the Goods declaration is correctly made out and that the supporting documents required fulfil the prescribed conditions;

E5./ F9.

“clearance ” means the accomplishment of the Customs formalities necessary to allow goods to enter home use, to be exported or to be placed under another Customs procedure;

E6./ F10.

“Customs ” means the Government Service which is responsible for the administration of Customs law and the collection of duties and taxes and which also has the responsibility for the application of other laws and regulations relating to the importation, exportation, movement or storage of goods;

E7./ F3.

“Customs control ” means measures applied by the Customs to ensure compliance with Customs law;

E8./ F11.

“Customs duties ” means the duties laid down in the Customs tariff to which goods are liable on entering or leaving the Customs territory;

E9./ F16.

“Customs formalities ” means all the operations which must be carried out by the persons concerned and by the Customs in order to comply with the Customs law;

E10./ F18.

“Customs law ” means the statutory and regulatory provisions relating to the importation, exportation, movement or storage of goods, the administration and enforcement of which are specifically charged to the Customs, and any regulations made by the Customs under their statutory powers;

E11./ F2.

“Customs office ” means the Customs administrative unit competent for the performance of Customs formalities, and the premises or other areas approved for that purpose by the competent authorities;

E12./ F25.

“Customs territory ” means the territory in which the Customs law of a Contracting Party applies;

E13./ F6.

“decision ” means the individual act by which the Customs decide upon a matter relating to Customs law;

E14./ F7.

“declarant ” means any person who makes a Goods declaration or in whose name such a declaration is made;

E15./ F5.

“due date ” means the date when payment of duties and taxes is due;

E16./ F12.

“duties and taxes ” means import duties and taxes and/or export duties and taxes;

E17./ F27.

“examination of goods ” means the physical inspection of goods by the Customs to satisfy themselves that the nature, origin, condition, quantity and value of the goods are in accordance with the particulars furnished in the Goods declaration;

E18./ F13.

“export duties and taxes ” means Customs duties and all other duties, taxes or charges which are collected on or in connection with the exportation of goods, but not including any charges which are limited in amount to the approximate cost of services rendered or collected by the Customs on behalf of another national authority;

E19./ F8.

“Goods declaration ” means a statement made in the manner prescribed by the Customs, by which the persons concerned indicate the Customs procedure to be applied to the goods and furnish the particulars which the Customs require for its application;

E20./ F14.

“import duties and taxes ” means Customs duties and all other duties, taxes or charges which are collected on or in connection with the importation of goods, but not including any charges which are limited in amount to the approximate cost of services rendered or collected by the Customs on behalf of another national authority;

E21./ F1.

“mutual administrative assistance ” means actions of a Customs administration on behalf of or in collaboration with another Customs administration for the proper application of Customs law and for the prevention, investigation and repression of Customs offences;

E22./ F21.

“omission ” means the failure to act or give a decision required of the Customs by Customs law within a reasonable time on a matter duly submitted to them;

E23./ F22.

“person ” means both natural and legal persons, unless the context otherwise requires;

E24./ F20.

“release of goods ” means the action by the Customs to permit goods undergoing clearance to be placed at the disposal of the persons concerned;

E25./ F24.

“repayment ” means the refund, in whole or in part, of duties and taxes paid on goods and the remission, in whole or in part, of duties and taxes where payment has not been made;

E26./ F17.

“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;

E27./ F26.

“third party ” means any person who deals directly with the Customs, for and on behalf of another person, relating to the importation, exportation, movement or storage of goods.

Guidelines to Chapter 2

Guidelines to the legal text

Chapter 2

DEFINITIONS

For the purposes of the Annexes to this Convention :

E1./ F23.	“appeal” means the act by which a person who is directly affected by a decision or omission of the Customs and who considers himself to be aggrieved thereby seeks redress before a competent authority;
E2./ F19.	“assessment of duties and taxes” means the determination of the amount of duties and taxes payable;
E3./ F4.	“audit-based control” means measures by which the Customs satisfy themselves as to the accuracy and authenticity of declarations through the examination of the relevant books, records, business systems and commercial data held by persons concerned;
E4./ F15.	“checking the Goods declaration” means the action taken by the Customs to satisfy themselves that the Goods declaration is correctly made out and that the supporting documents required fulfil the prescribed conditions;
E5./ F9.	“clearance” means the accomplishment of the Customs formalities necessary to allow goods to enter home use, to be exported or to be placed under another Customs procedure;
E6./ F10.	“Customs” means the Government Service which is responsible for the administration of Customs law and the collection of duties and taxes and which also has the responsibility for the application of other laws and regulations relating to the importation, exportation, movement or storage of goods;
E7./ F3.	“Customs control” means measures applied by the Customs to ensure compliance with Customs law;

E8./ F11.	“Customs duties” means the duties laid down in the Customs tariff to which goods are liable on entering or leaving the Customs territory;
E9./ F16.	“Customs formalities” means all the operations which must be carried out by the persons concerned and by the Customs in order to comply with the Customs law;
E10./ F18.	“Customs law” means the statutory and regulatory provisions relating to the importation, exportation, movement or storage of goods, the administration and enforcement of which are specifically charged to the Customs, and any regulations made by the Customs under their statutory powers;
E11./ F2.	“Customs office” means the Customs administrative unit competent for the performance of Customs formalities, and the premises or other areas approved for that purpose by the competent authorities;
E12./ F25.	“Customs territory” means the territory in which the Customs law of a Contracting Party applies;
E13./ F6.	“decision” means the individual act by which the Customs decide upon a matter relating to Customs law;
E14./ F7.	“declarant” means any person who makes a Goods declaration or in whose name such a declaration is made;
E15./ F5.	“due date” means the date when payment of duties and taxes is due;
E16./ F12.	“duties and taxes” means import duties and taxes and/or export duties and taxes;
E17./ F27.	“examination of goods” means the physical inspection of goods by the Customs to satisfy themselves that the nature, origin, condition, quantity and value of the goods are in accordance with the particulars furnished in the Goods declaration;
E18./ F13.	“export duties and taxes” means Customs duties and all other duties, taxes or charges which are collected on or in connection with the exportation of goods, but not including any charges which are limited in amount to the approximate cost of services rendered or collected by the Customs on behalf of another national authority;
E19./ F8.	“Goods declaration” means a statement made in the manner prescribed by the Customs, by which the persons concerned indicate the Customs procedure to be applied to the goods and furnish the particulars which the Customs require for its application;
E20./ F14.	“import duties and taxes” means Customs duties and all other duties, taxes or charges which are collected on or in connection with the importation of goods, but not including any charges which are limited in amount to the approximate cost of services rendered or collected by the Customs on behalf of another national authority;

E21./ F1.	“mutual administrative assistance” means actions of a Customs administration on behalf of or in collaboration with another Customs administration for the proper application of Customs law and for the prevention, investigation and repression of Customs offences;
E22./ F21.	“omission” means the failure to act or give a decision required of the Customs by Customs law within a reasonable time on a matter duly submitted to them;
E23./ F22.	“person” means both natural and legal persons, unless the context otherwise requires;
E24./ F20.	“release of goods” means the action by the Customs to permit goods undergoing clearance to be placed at the disposal of the persons concerned;
E25./ F24.	“repayment” means the refund, in whole or in part, of duties and taxes paid on goods and the remission, in whole or in part, of duties and taxes where payment has not been made;
E26./ F17.	“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;
E27./ F26.	“third party” means any person who deals directly with the Customs, for and on behalf of another person, relating to the importation, exportation, movement or storage of goods.

Chapter 3 - Clearance and other customs formalities

CHAPTER 3

CLEARANCE AND OTHER CUSTOMS FORMALITIES

Legal Text

Competent Customs offices

3.1. Standard

The Customs shall designate the Customs offices at which goods may be produced or cleared. In determining the competence and location of these offices and their hours of business, the factors to be taken into account shall include in particular the requirements of the trade.

3.2. Standard

At the request of the person concerned and for reasons deemed valid by the Customs, the latter shall, subject to the availability of resources, perform the functions laid down for the purposes of a Customs procedure and practice outside the designated hours of business or away from Customs offices. Any expenses chargeable by the Customs shall be limited to the approximate cost of the services rendered.

3.3. Standard

Where Customs offices are located at a common border crossing, the Customs administrations concerned shall correlate the business hours and the competence of those offices.

3.4. Transitional Standard

At common border crossings, the Customs administrations concerned shall, whenever possible, operate joint controls.

3.5. Transitional Standard

Where the Customs intend to establish a new Customs office or to convert an existing one at a common border crossing, they shall, wherever possible, co-operate with the neighbouring Customs to establish a juxtaposed Customs office to facilitate joint controls.

The Declarant

(a) Persons entitled to act as declarant

3.6. Standard

National legislation shall specify the conditions under which a person is entitled to act as declarant.

3.7. Standard

Any person having the right to dispose of the goods shall be entitled to act as declarant.

(b) Responsibilities of the declarant

3.8. Standard

The declarant shall be held responsible to the Customs for the accuracy of the particulars given in the Goods declaration and the payment of the duties and taxes.

(c) Rights of the declarant

3.9. Standard

Before lodging the Goods declaration the declarant shall be allowed, under such conditions as may be laid down by the Customs:

a. to inspect the goods; and

b. to draw samples.

3.10. Standard

The Customs shall not require a separate Goods declaration in respect of samples allowed to be drawn under Customs supervision, provided that such samples are included in the Goods declaration concerning the relevant consignment.

The Goods declaration

(a) Goods declaration format and contents

3.11. Standard

The contents of the Goods declaration shall be prescribed by the Customs. The paper format of the Goods declaration shall conform to the UN-layout key.
For automated Customs clearance processes, the format of the electronically lodged Goods declaration shall be based on international standards for electronic information exchange as prescribed in the Customs Co-operation Council Recommendations on information technology.

3.12. Standard

The Customs shall limit the data required in the Goods declaration to only such particulars as are deemed necessary for the assessment and collection of duties and taxes, the compilation of statistics and the application of Customs law.

3.13. Standard

Where, for reasons deemed valid by the Customs, the declarant does not have all the information required to make the Goods declaration, a provisional or incomplete Goods declaration shall be allowed to be lodged, provided that it contains the particulars deemed necessary by the Customs and that the declarant undertakes to complete it within a specified period.

3.14. Standard

If the Customs register a provisional or incomplete Goods declaration, the tariff treatment to be accorded to the goods shall not be different from that which would have been accorded had a complete and correct Goods declaration been lodged in the first instance.

The release of the goods shall not be delayed provided that any security required has been furnished to ensure collection of any applicable duties and taxes.

3.15. Standard

The Customs shall require the lodgement of the original Goods declaration and only the minimum number of copies necessary.

(b) Documents supporting the Goods declaration

3.16. Standard

In support of the Goods declaration the Customs shall require only those documents necessary to permit control of the operation and to ensure that all requirements relating to the application of Customs law have been complied with.

3.17. Standard

Where certain supporting documents cannot be lodged with the Goods declaration for reasons deemed valid by the Customs, they shall allow production of those documents within a specified period.

3.18. Transitional Standard

The Customs shall permit the lodgement of supporting documents by electronic means.

3.19. Standard

The Customs shall not require a translation of the particulars of supporting documents except when necessary to permit processing of the Goods declaration. Lodgement, registration and checking of the Goods declaration

3.20. Standard

The Customs shall permit the lodging of the Goods declaration at any designated Customs office.

3.21. Transitional Standard

The Customs shall permit the lodging of the Goods declaration by electronic means.

3.22. Standard

The Goods declaration shall be lodged during the hours designated by the Customs.

3.23. Standard

Where national legislation lays down a time limit for lodging the Goods declaration, the time allowed shall be sufficient to enable the declarant to complete the Goods declaration and to obtain the supporting documents required.

3.24. Standard

At the request of the declarant and for reasons deemed valid by the Customs, the latter shall extend the time limit prescribed for lodging the Goods declaration.

3.25. Standard

National legislation shall make provision for the lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods.

3.26. Standard

When the Customs cannot register the Goods declaration, they shall state the reasons to the declarant.

3.27. Standard

The Customs shall permit the declarant to amend the Goods declaration that has already been lodged, provided that when the request is received they have not begun to check the Goods declaration or to examine the goods.

3.28. Transitional Standard

The Customs shall permit the declarant to amend the Goods declaration if a request is received after checking of the Goods declaration has commenced, if the reasons given by the declarant are deemed valid by the Customs.

3.29. Transitional Standard

The declarant shall be allowed to withdraw the Goods declaration and apply for another Customs procedure, provided that the request to do so is made to the Customs before the goods have been released and that the reasons are deemed valid by the Customs.

3.30. Standard

Checking the Goods declaration shall be effected at the same time or as soon as possible after the Goods declaration is registered.

3.31. Standard

For the purpose of checking the Goods declaration, the Customs shall take only such action as they deem essential to ensure compliance with Customs law.

Special Procedures for Authorized persons

3.32. Transitional Standard

For authorized persons who meet criteria specified by the Customs, including having an appropriate record of compliance with Customs requirements and a satisfactory system for managing their commercial records, the Customs shall provide for:

release of the goods on the provision of the minimum information necessary to identify the goods and permit the subsequent completion of the final Goods declaration;
clearance of the goods at the declarant's premises or another place authorized by the Customs; and, in addition, to the extent possible, other special procedures such as:
allowing a single Goods declaration for all imports or exports in a given period where goods are imported or exported frequently by the same person;
use of the authorized persons’ commercial records to self-assess their duty and tax liability and, where appropriate, to ensure compliance with other Customs requirements;
allowing the lodgement of the Goods declaration by means of an entry in the records of the authorized person to be supported subsequently by a supplementary Goods declaration.

Examination of Goods

(a) Time required for examination of goods

3.33. Standard

When the Customs decide that goods declared shall be examined, this examination shall take place as soon as possible after the Goods declaration has been registered.

3.34. Standard

When scheduling examinations, priority shall be given to the examination of live animals and perishable goods and to other goods which the Customs accept are urgently required.

3.35. Transitional Standard

If the goods must be inspected by other competent authorities and the Customs also schedules an examination, the Customs shall ensure that the inspections are co-ordinated and, if possible, carried out at the same time.

(b) Presence of the declarant at examination of goods

3.36. Standard

The Customs shall consider requests by the declarant to be present or to be represented at the examination of the goods. Such requests shall be granted unless exceptional circumstances exist.

3.37. Standard

If the Customs deem it useful, they shall require the declarant to be present or to be represented at the examination of the goods to give them any assistance necessary to facilitate the examination.

(c) Sampling by the Customs

3.38. Standard

Samples shall be taken only where deemed necessary by the Customs to establish the tariff description and/or value of goods declared or to ensure the application of other provisions of national legislation. Samples drawn shall be as small as possible.

Errors

3.39. Standard

The Customs shall not impose substantial penalties for errors where they are satisfied that such errors are inadvertent and that there has been no fraudulent intent or gross negligence. Where they consider it necessary to discourage a repetition of such errors, a penalty may be imposed but shall be no greater than is necessary for this purpose.

Release of Goods

3.40. Standard

Goods declared shall be released as soon as the Customs have examined them or decided not to examine them, provided that :

no offence has been found;
the import or export licence or any other documents required have been acquired;
all permits relating to the procedure concerned have been acquired; and
any duties and taxes have been paid or that appropriate action has been taken to ensure their collection.

3.41. Standard

If the Customs are satisfied that the declarant will subsequently accomplish all the formalities in respect of clearance they shall release the goods, provided that the declarant produces a commercial or official document giving the main particulars of the consignment concerned and acceptable to the Customs, and that security, where required, has been furnished to ensure collection of any applicable duties and taxes.

3.42. Standard

When the Customs decide that they require laboratory analysis of samples, detailed technical documents or expert advice, they shall release the goods before the results of such examination are known, provided that any security required has been furnished and provided they are satisfied that the goods are not subject to prohibitions or restrictions.

3.43. Standard

When an offence has been detected, the Customs shall not wait for the completion of administrative or legal action before they release the goods, provided that the goods are not liable to confiscation or forfeiture or to be needed as evidence at some later stage and that the declarant pays the duties and taxes and furnishes security to ensure collection of any additional duties and taxes and of any penalties which may be imposed.

Abandonment or destruction of goods

3.44. Standard

When goods have not yet been released for home use or when they have been placed under another Customs procedure, and provided that no offence has been detected, the person concerned shall not be required to pay the duties and taxes or shall be entitled to repayment thereof:

when, at his request, such goods are abandoned to the Revenue or destroyed or rendered commercially valueless under Customs control, as the Customs may decide. Any costs involved shall be borne by the person concerned;
when such goods are destroyed or irrecoverably lost by accident or force majeure, provided that such destruction or loss is duly established to the satisfaction of the Customs;
on shortages due to the nature of the goods when such shortages are duly established to the satisfaction of the Customs.

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

3.45. Transitional Standard

When the Customs sell goods which have not been declared within the time allowed or could not be released although no offence has been discovered, the proceeds of the sale, after deduction of any duties and taxes and all other charges and expenses incurred, shall be made over to those persons entitled to receive them or, when this is not possible, held at their disposal for a specified period.

Guidelines to Chapter 3

Guidelines to the legal text

Chapter 3

CLEARANCE OTHER CUSTOMS FORMALITIES

Introduction

Clearance of goods and other Customs formalities form the core functions of Customs business. These functions place Customs administrations in the centre of world commerce since the manner in which they clear goods and carry out other related tasks, such as enforcing the law and collecting duties and taxes, has a great impact on national and international economy.

There are various Customs formalities to be accomplished when goods are brought into a Customs territory in order to ensure compliance with Customs law. These are the operations that must be carried out by both the persons concerned with the goods and by Customs in order to comply with the statutory or regulatory provisions which Customs has responsibility to enforce. Examples of Customs formalities are the specific actions that must be taken to clear goods for home use, exportation, temporary admission, warehousing or Customs transit. In addition, there are other Customs formalities that must be complied with from the time the goods are introduced into a Customs territory, regardless of the mode of transport that carried the goods, until they are placed under a specific Customs procedure.

The Customs formalities place obligations on the person concerned with the goods. This person is generally the owner of the goods, a third party designated by the owner or a transporter of the goods, depending on the formality to be completed. The overall obligations are to produce the goods and the means of transport to Customs at the earliest possible time; to lodge the Goods declaration with any required supporting documents (invoice, import license, certificate of origin, etc.); to furnish security where appropriate and to pay duties and taxes when applicable. There are also obligations on Customs which include establishing Customs offices, designating the hours of business, checking the Goods declaration, examining the goods, assessing and collecting duties and taxes, and releasing the goods.

These formalities are essential to ensure compliance with Customs laws and regulations and to ensure that Customs’ revenue and regulatory interests are safeguarded. At the same time they should be as simple as possible and should cause a minimum of inconvenience to international trade.

The formalities concerning assessment, collection and payment of duties and taxes are covered in Chapter 4 of the General Annex and the corresponding Guidelines, whereas matters concerning security are dealt with in Chapter 5 of the General Annex and the corresponding Guidelines.

In keeping with the principles of transparency and a system of open government, which includes the Customs administration, all information pertaining to Customs formalities must be made available in accordance with the principles laid down in Chapter 9 of the General Annex.

There are eleven parts to these Guidelines for Chapter 3. They deal with the following topics :

Part 1 Establishment of Customs offices

Part 2 Rights and responsibilities of the declarant

Part 3 The Goods declaration

Part 4 Lodgement and registration of the Goods declaration

Part 5 Amendment or withdrawal of the Goods declaration

Part 6 Checking the Goods declaration

Part 7 Special procedures for authorized persons

Part 8 Examination and sampling of the goods

Part 9 Errors

Part 10 Release of the goods

Part 11 Abandonment or destruction of goods

These Guidelines must be read in conjunction with the legal text contained in Chapter 3 of the General Annex.

It is important to reiterate that all the provisions in the General Annex apply to the provisions of the Specific Annexes. This is the reason that Standard 1 in each Chapter of each Specific Annex states that the procedure or practice is covered by the provisions of that Chapter and, insofar as applicable, by the provisions of the General Annex. Thus, every procedure or practice must be read in conjunction with the provisions of this Chapter of the General Annex in particular.

This Chapter, however, does not cover procedures relating to travellers and postal traffic. These subjects are covered in Chapters 1 and 2 of Specific Annex J, Special procedures. For these procedures the clearance formalities may be slightly different from those specified in the General Annex.

1. Part 1 – Establishment of Customs offices

1.1. Competent Customs offices

Formalities for clearing goods generally have to be completed at a Customs office. Customs administrations will not only establish Customs offices at their borders, but also at appropriate locations inland. The need to establish a Customs office will be based on the volumes of traffic, goods and travellers that enter the Customs territory at land routes, ports, airports and inland locations.

Where these volumes are sufficient to justify the establishment of a Customs office, Customs and other regulatory authorities involved in clearing goods, travellers and conveyances must proceed in co-operation with the trading community.

1.2. Establishment and designation of a Customs office

Standard 3.1

Standard 1 of this Chapter requires Customs to designate the Customs offices at which goods may be produced or cleared, taking into account the requirements of the trade as well as changing trade patterns. When a Customs office is established, the Customs will decide the jurisdiction of that office. In determining location of the offices and the responsibilities and its hours of business the Customs should do so in consultation with the trade, since the needs of both the trade and the Customs administration need to be taken into account in order to ensure efficient organization for all concerned.

Customs offices at major ports or harbours, airports and land frontier routes will normally be competent to deal with all Customs procedures, and may be open 24 hours a day for persons to present or declare goods.

However, the competence of certain Customs offices may be restricted in the types of transport that they cater for, such as only trains, aircraft or private vehicles, or they may be restricted to specific categories of goods, for example at oil terminals or bulk goods depots. This competence may also be dictated, particularly where containers are concerned, by the availability of security equipment and staff (scanners, anti-explosives dog teams, etc.). In determining the competence, Customs may require certain categories of goods that need to be examined or cleared by Customs officials with specialized knowledge to be cleared at Customs offices designated for that purpose. Such goods could be jewellery, antiques, plants, works of art and so on. Although the clearance of certain specialized goods may be restricted to certain offices designated for that purpose, a sufficient number of entry and exit points for those goods should nevertheless be retained.

Customs also has to take account of changing trade patterns and should consider such influences as quota expiration dates, the importation or exportation of goods prior to a particular season, or an increase in commercial or charter flights to a particular destination. During any of these periods Customs offices may have problems processing significantly increased traffic and they will need to plan for alternatives so as not to cause undue delays.

Where the term “Customs office” is used throughout the Convention, it is used in a general sense and does not necessarily refer only to a particular physical building. There may be a number of sub-offices within a designated Customs office in a particular area, for example in a large port, all with the same competencies.

1.3. Hours of business and places of clearance

Standard 3.2

There are times when Customs is requested to perform a Customs formality away from a Customs office or outside the designated hours of business. These circumstances could arise due to urgency on the part of the trader or due to an unforeseen circumstance such as transport delays, imminent closure of quotas, and special imports or exports needed for trade shows. In all cases, Customs is required to consider the request and to make a reasonable effort to approve it whenever possible. Standard 3.2 requires Customs to be flexible in such circumstances and, when they believe the request to be valid, to grant it if the resources are available. There are many reasons that can cause a trader to submit such a request, but perhaps the most common comes from importers or exporters who handle frequent and large volumes of goods and who request Customs to clear the goods at the declarant's premises or at cargo consolidation centres. This can save both time and costs to the trader and to the ultimate consumers. If resources allow, it can also help Customs to prevent congestion at border Customs offices and may provide more effective measures for Customs control. A request can also be considered valid when performing the Customs functions outside of office hours will simply provide a distinct economic advantage for the operator.

There will, however, be expenses incurred in providing such facilitation. These would include travelling expenses of Customs officers, overtime or other related charges. This Standard stipulates that such charges can be levied but that they must be limited to the approximate cost of the services rendered.

Many administrations provide for clearance at the premises of the declarant as a matter of course when such declarants are authorized persons such as those specified in Transitional Standard 3.32.

1.4. Juxtaposed Customs offices

Standard 3.3

Where Customs offices are located at a common border crossing, the Customs administrations concerned shall correlate the business hours and the competence of those offices.

Where Customs offices are located at common land or waterway borders, Standard 3.3 requires that the Customs administrations of the juxtaposed offices will arrange joint hours of business and equal competence, wherever practicable, to assist both travellers and the trade. Harmonizing the competence of corresponding Customs offices should apply to all the Customs activities of the office.

The experiences of many administrations that operate juxtaposed Customs offices clearly indicate the advantages that can accrue from such co-ordination. There has been better co-operation between officers of the two Customs territories; an easier exchange of information; more efficient control of documents, goods and means of transport; reduced building and running costs; and reduction in staff, particularly where officers of one administration are authorized to act on behalf of the other. Trade has also been facilitated through faster clearance and reduced costs due to the many conveniences provided by the juxtaposed Customs office.

1.5. Co-operation at juxtaposed Customs offices

Transitional Standard 3.4

At common border crossings, the Customs administrations concerned shall, whenever possible, operate joint controls.

Co-operation between Customs administrations in regard to juxtaposed offices, hours of business and competence may open the way to joint controls, as specified in Transitional Standard 3.4. These joint operations can become a one-stop Customs control. In many countries or Customs territories that share a common border, the formalities of the exporting administration could be carried out together with the import formalities in the juxtaposed Customs office. In addition, where there are no export formalities, the import data on the Goods declaration can be accepted as the export data for the exporting country or territory. The importing administration can furnish the pertinent data to the exporting country or territory for statistical purposes. Likewise, when the goods or conveyances are selected for examination for either export or import controls, the examinations can be conducted at one time by officers representing both Customs administrations.

Where joint Customs controls cannot be established on a common border, for example where this is a river, the Customs of the juxtaposed offices can still consult one another to standardize documentation requirements and share as much of the information as possible to minimize duplication of requirements at a common border for traders.

Customs administrations must therefore work, in co-ordination with their counterpart Customs, to seek ways to establish single controls in juxtaposed Customs offices. This is particularly advantageous to further facilitate the movement of goods and persons. Since establishing joint controls or a single control is a matter of national policy, it can only be truly effective if the governments of the countries or territories concerned find a political method to make it work.

An agreement concluded between Switzerland and France on juxtaposed Customs office is attached as Appendix III to this Guideline for reference purpose.

1.6. New Customs offices at common borders

Transitional Standard 3.5

Transitional Standard 3.5 stipulates that the co-operation between the Customs administrations of juxtaposed Customs territories be extended to the establishment of new or converted Customs offices where it is to the advantage of both administrations and it is possible.

To take this co-operative concept a step further, and if national policy allows, Customs administrations at common borders could also establish joint Customs offices. These can be established in one building or in separate buildings in the same area.

The close co-operation described in Standard 3.3 and Transitional Standards 3.4 and 3.5 is normally based on official mutual assistance arrangements or Memoranda of Understanding signed between Customs administrations or higher levels of government. Where possible, other interested authorities such as Immigration, Agriculture, Plant Quarantine and Public Health should take part in the negotiations for common Customs offices, hours of business and matters of competence since their functions are intrinsically linked to these as well. These other authorities should also be encouraged to co-operate with Customs and their counterparts in the juxtaposed country or territory.

2. Part 2 – Rights and responsibilities of the declarant

When goods are brought into the Customs territory, Customs must be informed who is the person responsible to fulfil the obligations to Customs with regard to the goods. This can be the owner of the goods or a third party, including Customs brokers, agents and transporters. In addition, Customs must be informed of the purpose of bringing the goods into the Customs territory. This information is conveyed by means of a declaration. When the goods are to be placed under a Customs procedure, this information is normally submitted in a Goods declaration. The person responsible for the contents of a declaration is generally referred to as the declarant. Some administrations use other terms such as the importer or the importer of record.

2.1. The declarant

Standard 3.6

National legislation shall specify the conditions under which a person is entitled to act as declarant.

The mutual responsibilities and obligations of both Customs and the trade are critical to proper administration of international trade procedures. Standard 3.6 therefore stipulates that national legislation must prescribe who is entitled to be a declarant and the conditions under which the person can act as a declarant.

National legislation can specify certain requirements, such as that the declarant be established in the Customs territory. Some countries specifically require the declarant to be approved by Customs. Others require that the declarant have a financial interest in the goods. In some countries the administration decides who can be a professional declarant and may specify certain criteria that must be fulfilled, such as the person demonstrating a high level of integrity, experience in the international movement of goods, knowledge of the Customs law and a clean record with no offences.

Exceptions can be made, however, for declarants who are responsible for goods under transit or for the temporary importation of means of transport, and for declarants who lodge a Goods declaration only on an occasional basis, where there are little or no duties and taxes involved, or where the goods are not subject to any restrictions. All of these exceptions are subject to the approval of Customs.

2.2. Who can be a declarant

Standard 3.7

Any person having the right to dispose of the goods shall be entitled to act as declarant.

This Standard allows that any person who has the right to dispose of the goods can act as a declarant. To provide an important facilitation to the trade, this should not be taken as referring solely to the owner of the goods, but should be interpreted as broadly as possible, in accordance with national legislation, to include third parties acting on behalf of the owner such as the carrier, the consignee, a forwarding agent or a Customs broker, express courier in door to door services etc. In some cases it may also include banks according to ICC the Uniform Customs and Practices for Documentary Letters of Credit, the government, in the case of seizure of goods or when goods are abandoned to the revenue (The Guidelines to Chapter 8 on the Relationship between the Customs and third parties should be consulted for more detailed information on third parties and the circumstances in which they act as a declarant).

Customs normally allow any person who can provide the necessary documentation to clear the goods to function as a declarant. However, where there may be any doubt Customs may require a declarant to justify that he has the right to dispose of the goods. The following documents are normally accepted as establishing the right to dispose of the goods : waybill, bill of lading, despatch note, loading receipt or commercial invoice. Customs may also accept an oral or written statement from the owner of the goods.

Where a Goods declaration imposes certain obligations on a specific person, for example, the terms of re-export for goods imported temporarily or for inward processing, national legislation may prescribe that the declaration must be made by that person or by someone acting on his behalf.

In the case of a third party, the declaration can be in the name of the person being represented by the third party (direct representation) or in the third party’s own name (indirect representation). Direct or indirect representation may be restricted to Customs agents established in the Customs territory.

Customs may require any representative acting on behalf of another person to produce evidence for such representation. Normally a representative must state that he is acting as such, for example in the Goods declaration, and specify whether the representation is direct or indirect. Where a representative fails to state that he is acting on behalf of another person, he will be deemed to be acting on his own behalf.

2.3. Responsibility for particulars given

Standard 3.8

The declarant shall be held responsible to the Customs for the accuracy of the particulars given in the Goods declaration and the payment of the duties and taxes.

This Standard states that the declarant is responsible for the particulars given to Customs by means of a Goods declaration. This also includes any particulars given in separate documents which are required to be produced with the Goods declaration, even where these are provided by another person. Thus the declarant should check these documents carefully.

The declarant is obliged to exercise reasonable care in preparing the Goods declaration and in reproducing documents from other sources. In some countries when a third party acts under direct representation, the person he represents is held responsible; if he is acting under indirect representation, he is held responsible.

2.4. Drawing samples

Standard 3.9

Before lodging the Goods declaration the delcarant shall be allowed, under such conditions as may be laid down by the Customs :

(a) to inspect the goods; and

(b) to draw samples.

Declarants may wish to inspect the goods or draw samples before lodging the Goods declaration. Standard 3.9 specifies that Customs should allow this, subject to necessary conditions. The most common conditions would be that this take place under Customs supervision and that the declarant specifically request this facilitation. The quantity drawn as a sample is normally not more than that necessary for inspection or analysis, and possible counter-analysis. Any costs are the responsibility of the declarant.

Normal Customs formalities apply to any samples taken, except for those which have been destroyed or lost through inspection or analysis. Treatment of waste or scrap from samples should follow the procedures laid down for such goods.

2.5. Goods declaration for samples

Standard 3.10

Where the Goods declaration for the consignment is normally lodged soon after the samples have been drawn, the quantity of the samples will be included in the declaration for the whole consignment. Customs will not ask for a separate Goods declaration for the samples.

If samples are temporarily removed from the consignment, Customs may require an application document for verification and control.

3. Part 3 – The Goods declaration

After the goods have been introduced into a Customs territory, they have to be placed under a Customs procedure, such as home use, temporary admission, transit, Customs warehousing or processing, within a certain time limit. The declarant indicates which Customs procedure is to be applied to the goods by lodging a Goods declaration, or in other words, by declaring the goods for a certain Customs procedure. For the purposes of this Convention, a declarant is any person, as described in Part 2 above, who makes a Goods declaration.

Chapter 2 of the General Annex, Definitions, describes a Goods declaration as a statement made by the person concerned in the manner prescribed by Customs. The manner in which the person concerned, the declarant, makes a statement could be oral, on paper or in an electronic format. This statement will indicate to Customs the procedure to be applied to the goods and it will furnish the particulars which Customs require for the procedure requested.

Although the format and content of such declarations are specified by Customs, this does not preclude the use of other documents, including those provided for under other international agreements. The following are examples of such declarations and the Customs practices and procedures where they could apply :

For the formalities prior to lodgement of a Goods declaration included in Specific Annex A.1, for temporary storage included in Specific Annex A.2 and for stores included in Specific Annex J.4, the Facilitation Convention of the International Maritime Organisation (1965) contains FAL Forms 1, 2 and 3 for the General declaration, the Cargo declaration and Ship’s stores declaration respectively.
Annex 9 (Facilitation) to the Convention on International Civil Aviation provides for the use of General and Cargo declaration forms in international air transport. However, most countries use the cargo manifest in place of the Cargo declaration based on a recommendation in that Convention.
For the temporary admission procedure included in Specific Annex G.1, an ATA or CPD Carnet specified in the Istanbul Convention on Temporary Admission can replace a Goods declaration.
For the international cross-border transit of goods included in Specific Annex E.1, a TIR Carnet prescribed by the TIR Convention of the UNECE can be used as a Goods declaration.

3.1. Contents and format of the Goods declaration

Standard 3.11

The contents of the Goods declaration shall be prescribed by the Customs. The paper format of the Goods declaration shall conform to the UN-layout key.

For automated Customs clearance processes, the format of the electronically lodged Goods declaration shall be based on international standards for electronic information exchange as prescribed in the Customs Co-operation Council Recommendations on information technology.

Standard 3.11 states that Customs will prescribe the contents of the Goods declaration. Therefore Customs will ensure that all the information needed for Customs requirements is taken into account. However, in many administrations, since Customs is the major agency dealing with imported goods at the border, Customs is frequently required to obtain information relating to other matters such as compilation of trade statistics or banking and exchange control requirements. When this is the case, Customs will also prescribe these additional information requirements. For the format of the Goods declaration, most administrations prescribe a standard format that is based on the UN-layout key for paper-based declarations. Thus the two main considerations in designing a Goods declaration are the format and the data content that is required by Customs.

A Goods declaration can be lodged in paper form or electronically using electronic data interchange (EDI). In certain cases where the value of the goods is low or below a certain threshold, and particularly when such goods are brought into the Customs territory by travellers, oral declarations should be accepted.

In order to facilitate international trade, it is very important that the layout of the Goods declaration used by all Customs administrations be standardised. Thus Customs administrations are required by this Convention to conform to the UN layout key. This layout key prescribes the size of the form and the minimum data to be provided on a Goods declaration. Any Contracting Party that does not conform to this format will be required to modify their formats during the transitional period provided by the Convention for implementation of the provisions. Detailed information on the UN layout key is included in Appendix I to this Guideline.

The use of the UN layout key has led to the development of the Single Goods Declaration (SGD), which appears in the Recommendation of the Customs Co-operation Council (WCO) of 26 June 1990 and is included in Appendix II.

A Goods declaration similar to the SGD and known as the Single Administrative Document (SAD) was introduced in 1988 by the European Community to be used in the countries of the European Union for all import, export and transit procedures. The SAD format is widely applied amongst Customs administrations. It is also used by the countries which have applied for membership of the European Union and by the countries of the European Free Trade Association. In addition, a modified version of the SAD is used by countries which have implemented UNCTAD’s ASYCUDA Customs automation system. The data elements contained in both the SGD and the SAD are limited to a maximum of approximately 55 for all Customs procedures.

The concept of combining information required by Customs with data required by other governmental agencies, which is an important advantage of the SAD, can give useful support to the co-ordination of official controls provided for in Transitional Standard 3.35.

When describing the data elements for the Goods declaration, Customs should provide detailed instructions in the form of explanatory notes for the specifications that are to be entered on the declaration. Customs is also required by Chapter 9 of the General Annex, Information, decisions and rulings supplied by Customs, to make this information easily available to the public. The Guidelines to Chapter 9 contain further details on how Customs can make this information available.

Where Goods declarations are required in a paper format, Customs must ensure that the Goods declaration forms are also easily available to the declarants. In many administrations Customs permits the private sector to produce and sell Goods declaration forms in accordance with Customs specifications.

As required for paper-based Goods declarations, the formats used for the electronic data interchange (EDI) in automated processes must be harmonised. The WCO advocates that Customs administrations use the internationally accepted standards for Customs messages developed under UNEDIFACT. Similarly, the use of codes in an electronic environment is essential and there are several internationally accepted standards on codes, particularly those of the International Standards Organisation (ISO). With information technology developing at a rapid pace, there may well be alternative standards emerging in the future, such as use of the Internet. The key point for traders and Customs alike is that the electronic message requirements are internationally standardized and harmonized.

Standard 1 of Chapter 7 of the General Annex on the Application of information technology states that Customs must apply information technology where this is helpful and cost-effective for both Customs and trade. The Guidelines to Chapter 7 address the use of EDI by Customs in detail.

3.2. Minimum data requirements

Standard 3.12

Customs must keep the data requirements to the minimum in accordance with Standard 3.12. To comply with this, Customs should examine their needs carefully and should consult with any other government agencies involved, in particular the statistical authorities. In some countries the statistical authority collects or receives data directly from the declarant. However, Customs and the other authorities should make every effort to ensure that a declarant provides the necessary information only once.

Customs usually requires the following particulars in full detail or by code sets, as applicable:

(a) The Customs procedure requested.

(b) Particulars relating to persons :

name and address of the declarant,
name and address of the importer, and
name and address of the consignor.

mode of transport, and
identification of the means of transport.

(d) Particulars relating to the goods :

description of the goods,
tariff classification of the goods,
country of origin,
country of dispatch or export,
country of destination,
description of the packages (number, nature, marks and numbers), and
quantity, gross weight and net weight of the goods.

(e) Particulars for the assessment of import or export duties and taxes :

rates of import or export duties and taxes,
dutiable value or invoice price,
exchange rate,
information concerning tax bases other than value, such as weight, litres for alcohol products, carats for gold or gems, etc., and
terms of delivery.

(f) Other particulars :

information concerning preferential or other special treatment;
reference to documents submitted in support of the Goods declaration; and
place, date and signature of the declarant.

Where automated systems are used for Customs clearance, fewer data elements may be required since some of the data elements can be generated automatically from other sources. For instance, the dutiable or Customs value can be obtained from the invoice price with some deductions and/or additions as necessary for the terms of delivery (f.o.b, c.i.f, c&f, etc.), or from information already available in the automated system such as the rate of exchange.

By using automated systems many countries generate statistical information directly from the electronic Goods declaration. This information is forwarded to the national statistical authorities on a regular basis by Customs, hence there is no need to require a separate copy of the Goods declaration for statistical purposes.

3.3. Provisional or incomplete declaration

Standard 3.13

To facilitate the quick release of goods, Standard 3.13 allows that a provisional or incomplete declaration may be submitted. In some countries this is regarded as a simplified procedure.

A provisional declaration is considered as an undertaking by the declarant to produce a final declaration or to provide supplementary information to Customs within a specified period in order to receive immediate release of the goods, whereas an incomplete declaration may be one that is made out on the same form as a complete declaration but without all the details having been included.

If an authorization is required for the lodgement of a provisional or incomplete declaration, it is normally granted at the discretion of Customs. This authorization may be issued on a general or a case-by-case basis. Some Customs administrations grant authorizations on a general basis for provisional declarations and on a case-by-case basis for incomplete declarations. In other administrations the acceptance of the provisional or incomplete declaration itself constitutes an authorization. In regard to the levels of approval for such authorizations, general authorizations may be granted at the Head office level, whereas authorizations on a case-by-case basis may be granted at the local level.

A provisional or incomplete declaration should be allowed when it is clear that the declarant does not have all the data required on hand, for example with bulk goods where the weight can only be determined after unloading.

Customs can refuse the lodgement of a provisional or incomplete declaration if essential information is missing, such as a reasonable description of the goods, the application of a quota arrangement or information considered indispensable for the application of controls for purposes of security measures* . Where appropriate, Customs may require that a provisional estimated value be stated. The declarant may also be required to state which other particulars in the declaration are only provisional or incomplete.

A provisional or incomplete declaration must be completed within a definite period that should be specified in national legislation.

There are different ways in which the missing data may subsequently be furnished. Where essential information such as the description of the goods or value is not involved, Customs may allow the missing data to be completed by an oral or written notification. For an incomplete declaration, the missing data may be completed on the same declaration or through a supplementary Goods declaration. Where essential information is missing, the Customs may require the declarant to furnish a new and complete Goods declaration.

The provisional or incomplete declaration does not need to conform to the UN layout key, although this is recommended. Customs may, for example, develop formats which preclude the use of the UN layout key in these situations. However, once the supplementary data is submitted to complete the Goods declaration, the final declaration must conform to the standardized format discussed earlier.

Where appropriate, the provisions of this Standard may be applied instead of Standard 3.24 that allows an extension of the time period to lodge the Goods declaration.

3.4. Tariff treatment

Standard 3.14

The release of the goods shall not be delayed provided that any security required has been furnished to ensure collection of any applicable duties and taxes.

When Customs accepts a provisional or incomplete declaration, they should determine the tariff treatment of the goods on the basis of the information provided or that they are assured will subsequently be provided. This Standard provides that the tariff treatment, including the classification and the rate of duty, should not be any different from that which would have been accorded had a complete and correct declaration been submitted. This treatment also includes processing the declaration normally and without undue delay.

Likewise, release of the goods must not be delayed solely due to the fact that Customs is not in possession of a complete Goods declaration, provided that information on the nature and value of the goods is available or that Customs is satisfied that it will be given and all the obligations fulfilled. Customs may require that a security be furnished to ensure that the declarant fulfils obligations relating to the provisional or incomplete declaration and that no material discrepancy for the revenue arises when the complete Goods declaration is submitted. In some cases the Customs may also require the declarant to provide samples or an estimation of value where it is not known.

3.5. Copies of the Goods declaration

Standard 3.15

The Customs shall require the lodgement of the original Goods declaration and only the minimum number of copies necessary.

Standard 3.15 reflects an important principle that is a sensitive issue for many international traders. Customs must only ask for copies of the original Goods declaration where this is essential for clearance of the goods. When this is necessary, Customs should demand only a minimum number of copies.

To secure the obligations of the declarant, Customs will always require the original Goods declaration containing the signature of the declarant. There may be a need in some administrations for an additional copy of the Goods declaration to provide for statistical information. A copy may also be required for return to the declarant after the completion of the clearance formalities, which Customs can complete after examination of the Goods declaration and/or physical examination of the goods and calculation of duties and taxes. Where specific Customs procedures are used, such as temporary importation, processing or transit, additional copies may be required to fulfil particular control measures.

To facilitate both Customs and the trade, the Goods declaration should be designed so that the declarant can complete all necessary copies by a self-copying or a single copying process. In some administrations the declarant is allowed to make photocopies of the original Goods declaration. Others allow the form and contents of the Goods declaration to be drawn up on plain paper by means of official or trade data-processing systems.

In all cases, information on the number of copies to be submitted should be clearly published and available for the trade and the general public.

3.6. Supporting documents

Standard 3.16

Standard 3.16 guides Customs to limit the documents required in support of the Goods declaration. Supporting documents should be required only where they are essential for implementing provisions in national legislation and to ensure the correct application of the Customs procedure for which the goods are declared. Examples of documents usually required by Customs are :

commercial invoice,
import or export licence,
documentary evidence of origin,
document for a preferential tariff arrangement,
health or phytosanitary certificate, or
transport documents.

Some countries allow the supporting documents to be presented to Customs at a later stage or do not require them to be presented at all, provided they are held available by the declarant. Customs can require that information about these documents, such as the type and number, is given in the Goods declaration and that the declarant keeps a record of the relation between the Goods declaration and the supporting documents. Customs can also require that these documents be made available to them for a specified period.

In the framework of the measures taken to secure freight and the international supply chain, Customs may require documents proving that the freight was taken into charge by the carrier in the country of loading. Such supporting documents might include the transport contract, the air waybill or cargo manifest, or any other document providing evidence of the route followed by the goods and their place of departure.

For the application of security measures in general and risk management policy in particular, Customs can also require the provision of information prior to the arrival of the goods* . Standard 3.25 of the General Annex to the revised Kyoto Convention permits the lodging of the Goods declaration and supporting documents prior to the arrival of the goods.

The expression “control of the operation” in this provision includes classification and valuation of the goods.

Where the supporting documents are handed over to Customs and the declarant needs them for other operations, Customs should ensure that they can only be used again in connection with the quantities or the value of goods for which they remain valid.

3.7. Subsequent presentation of supporting documents

Standard 3.17

Where certain supporting documents cannot be lodged with the Goods declaration for reasons deemed valid by the Customs, they shall allow production of those documents within a specified period.

In allowing late presentation of supporting documents, Standard 3.17 has the same objective as allowing a provisional or incomplete declaration as provided for Standard 3.13. Therefore similar procedures and facilities should be applied. Some administrations also regard this Standard as a simplified procedure.

Customs may require that the nature of the missing documents be indicated in the Goods declaration.

Where release of the goods can be granted, Customs should be satisfied that the supporting documents concerned exist and are valid. The declarant may also be required to furnish security to ensure the presentation of the supporting documents within the specified period. If the supporting documents are not presented within the specified period, Customs may refuse future requests for late submission of supporting documents.

Customs would not normally release goods where the supporting document which cannot be produced is, for example, an import or an export licence or a health certificate.

3.8. Lodgement of supporting documents by electronic means

Transitional Standard 3.18

The Customs shall permit the lodgement of supporting documents by electronic means.

If Customs uses electronic means for lodging and managing Goods declarations, this Transitional Standard requires that electronic submission of supporting documents should also be allowed. Customs can require that the original supporting documents be held available for them by the declarant for a specified period.

The format for electronic lodgement of supporting documents must be based on the same international standards for electronic information exchange as that for the Goods declaration.

As indicated earlier, Standard 1 of Chapter 7 of the General Annex on the Application of information technology states that Customs must apply information technology where this is helpful and cost-effective for both Customs and trade. The Guidelines to Chapter 7 address the use of EDI by Customs in detail.

3.9. Translation of supporting documents

Standard 3.19

The Customs shall not require a translation of the particulars of supporting documents except when necessary to permit processing of the Goods declaration.

As provided for earlier, documents may be presented to Customs to support statements in the Goods declaration, and the requirement for these documents should be limited. In many cases these supporting documents are made up in a country other than that where the Goods declaration is lodged and they may be in a different language. The layout of many supporting documents will meet international standards, so the information contained in them may be easily understood. Standard 3.19 requires that Customs should not routinely demand translation of supporting documents presented in another language when processing the Goods declaration. It should only be necessary where the information is ambiguous or not easily accessible.

Some administrations may always find a translation necessary when processing a Goods declaration in order to facilitate clearance. This may be particularly true, for example, in an electronic environment. However they should try to waive this requirement wherever possible. This Standard does not effect Customs requirements relating to translation of documents when conducting an investigation or during post transaction auditing.

4. Part 4 – Lodgement and registration of the Goods declaration

4.1. Lodgement at a designated Customs office

Standard 3.20

The Customs shall permit the lodging of the Goods declaration at any designated Customs office.

Where more than one Customs office has been designated to perform a particular Customs procedure, Standard 3.20 provides that the declarant should be allowed to choose the Customs office which is most convenient to fulfil the Customs formalities regarding the Goods declaration. This applies for goods entering or leaving the Customs territory.

In an automated environment it is possible to lodge a Goods declaration electronically at any designated Customs office. This can be at a Central Customs office, in which case it is necessary to indicate where the goods are located. If the Customs should decide to examine the goods, the declaration can simply be retrieved from the system wherever the goods are located.

When a paper Goods declaration is lodged, however, this may not be as simple. Customs could allow the office where the declaration was lodged to fax the Goods declaration to the Customs office where the goods are located. In practice, however, the declarant must normally lodge a paper Goods declaration at the office where the goods are located so that Customs will have the declaration available should they need to examine the goods. In this situation, lodging the goods declaration where the goods are located is actually a measure that, in certain instances, might well facilitate the examination and release of the goods to the declarant.

In some administrations Customs require declarants to lodge the Goods declaration at the Customs office which has jurisdiction over the place where the goods are located.

4.2. Electronic Goods declaration

Transitional Standard 3.21

The Customs shall permit the lodging of the Goods declaration by electronic means.

The growth in international trade and the increasing use of automated commercial systems has led many Customs administrations to automate their clearance operations. This Transitional Standard therefore allows Goods declarations to be lodged electronically, including by fax.

Other provisions that complement this principle are Standard 3.11 that obliges Customs to use internationally recognised standards for the development of such systems and Standard 3.18 that provides for supporting documents to be lodged by electronic means. The Guidelines to Chapter 7 of the General Annex on Application of information technology deal with the use of automated systems by Customs.

4.3. Time of lodgement of the Goods declaration

Standard 3.22

The Goods declaration shall be lodged during the hours designated by the Customs.

In accordance with Standard 1 of this Chapter, Customs will designate the hours of business and the competence of each Customs office. Standard 3.22 then provides that the declarant can lodge a Goods declaration within these designated hours. This implies that the Customs office must also have the necessary competence for the procedure requested.

When the Goods declaration is lodged electronically, the designated hours of business may not be an important factor, since the electronic information can be transmitted 24 hours a day and sometimes 7 days a week. Customs could, however, specify certain days and hours for lodging an electronic Goods declaration at particular Customs offices.

When Customs permits the Goods declarations to be lodged electronically outside the normal working hours, this does not guarantee that Customs would deal with the Goods declaration immediately. Processing the declarations is normally done during the official hours of business of the Customs office. It is also possible that the point in time taken for the lodgement of a declaration, when this affects the determination of duties and taxes, may apply only to the official hours of business of the Customs office.

4.4. Time limit for lodgement of the Goods declaration

Standard 3.23

After the goods have been brought into the Customs territory and presented to Customs, the declarant must lodge a Goods declaration within a reasonable time. This Standard requires that the period of time allowed is sufficient for the declarant to obtain all the information and documents necessary to complete the Goods declaration. For example, the declarant may need to receive hard copies of the supporting documents or to obtain an import license to be submitted with the Goods declaration.

National legislation may provide that the time limit for lodging of a Goods declaration begins, for example,

from the time when the goods are brought into the Customs territory;
from the time when the goods are presented at the Customs office;
from the time when the goods are temporarily stored;
from the time when the goods are unloaded; or
from the time when the goods are released, where release is allowed before the final clearance.

When the Goods declaration has not been lodged within the time limit, Customs may take action as deemed necessary. Any such action would be to protect the interests of the Revenue or other matters which Customs is responsible for enforcing.

The time limit covered by this Standard and the responsibilities of the declarant in regard to the time limit for lodging the Goods declaration should not be confused with the responsibilities of the transporter who brings the goods into the Customs territory. The latter responsibilities relate to the Cargo declaration, not the Goods declaration, and they are covered in Chapters 1 and 2 of Specific Annex A.

4.5. Extension of the time limit

Standard 3.24

At the request of the declarant and for reasons deemed valid by the Customs, the latter shall extend the time limit prescribed for lodging the Goods declaration.

Standard 3.24 allows for an extension of the time limit to lodge the Goods declaration. Customs can allow an extension when they accept that the declarant has valid reasons for needing it, for example, if the declarant does not have all the information necessary to prepare the Goods declaration. Where appropriate, the provisions of this Standard may be applied instead of Standard 3.13 that allows a provisional or incomplete declaration to be lodged.

When the goods have already been released, this extension of the time limit to lodge the Goods declaration should not be equated with allowing the declarant more time to pay duties and taxes. Any extension may also be conditional upon the provision of security for the payment of any duties or taxes.

4.6 Prior lodgement and registration

Standard 3.25

National legislation shall make provision for the lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods.

This Standard provides for an advanced lodgement procedure that strikes a balance between the interests of traders and the actions of Customs. Customs can process the information that is provided in advance and can make their determination whether they need to examine the goods. If not, the goods can be released upon arrival. While this procedure enables the trading community to dispose of the goods as soon as possible, it also allows Customs to spread their workload. It is a facilitation measure that reduces storage costs for the importers and exporters and gives them more time to organize their post-clearance operations. For Customs, it reduces congestion by enabling documentary controls to be staggered and the examination of the goods, if any, to be better organized. The lead time provided for by this procedure also allows Customs to examine the documents more thoroughly.

In some countries this procedure allows for the clearance of goods prior to their arrival (pre-clearance), while others allow the advance lodgement of the Goods declaration but not prior release or clearance. This is to avoid any changes being made to the consignment during its transportation. The pre-release or pre-clearance facility is most practical for air and sea modes of transport where switching of consignments is almost impossible. The extensive use of automated cargo manifest systems by airlines and vessel companies and the transit times needed for these modes of transport also contribute to the practical benefits that the advanced lodgement procedure can offer. The WCO Guidelines on the clearance of express consignments advocate the application of these principles and should be consulted.

Customs can also allow prior lodgement of the Goods declaration on condition that the goods will arrive within a prescribed period of time.

The lodgement of the Goods declaration in advance does not effect the normal point in time for determination of the applicable rates of import or export duties and taxes.

In relation to the prior lodgement of the Goods declaration, Customs may require that this Goods declaration includes the data elements necessary to identify high-risk consignments* . To facilitate the prior lodgement of the Goods declaration and also to comply with the risk management requirements relating to security measures, Customs may make arrangements that the information required is submitted at the same time, possibly in a combined message using the single window concept.

4.6.1 Explanation of terms used

Several terms are used in this Standard which need clear explanation. “Lodgement” of the Goods declaration is the presentation or transmission by electronic means to Customs of a Goods declaration that contains the information prescribed by Customs and is accompanied by any necessary supporting documents. In lodging the Goods declaration the declarant assumes full responsibility for its contents and the particulars given.

“Registration” is the act by Customs of recording the Goods declaration administratively. The minimum requirements for registration are recording the allocated number of the Goods declaration and the registration date. The number of the Goods declaration can be assigned either by Customs or by the declarant in a manner prescribed by Customs. In an electronic environment, the registration of the Goods declaration is generated automatically and includes the date, the number and a record of the contents of the Goods declaration in the database.

Before Customs can register the Goods declaration they normally need to satisfy themselves that :

the declaration is made out in the prescribed form;
it is signed by the declarant;
all the required information is furnished;
required supporting documents are furnished; and
if copies are required, the right number of copies are presented.

Some administrations register the Goods declaration first before checking it, while others check the declaration and then register it.

The term “acceptance” is also used in some administrations, however, the use of this term differs among administrations. In some administrations acceptance takes place at the time of registration of the Goods declaration. In others, it takes place after checking the Goods declaration. Still other administrations combine the checking and registering into a single function that they refer to as acceptance of the Goods declaration. For the purposes of this Convention, the term “registration” is used to signify the formal admission of the Goods declaration by Customs.

The date of registration is very important in connection with the date applicable to the rate of duties and taxes and with other measures related to the Goods declaration.

This Standard can include the registration of a provisional or incomplete Goods declaration and the subsequent presentation of the supporting documents required, as provided for in Standards 3.13 and 3.17 of this Chapter.

4.7. Refusal to register a Goods declaration

Standard 3.26

When the Customs cannot register the Goods declaration, they shall state the reasons to the declarant.

Customs can refuse to register a Goods declaration when they discover substantial or basic errors in it. For example, registration may be refused when the declarant’s signature is missing, when an incorrect form is used for a particular procedure or when essential supporting documents are not submitted. When non-essential information is missing or incorrect, the declarant should be given the opportunity to remedy the errors. In these cases, some administrations will accept the Goods declaration unofficially and give the declarant the opportunity to amend it as soon as possible.

A Goods declaration may also be refused registration when the Customs office where the Goods declaration was presented does not have the necessary competence.

When Customs refuses to register a Goods declaration, Standard 3.26 obliges Customs to inform the declarant of the reasons for their refusal. Where appropriate, this should be given in writing or by electronic notification. Customs should also inform the declarant of the remedial action that should be undertaken to rectify the Goods declaration.

5. Part 5 – Amendment or withdrawal of the Goods declaration

5.1. Amendment of a Goods declaration

Standard 3.27

After the Goods declaration has been lodged, the declarant may discover that the particulars he has furnished in it are not accurate. Standard 3.27 requires Customs to allow the declarant to amend the Goods declaration under certain conditions. It usually is only allowed when the request for amendment is submitted before the checking of the Goods declaration or the examination of the goods has commenced. For an amendment to a Goods declaration after checking the Goods declaration has commenced, see Transitional Standard 3.28.

Normally such requests are made when the declarant discovers an error or omission in the Goods declaration. This could be caused by a mistake, a change in the circumstances of the consignment or some other unintentional reason. Generally the request is made verbally and the declarant is not required to state the reasons for the request. In some cases Customs may discover an error or omission while checking the Goods declaration and, as a facilitative measure, may allow the declarant to amend or complete the declaration depending upon the nature of the error.

Many Customs administrations release goods without examination before checking the Goods declaration. In this case, when an amendment is requested after the release of the goods, Customs may require that valid reasons be given for the amendment.

The declarant may be allowed to replace supporting documents that have been presented with the Goods declaration by mistake. However, amending a supporting document, in principle, should not be allowed as the declarant is not the party who provides the information in the supporting document.

In the electronic environment, the system will frequently allow a period of time in which a Goods declaration can be amended. Otherwise Customs may require the declarant to file a replacement for the initial Goods declaration.

Transitional Standard 3.28

Once Customs has begun to check the Goods declaration, they are already in the process of verifying the accuracy or completeness of the declaration. Therefore it is reasonable that the information provided should no longer be able to be amended. Transitional Standard 3.28 nevertheless requires Customs to evaluate a request in this circumstance and determine if they believe the reasons for the amendment to be valid. If Customs agrees that the reasons given by the declarant are justified, they should allow the amendment. When the amendment involves non-essential information, such as information regarding the means of transport, it should also be allowed. When the amendment concerns essential information, Customs will need to determine whether granting the request is justifiable in terms of the amount of duties and taxes due or other control measures that Customs is responsible for enforcing.

Customs may impose certain restrictions on amendments to the Goods declaration by inserting appropriate provisions in their national legislation. For example, a request for an amendment may be refused if it would have the effect of making the Goods declaration applicable to goods other than those it originally covered.

Even if a request to amend the Goods declaration is granted Customs can always take any necessary action, including the imposition of a penalty, if an offence is discovered while checking the Goods declaration or examining the goods.

5.2. Withdrawal of a Goods declaration

Transitional Standard 3.29

Transitional Standard 3.29 provides that a Goods declaration that has already been registered can be withdrawn upon request by the declarant if Customs is satisfied that the circumstances are justified. Examples of such circumstances would be when :

the goods were declared for the wrong Customs procedure; or
ownership of the goods has changed during the clearance process and the new owner selects a different Customs procedure or practice for the goods.

In some administrations a request for a different Customs procedure will in effect be regarded as a request for the withdrawal of the initial Goods declaration and the lodgement of a new one.

As a greater facility, many Customs administrations also allow the Goods declaration to be withdrawn when the goods do not arrive, they remain under the previously granted Customs procedure or a duplicate Goods declaration for the same consignment has been lodged in error.

Customs administrations that allow the application of another Customs procedure after the goods have been released, but before the duties and taxes are paid, can also be regarded as providing a greater facilitation in accordance with Article 2 of this Convention.

Withdrawal of the Goods declaration will not preclude any necessary Customs action, including the imposition of a penalty, where an offence is discovered during the checking of the Goods declaration or examination of the goods.

6. Part 6 – Checking the Goods declaration

6.1. Time of checking the Goods declaration

Standard 3.30

Checking the Goods declaration shall be effected at the same time or as soon as possible after the Goods declaration is registered.

In order to enable more rapid clearance of goods, Standard 3.30 requires Customs to check the Goods declaration at the time it is registered or as soon as possible thereafter. In normal practice, after the declarant has lodged the Goods declaration, Customs must register it and check it before releasing the goods. However, with the considerable growth in international trade, it is nearly impossible for most Customs administrations to check every Goods declaration without causing long delays in the clearance of goods. Therefore, Customs should use the principles of risk management to distinguish which declarations need to be checked.

Risk analysis should identify which goods pose a high or a low risk to the revenue or for other measures that Customs is responsible for enforcing. Declarations for goods that are low risk can be dealt with administratively. In other words, there does not need to be a thorough checking of the declaration and the goods can be released without delay. A comprehensive explanation of the risk management process is found in the Guidelines to Chapter 6 of the General Annex.

In an electronic environment, elements of the risk management process should be built into the specifications of the Customs automated systems. The Guidelines to Chapter 7 of the General Annex contain further details on this.

6.2. Checking the Goods declaration

Standard 3.31

For the purpose of checking the Goods declaration, the Customs shall take only such action as they deem essential to ensure compliance with Customs law.

The purpose of checking the Goods declaration is to ensure its accuracy and completeness as required by Customs law. Standard 3.31 states that Customs should only take essential actions in this regard. As a general rule, Customs will verify the following :

that the tariff classification in the Goods declaration corresponds to the description of the goods;
that the rates of duties and taxes indicated are those in force;
that the particulars in the Goods declaration correspond with those in the supporting documents submitted, especially in regard to the quantity, value and country of origin of the goods;
the authenticity and validity of the supporting documents; and
that the Customs procedure requested is appropriate.

Customs should provide informational aids such as handbooks, directives and circular notices to the personnel who perform the task of checking the Goods declaration so that there is a systematic and standardized implementation of this function.

In an electronic environment, the specifications for checking of the Goods declaration should be integrated in the automated clearance system.

Customs should only require the declarant to present additional information or documents when necessary to verify the accuracy of the particulars contained in the Goods declaration or supporting documents.

Checking the Goods declaration may prompt Customs to take a sample or examine the goods in order to verify the particulars in the declaration.

7. Part 7 – Special procedures for authorized persons

7.1. Special procedures

Transitional Standard 3.32

release of the goods on the provision of the minimum information necessary to identify the goods and permit the subsequent completion of the final Goods declaration;
clearance of the goods at the declarant's premises or another place authorized by the Customs;
and, in addition, to the extent possible, other special procedures such as :
allowing a single Goods declaration for all imports or exports in a given period where goods are imported or exported frequently by the same person;
use of the authorized persons’ commercial records to self-assess their duty and tax liability and, where appropriate, to ensure compliance with other Customs requirements;
allowing the lodgement of the Goods declaration by means of an entry in the records of the authorized person to be supported subsequently by a supplementary Goods declaration.

7.1.1. Introduction

Through implementation and use of a risk management programme, Customs can determine which goods and which traders are generally in compliance with Customs law and thus pose a low risk for control purposes. These traders can then be approved for special or “fast track” procedures that require little intervention by Customs for the release and clearance of their goods. Such traders are referred to as “authorized persons” for the purposes of this Convention. This provision is especially appropriate for traders who regularly import or export goods.

The special procedures enumerated in Transitional Standard 3.32 that are granted to authorized persons will allow :

the provision of minimal information at the time of release of the goods; and
clearance at the declarant’s premises or other inland locations.

In addition Customs may also allow :

lodgement of a Goods declaration covering multiple transactions over a certain period;
the self-assessment and accounting of duties and taxes by the authorized person; and
lodgement of the Goods declaration by an entry in the commercial records of the authorized person.

Special procedures are beneficial for both Customs and the trade. They facilitate the movement of goods, encourage compliance with Customs rules and enable more effective use of Customs resources. They also promote the modern concept of a partnership between Customs, traders and third parties within international trade.

It is therefore a requirement that at least two special procedures be introduced by all Customs administrations and that other special procedures are considered for possible implementation. Customs should consult regularly with the various parties involved to ensure that once special procedures have been introduced, the optimum benefits are realized for all the trade partners, including Customs.

Although Contracting Parties to this Convention must implement a programme for special procedures in accordance with Transitional Standard 3.32, the procedures are applied at the trader’s request. They are clearly not mandatory upon all traders, particularly as they are designed only for those who meet the qualifications to be authorized.

7.1.2. Authorization

Customs will determine criteria or conditions that a trader must meet in order to be considered eligible for a special procedure. Any trader can apply for approval to use the special procedures. Once Customs agrees that a trader meets the criteria they have identified as necessary to ensure the trader’s compliance with Customs law, they will authorize the trader for one or more of the special procedures.

The criteria and conditions for this authorization should be developed by Customs through the consultative process with the trading community. Where possible, the criteria should be based on measurable requirements, such as the ability to supply the necessary information to Customs within given time scales. As illustrated in this Transitional Standard, the basic criteria are that the applicant can demonstrate a good record of compliance with all Customs requirements and the maintenance of an adequate system for commercial records. Compliance with Customs requirements includes all the elements associated with accurate and correct declarations, adequate security provided to meet obligations, timely duty and tax payments, proper methods for tariff classification and country of origin claims, and no history of significant recurring errors or violations.

In addition to the practical requirements, the assessment of any application by a trader for a special procedure will be based on risk management techniques as explained in the Guidelines to Chapter 6 of this Annex.

Once granted, the authorization will indicate the obligations of the authorized person concerning the use of a special procedure. Some Customs administrations allow the use of a special procedure without an authorization to any trader who wants to use it. This can be considered as granting a greater facility in accordance with Article 2 of the Convention.

7.2. Types of special procedures

7.2.1. Release on minimum information

This procedure allows for the release of goods for the Customs procedure requested using a minimum amount of information.

The procedure usually requires an initial declaration to enable the release of the goods, followed later and within a specified period of time by a supplementary declaration containing all the normally required information or by the provision of any supplementary information. The amount of duties and taxes due will be based on the completed information. However, the goods will be assigned to the requested Customs procedure based on the initial declaration.

The information required on the initial declaration should be limited to that necessary to determine the admissibility of the goods. This will normally include the description, origin, place of departure, quantity and value of the goods.

In some administrations, the information in the initial declaration can also simply comprise the declarant’s authorization number and a commercially recognized description of the goods or the commercial reference to the goods in the authorized person's records. With this reference to the authorized person's records it is possible for Customs to have access to all the information necessary. Some administrations also allow a commercial or official document to be the initial declaration.

Standard 4.5 of the General Annex requires national legislation to fix the point in time for determining the rates of duties and taxes. In many administrations the date of registration of the initial declaration establishes this time of lodgement of the Goods declaration.

It is not always necessary for Customs to be able to assess the exact amount of liability for import or export duties and taxes at the time of release of the goods. This can be done at a later stage using the more comprehensive supplementary declaration. In most administrations that use this special procedure, the supplementary declaration is required at the end of a month, or even longer, after the release of the goods. The supplementary declaration may be a single Goods declaration covering a single transaction or it may be a single Goods declaration covering a number of transactions within the given period.

7.2.2. Clearance of goods at the declarant’s premises

This procedure allows the clearance of goods for the Customs procedure requested at designated locations away from the Customs office or at approved traders’ premises. It provides advantages for the trade, not only for the treatment of urgent consignments such as perishables, but also for increasing the convenience of clearance, the security of the goods themselves and a degree of certainty for delivery at the expected time. For Customs, the procedure enables them to become more familiar with the goods and systems that they are dealing with and may create more favourable conditions in which to carry out their work.

Normally the goods arrive at the declarants’ premise under Customs transit procedure or under an approved simplified system for the movement of goods. The requirement to use this procedure may simply be a notification to Customs of the impending arrival of imported goods at the approved premises or the despatch of goods for export. This is followed, within a period of time specified in the authorization, by the lodgement of the Goods declaration.

When the arrival or the despatch of the goods is on a regular basis, Customs may even accept a list of impending arrivals or despatches of goods for a certain period, or they may waive the requirement for the notification and only require the subsequent lodgement of the Goods declaration.

The procedure may also be divided into two stages : an initial declaration that may be accepted as the notification, followed by a supplementary declaration. Together these constitute the Goods declaration. This Goods declaration would have the same legal status as a normal Goods declaration.

Some administrations, particularly in Europe, grant the procedure described above combined with the procedure of lodgement by entry in the records as described in 7.3.3 as a Local clearance procedure.

7.3. Additional special procedures

The following procedures are optional and provide only an example of additional special procedures that could be introduced. They are not mutually exclusive, but provide a framework within which Customs and the relevant parties can work to find agreeable facilitation methods that meet Customs requirements. The decision to introduce these special procedures depends on each Contracting Party, although all Customs administrations are encouraged to make these special procedures available.

7.3.1. Periodic Goods declaration

One of the more widely applied special procedures is permitting the lodgment of a single Goods declaration for imports and/or exports that have taken place over a given period of time.

This procedure has great benefits for both the trade and the Customs administrations. For the trade, the periodic declaration procedure allows for improved speed in their overall operations by more rapid release of goods and less repetitive documentation demands. This in turn should lead to reduced clearance and transport costs. For Customs this procedure enables a more rational use of the available resources and allows controls to be applied more flexibly as well as any overall reduction in the number of documents and transactions to be processed. This in turn results in more effective post-audit checks and enhanced risk management.

To implement this procedure, administrations must have either legislative or regulatory provisions in place that allow the Goods declarations for importation and/or exportation to be lodged periodically. This is an additional requirement since most administrations traditionally require a Goods declaration to be lodged for every import or export consignment.

The procedure may not be applied in situations where it may place undue risks on the revenue or on the administration of the procedure. Thus certain categories of goods may be excluded because of their nature (difficult to apply post-audit checks), because they are placed under Customs procedures that will not be facilitated by periodic lodgment of the declaration (processing procedures) or because they are a high risk to the revenue.

Traders must obtain prior authorization by Customs to use the periodic declaration procedure. Customs can issue these authorizations at a central level or at the regional or local level. The authorization may be granted on a case-by-case basis for specific goods, operations or persons. The authorization may also be a general one for certain approved traders but subject to conditions that Customs might prescribe, by such as specific requirements for the premises where the goods are kept, the maintenance of adequate commercial records, a good record of compliance with Customs requirements, and so on. General authorization may also be granted for traders who conclude an agreement with Customs for the implementation of this simplified procedure and are usually based on the same conditions. Customs can also combine the two types of authorizations for a single trader, i.e. a case-by-case approval for certain types of goods and a general approval for other goods.

Goods are released under the periodic declaration procedure upon arrival if no physical examination is necessary. Customs requires only the provisional declaration at this initial stage. The trader may lodge a simplified provisional declaration either in the form of a list of the goods or with a commercial document, both of which are conditional that the trader maintains records of the goods in a format that is acceptable to Customs. In many administrations this provisional declaration is closely linked with that described in Standard 3.13 of this Chapter. These are normally very simplified and contain only the basic information relating to the goods. For highly reliable traders, Customs may allow the trader to simply enter the details of the goods in their records.

Customs retains the right to examine the goods covered by this procedure based on the initial information provided. Since this procedure is reliant on audit-based controls, Customs will base the requirement for any examinations on their risk management programme. For additional details on audit-based control systems, see the Guidelines to Chapter 6 on Customs Controls.

To clear the goods, the periodic Goods declarations are lodged at the end of a period specified in the regulation or legislation. This is normally one month. The authorized trader would be required to submit the declaration in a standard format giving the details of the goods released during that period. As mentioned, this periodic Goods declaration is linked with the provision of certain minimal information at the time the goods are imported or exported or an entry made in the records. The date on which that initial notification was given to Customs or the date on which the entry was made is usually taken to be the date for the assessment of duties and taxes. Electronic submission of the periodic declarations is a common feature of this special procedure.

Under this procedure, the provisional and periodic declarations, which together constitute the Goods declaration, may have the same legal status and are regarded as normal Customs declarations, and thus the provisional declaration may determine the date for the assessment of duties and taxes. This may also apply where changes occur in the rates of duty and taxes or in the regulations during the period covered by the periodic Goods declaration, unless otherwise specified in national legislation under Standard 4.5.

When Customs perform audit-based controls for the periodic Goods declaration, they ensure to their satisfaction that all goods imported under the procedure during the relevant period are declared and that the information contained in the declarations is accurate.

7.3.2. Self-assessment of duties and taxes using commercial records

This procedure is a system whereby the trader himself is authorized to determine the duties and taxes due. It is based on the principle that, in international trade, systems are required for commercial purposes in order to control the movement, supply and storage of goods and to carry out effective fiscal controls. Once Customs performs an audit of the trader’s relevant system and commercial records and is satisfied that they meet the criteria necessary for authorization to use special procedures, Customs has a reasonable assurance that it can rely on the system for Customs control. In effect Customs control becomes an integral part of the authorized person's commercial activities.

This self-assessment procedure is accompanied by Customs performing audit-based controls as provided for in Standard 6.6 of the General Annex and described in the Guidelines to that Chapter.

Goods imported under the self-assessment procedure should be released at importation immediately upon their arrival in the Customs territory. Likewise, goods exported under the procedure should be authorized to move directly to the place of exportation. Minimum checks or indeed no checks at all should be carried out at a Customs office or at the trader’s premises in either situation under normal circumstances, other than random checks conducted as part of the risk management programme. Detailed checks are always appropriate in exceptional circumstances, for instance, where it is suspected that the procedure is being abused or where information is received that a consignment may be misrepresented or used as a medium to import or export illicit goods.

Once the physical movement of the goods has taken place for import or export, a declaration should be furnished by the authorized person or their representative. This normally indicates the amount of duties and taxes that will be due. Other information may be required in the declaration, such as value and origin, but it should be kept to a minimum.

Some administrations require a supplementary declaration which may not be required for a month or more after the release of the goods. As described for the procedure of release on minimum information, the supplementary declaration may be a single Goods declaration covering a single transaction or it may be a single Goods declaration covering a number of transactions within the given period.

When the time of lodgement of the Goods declaration is used to establish the rates of duties and taxes applicable, it can be established by a number of methods. It is acceptable to use either the date of the provision of minimum information, the date of the entry of the individual consignment into the trader’s accounts or the date of registering or acceptance of the periodic declaration.

Where the last method is used, it will constitute a single tax point for the period covered by the declaration. This single tax and duty point may therefore cover several imports and exports over the given period.

The method used to establish the point in time for duty and tax application will be specified in national legislation in accordance with Standard 4.5 and should be specified by Customs in the trader’s authorization. For goods assigned to a Customs procedure which places them under the suspension of duties and taxes, Customs can authorize that these goods are not included in the periodic declaration until such time as they are either moved out of the regime and become liable for duties and taxes or are re-exported. Any goods held by the authorized person which are under suspension of duties and taxes should be identifiable in the commercial system.

Where Customs is satisfied that the trader’s commercial system is operating correctly, the declarations submitted for the period should be considered to be correct unless there is evidence to the contrary.

The regularity of any checks on the authorized person's system should be based on risk management techniques and the nature and complexity of the business. Whenever controls are carried out, they should be targeted at the functioning of the system. However, this does not preclude checking individual consignments to verify that amounts of duties and taxes due have been correctly attributed.

In administrations which allow the special procedure of self-assessment, Customs retain the authority to determine the amount of duties and taxes.

7.3.3. Lodgement by entry in the records

Where release or clearance is allowed away from the border and at approved premises, allowing the Goods declaration to be lodged simply by an entry in the authorized person's commercial records can be a substantial facilitation measure for the declarant. Customs can authorize this special procedure where they are satisfied that the applicant’s records will enable them to carry out effective checks, particularly retrospective audits.

Normally the entry in the records consists of specific information concerning the goods such as the shipper, consignee, quantity, value and country of origin, the date of release of those goods and any other information which may be required by Customs for the application of the Customs procedure concerned. The information to be entered in the records of the authorized person will be specified in the authorization for this special procedure.

The entry in the records can be regarded as the initial declaration, which has to be followed by a supplementary declaration. A simple notification to Customs of the impending arrival of the goods at the approved premises or despatch of the goods from these premises can be required in order to allow Customs to perform random checks when deemed necessary.

The date of the entry into the records is regarded as the formal time for the lodgement of the Goods declaration.

Customs administrations which grant any of these special procedures often combine more than one in the authorization since they have already determined with a satisfactory level of assurance that the trader will maintain high standards of compliance with Customs requirements. Many authorized persons are granted lodgement by entry in their records along with submission of periodic supplementary Goods declarations or with the self-assessment of duties and taxes.

8. Part 8 – Examination and sampling of the goods

8.1. Time required for examination of goods

Standard 3.33

When the Customs decide that goods declared shall be examined, this examination shall take place as soon as possible after the Goods declaration has been registered.

This Standard sets out a key principle that when Customs decides that goods should be examined, they are required to carry out the examination without any delay. The use of the term “when” implies that all goods that are declared should not be examined as a matter of course. It is linked to Standard 6.4 which states that the decision to examine goods should be based on risk-assessment techniques. This will ensure the goods are released as quickly as possible, even when Customs decides to examine them. The Guidelines to Chapter 6 extensively explain the establishment of a risk-management programme in Customs and risk-assessment techniques, along with all other aspects concerning the examination of goods by Customs.

The decision whether or not to examine the goods should be made as early as possible. In some cases Customs may make this decision as soon as the Goods declaration is registered. Normally, however, since this decision is usually based on the information contained in the Goods declaration, it can only be made after checking the Goods declaration, as referred to in Standards 3.30 and 3.31. It is therefore important that the checking of the Goods declaration takes place as soon as possible after the Goods declaration has been registered. As there may be goods for which priority release is required, it will not always be possible to check the Goods declaration and examine goods in the order in which the relevant Goods declaration were registered (see Standard 3.34). To the extent possible Customs should, within a specified time limit, notify the party having submitted the Goods declaration, whether the goods will be examined.

The examination of goods can be either summary or detailed. In a summary examination Customs carries out some or all of the following checks :

count the packages;
compare marks and numbers to that on the declaration or invoices;
verify that the goods are the same as those described on the declaration.

A summary examination may be considered sufficient where goods of the same description are imported or exported frequently by the same person and this person is known by Customs to be reliable; where the accuracy of the particulars given in the Goods declaration can be checked against the supporting documents or against other evidence; or where the import or export duties and taxes involved are low.

A detailed examination is warranted when Customs is not satisfied about the accuracy of the particulars in the Goods declaration or in the supporting documents. Likewise, goods liable to substantial import or export duties and taxes may be routinely subjected to closer examination. A detailed examination usually involves :

thorough inspection of the goods to determine as accurately as possible their composition;
verification of the quantity;
verification of the tariff classification;
verification of the value; and
where necessary, verification of the origin of the goods.

Based on Standard 3.2 of this Chapter Customs should, subject to availability of resources, examine goods outside their normal hours of business and/or at a place other than the Customs office where the Goods declaration was lodged. An examination at another location can be beneficial for both Customs and the declarant. This is especially valid for goods such as grains, ores, oil or other commodities imported in bulk, where special equipment should be used that is only available at that location, or where the goods have to be treated under special conditions (dark room or freezing-chamber). In such special circumstances, in fact, Customs may prefer to examine the goods at another location so that a more appropriate examination is guaranteed. If that is the case, Customs will normally not charge the expenses caused by the examination to the declarant.

Similarly, in some cases Customs will contract with specialized independent commercial firms to examine goods such as antiques, gemstones, chemicals, pharmaceuticals, or other goods for which highly technical evaluations must be made. Customs should ensure that arranging for these types of services is also done promptly and does not incur unnecessary delay in the examination.

Customs may require that goods to be examined at another location will be transported there under Customs seal or some other form of control.

Modern Customs administrations often use risk-management techniques to select goods for examination before the Goods declaration is lodged. This is based on information supplied in advance by the trade, usually on the cargo declaration (goods manifest). Providing the advance notification is usually a result of formal or informal agreements between Customs and the trade. However, in some administrations that are extensively automated this is a normal practice which does not require a separate agreement with the trade. In either case, this working method allows Customs and the trade to work together efficiently and to generate a quick release of the goods.

Determining the goods that are to be examined based on the details available in advance information, instead of delaying a determination until the Goods declaration is lodged, is absolutely necessary, for example, in container ports where there are a large volume of goods. In this environment it is impossible for Customs to examine all the containers, and any random examinations that are conducted have limited chance of being significant. In addition, waiting to examine goods in containerised cargo until after checking of the Goods declaration can be very inefficient, since the containers have already been placed in stacks and would be difficult to reach if selected for examination. There are other circumstances when the determination of whether goods are to be examined made in advance of the lodgement of a declaration would also be facilitative for the quick release of goods. This would be especially true for the clearance of goods carried by air for express courier services or where a trader is authorised to clear the goods under the special procedures of Transitional Standard 3.32.

Risk management criteria for selecting goods for examination prior to the lodgement of the Goods declaration can be the place of loading of the goods onboard the means of transport, the itinerary of the means of transport, or the country of origin or nature of the goods. This working method is also effective where Customs wants to trace the illicit traffic of drugs at an early stage.

A very advanced measure of facilitation in this area is where Customs administrations use mutual administrative assistance agreements to set up special procedures and share information. For example, if goods must be examined at export then, unless there were special reasons, Customs in the country of export can share the examination results with Customs in the country of import, and the goods would not have to be examined upon arrival at import. Mutual administrative assistance agreements are described in Chapter 6 of the General Annex and its Guidelines.

8.2. Examination of live animals, perishable goods and other urgent consignments

Standard 3.34

When scheduling examinations, priority shall be given to the examination of live animals and perishable goods and to other goods which the Customs accept are urgently required.

Certain goods because of their nature need to be conveyed rapidly from the point of origin to their final destination and thus require the completion of Customs formalities with a minimum of delay. Standard 3.34 requires that for such urgently required goods, including live animals and perishable goods, Customs must examine them without delay in order to avoid loss or deterioration of the goods. In principle, and as stated in Standard 3.33, any examination of goods should be conducted as soon as possible, regardless of whether the goods are urgently required or not. Many Customs administrations normally do provide greater facilities for the clearance of perishable goods, live animals and urgent consignments. Examples of the types of goods granted rapid clearance as perishable and urgent goods are bodily organs, blood and blood plasma, perishable medical research materials, news materials, medicaments and vaccines, replacement parts, scientific and medical equipment, fire fighting and rescue equipment, equipment for use in searches, investigations and salvage in connection with accidents or any other items considered to fall within the scope of this Standard.

As stated in Standard 3.2 Customs should, subject to the availability of resources, examine perishable goods, live animals or goods that are urgently required outside their normal hours of business and/or at a place other than the Customs office where the Goods declaration was lodged. Examination and release of these goods at the premises of the person concerned, at premises with appropriate equipment, at a different Customs office than that where the clearance is given, or at the place of destination can be beneficial for both Customs and the declarant. This is especially true for goods such as medicaments, sterile medical research materials, chemicals or bulk liquids and other goods which cannot be readily examined and released until unloaded at destination. Customs should co-ordinate with the traders and allow for examination and release of these types of goods as would best suit everyone’s needs.

8.3. Inspection of goods by other competent authorities

Transitional Standard 3.35

In most countries Customs is not the only authority present at the frontier that is responsible for goods that enter or leave the Customs territory. There would normally be other competent authorities who represent agriculture, veterinary, health, phytosanitary or other government agencies that have a responsibility over the quality or nature of imported goods. When more than one of these authorities, including Customs, must examine the goods, it is only sensible and practical for the trade that the goods be presented for examination only once. The ideal situation is reflected in Standard 3.35 where the interested authorities would co-ordinate and conduct only a single exam. This facility obviously allows significant cost savings to the importer or exporter, as well as speeding up release of the goods.

This provision does not require Customs to take special actions to ensure that all the examinations required by the various competent authorities are carried out at the same time. However, it does require that Customs establish effective communications with other competent authorities and where possible to carry out their examination at the same time as the other authorities. This will ensure timely and efficient clearance of goods, and thereby optimise the use of resources and expertise at designated Customs offices or other suitable locations.

In the interest of cost-effectiveness and efficiency to both governments and the trade, Customs may give consideration to re-engineering its clearance process based on this Standard. It could establish an inspection service or compliance verification process that is integrated with the other competent authorities that have a vested interest in controlling the movements of goods. Such a convergence of controls into a single control to meet all government requirements is an important trade facilitation measure. It would concentrate and optimize inspection expertise at designated (Customs) offices, and would be particularly beneficial at locations that have a high volume of imports or exports requiring special examination procedures. To achieve the maximum efficiency and effectiveness for all government compliance verifications, such high-volume locations that offer single controls could provide clearances 24 hours, 7 days a week.

8.4. Presence of the declarant at the examination of the goods

Standard 3.36

The Customs shall consider requests by the declarant to be present or to be represented at the examination of the goods. Such requests shall be granted unless exceptional circumstances exist.

In many instances Customs examines goods without the declarant being present, especially when it is necessary to carry out examinations on a random basis such as at the place of unloading. In these cases it is not practical to inform the declarant in advance or to delay the examination and release of goods until the declarant could be present.

However, Standard 3.36 provides that when Customs decides to examine goods based on the Goods declaration, they may normally allow the declarant or a representative of the declarant to be present at the examination if so requested. However in certain circumstances this request can be denied. For example, Customs can refuse a request by the declarant to be present at the examination of goods when they have the knowledge or the suspicion that the goods are not those that were declared or where the examination will be performed in connection with the investigation of an offence.

In many instances the presence of the declarant or a representative may be of assistance to Customs. An example would be where the goods, in opinion of the declarant, need special treatment or need other precautions to be taken which he can provide.

Standard 3.37

If the Customs deem it useful, they shall require the declarant to be present or to be represented at the examination of the goods to give them any assistance necessary to facilitate the examination.

When goods needs special attention or when Customs finds it necessary that the declarant gives any sort of assistance, Standard 3.37 states that Customs can require the declarant to assist with the examination of the goods. This could be useful to prevent claims of loss or damage to the goods, or when the declarant would be required to group the packages, open them, sort the goods by description and tally them.

If the goods are dangerous, delicate or fragile, the declarant may be required to provide experts to assist Customs with the examination or to protect the goods or the people involved with the examination.

In certain administrations, it is compulsory for the declarant or his representative to be present at the examination of the goods.

8.5. Sampling by Customs

Standard 3.38

Standard 3.38 limits the instances when Customs should take samples of goods. To prevent abuses, to relieve Customs of responsibility and to avoid misunderstandings, Customs may ask the declarant to be present and to draw the samples required. Customs can also ask the declarant to present additional documents in order to verify the accuracy of the description of the goods as shown in the declaration.

9. Part 9 – Errors

Standard 3.39

During the process of supplying information to Customs by means of a Goods declaration, supporting documents, a cargo declaration, or any other means, it is always possible that errors occur. When errors in the information are accidental and they are not made on a regular basis, Customs may normally give the opportunity to correct the mistake(s) and will take no further action such as imposing a penalty. Customs should nevertheless be able to expect that the declarant or trader has taken reasonable care and acted in good faith in providing the information. In some administrations, when a declarant makes errors without exercising reasonable care in regard to the information he supplies, such errors are not considered inadvertent or accidental.

The terms “penalty”, “inadvertent” and “gross negligence” in this provision are open to different interpretation and application by Contracting Parties. The provisions of GATT Article VIII contain a reference to substantial penalties and provide a clear indication of the circumstances where penalties could be imposed. This Article states that “No Contracting Party shall impose substantial penalties for minor breaches of Customs regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in Customs documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than that necessary to serve merely as a warning.”

Thus when a declarant is routinely careless or even abuses the confidence of Customs in accepting the validity of the information supplied, Customs may take measures to discourage such behaviour. One measure would be the imposition of a penalty that is in proportion to the infraction or abuse. Other measures could be refusing the Goods declaration to be registered or not allowing amendments to a Goods declaration that has already been registered. The result would be that Customs would only register the Goods declaration when it is correct and complete, without any errors. This can have a significant impact on a declarant who makes errors regularly since he will be confronted with numerous checks of the Goods declarations, more frequent examinations of the goods, and possible increasing penalties.

The following are some examples of the types of errors that could be addressed by Standard 3.39.

Inadvertent errors in the declared value of goods can occur as :

- errors in transcription;

- arithmetical mistakes in declarations or supporting documents;

- inadvertent omissions of elements of the dutiable value, such as inland freight abroad;

- inadvertent errors in the conversion of foreign currency; or

- incorrect deductions, such as discounts, the inadmissibility of which is not within the knowledge of the importer, and similar errors arising from misunderstanding of the principles laid down in the legal provisions relating to valuation for Customs purposes.

Provided that the nature and other physical characteristics of the goods have been properly declared, an incorrect declaration of the tariff heading may also be regarded as an inadvertent error.
A discrepancy between the quantity of goods shown in the freight declaration and the actual quantity may be treated as an inadvertent error where it is due, for example, to a clerical error.

There may also be a limit such as a fixed sum and/or a percentage of the duties and taxes chargeable below which an error is not subjected to penalties.

When the error involves liability to additional duties and taxes, the amount of those duties and taxes becomes chargeable in any case, whether or not Customs decides to issue a penalty.

10. Part 10 – Release of the goods

10.1. Release of the goods as soon as possible

Standard 3.40

Goods declared shall be released as soon as the Customs have examined them or decided not to examine them, provided that :

no offence has been found;
the import or export licence or any other documents required have been acquired;
all permits relating to the procedure concerned have been acquired; and
any duties and taxes have been paid or that appropriate action has been taken to ensure their collection.

Standard 3.40 reflects one of the core principles of modern and simplified Customs procedures. Once Customs is satisfied that the physical goods are in compliance with the basic requirements of the procedure to be applied, the goods should be released to the declarant as soon as possible. When the goods are in compliance there is no need for Customs to delay their release as this will only incur unnecessary costs and loss of productivity to the persons to whom the goods are destined.

Historically in most countries, Customs did not grant release of the goods until all the formalities, including the payment of any duties and taxes, had been finalized. One of the main reasons for this procedure was that the goods constituted the legal security for the duties and taxes and for compliance with any formalities. Once the goods were no longer under Customs control, it was considered that Customs law would no longer be applied to them.

Today, however, some Customs administrations take the approach that physical control of the goods is not normally necessary if Customs has a financial guarantee for the duties and taxes and the accomplishment of all requirements. Thus Customs can rely on a system of security to guarantee the ultimate compliance of the goods with Customs law and can allow the goods to be released to the declarant promptly as long as they meet such basic requirements as safety and health. This saves time and costs to both Customs and the traders, thereby benefiting the national economy and the eventual consumers.

This release may be considered conditional or provisional until the goods are finally cleared, assuring that all the conditions have been met. If a problem is discovered after the goods have been released and before clearance, Customs may issue a recall notice for the goods or may invoke the security as compensation. Chapter 5 on Security in the General Annex and its Guidelines describe this important procedure in detail.

The prior permission for release of the goods is given by Customs on a case-by-case basis. A general permission would seldom be granted since Customs will always retain the right to perform random examinations and random detailed checks of the declaration and supporting documents.

In the case of juxtaposed Customs offices, the release of goods can be expedited at the point of export from one country and import to the other by carrying out the Customs formalities required for the release of goods simultaneously or consecutively.

10.2. Prior permission for release of the goods

Standard 3.41

Normally a declarant is required to accomplish all the necessary formalities, including lodging a Goods declaration, to obtain the release of the goods. However, there are often situations when the declarant does not have the necessary details to complete all the formalities or when he may wish to expedite the release of the goods and may only have an invoice or similar document confirming the purchase or despatch of the goods. Standard 3.41 requires Customs to release goods on the basis of a commercial or official document but only when they are satisfied that all the formalities, including the lodgement of a complete Goods declaration, will be carried out after the goods have been released.

National legislation (in particular the Customs regulations) should clearly indicate the nature of the documents that would be acceptable as commercial or official documents. For example an “official document” may be a simplified document on a special form identifying the packages and giving a brief description of the goods. In addition the declarant may be required to furnish security to ensure compliance with his undertaking to Customs under this facility, including securing any duties and taxes that may become due. Customs should specify the point in time to be taken for determining the duties and taxes.

Customs may also make it a condition for prior release that the essential supporting documents be produced and that any other required inspections (veterinary, health, phytosanitary, etc.) be carried out by the competent authorities.

It should be noted that this is a facility available to all declarants, and Customs will apply it on a case-by-case basis when the declarant informs them in advance of his inability to fulfil all the formalities prior to release. This is considered a facilitation measure that enables the trader to obtain his goods and avoid payment of unnecessary storage and other costs and that prevents congestion at ports, airports and land borders.

This provision is different from Standard 3.13 which requires a Goods declaration to be lodged even though such a declaration may be an incomplete or a provisional one. Under Standard 3.41 there is no requirement for a Goods declaration, and the only documents necessary for the release of the goods are a commercial or official document such as an invoice, a purchase order, bill of lading or similar document that would be specified by Customs. The declarant is required to complete all the normal formalities subsequently and within a period specified by Customs. Administrations which waive the requirement for subsequent lodgement of a Goods declaration can be regarded as granting a greater facility under Article 2 of the Convention.

This Standard also differs from the special procedures described in Transitional Standard 3.32 where Customs makes a similar facility available to certain authorized traders. These authorized traders can receive clearance for all their goods upon providing minimal information to obtain release and ensuring that all the information for the normal formalities is provided later or is maintained in their records and available for Customs.

10.3. Release of the goods before the results of an examination

Standard 3.42

In many instances Customs will not be able to release goods without a laboratory analysis of samples of the goods. In other instances Customs may require additional technical information or expert advice on the goods. Standard 3.42 provides that in such cases the goods should not be detained until the requisite test results are received or a final opinion is received on the nature of the goods, if adequate security has been given and provided Customs are satisfied that the results of the analysis would not result in the goods being liable to prohibitions or restrictions. It should be noted, however, that release of the goods would in any event be possible only when the doubts relate to Customs formalities. Release without delay would normally not be possible if the unresolved questions relate to the inspections of other authorities such as those dealing with health, phytosanitary or veterinary requirements.

The types of checks included in this Standard are those required when the goods cannot be identified or classified by a routine physical examination. An example would be where Customs needs to determine the exact composition of the goods in order to classify them accurately under certain specific headings or sub-headings of the tariff. In this case laboratory analysis of any samples, detailed technical documentation or the advice of experts will assist Customs in reaching a decision.

Another type of check may be a detailed examination of technical documents necessary for determining the duties and taxes to be charged, the production of some specific licence or other national requirement for clearance of the goods. In such cases Customs would secure the specific obligations by taking a security.

10.4. Release of goods when an offence has occurred

Standard 3.43

When an offence is detected there may be a considerable time gap before the administrative or legal procedure is completed. It is often not beneficial to Customs or to the trade to delay the release of the goods until a final decision is taken on the offence. Standard 3.43 provides for Customs to release the goods under certain conditions and enables Customs to take adequate security to ensure the payment of any additional duties and taxes or any penalties that may be imposed once the administrative or legal procedure is completed. One of the main conditions for the release of such goods is that they must not be liable to confiscation or forfeiture or required as evidence later in the proceedings.

It should be noted that Customs can only release the goods when empowered to do so by the national legislation.

11. Part 11 – Abandonment or destruction of goods

11.1. Repayment or remission of duties and taxes

Standard 3.44

when, at his request, such goods are abandoned to the Revenue or destroyed or rendered commercially valueless under Customs control, as the Customs may decide. Any costs involved shall be borne by the person concerned;
when such goods are destroyed or irrecoverably lost by accident or force majeure, provided that such destruction or loss is duly established to the satisfaction of the Customs;
on shortages due to the nature of the goods when such shortages are duly established to the satisfaction of the Customs.

For the purposes of this Convention, the term “repayment” includes the principle of remission. See the General Annex, Chapter 2, Definition E25/F24 and the Glossary of International Customs terms.

The basic principle contained in this Standard is that when the declared goods are not available to the person concerned due to any of the circumstances specified, the person should not be liable to pay the duties and taxes on the goods (remission) or, if a payment has been made, the person should be entitled to repayment. Standard 3.44 therefore sets out the conditions under which goods that are abandoned to the Revenue, are destroyed or are short due to their nature will not be subject to the payment of duties and taxes.

This provision also implies that repayment or remission of duties and taxes should be given on goods destroyed or irrecoverably lost by a duly authenticated accident or force majeure while they are under Customs control (including goods in Customs transit, in bonded warehouses or under temporary admission procedures). In all cases the repayment or remission may be subject to satisfying Customs that the destroyed or lost goods were legally imported and that, up to the time of their destruction or loss, any Customs conditions imposed on those goods had been complied with.

When partial relief of duties and taxes has been granted on imported goods on the condition that they are re-exported or used for specific purposes, the repayment or remission may be limited to that part of the duties and taxes which was not levied.

One of the conditions for a person to be entitled to repayment or remission of duties and taxes is that no offence should have been discovered. Some administrations allow the repayment or remission under this facility even if there is an offence, subject to the payment of any penalties that may be set out in national legislation.

For the goods to be abandoned to the Revenue or to be rendered commercially valueless under Customs control as provided for in this Standard, the main condition is that person concerned requests this action. The expression “rendered commercially valueless” means that the goods have been reduced to such a condition that they have no commercial value and thereby cease to be of any interest to the Revenue. Since such abandonment or rendering the goods commercially valueless will only be done at the request of the person concerned, the declarant is normally required to bear any costs to Customs that this may involve.

Stolen or pilfered goods are not considered to be goods that are irrecoverably lost by accident or force majeure, and would not therefore qualify for repayment or remission of duties and taxes under this provision. Goods may be deemed to be irrecoverably lost if salvage would be impossible or impracticable.

Goods that have simply deteriorated or been spoiled through accident or force majeure before their release are also not normally covered by this provision. Customs may nevertheless allow such goods to be declared in their deteriorated or spoiled state.

When the declarant has opted to destroy the goods, remnants, waste or scrap may be remain. If such remnants, waste or scrap are cleared by the declarant, then any duties and taxes assessed will be those that are applicable to waste or scrap or remnants.

When a person is entitled to repayment or remission, Customs should make a notification on the Goods declaration that repayment or remission was allowed in order to finalise the Customs procedure involved.

11.2. Proceeds of sale by Customs

Transitional Standard 3.45

There are instances when Customs sell goods. In such cases Customs has the right to recover the duties and taxes, storage costs and any other charges or expenses from the proceeds of the sale. In addition, any sums owed to creditors may be deducted from the sale proceeds if this is allowed by national legislation.

After recovery of the amounts due to Customs, the remaining proceeds of the sale are to be held at the disposal of the entitled person for a period that is specified in national legislation. Customs may require a claim to be filed by the persons concerned or creditors prior to releasing the proceeds.

It should be noted that this provision does not apply to the sale of goods by Customs that have been voluntarily abandoned to the Revenue. In that case all the proceeds would remain with the government.

United Nations Layout Key for Trade Documents

TABLE OF CONTENTS

Recommendation No. 1 , second edition, adopted by the Working Party on Facilitation of International Trade Procedures, Geneva, March 1981 Source: ECE/TRADE/137

Chapter	Paragraphs
I. Background	1 - 14
II. Scope	15
III. Field of application	16 - 17
IV. Review procedures	18
V. References	-
VI. Terminology	19
VII. Description	20 - 26
VIII. Data elements	27
IX. Rules for the location of codes	28 - 30
X. United Nations System of Aligned Trade Documents	31 - 43

Annex : Layout Key for Trade Documents

Prefatory Note

This recommendation presents the United Nations Layout key for trade documents, the rules for the location of codes used in this context and explains the United Nations System of Aligned Trade Documents.

Work on international trade facilitation is pursued by the ECE Working Party assisted by a large number of international organizations, each responsible for special aspects of a trade transaction.

Co-operation between the ECE and UNCTAD secretariats is especially close in this respect; and the present publication is distributed in the joint series of documents issued by the two secretariats for information on international trade facilitation work.

The present versions of the Recommendations on the Layout Key and the Location of Codes referred to in the text of this publication were adopted by the Working Party on Facilitation of International Trade Procedures at its thirteenth session in March 1981.

At the thirteenth session of the Working Party, representatives attended from:

Austria; Belgium; Bulgaria; Canada; Czechoslovakia; Denmark; Finland; France; German Democratic Republic; Germany, Federal Republic of; Greece; Hungary; Italy; Netherlands; Norway; Poland; Romania; Sweden; Switzerland; Turkey; Union of Soviet Socialist Republics; United Kingdom of Great Britain and Northern Ireland; and United States of America. Representatives from Bangladesh, Japan and Kenya participated under Article 11 of the Commission's terms of reference.

The following specialized agencies and other intergovernmental and non-governmental organizations were also represented:

Inter-Governmental Maritime Consultative Organization (IMCO); General Agreement on Tariffs and Trade (GATT); European Economic Community (EEC); Customs Co-operation Council (CCC); Central Office for International Railway Transport (OCTI); International Chamber of Commerce (ICC); International Air Transport Association (IATA); International Union of Railways (UIC); International Organization for Standardization (ISO); International Chamber of Shipping (ICS); International Federation of Freight Forwarders Associations (FIATA); and International Railway Transport Committee (CIT).

I. Background

1. In October 1960 the Committee on the Development of Trade of the Economic Commission for Europe decided to set up a Working Party to examine, among other things, the possibility of drawing up recommendations with a view to the possible reduction, simplification and standardization of external trade documents.

2. The Working Party, at its first session in August 1961, agreed that in order to enable national standardization to proceed in the various countries on similar lines it would be useful to prepare an international model form which could contain all the data elements needed in various external trade documents and to set them out in certain defined spaces. Having agreed on paper size, form design principles and the list of items to be included, a draft model form was prepared and presented to Governments and interested international organizations for comment.

3. In the light of the views expressed and after extensive consultations with experts, the Working Party in October 1962 agreed to put forward a revised model form drawn up on the basis of the discussion during that session.

4. At its third session in October 1963, the Working Party considered the replies from Governments and interested international organizations, and came to the conclusion that the revised model form could be used as a layout key for the simplification and standardization of documents used in export trade.

5. During the period 1963 to 1969 decisions or recommendations to align various internationally-established documents to what was then known as the ECE Layout Key were taken by the International Chamber of Shipping (1963), the International Technical Conference on the Rationalization of Relations between Banks (1963), the Universal Postal Union (1963), the Customs Co-operation Council (1965), the International Federation of Freight Forwarders Associations (1967), the Central Office for International Railway Transport (1967) and the International Road Transport Union (1969). During this period, aligned series of forms based on the ECE Layout Key were introduced in several member countries of the Economic Commission for Europe.

6. In April 1969, noting the progress made in the international acceptance of these documents, the Economic Commission for Europe adopted Resolution 4 (XXIV), recommending, inter alia, "that consideration should be given to the ECE Layout Key whenever documents used in connection with international trade are being designed". The Commission also drew the attention of the Economic and Social Council to the practical value of the work of simplification and standardization of procedures and documents for international trade and the desirability of coordinating that work on a world-wide basis.

7. Following these recommendations, many countries created facilitation bodies to pursue this work at the national level. Coordination of the facilitation work on a world-wide level was provided through the setting up of a separate secretariat unit in UNCTAD (United Nations Conference on Trade and Development), having the extension of the application of the Layout Key to the other regions of the world as one of its main activities.

8. Since the Layout Key was adopted in 1963, rapid progress in the field of automatic data processing (ADP) and data transmission has caused some concern that the development of documentation procedures to match new techniques might result in incompatibility between systems applied in various areas of the world, and also that the Layout Key might not be suitable for ADP applications. On the basis of experience in several countries and organizations it was confirmed, however, that the Layout Key System was indeed suitable for these applications as well as for traditional methods, and it was felt that it would be justified and appropriate to recommend it as a common basis for the presentation of documents for international trade, whether these documents were to be processed by automated or by traditional, non-automated methods.

9. In this context the Working Party noted that documents used in international trade increasingly served as a basis for input into ADP systems or were obtained from such systems. It therefore came to the conclusion that the information contained in trade documents could sometimes be processed in the most rapid and economic way in ADP systems if it were presented in coded form. Rules for the location of coded data elements were then discussed and prepared.

10. These developments, and a review of national and international progress in the alignment of trade documents, enabled the Working Party on Facilitation of International Trade Procedures to adopt, in 1973, two Recommendations: Recommendation No. 1 on the ECE Layout Key for Trade Documents (confirming the Layout Key adopted in 1963 and recommending that Governments and interested organizations pursue their efforts to align all documents used in external trade with that Layout Key), and Recommendation No. 2 on the Location of Codes in Trade Documents.

11. In 1975 an ad hoc Meeting noted that documents aligned on the ECE Layout Key had already been introduced in many countries outside the ECE region, including countries with broad interest in world trade such as Australia, Japan, and New Zealand, and that the introduction of urgently needed common national systems had been facilitated by the availability of an international standard.

12. In 1978 the Committee on the Development of Trade noted with satisfaction "that the Layout Key for trade documents agreed by ECE experts in 1963, and formally recommended by the Working Party on Facilitation of International Trade Procedures in 1973, had reached a level of world-wide acceptance that made it feasible and desirable to refer to it as the 'United Nations Layout Key for Trade Documents'."

13. In 1979 the Working Party agreed that the Recommendation on the Layout Key should be issued as a United Nations sales publication and that the text should combine the provisions of the two Recommendations of 1973 referred to above. The Working Party also defined the overall concept of the "United Nations system of aligned trade documents" and agreed to incorporate a description of the system in the publication.

14. Because of its flexibility of application, it has been possible to use the Layout Key, without change, in a wider context than was anticipated in 1963. However, in the present version (1981) of the Layout Key, certain changes in field identifier terminology have been made, reflecting developments in the standardization of data elements. In addition, a certain up-dating of the explanatory notes has taken place.

II. Scope

15. The recommendation on a layout key for trade documents aims at providing an international basis for the standardization of documents used in international trade and transport and for visual display representations of such documents.

III. Field of Application

16. The United Nations Layout Key for Trade Documents, appended to this publication, is intended for application in the designing of documents related to the various administrative, commercial, productive and distributive activities constituting external trade, whether these documents are completed in handwriting, by mechanical means such as typewriters and automatic printers, or by reproduction methods. It applies to documents describing individual consignments (or groupage consignments, e.g. container loads) rather than documents listing the total load of a means of transport (e.g. Ship's Cargo Manifest); regarding the latter type of document, the Layout Key can be applied for the goods description particulars. Although the Layout Key applies mainly to documents used in trade with goods, it can also in relevant parts be applied to transactions not involving goods.

17. The Layout Key is intended particularly as a basis for the designing of aligned series of forms employing a master document in a reprographic one-run method of document preparation; it can also be applied for the layout of visual display presentation in ADP applications.

IV. Review Procedures

18. Since a large number of international and national documents systems based on the Layout Key have been introduced, a sufficient period of time has to be allowed before any changes in the Layout Key affecting such document systems are permitted. It has therefore been agreed that a period of at least three years will be allowed before any amendment enters into force.

V. References

Writing paper and certain classes of printed matter - Trimmed sizes - A and B series, ISO 216-1975;

Forms design sheet and layout chart, ISO 3535-1977;

Continuous forms used for information processing - Sized and sprocket feed holes, ISO 2784-1974.

VI. Terminology

19. Some terms used in this publication are defined below, with the source of the definition indicated within brackets. "ECE" means that the definition originates within the ECE; "ISO" or "ISO DP" means that it has been adopted or proposed for adoption as international standard; the number is that of the corresponding ISO standard or draft proposal.

A-sizes

A series of trimmed paper sizes as specified in ISO 216-1974 (ISO DP 6760). Note: These are paper sizes in which the relationship of the longer side to the shorter side of the trimmer paper is equal to the ratio between the diagonal and the side of a square (Ö2:1 = 1 414: 1000).

Address field

An area on a form or envelope reserved for a name and/or address (ISO DP 6760).

Character

A member of a set of elements upon which agreement has been reached and that is used for the organization, control or representation of data (ISO 2382/IV-1974; 04.02.01).

Character spacing ("Pitch")

Distance between corresponding points of the stroke center lines of adjacent characters on the same line (ISO DP 6760). Note: Width space for office machines.

Code

1. a set of unambiguous rules specifying the manner in which data may be represented in a discrete form (ISO 2382/IV-1974; 04.02.07).

2. the representation of an item of data established by a code or the representation of a character series established by a coded character set (ISO 2382/IV-1974; 04.02.10).

3. the complete set of coded representations defined by a code or by a coded character set (ISO 2382/IV-1974; 04.02.11).

Code box

An area, within a data field, designated for a coded data entry (ECE; ISO DP 6760).

Coded data entry

A data entry expressed in code (ECE).

Column

A field designed for the recording of data in vertical sequence (ISO DP 6760).

Data

A representation of facts, concepts or instructions in a formalized manner suitable for communication, interpretation, or processing by humans or automatic means (ISO 2382/I-1974; 01.01.01).

Data carrier

A data medium that is designed for storage and/or transportation of data (ISO DP 6760).

Data entry

Data entered on a data carrier (ECE; ISO DP 7670).

Data field

An area designated for a specified data entry (ECE).

Descriptive data entry

A data entry expressed in plain language or in an abbreviated manner (ISO DP 6760).

Document

A data carrier and the data recorded on it, that is generally permanent and that can be read by man or machine (ISO DP 6760).

Document code

A document identifier expressed in code (ECE; ISO DP 6760).

Document identifier

A text or code that specifies the function of a document (ECE; ISO DP 6760).

Document name

The title of a document expressed in plain language (ECE; ISO DP 6760).

Field code

A field identifier expressed in code (ECE).

Field heading

A field identifier expressed in plain language, full or abbreviated (ECE; ISO DP 6760).

Field identifier

A text or code specifying the nature of the data in a data field (ISO DP 6760).

Form

A data carrier designed to carry a visible record of data entries (ECE; ISO DP 6760).

Forms design sheet

An application of a layout chart, intended as an aid for the placing of rules and other pre-printed matter in the designing of forms containing margin indicators and a network of lines indicating the location of printed rules (ECE; cf. ISO 3535-1977).

Gripper margin

A margin parallel to an edge of a form providing space for grippers in printing or duplicating machines (ISO DP 6760).

Image area

A predetermined area within which information can be entered for subsequent reproduction, storage or transmission (ISO DP 6760).

ISO-sizes

Paper sizes specified in ISO 216-1975 (ISO DP 6760; cf A-sizes).

Layout chart

A sheet provided with scales and other indicators conforming to the characteristics of the majority of character-printing machines in general office and data-processing use (ECE; ISO 3535-1977).

Layout key

A pro-forma document used for indicating spaces reserved for certain statements appearing in documents in an integrated system (ECE; ISO DP 6422).

Line spacing

The distance between two adjacent base-lines (ECE; ISO DP 6760).

Margin

The space between an edge of the form and its adjacent image area (ISO DP 6760).

Master

A document prepared for the purpose of producing other documents, by duplicating or copying its data, completely or in relevant parts (ECE).

One-run method

The use of a reproduction process to transfer all or part of the information recorded on a master on one or more forms constituting an aligned series (ECE; ISO DP 6760).

Ordinal data entry

Data entry intended for identification of an individual document or an item, or for classification and sorting, but not as a quantity for calculation (ECE).

Quantitative data entry

Numerical data entry which can be used as a quantity for calculation (ECE).

Top margin

A margin along the upper edge of the form (ISO DP 6760).

Trimmed size

The final dimensions of a sheet of paper (ISO 4046-1978).

VII. Description

20. Paper size - The paper size for the Layout Key is the international ISO size A4 (210 x 297 mm, 8 1/3 x 11 2/3 in), with provision for ISO size A5L (148 x 210 mm) for certain postal forms and for the equivalent sizes specified for continuous forms in ISO 2784-1974. In some countries, particularly in North America, the paper size 216 x 280 mm (8 1/2 x 11 in) is commonly used. Where this size is used, alignment can be achieved by maintaining the same top and left-hand margins, which places the layout in the same relative position vis-a-vis the top and left-hand paper edges; the resulting common image area measures 183 x 262 mm.

21. Spacing measurements - The basic spacing measurements of the Layout Key (1/6 in or 4.24 mm for line spacing and 1/10 in or 2.54 mm for character spacing) correspond to the line and character spacings utilized in the majority of machines used for completion of forms, such as typewriters, computer high-speed printers and other automated character-producing equipment and also with optical character recognition devices.

22. Margins and design principles - A top (gripper) margin of 10 mm and a left-hand (filing) margin of 20 mm have been reserved. The design is based on ISO 3535-1975 "Forms Design Sheet and Layout Chart", using standard column widths suitable for pre-set standard tabulating positions.

23. Design considerations - Generally, the design of the Layout Key is based on the "box design" principle. Care has been taken to place recipient addresses in an area acceptable to postal authorities for use with window envelopes. In placing the other data elements included in the Layout Key, consideration has been given to arguments of a technical, legal, commercial, administrative and practical nature put forward by the various interested parties consulted. An area for "free disposal" at the lower part of the format is intended to cater to more particular needs in individual applications.

24. Application principles - The following principles apply for the designing of forms on the basis of the Layout Key:

24.1. Data elements specified in the Layout Key should be placed in the corresponding space in the form under design.

24.2. Data elements not specified in the Layout Key should be placed in the "free disposal area".

24.3. Data elements specified in the Layout Key but not required in the form under design can be disregarded and the corresponding space used for other purposes in the same way as the "free disposal area", as set out in 24.2 above.

24.4. The use of the area for free disposal (any space made available under point 24.3 above) may be subject to particular design considerations if the form is to be included in an aligned series or otherwise used in a one-run application. Before any "in-house" data elements can be included in a reproducible master at company level, the designer has to take into account, and place in their proper locations, all relevant items appearing in any international, sectoral or national layout key or standard form which would apply to the aligned series under design. Only such annotations, stamps and similar entries which are made after the initial one-run completion of the form can be placed without these considerations.

24.5. If any free space is used for the expansion of other data fields, it should be taken into account that this may create problems for trading partners whose automated office procedures might be based on aligned documents. If they receive documents containing data fields larger than those set out in the United Nations Layout Key or in related data standards, they may be unable to accommodate the corresponding data entries in their own systems; in that case appropriate measures should be taken for co-ordination between trading partners concerned.

25. The field identifiers in the Layout Key indicate the general nature of the information to be contained in the fields. The data fields can be further sub-divided observing certain practices which have emerged in the development of various international documents. As examples, it is possible to provide space for the exporter's agent in the bottom part of the exporter field, the field for transport details can be subdivided to accommodate the various data elements specifying places of the itinerary, modes and means of transport, etc. The depth of the "goods description" area can be adjusted to the average need by raising or lowering the dotted line as required. The order can be reversed between the two data elements sets "gross weight - cube" and "net quantity - value".

26. If, when drafting a document in accordance with the Layout Key, there is any doubt about which deviations are permissible within the framework of the Layout Key, it is advisable to contact either the national facilitation body, if any, or the secretariat of the Economic Commission for Europe, or UNCTAD's Special Programme on Trade Facilitation (FALPRO) both in the Palais des Nations at Geneva, Switzerland.

VIII. Data Elements

27. The field headings of the Layout Key are listed below. The remarks are intended to explain the nature of the data to be entered in the corresponding data fields.

Consignor (Exporter)

This field is intended to show the name and address of the sender of goods or the originator of the documents, as the case may be.

Consignee

The field for the name and address of the consignee has been located in conformity with international postal specifications so as to allow the use of window envelopes.

Notify or delivery address

If in maritime transport the goods are consigned "to order", a notifying address may be required. If not, this space can be used for specifying the address where the goods are to be delivered, if it differs from the (mail) address of the consignee.

Transport details

This field is reserved for a description of the transport, including places involved in the chain of transport, modes and means of transport, etc.

Date, Reference No., etc.

If not otherwise specified, "date" means the date of issue of the document in which it appears. The reference number is a number or designation preferably common throughout each set of documents. It can be the same as order number, invoice number, etc. In this field, other dates and numbers can be entered, either at the time of the completion of the document, or later in the procedure by parties to whom the documents are handed over. The sequence of these items can be modified.

Buyer (if other than consignee) or other address

Often goods are sent to one address and documents to another. In such cases, the consignee field is used for the goods address required, inter alia, in transport documents, whereas the alternative address field is used for the address to which documents, such as invoices, are sent (buyer's address).

Country details

Information on country of origin, country whence consigned (country of provenance) and country of destination may be required for statistical and other purposes. If any of these items are not required, the space left may be used for other purposes, e.g. indication of licence number; it can also - in such cases - be added to the field for terms of delivery and payment.

Terms of delivery and payment

This space may be freely used for the purpose indicated, normally specifying time of delivery, terms of delivery, terms of payment, insurance details, etc.

Shipping marks and container numbers

This field is intended for the particulars needed to identify goods (and freight containers) and to relate them to the documents, preferably in accordance with the UN/ECE/FAL Recommendation No. 15, "Simpler Shipping Marks". If goods are marked with the consignee address, this should be indicated by an expression such as "Addressed to consignee", or preferably - by entering the full address as shown on the goods.

Number and kind of packages

No particular column width has been reserved for these data elements, as it would have to be wide enough to accommodate a maximum number of packages which would only rarely appear and would thus, in more cases, unnecessarily reduce the space for description of goods. It is recommended that a typing layout be used that clearly separates this information from the goods description.

Description of goods

This field is intended for a description of the goods in common trade terms, if possible using terminology of the applicable Customs or freight tariffs. For detailed specifications of articles, the "free disposal" area should be used.

Commodity number

When appropriate the applicable number of the relevant statistical commodity list or Customs tariff should be given, since at least the first digits of these numbers are in most cases used globally.

Gross weight (mass)

The gross weight (mass) is intended for transport and other cargo-handling purposes. It is shown in the same column as net quantity, but can be separated by using a "tier" layout or otherwise by placing it on another level.

Cube

This field is intended for indicating the cubic space required for the goods under transport. It should be located beside the gross weight.

Net quantity

This column shows net weight and supplementary quantities required, inter alia, for statistical purposes as specified in the relevant commodity list or Customs tariff.

Value

This indication of value is intended mainly for statistical purposes. In most countries export statistics are based on FOB value and import statistics on CIF value.

Free disposal

This area can be used at discretion for such additional information as cannot be accommodated within the specified fields. Individual space requirements determine the exact location of the dividing dotted line.

Authentication (Signature)

Besides signature or other proof of authentication, information may be entered in this field regarding the place where the document is signed or otherwise authenticated, date of authentication, etc.

IX. Rules for the Location of Codes

28. In all cases where document codes, data field codes (tags) and coded data entries are to be shown in documents used in international trade, the following rules for their location should be applied:

Location of document code

The document code should be placed immediately before the document name or should take its place.

Location of field code (tag)

If a data field code is used, it is important to avoid confusion with coded data entries. The field tag should therefore be placed before the field heading (data element name) or should take its place starting at the top left-hand corner of the data field.

Location of coded data entries

- In box-type data fields, coded data entries should be placed in the top right-hand corner of the box. A short vertical line can be used to separate the code box from the rest of the data field.

- In column-type data fields, coded data entries should be placed in vertical order under the field code (tag) and, where necessary, should be preceded by an ordinal number (item number).

29. When ordinal and quantitative data entries (such as dates, weights, quantities, values, container number) are represented in a form which can be used directly as coded input into ADP systems, it is not necessary to repeat them in a special code box.

30. Examples of the application of these rules for the location of codes are given on the next page.

Examples :

DOCUMENT CODE

710 Bill of lading or 710 Bill of lading

BOX TYPE DATA FIELDS and COLUMN TYPE DATA FIELDS

NOTE : The examples are given as illustrations only and do not specify any precise dimensions for the various boxes and columns. Numeric identifiers (tags) from the ECE/UNCTAD Trade Data Elements Directory are used as examples of field codes.

X. The United Nations System of Aligned Trade Documents

31. The United Nations Layout Key serves as the basis for the creation of subsidiary international and national layout keys, internationally or nationally established standard forms and--ultimately--aligned masters and forms used at company level.

32. Such "derived" layout keys and forms can be successfully aligned only if certain rules are observed, taking into account a hierarchic structure of interdependence and relations on a number of levels, which can be presented graphically as illustrated below and further explained in the notes that follow. In the illustration, interrupted lines (---) depict layout keys which serve as the basis for the design of forms but cannot themselves be used as operational documents, whereas a full line indicates national masters, to be used for the completion of forms, and standard or other aligned forms to be used as operational documents.

The United Nations System of Aligned Trade Documents

33. In principle, no form can be designed without taking into account the existence of a layout key, master or standard form at a higher level; conversely, it would be possible for a company to design an aligned form directly on the basis of the United Nations Layout Key if there were no applicable mandatory layout keys, masters or standard forms on the intermediate levels.

34. In the following paragraphs the levels illustrated above are described and examples given of applications at these levels.

International specialized or sectoral layout keys

35. These are intergovernmental or non-governmental standards (mainly optional) which present data elements in accordance with the United Nations Layout Key and direct the layout of further data elements common to the special application or sector for which the layout key is intended.

36. Specialized or sectoral layout keys serve as the basis for the design of aligned forms for use in a special application or sector, and are suitable for a one-run system.

Examples :

- Aligned Invoice Layout Key for International Trade (UN/ECE/FAL/Rec. No. 6, 1976);

- ICS Standard Bill of Lading (1972);

- CCC Layout Keys for Goods Declarations (1965, 1977).

Aligned international standard forms

37. These are internationally-established forms (mostly mandatory) which present data elements in accordance with the United Nations Layout Key, and direct the layout of further data elements required in relevant treaties, conventions, protocols, and similar agreements. These forms do not, in principle, permit any deviation in design. Models of standard forms are often included in such agreements and are named in accordance with the documentary function which they fulfil.

Examples :

- Rail Consignment Note (1980) under the CIM Convention;

- TIR Carnet (1975);

- GSP Certificate (1971);

- Movement Certificate EUR 1 (1975).

National layout keys

38. These are nationally-recommended standards (mandatory or voluntary) which present data elements in accordance with the United Nations Layout Key (taking into account relevant specialized and sectoral layout keys and standard forms), and which direct the layout of any further nationally-required data elements with a view to establishing national aligned series of trade documents.

39. National layout keys (with or without national series of aligned forms) are often adopted as National Standards by national standards bodies; they may be prescribed by government regulation for certain applications.

Examples :

- "Trade documentation: Layout Key for the designing of forms" (Swedish national standard SIS 614110, 1970);

- "Unified System of Documentation. System of documentation on foreign trade. Standard Form". (USSR State Standard, GOST 6.2-1973)

National masters

40. These are nationally-recommended standards (mandatory or voluntary) which present data elements in accordance with the United Nations Layout Key (taking into account relevant specialized and sectoral layout keys and standard forms) and which include further required data elements. They serve as the basis for aligned series of trade documents; copies of masters can be used directly for the production of documents: such copies are called "master forms". National masters (with or without national series of aligned forms) can be adopted as National Standards by national standards bodies; they may be prescribed by government regulation for certain applications.

Examples :

- "United States Standard Master for International Trade" (National Committee on International Trade Documentation, 1970);

- "Master Document" (Indian Institute for Foreign Trade, 1978).

Aligned national standard forms

41. These are nationally standardized forms which present data elements in accordance with the United Nations Layout Key and which are adapted to the needs of the relevant country.

42. National standard forms are often based both on national layout keys/masters and on specialized or sectoral layout keys, and are designed for use within an aligned series of trade documents.

Examples:

- National Customs entry forms;

- National Standards for commercial invoices.

Aligned company masters and forms

43. In practical applications, a company using the one-run method for completion of trade documents establishes a company master to cover all relevant forms needed for a trade transaction. In countries where a national master has been established, the master form can, in principle, be used as the company master. The forms needed for a trade transaction include - in addition to mandatory international and national standard forms - a number of other forms, adapted to the particular needs of the company concerned, with company name and logotype pre-printed and sometimes reflecting other company characteristics. The detailed design of these "company forms" is left to the discretion of the issuing company. Some forms intended for general application, such as commercial invoices, bills of lading, etc., are commercially available in aligned neutral versions.

Annex : LAYOUT KEY FOR TRADE DOCUMENTS

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE SINGLE GOODS DECLARATION

(26 June 1990)

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate international trade by simplifying and harmonizing Goods declaration formalities,

DESIRING to harmonize the data elements required by the Customs for import, export and Customs transit,

DESIRING to harmonize the lay-out of Goods declaration for import, export and Customs transit,

CONSIDERING that the introduction of a uniform Goods declaration worldwide for import, export and Customs transit would ensure the attainment of the above objectives,

NOTING that the introduction of a uniform Goods declaration worldwide for Customs purposes would greatly facilitate the shift to Electronic Data Interchange as a means of transmitting international trade data,

NOTING the desire of a number of Member Customs administrations and of certain international organizations promoting trade facilitation to introduce such a uniform Goods declaration as soon as possible,

EMPHASIZING that the present Recommendation is a provisional instrument pending the elaboration and entry into force of an international Convention on the Single Goods declaration,

RECOMMENDS that any Members of the Council and any members of the United Nations or its specialized agencies as well as Customs or Economic Unions should :

- test or introduce, as far as possible, in lieu of their existing Goods declaration forms for import, export and Customs transit, the Single Goods Declaration form in Annex I in accordance with the rules in Annex III, and having regard to the Explanatory Notes set out in Annex II,

RECOMMENDS that the result of such tests or introduction should be submitted to the Secretariat of the Customs Co-operation Council by the end of January 1992, to be taken into account when elaborating an international Convention on the Single Goods Declaration,

REQUESTS any Members of the Council and any members of the United Nations or its specialized agencies as well as Customs or Economic Unions which accept this Recommendation to notify the Secretary General of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the members of the United Nations or its specialized agencies or any Customs or Economic Unions which have accepted this Recommendation.

ANNEX I

The Single Goods Declaration

ANNEX II

Explanatory Notes on data elements for the Single Goods Declaration

The Explanatory Notes in this Annex explain the scope of each individual data element in the Single Goods Declaration. The Notes are based on the Customs Co-operation Council Glossary of International Customs Terms and the United Nations Trade Data Elements Directory.

The Explanatory Notes are set out following the order of the boxes of the Single Goods Declaration.

BOX	DATA ELEMENTS AND RELEVANT EXPLANATORY NOTES
1	Type of declaration An indication of whether the Goods declaration is lodged for importation, exportation or Customs transit. Customs procedure Treatment applied by the Customs to goods which are subject to Customs control. There are various Customs procedures, for example, clearance for home use, Customs warehousing, temporary admission for inward processing, Customs transit.
2	Exporter/Consignor The name, complete address and any identification number (for fiscal, statistical or other purposes) of the natural or legal person(s) concerned. The exporter is the person who makes, or on whose behalf a Customs clearing agent or other authorized person makes, an export declaration. This may include a manufacturer, a seller or other person. The consignor is the person who, by contract with a carrier, consigns or sends goods with the carrier, or has them conveyed by him. Note : For trade within a Customs Union, the term "consignor" may have a similar meaning to the term "exporter".
3	Number of forms making up the declaration Total number of the Goods declaration forms required to declare the goods contained in the consignment. This box may also be used to indicate the serial number of the form concerned in relation to the total number of forms, for example, 1/6, 2/6, etc.
4	Number of loading lists Number of loading lists or other similar specifications attached to the Goods declaration.
5	Number of items for the declaration Total number of items (at the level of national subdivisions of commodity codes) of goods covered by the Goods declaration (including the main form and any continuation sheets, loading lists, commercial lists, etc.).
6	Total number of packages Total number of packages of the entire consignment. Note : For the purposes of the Single Goods Declaration, this means the total number of packages covered by a Goods declaration.
7	Common access reference Unique reference used for identification purposes in documents and messages exchanged between parties in international trade.
8	Importer/Consignee The name, complete address and any identification number (for fiscal, statistical or other purposes) of the natural or legal person(s) concerned. The importer is the person who makes, or on whose behalf a Customs clearing agent or other authorized person makes an import declaration. This may include a person who has possession of the goods or to whom the goods are consigned. Also the importer has normally ordered the goods from abroad and is responsible for the payment of the amount of the commercial invoice to the foreign seller. The consignee is the person to whom the goods are consigned.
9	Gross mass Weight (mass) of goods including packing but excluding the carrier's equipment. The gross mass should be expressed in metric units normally in kilogrammes.
10	Transport document type/number Name or other qualification of the type of the transport document such as sea waybill, bill of lading, rail/road consignment note, air waybill, multimodal/combined transport document, etc. The transport document number is the reference assigned by the carrier or his agent to the transport document.
11	Location of goods Indication of the place where the goods are located and where they are available for examination. This may be the exporter's or importer's premises, temporary store, railway wagon, open area at port, etc. This box is not to be used for declaring the Customs warehouse from which the goods are exported or in which they are placed on importation.
12	Identification of Customs warehouse Identification and location of the Customs warehouse in which the goods will be or have been deposited.
13	Declarant's reference Reference assigned by the declaration to the transaction.
14	Goods declaration presentation date Date on which the Goods declaration is present or lodged with Customs. This date may be entered by the declarant or be stamped by the Customs authorities, as national legislation may provide.
15	This box is for national use.
16	Declarant/Customs clearing agent or representative The name, complete address and any identification number (for fiscal, statistical or other purposes) of the natural or legal person(s) concerned. The declarant is the person who makes a Customs declaration or in whose name such a declaration is made. In some countries, the term "declarant" is confined to the person who actually makes a Customs declaration. In some other countries, the declarant is any natural or legal person who makes a Customs declaration whether in his own name but on behalf, or in the name and on behalf of another natural or legal person, or in his own name but on behalf of another natural or legal person. Often the declarant is an agent/representative/a professional Customs clearing agent who deals directly with the Customs on behalf of the importer or exporter. In some countries, the term used for the declarant for the purposes of the Customs transit procedure is "the person responsible for transit", or "principal". In some other countries, the carrier has responsibilities in connection with Customs transit which are close to those of the declarant. Where the importer or the exporter is also the declarant, the word "importer" or "exporter" should be entered in the box relating to the declarant/Customs clearing agent or representative. The Single Goods Declaration also includes a data element "Declarant's reference".
17	Country and/or region of exportation/whence consigned Country from which the goods were initially despatched to the importing country without any commercial transaction taking place in intermediate countries. This box is also used for declaring the region of exportation/whence consigned, as national legislation may provide.
18	Country of first destination The country where the goods are off-loaded from the means of transport used for their exportation. The text excludes any country through which the goods are merely transited on board the means of transport used for their exportation.
19	Country of purchase/Country of sale Country where the importer's or the exporter's co-contractor is domiciled or has his business. On importation, the term "Country of purchase" is used, on exportation "Country of sale".
20	Country and/or region of destination The country known to the consignor or his agent at the time of dispatch to be the final country to which the goods are to be delivered. This data element is used only on importation. The region of destination is declared as required by national legislation. That sub-element denotes the region where the goods will be consumed, sold or manufactured or in which the importer is established.
21	Identification and nationality of means of transport Name or number identifying a vessel or a vehicle, flight number and date, etc. The nationality is indicated by the name of the country in which the means of transport is registered.
22	Terms of delivery Terms agreed between the seller and the buyer under which the seller undertakes to deliver merchandise to the buyer. Terms of delivery in international trade are laid down in INCOTERMS and include ex. works, f.o.b., c.i.f., etc. These terms may also be used in non-commercial transactions where there is no buyer or seller proper.
23	Identification and nationality of active means of transport crossing the border Identification of the active means of transport used in crossing the border of the country of dispatch/export or the country of final destination. This data element is to be declared in the case of combinations of means of transport. The active means of transport is the one which propels the whole combination. For example, if lorry on sea-going vessel, the active means of transport is the vessel, if tractor and trailer, the active means of transport is the tractor, etc. However, this data elements do not cover trucks which are used to merely move trailers to and from ferry boats. The particulars to be declared are the same as those required for "identification and nationality of means of transport".
24	Payment currency The name or symbol of the monetary unit in which payment is made, or is to be made. Total invoiced amount The invoiced price for the total of the goods declared.
25	Rate of exchange The rate at which one specified currency is expressed in another specified currency.
26	Nature of transaction An indication for Customs of the type of contract under which goods are supplied, such as sale, exchange, gift, loan, hire, sale or return, etc.
27	Inland mode of transport Method of transport sued when carrying imported goods further inland or when carrying export goods within the country of exportation to the place from which they will be exported.
28	Mode of transport Method of transport used for the carriage of the goods across the border, such as air, sea, rail, road, etc.
29	Place of loading Name of the seaport, airport, freight terminal, rail station or other place at which the goods (cargo) are loaded onto the means of transport being used for their carriage. The exact location of the goods within the place of loading is declared in the box "Location of goods". Place of discharge Name of the seaport, airport, freight terminal, rail station or other place at which the goods (cargo) are unloaded from the means of transport having been used for their carriage. The exact location of the goods within the place of discharge is declared in the box "Location of goods".
30	Financial and banking information Terms of payment, the name of the bank through which the payment is made, etc., particulars concerning the payment or domiciliation of the invoice amount.
31	Container transport indicator An indication of whether or not goods are transported in a container. This indication should be expressed in a coded form.
32	Customs office of entry/Arrival date Customs office at which the goods enter the country of destination. The arrival date means the date (and time) of arrival of the means of transport. That date may be that of actually arriving in the Customs territory, or the date when the declaration of arrival for the means of transport is lodged with the competent Customs office, as national legislation may provide. Customs office of exit/Date of exit Customs office through which the goods leave the Customs territory. The date of exit means the date (and time) of exit of the means of transport. That date may be the date of actually leaving the Customs territory or the date when the declaration of departure for the means of transport is lodged with the competent Customs office, as national legislation may provide. These data elements are to be declared in a coded form.
33	Container identifier, marks and number of packages, number and type of packages, description of goods Container identifier : marks letters and/or numbers) which identify a freight container or similar unit load device. The identification marks and numbers of containers should be entered clearly distinct from those of the packages. Marks and numbers of packages : marks and numbers identifying individual packages. Numbers of packages : number of packages per commodity code packed in such a way that they cannot be divided without first undoing the packing. Where the goods are unpackaged, enter the number of such goods covered by the Goods declaration, or the word "bulk", as the case may be, together with the particulars necessary to identify the goods. Type of packages : description of the form in which the goods are presented, such as cartons, drums, crates, bundles, etc. Description of goods : plain language description of the nature of the goods sufficient to identify them at the level required for Customs purposes. Normally, it should be expressed in precise terms to allow the classification of the goods. Coded attributes, brand names or fancy descriptions should not be accepted.
34	Item number Serial number of a given item in relation to the total number of items declared on the Goods declaration.
35	Other information This box can be used for declaring any other information which is required but for which no specific box is provided for. Such other information includes, inter alia : Liability of goods to specific requirements Information about specific requirements includes an indication of the goods being subject to origin marking or laboratory analysis before release, of their being dangerous or hazardous goods in the sense of relevant international Conventions, etc. Supporting documents Reference to documents lodged in support of the Goods declaration as required under national legislation, for example, invoice; certificate of origin; decision of competent authority to grant duty concession or exemption; import or export licence or permit; certificate of health, etc. Licence : quantity and/or value deducted Quantity and/or value deducted from the export or import licence.
36	Commodity code Number identifying goods for Customs, transport or statistical purposes.
37	Country of origin Country in which the goods have been produced or manufactured, according to criteria laid down for the purposes of application of the Customs tariff, or quantitative restrictions, or of any other measure related to trade.
38	This box is for national use.
39	Supplementary quantity Number of units of measurement of the goods as required by Customs to be expressed for tariff, statistical or fiscal purposes. This element may include a weight (mass), if different from that already specified elsewhere. The supplementary quantity includes units such as square or cubic metre, piece, etc.
40	Net mass Weight (mass) of goods including any packing normally going with them to a buyer in a retail sale. Alternatively, a net net mass may be required to be declared, as national legislation may provide. The net net mass is the weight (mass) of the goods themselves without any packing. The net mass and the net net mass should be expressed in metric units, normally in kilogrammes.
41	Cargo manifest reference Reference to relate the Goods declaration to the corresponding item in the relevant cargo manifest (cargo declaration, freight manifest, bordereau, etc.). In maritime transport, the bill of lading number may sometimes serve as such a reference.
42	Previous Customs procedure Customs procedure, if any, under which the goods have been placed prior to the procedure applied for in the declaration. The reference to the previous Customs procedure may be made by means of the number of the Goods declaration lodged for the purposes of the previous Customs procedure, or of other identification.
43	Valuation method used Any necessary details concerning the method by which the Customs or statistical value is determined, for example, a reference to the Brussels Definition of Value or to one of the alternative methods under the GATT Valuation Code.
44	Customs value basis Invoice or other price (e.g., selling price, price of identical goods) to be used as the basis for determining the value for Customs purposes of those goods in a consignment which are subject to the same Customs procedure, and have the same commodity code, country and duty regime.
45	Added amount Required additions to the Customs value basis used, such as costs for transport, insurance, packing, etc.
46	Deducted amount Allowable deductions from the Customs value basis used, such as discounts, rebates, etc.
47	Duty/tax treatment applied for The application for the duty or tax treatment to which the goods may be entitled, for example, concessional rate, preferential duty (GSP), exemption, franchise, etc.
48	Quota Reference to any quota applicable to the goods, for example, in application of quantitative restrictions or preferential treatment.
49	Statistical value Value declared for statistical purposes of those goods in a consignment which have the same commodity code and country of origin.
50	Calculation of duties, taxes and fees Duty/tax/fee type Type of duty or tax or fee applicable to commodities, or of tax applicable to services, for example, Customs duty, excise duty, value added tax, sales tax. Duty/tax/fee assessment basis Value or quantity on which a duty, tax or fee will be assessed. Duty/tax/fee rate Rate of duty, tax or fee applicable to a specific commodity or service. Amount to collect per duty/tax/fee type The amount to be collected per each duty/tax/fee type involved. Amount of duties, taxes and fees per item The amount of duties, taxes and fees to be collected for each item concerned. Duty/tax/fee payment method Method by which a duty, tax or fee is paid to the relevant administration.
51	Intended Customs offices en route (and countries) Customs offices where the goods enter or leave a territory in the course of a Customs transit operation, to be determined in accordance with national legislation. The countries involved should also be indicated, when required.
52	Customs office of destination (and country) Customs office at which a Customs transit operation is terminated. The country in which the Customs office of destination is situated, should also be indicated, when required.
53	Security details Details regarding undertaking given in cash, bond or as a written guarantee to ensure that an obligation to the Customs will be fulfilled, for example, under a temporary admission or Customs transit procedure.
54	Deferred payment Reference or indication of deferred payment of duty/tax/fee.
55	Total amount of duties, taxes and fees per declaration The total amount (grand total) of duties, taxes and fees to be collected. Duty/tax/fee payment method Method by which a duty, tax or fee is paid to the relevant administration.
56	Authentication Signature or other authentication of the Goods declaration, indicating, when appropriate, the status of the person signing or authenticating it. The date and place of signature or other authentication may also be entered, where so required by national legislation.
57, G	Transfer during Customs transit Transfer of goods from one means of transport to another in the course of one Customs transit operation. The relevant details include the reason for transfer; place and country; identification and nationality of the new means of transport; identification of new Customs seals or other identification marks affixed; certification by competent authorities; etc.
58, H	Control measure/Incidents during Customs transit Account of any control measures taken at Customs offices en route. The relevant details include the reason for control; findings; identification of new Customs seals or other identification marks affixed; Customs office and country; signature of the Customs officer. This data element also includes an account of any incidents other than transfer occurring in the course of transport, such as those necessitating the change of the prescribed route or delaying the presentation of the goods at the Customs office of destination; change of the active means of transport, etc. Such incidents shall also be certified by a competent authority, Customs or police, etc.
A	Identification of Customs office The Customs office which clears the goods for import or export, or at which the Goods declaration is registered. Customs office of departure The Customs office at which the Customs transit operation commences, that is the office which authorizes the carrying of the goods under Customs transit. Goods declaration number Number, assigned or accepted by Customs, to identify the Goods declaration for any Customs purposes. Goods declaration acceptance date Date on which the Goods declaration is accepted by Customs in accordance with national legislation.
B, F	Accounting details Accounting entries relating to the collection of duties, taxes and fees. This includes items such as the date of notifying the declarant of the duties, taxes and fees payable; the number of such notice; the date of the actual payment of duties, taxes and fees; the number of the receipt for payment; bad debt; etc.
C	Control measure at the Customs office of departure Recording of the control measures taken at the Customs office of departure such as affixing Customs seals or other identification marks; prescribing a time-limit for the presentation of the goods at the Customs office of destination; prescribing a route; etc.
D	Acceptance/control of import/export Goods declaration Box for the signature(s) of the Customs officer(s) who check(s) the import or export Goods declaration.
E	Control measures at the Customs office/Result of control measures Recording of any control measure to be taken in respect of import or export goods, such as physical examination, laboratory analysis, verification or origin marking or of number of goods, etc. Also the findings in connection with the control measures are recorded in this box. This box may also be used to enter the Customs office and the date of re-exportation or reimportation of temporarily admitted or temporarily exported goods, as well as, any extension of that time-limit. Further, this box can be used to keep record of the re-exportation or reimportation in several consignments of temporarily admitted or temporarily exported goods.
I	Address for returning the document proving the completion of Customs transit The name and address of the Customs office to which the document proving the completion of Customs transit (normally a sheet of the transit Goods declaration) has to be returned from the Customs office of exit or of destination. Generally, the document is returned to the Customs office of departure or of entry. A country may also designate a central clearing office to which the documents must be returned, irrespective of the Customs office of departure.
J	Control measures at the Customs office of destination Recording of the control measures taken at the Customs office of destination upon termination of Customs transit, such as verification of the condition of the Customs seals and any identification marks; tallying of the goods against documents, etc.

ANNEX III

Rules

1. The size of the form for the Single Goods Declaration (SGD) shall be the international ISO size A4 (210 x 297 , 8.27 x 11.69 inches). There shall be provided a 10 mm top margin and a 20 mm left-hand filing margin. Line-spacing shall be based on multiples of 4.24 mm (1/6 inch) and width-spacing on multiples of 2.54 mm (1/10 inch). Minor deviations in the exact size of boxes, etc. are permitted in required for particular reasons in the issuing country, such as the existence of other than metric measurement systems, features of national aligned systems of documents, etc.

2. The heading of the boxes of the form are intended to indicate the nature of the data elements which should appear in a given box. However, Customs administrations remain free to replace, in their national forms, the headings by such wording as is considered more appropriate provided that this wording does not affect the nature of the data elements, as laid down in the Explanatory Notes in Annex II.

3. The form shall be printed on self-copying paper dressed for writing purposes and weighing at least 40 grammes per square metre. The paper must be sufficiently opaque for the information on one side not to affect the legibility of the information on the other side and its strength should be such that in normal use it does not easily tear or crease.

4. The form shall conform to the model in Annex I. However, countries are free to determine those data elements which are compulsory in the SGD. In addition, the untitled boxes are for free disposal by countries. The numbered boxes are to be filled in by the declarant whereas those marked with a letter are for official use. When printing the form, the number and letter symbols of the boxes must be maintained, as this facilitates the use of the SGD between two or more countries.

5. The vertical box on the top left-hand corner of the form is intended for designating the use of a given sheet. The serial number of a sheet with a set may also be entered therein.

6. The Explanatory Notes in Annex II clarify the scope of the boxes of the SGD and specify the exact content of each individual data element. Customs administrations are free to insert, in their national regulations on the use of the SGD, practical examples concerning the filling of the boxes.

7. The SGD replaces only the existing Goods declaration. It does not replace supporting documents such as commercial invoice, certificate of origin, etc. This Recommendation does not also impose an obligation to require a written Goods declaration in cases where no such declaration is presently required, or prevent from dispensing with such a requirement.

8. The SGD is a multipurpose form which is designed for use in clearance of goods for import, export or Customs transit. Therefore, apart from boxes common to all those procedures, it incorporates boxes which are appropriate for two or only one of them. From this it follows that, when using the SGD for a given procedure, the boxes which are not required to be filled in under that procedure, will remain empty.

9. The SGD is also a multipurpose Goods declaration in that its use is not restricted to Customs clearance in one country. The SGD is capable of being use to clear a consignment through Customs in two or more countries. Such use of the SGD will expedite Customs clearance and enhance the effectiveness of Customs control. Such use of the SGD calls for the following arrangements between the countries concerned :

- provision should be made for printing and filling in the SGD in sets which comprise the number of sheets necessary to clear a consignment through Customs in the countries involved. By way of example, a set should include the sheets necessary to clear the consignment for export in the country of exportation and the sheet necessary to clear the same consignment for import in the country of importation. In addition, if the goods are carried under a common Customs transit procedure, the set must also contain the sheets necessary for the Customs transit procedure. Thus, a three-procedure set might be composed as follows :

Sheet 1 which is retained by the Customs of the exporting country (export formalities);
Sheet 2 which may be used for statistical or any other administrative purposes in the exporting country;
Sheet 3 which is returned to the exporter;
Sheet 4 which is to be kept in a Customs transit operation by the Customs office of destination;
Sheet 5 which is the sheet proving the completion of a Customs transit operation and which is returned to the Customs office of departure or to another designed Customs office;
Sheet 6 which is retained by the Customs of the importing country (import formalities);
Sheet 7 which may be used for statistical or any other administrative purposes in the importing country;
Sheet 8 which is returned to the importer;

- as appears from the above, the use of the SGD for Customs transit between two or more countries presupposes a common Customs transit procedure;

- one of the basic features of the SGD is that the data elements entered on the export sheets in the country of exportation copy through onto the sheets to be used for import clearance in the country of importation, and are thus available to the Customs in that country. There are, however, certain exceptions. For example "Declarant" is not the same person in the country of exportation and in that of importation. If the name of the declarant entered on the export sheets copies through to the import sheets, the relevant box can no longer be filled in in the country of importation.

Other considerations, such as the protection of business secrecy, may also render it necessary to prevent the copying through of some data elements. The countries concerned should therefore determine the boxes the data contents of which may not copy through and, when printing the form, desensitize the background on the form of such boxes so as the prevent the transcription of the relevant data elements on the import sheets;

- to facilitate the manual filling in of the SGD and its subsequent manual processing by the Customs, and to avoid any confusion, the sheets for export, Customs transit and import, on the one hand, and the use of each individual sheet, on the other hand, should be made capable of easy identification. To that effect, a 3 mm wide colour band should be printed from top to bottom on the right-hand side of the sheets. The following colours should be used when printing multi-purpose forms (use in several countries) :

sheets 1 and 6 (Customs copies) : red
sheets 2 and 7 (administrative copies) : green
sheets 3 and 8 (declarant's copies) : yellow
sheets 4 and 5 (transit copies) : blue.

In addition, the colour band of sheets 1, 2, 3 and 5 (sheets for use in the exporting country) should be continuous and that of sheets 4, 6, 7 and 8 (sheets for use in the importing country) should be discontinuous.

Note : The above colouring system should also be followed when printing the SGD for use at national level only, if the use of colour is deemed necessary.

- the choice of whether to use the SGD, in respect of a given consignment, for all three Customs procedures, for any one of them, or for a combination of any two of them, may be left to the declarant or, alternatively, the countries may agree, that the SGD must be used for all three procedures, as the case may be. Where the choice is left to the declarant, he should be allowed to print and use such sets of the SGD as fit his purposes;

- the forwarding to the country of importation of the import sheets which have been partly filled in in the country of exportation may be left to the declarant;

- each country concerned may print the SGD in its official language(s). The countries may accept SGD forms which are completed in one of the official languages of other countries. Where necessary, a translation may be required;

- each declarant shall be responsible to the Customs for the accuracy and correctness of the data elements on the SGD only in respect of the Customs procedure he has applied for.

10. Internationally adopted codes should be used when declaring the following data elements on the SGD :

(a) For declaring persons , the general guidelines concerning the coding of persons proposed by the CCC Working Party on Customs applications of computers (subsequently the ADP Sub-Committee) which are compatible with International Standard ISO 6523, should be used, see Annex I to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984;

(b) For declaring mode of transport , a one-digit numeric code structure for the representation of modes of transport, as provided for in Recommendation No. 19 adopted in March 1981 by the Working Party on Facilitation of International Trade Procedures of the Economic Commission for Europe (ECE), should be used, see the Recommendation of the Customs Co-operation Council concerning the use of a code for the representation of modes of transport;

(c) For declaring nationality of means of transport , a two-letter alphabetic code referred to in International Standard ISO 3166 as the "ISO alpha-2 country code" should be used, see the Recommendation of the Customs Co-operation Council concerning the use of the ISO alpha-2 country code for the representation of names of countries, 16 June 1982;

(d) For declaring countries , the ISO alpha-2 country code for the representation of names of countries should be used (see subparagraph (c) above);

(e) For declaring marks and numbers of containers , the ISO code contained in International Standard 6346 for the representation of data concerning freight containers used in modes of transport other than air transport, and the code developed by the International Air Transport Association for the representation of data concerning air freight containers should be used (see Annex II to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984);

(f) For declaring commodity codes , the Harmonized Commodity Description and Coding System developed by the Customs Co-operation Council should be used (see Annex V to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984);

(g) For declaring terms of delivery , the INCOTERMS developed by the International Chamber of Commerce should be used;

(h) For declaring invoice currency , the ISO three-letter alphabetic currency code contained in International Standard 4217 should be used (see Annex IV to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984);

(ij) For declaring Customs procedure , the general guidelines and one-digit code developed by the CCC Working Party on Customs applications of computers (subsequently the ADP Sub-Committee) for the representation of Customs procedures should be used (see Annex VI to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984);

(k) For declaring units of measurement , the codes contained in ECE Recommendation No. 20 for the representation of units of measurement should be used (see Annex VII to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984);

(l) For declaring dates , the representation given in ECE Recommendation No. 7, which is based upon the international ISO Standard 8601 should be used (see Annex III to the Recommendation of the Customs Co-operation Council concerning the use of codes for the representation of data elements, 22 May 1984).

11. In the case of Goods declarations processed by computer, the Customs authorities should allow, under conditions to be laid down by them, authentication of such declarations by means other than handwritten signature (see the Recommendation of the Customs Co-operation Council concerning the transmission and authentication of Goods declarations which are processed by computer, 16 June 1981).

__________

Convention between Switzerland and France on juxtaposed national control offices and controls en route

Concluded on 28 September 1960

Approved by the Federal Assembly on 22 June 1961¹

Instruments of ratification exchanged on 8 July 1961

Entry into force 8 July 1961

The Swiss Federal Council

and the President of the French Republic,

President of the Community ,

Desirous of facilitating the crossing of the frontier between the two countries, have

decided to conclude a Convention and, to this effect, have appointed as their respective plenipotentiaries:

(names of plenipotentiaries )

who, having exchanged full powers in due and proper form,

have agreed as follows:

Title I

General provisions

Art. 1

1. The Contracting Parties shall, within the framework of this Convention, take the necessary measures with a view to facilitating and expediting the crossing of the frontier between the two countries.

2. To this end, they:

a. may create juxtaposed national control offices,

b. may institute controls in vehicles en route on specified itineraries,

c. shall therefore authorize the competent officials of one of the two States to perform their duties on the territory of the other State, within the framework of this Convention.

3. ²The establishment, transfer, modification or elimination:

a. Of juxtaposed national control offices;

b. Of itineraries on which controls may be carried out en route, shall be determined by joint agreement between the competent authorities of the two States.

4. The arrangements referred to in paragraph 3 shall be confirmed by an exchange of diplomatic notes. They shall become effective upon completion, where appropriate, of the formalities laid down in the legislation of each State.

Art. 2

For the purposes of this Convention, the term:

«Control» shall mean the application of any statutory, regulatory or administrative provision of the Contracting Parties concerning the crossing of the frontier by persons, as well as the entry, exit and transit of merchandise, including vehicles, and other goods.
«Host State» shall mean the State on whose territory the control of the other State is carried out.
«Adjacent State» shall mean the other State.
«Zone» shall mean the part of the territory of the host State within which the officials of the adjacent State are authorized to carry out controls.
«Officials» shall mean those persons belonging to the administrations responsible for the controls who perform their duties in the juxtaposed national control offices or in vehicles en route.
«Offices» shall mean the juxtaposed national control offices.

Art. 3

The zone may include:

1. Where rail traffic is concerned:

a. Part of the station and its installations,

b. The section of track between the frontier and the office, as well as parts of the stations located on this stretch;

c. Where it is a matter of controlling a train en route, the train on the specified stretch of track, and part of the stations at which this stretch begins or ends, as well as parts of the stations through which the train passes.

2. Where road traffic is concerned:

a. Part of the service buildings;

b. Sections of the road and other installations;

c. The road between the frontier and the office;

d. Where it is a matter of controlling a vehicle en route, the vehicle on the specified stretch of road and an area of the buildings and installations where this stretch begins and ends.

3. Where waterway traffic is concerned:

a. Part of the service buildings;

b. Sections of the waterway, as well as waterside and port installations;

c. The waterway between the frontier and the office;

d. Where it is a matter of controlling a vessel en route, the vessel and the accompanying control vessel on the specified stretch of waterway, as well as an area of the buildings and installations at which this stretch begins and ends.

4. Where air traffic is concerned:

a. Part of the service buildings;

b. Part of the airport and its installations.

Title II³

Controls

Art. 4

The statutory, regulatory and administrative control provisions of the adjacent State shall be applicable in the zone, as they are in the commune to which the office of the adjacent State is attached. They shall be applied by the officials of the adjacent State to the same extent and with the same consequences as in their own country. The commune to which the office of the adjacent State is attached shall be designated by the Government of that State.
When the statutory, regulatory and administrative control provisions of the adjacent State are infringed in the zone, the criminal courts of the adjacent State shall be competent and shall rule under the same conditions as if the offence had been committed in the corresponding commune.
In other respects, the law of the host State shall remain applicable in the zone.

Art. 5

The officials of the adjacent State may not arrest inside the zone persons not in the process of entering that State unless they infringe inside the zone the statutory, regulatory or administrative provisions of the adjacent State relating to Customs control.

Art. 6

The control of the country of exit shall be carried out before the control of the country of entry.
The authorities of the country of entry shall not be authorized to begin their control before the end of the exit control, which shall be deemed to include the waiving of that control.
The authorities of the country of exit may no longer carry out their control once the officials of the country of entry have begun their control procedures. Exceptionally, exit control procedures may be resumed with the consent of the competent officials of the country of entry.
If, in the course of the controls, the order of events provided for in paragraphs 1 to 3 above is modified for practical reasons, the officials of the country of entry may not proceed to make arrests or seizures until after the control of the country of exit has been completed. If they wish to take such a measure, they shall bring the persons, merchandise or other goods for which the exit control has not yet been completed to the officials of the country of exit. If the latter wish to proceed with arrests or seizures, they shall have priority.

Art. 7

The officials of the adjacent State may freely transfer into the territory of their State sums of money collected in the zone, as well as merchandise and other goods which have been detained or seized. They may also sell them in the host State, provided they comply with the legal provisions in force therein, and then transfer the proceeds to the adjacent State.

Art. 8

Goods turned back into the adjacent State by its exit control officials or returned to the adjacent State, at the request of the interested party, before the host State’s entry controls begin, shall be subject neither to the export regulations nor to the exit controls of the host State.
Persons and goods turned back by the officials of the country of entry may not be prevented from returning to the country of exit.

Art. 9

The officials of the two States shall, as far as possible, assist each other in performing their duties in the zone, in particular for the purpose of implementing and expediting the respective controls and preventing persons, merchandise and other goods from leaving the route or the place designated for the control operations of the two States.
Merchandise and other goods from the adjacent State which evade control in the zone shall, when seized on the spot in or near the zone by the officials of the host State, be returned as a matter of priority to the officials of the adjacent State. If it is established that the export regulations of the adjacent State have not been infringed, these objects must be returned to the officials of the host State.
The Customs authorities of the host State shall proceed, at the request of the Customs authorities of the adjacent State, with official investigations whose results they shall notify. In particular, they shall proceed with the hearing of witnesses and experts.
They shall also transmit to the interested parties the documents concerning criminal proceedings and notify procedural steps and administrative decisions relating to offences found to have been committed in the zone.
The procedure to be adopted for the application of the provisions of paragraphs 3 and 4 above shall be that laid down for similar cases in the legislation of the host State.
The mutual administrative assistance provided for in paragraphs 3 and 4 above shall be limited to offences detected on the spot or immediately after being committed and committed in the zone in violation of the Customs regulations governing the crossing of the frontier by persons or goods.
The provisions of internal law which, for the application of the above-mentioned measures, require the authorization of other authorities shall not be affected by the provisions of paragraph 1.

Title III⁴

Officials

Art. 10

The authorities of the host State shall accord the officials of the adjacent State, in the performance of their duties, the same protection and assistance as their own officials.
Crimes and offences committed in the zone against officials of the adjacent State in the performance of their duties shall be punished in accordance with the legislation of the host State, as if they had been committed against officials of the host State performing similar duties.

Art. 11

Claims for compensation for damage caused by the officials of the adjacent State in the performance of their duties in the zone shall be subject to the law and jurisdiction of the adjacent State as if the act giving rise to the claim had taken place in the commune of the adjacent State to which the control office is attached. However, nationals of the host State shall be treated on the same footing as nationals of the adjacent State.

Art. 12

Officials of the adjacent State called upon, under this Convention, to perform their duties in the zone shall be exempt from passport and visa requirements. They shall be authorized to cross the frontier and proceed to their place of duty after proving their identity and status by producing official documents.
The competent authorities of the host State reserve the right to request the authorities of the adjacent State to recall certain officials.

Art. 13

Officials of the adjacent State called upon, under this Convention, to perform their duties in the host State may wear their national uniform or a clearly visible badge; they may carry regulation firearms both inside the zone and en route between their place of duty and their home. However, these firearms may only be used inside the zone and for self-defence.

Art. 14

The officials of the adjacent State shall be answerable solely to the authorities to which they belong for everything relating to their official activities, service relations and discipline.
These officials may not be arrested in the zone by the authorities of the host State for acts performed in the execution of their duties; in such cases they shall come under the jurisdiction of the adjacent State.

Art. 15

Officials of the adjacent State who, under this Convention, perform their duties in the zone and reside in the host State must, with regard to the conditions relating to their residence, satisfy the requirements of the competent authorities in accordance with the provisions concerning foreign residents. They shall, where necessary, be provided free of charge with residence permits and other documents by the authorities of the country in which they perform their duties. A residence permit may not be denied to the wives and children of the officials concerned living under the same roof who do not pursue any gainful activity, unless they are personally the subject of a decision to prohibit entry. Wives and children living under the same roof as these officials and not pursuing any gainful activity shall be exempt from the taxes relating to residence permits. The issuing of authorization to engage in a gainful activity to members of the family of these officials shall be left to the discretion of the competent authorities. If such authorization is requested, its granting shall give rise to the collection of the statutory taxes.
The time during which officials of the adjacent State perform their duties in the host State or reside there shall not be included in the periods giving entitlement to preferential treatment under Conventions existing between the two States. The same shall apply to family members granted a residence permit by reason of the presence of the head of the family on the territory of the host State.

Art. 16

Officials of the adjacent State who, under this Convention, must perform their duties in the zone and reside in the host State shall benefit, for themselves and for the members of their family living under their roof, from exemption from all entry and exit charges on their furniture, personal effects, including vehicles, and normal household provisions when they set up home in the host State. To benefit from this exemption, these objects must have been in free circulation in the adjacent State or in the State in which the official or his family members were previously established. The regulations of the host State concerning the use of goods admitted duty-free shall remain unaffected.
These officials, together with the members of their family living under their roof, shall be exempt, under public law, from all obligations, personal or in kind, in the host State. With respect to nationality and military service they shall be considered as having their residence on the territory of the adjacent State. They shall not be subject, in the host State, to any tax or charge from which nationals of the host State residing in the same commune would be exempt.
Officials of the adjacent State who, under this Convention, must perform their duties inside the zone but do not reside in the host State shall be exempt in that State, under public law, from all obligations, personal or in kind, and from direct taxes on their official remuneration.
Double taxation treaties concluded between the Contracting States shall also be applicable to officials of the adjacent State who, under this Convention, must perform their duties inside the zone.
The salaries of officials of the adjacent State who, under this Convention, must perform their duties inside the zone shall not be subject to any currency restrictions. Officials may freely transfer their savings into the adjacent State.⁵

Title IV⁶

Offices

Art. 17⁷

1. The competent administrations shall determine by joint agreement:

a. The facilities necessary for the services of the adjacent State to operate in the zone, as well as any compensation payable for their use;

b. The compartments and facilities to be reserved for the officials responsible for controls en route.

2. The hours of business and functions of the offices shall be determined by joint agreement between the two competent administrations.

Art. 18

The premises set aside for the offices of the adjacent State shall be indicated by signs and official insignia.

Art. 19

The officials of the adjacent State shall be authorized to maintain order inside the premises set aside for their exclusive use and to expel anyone who disturbs it. They may, if necessary, call upon the assistance of the officials of the host State for this purpose.

Art. 20

Objects required to operate the offices and those needed by the officials of the adjacent State in the course of their duties in the host State shall be exempt from Customs duties and all entry and exit charges. Security shall not be required. Unless otherwise jointly agreed by the competent administrations, import and export bans and restrictions shall not apply to these items. It shall be the same for official or private vehicles used by the officials in the execution of their duties in the host State.

Art. 21

The host State shall authorize free of charge, subject to payment of any equipment installation or rental costs, the telephone and telegraph installations (including teleprinters) needed to operate the offices of the adjacent State in the host State and their connection to the corresponding installations of the adjacent State, together with the exchange of direct communications with those offices reserved exclusively for official business. These communications shall be regarded as internal communications of the adjacent State.
The Governments of the two States undertake to grant, for the same purposes and to the extent possible, every facility as regards the use of other means of telecommunication.
Moreover, the regulations of the two States relating to the construction and operation of telecommunications installations shall remain unaffected.

Art. 22

Official letters and packages and securities may be transported from or to the offices of the adjacent State by the officials of that State without the intervention of the postal service. These items must circulate under the official stamp of the interested service.

Title VI⁸

Customs declarants

Art. 23

Persons coming from the adjacent State may carry out with the services of that State installed in the zone any control-related operation on the same conditions and subject to the same reservations as in the adjacent State.
The provisions of paragraph 1 shall, in particular, apply to persons coming from the adjacent State who carry out these operations on a professional basis; these persons shall, in this respect, be subject to the statutory, regulatory and administrative provisions of the adjacent State relating to these operations. Operations carried out and services rendered under these conditions shall be considered to have been exclusively carried out and rendered in the adjacent State, with all the fiscal consequences which that implies.
The persons mentioned in paragraph 2 may, for these operations, use either Swiss or French personnel. The statutory and regulatory provisions of the host State governing the employment of foreign workers shall not be applicable in this case.
Facilities compatible with the general provisions of the host State relating to the crossing of the frontier and presence in that State shall be accorded to the persons mentioned in paragraph 2 and their personnel to enable them to carry out these operations normally.

Art. 24

1. Persons residing in one of the Contracting States may also carry out in the offices of the other State any control-related operation, whichever the host State. They must be treated by the authorities of the other State on a completely equal footing.

2. The provisions of paragraph 1 shall be applicable, in particular, to persons residing in a Contracting State who carry out these operations on a professional basis. As regards turnover tax, services rendered in an office of the other State must always be regarded as having been rendered in the State to which the office belongs.

3.⁹If the professional activity of these persons in one of the two States is subject to authorization, the granting of that authorization should not give rise to any discrimination between persons residing in one or the other of the Contracting States.

4. Moreover, paragraphs 3 and 4 of Article 23 shall apply to persons residing in the adjacent State.

Title VI

Final provisions

Art. 25¹⁰

The procedures for implementing this Convention shall be determined, in so far as necessary, by joint agreement between the interested administrations of the two States.

Art. 26

Each Contracting Party may, after consulting the Joint Commission provided for in Article 27, terminate the arrangements mentioned in Article 1, paragraph 3, within the time limits and on the terms stipulated therein.
The High Contracting Parties may, after consulting the Joint Commission provided for in Article 27, make any amendments to this Convention which they consider necessary by means of a simple exchange of notes. However, the provisions of this paragraph shall not be applicable to the clauses of this Convention which, by virtue of the constitutional provisions of the two States, require the approval of the legislature before they can enter into force.

Art. 27¹¹

1. A Joint French-Swiss Commission, which shall be set up as soon as possible after the entry into force of this Convention, shall have the task of:

a. preparing the arrangements provided for in Article 1 and formulating any proposals to amend the Convention;

b. Endeavouring to resolve any difficulties which might result from the implementation of this Convention.

2. This Commission shall consist of six members, of which the Contracting Parties shall appoint three each. It shall choose its Chairman alternately from among the Swiss and French members. The Chairman shall not have a casting vote. The members of the Commission may be assisted by experts.

Art. 28¹²

Measures which one of the Contracting Parties may be called upon to take for reasons of national security or because of a state of war, the proclamation of a state of siege or a state of emergency or in connection with mobilization in one of the two States are expressly reserved.

Art. 29

This Convention shall be ratified and the instruments of ratification exchanged as soon as possible in Paris.
It shall enter into force on the day on which the instruments of ratification are exchanged.
It shall terminate two years after its denunciation by one of the Contracting Parties.

In witness whereof, the Plenipotentiaries of the two Contracting States have affixed their signature to this Convention and applied to it their seal.

Done at Berne, on 28 September 1960, in two originals, in the French language.

For the Swiss Federal Council:

For the President of the French Republic,

President of the Community:

Max Petitpierre Etienne Dennery

Final protocol

During the signing of the Convention on juxtaposed national control offices and controls en route concluded today between Switzerland and France, the undersigned Plenipotentiaries agreed to the following provision which shall form an integral part of the Convention:

There is agreement that, as soon as this Convention enters into force, the provisions of Articles 4 to 16, 17, paragraph 2, 18 to 24, 27 and 28, as well as those of the two exchanges of letters forming an integral part of the Convention, shall be applicable mutatis mutandis to the juxtaposed national control offices already forming the subject of agreements between the Contracting Parties and shall take precedence over the corresponding provisions of those agreements.

Done at Berne, on 28 September 1960, in two originals, in the French language.

For the Swiss Federal Council:

For the President of the French Republic,

President of the Community:

Max Petitpierre Etienne Dennery

Exchange of letters dated 28 September 1960¹³

Embassy of France

Berne

Berne, 28 September 1960

To the President of the Confederation:

Sir,

I have the honour to confirm that during the signing of the Convention between France and Switzerland on juxtaposed national control offices and controls en route the two delegations agreed as follows:

"The authorities of the two States shall take all the measures necessary to facilitate the application of Article 24, paragraph 3, of the Convention.

To this end, the experience acquired in connection with operations carried out in the Customs offices of the host State shall be decisive in assessing the aptitude to exercise the profession of Customs clearing agent.

Moreover, derogations shall be granted to the full extent necessary to smooth over any difficulties to which the practical application of Article 24, paragraph 3, may give rise.

Finally, in the event of the authorities of one State refusing to authorize a national of the other State to exercise the profession of Customs clearing agent at an office, the reasons for that decision shall be indicated, at their request, to the competent authorities of the other State."

This exchange of letters forms an integral part of the said Convention.

Please accept, Sir, the assurance of my high consideration.

Etienne Dennery

Embassy of France

Berne

Berne, 28 September 1960

To the President of the Confederation:

Sir,

"It is understood that, prior to the conclusion of the arrangements provided for in Articles 1.3, 17 and 25 of the aforementioned Convention, the competent authorities of the two countries shall consult the interested transport enterprises."

This exchange of letters forms an integral part of the said Convention.

Please accept, Sir, the assurance of my high consideration.

Etienne Dennery

0.748.131.934.922

Exchange of Notes

of 19 October 1992 /26 January 1993 between Switzerland and France, concerning the establishment of a juxtaposed national control office at Basle-Mulhouse Airport¹⁴ and the delineation of the sectors

Entered into force on 1 March 1993

Original French

Embassy of Switzerland

Paris, 26 January 1993

In France

Ministry of Foreign Affairs

Paris

The Embassy of Switzerland presents its compliments to the Ministry of Foreign Affairs, and has the honour to acknowledge receipt of the Ministry’s Note of 19 October 1992 reading as follows :

“The Ministry of Foreign Affairs presents its compliments to the Embassy of Switzerland and has the honour to refer to Article 1, paragraph 4, of the Convention of 28 September 1960¹⁵ signed between France and Switzerland concerning juxtaposed national control offices and controls on board means of transport during journeys.

The French Government has taken cognisance of the Arrangement rescinding and replacing the text of 26 March 1971¹⁶ concerning the establishment of a juxtaposed national control office at Basle-Mulhouse Airport and the delineation of the sectors.

This Arrangement, signed on 5 February 1992 by France’s Director General of Customs and Indirect Taxation and on 21 May 1992 by the Swiss Director General of Customs, reads as follows :

“In the light of the Convention of 28 September 1960¹⁷ between France and Switzerland concerning juxtaposed national control offices and controls on board means of transport during journeys,

In the light of the Franco-Swiss Convention of 4 July 1949¹⁸ concerning the construction and operation of Basle-Mulhouse Airport in Blotzheim.

Art. 1

A juxtaposed national control office shall be established, on French territory, at Basle-Mulhouse Airport, for the control of passengers and goods leaving France for Switzerland and vice-versa.

At that office the Swiss Customs and police services shall also, under the conditions laid down by the Convention of 28 September 1960¹⁹, carry out controls on passengers and goods who have left a country other than France for Switzerland, and vice-versa.

Art. 2

1. In the present Arrangement, and for the purposes of their delineation, the sectors shall be as specified in Article 2, paragraph 6, of the Convention of 4 July 1949²⁰.

2. Consequently, the sectors shall be defined as follows :

- Swiss sector : the sector assigned to the Swiss services responsible for controlling passengers and goods leaving or entering Switzerland;

- French sector : the sector assigned to the French services responsible for controlling passengers and goods leaving or entering France;

- Joint sector : the sector encompassing the runways, set aside for general airport services and the circulation of passengers and goods.

Art. 3

1. The sectors defined in Article 2 are identified on the plan appended hereto²¹, which constitutes an integral part of this Arrangement.

2. The different sectors are identified as follows on the above-mentioned plans :

Swiss sector in red;
French sector in blue;
Joint sector in green.

The dotted areas on the perimeter of the sectors represent locations which may be temporarily assigned to another sector depending on traffic requirements.

3. The plans referred to in paragraph 1 above shall be displayed in the Swiss sector.

Art. 4

The delineation of the Swiss sector may be modified in the event that the activities of the companies located there should cease to satisfy the criterion for Customs exemption as defined in Article 10, Chapter 1, sub-paragraph 2, of the Convention signed between France and Switzerland on 4 July 1949²² concerning the construction and operation of Basle-Mulhouse Airport in Blotzheim.

Art. 5

1. The Regional Directorate of Customs of Mulhouse and the competent French police authority, on the one hand, and the First District Directorate of Swiss Customs in Basle and the competent Swiss police authority, on the other, shall decided by mutual agreement upon :

- the assignment of the areas referred to in paragraph 3 of Article 3;

- any changes to the sector delineations which might entail possible transfers of premises or land.

Such changes must be the subject of an exchange of letters between the Regional Directorate of Customs of Mulhouse and the First District Directorate of Swiss Customs in Basle. They shall also be submitted to the next session of the Joint Franco-Swiss Commission.

2. The Regional Directorate of Customs of Mulhouse and the First District Directorate of Swiss Customs in Basle shall, by mutual consent, settle the detailed arrangements after reaching agreement with the competent authorities and the Administrative Council of the Airport.

3. The duty officers for the relevant local administrations of the two States concerned shall, by mutual consent, take such measures as may be required instantly or for a short period of time, in particular in order to deal with problems arising in the course of controls. They may also, by delegation from the authorities referred to in paragraphs 1 and 2, resolve problems linked to the provisional transfer of sectors.

Art. 6

The present Arrangement rescinds that of 26 March 1971²³, amended on 17 October 1977, and shall remain in force for such time as the above-mentioned Convention of 4 July 1949²⁴ itself remains in force.

However, either of the two Governments may denounce it subject to six months’ notice, with the denunciation taking effect on the first day of the month following the date of expiry of the period of notice. The two Governments may also amend this Arrangement by mutual consent.”

The Ministry of Foreign Affairs would be grateful if the Embassy of Switzerland would be kind enough to indicate whether the Swiss Federal Council approves the above provisions.

If so, the present Note and the Swiss authorities’ reply shall, in accordance with Article 1, paragraph 4 of the above-mentioned Convention of 28 September 1960²⁵, constitute confirmation of this Arrangement.

The Ministry proposes that this Arrangement enter into force on the first day of the second month following the date of the Swiss authorities’ reply.

The Ministry of Foreign Affairs seizes this opportunity to renew to the Embassy of Switzerland the assurance of its high consideration.”

The Embassy has the honour to inform the Ministry that the Swiss Federal Council approves the provisions of this Arrangement.

Consequently, the aforementioned Note from the Ministry of Foreign Affairs and the present Note shall, in accordance with Article 1, paragraph 4 of the Franco-Swiss Convention of 28 September 1960²⁶ concerning juxtaposed national control offices and controls on board means of transport during journeys, constitute the Agreement between the Swiss Federal Council and the French Government on the establishment of a juxtaposed national control office at Basle-Mulhouse Airport and the delineation of the sectors. This exchange of Notes shall replace that of 26 March 1971²⁷, itself followed by the exchange of Notes of 17 October 1977. The Arrangement shall enter into force on the first day of the second month following the date of the present note, i.e., on 1 March 1993.

The Embassy of Switzerland seizes this opportunity to renew to the Ministry of Foreign Affairs the assurance of its high consideration.

0.631.252.934.951.5

Exchange of Notes

of 19 December 1994 between Switzerland and France, concerning the establishment of a juxtaposed national control office at Bardonnex/Saint-Julien²⁸

Entered into force on 19 December 1994

Original French

Ministry of Foreign Affairs

Paris, 19 December 1994

Embassy of Switzerland

Paris

The Ministry of Foreign Affairs presents its compliments to the Embassy of Switzerland, and has the honour to acknowledge receipt of the Embassy’s Note of 19 December 1994, reading as follows :

“The Embassy of Switzerland presents its compliments to the Ministry of Foreign Affairs and - with reference to Article 1, paragraph 4, of the Convention of 28 September 1960²⁹ signed between Switzerland and France concerning juxtaposed national control offices and controls on board means of transport during journeys - has the honour to inform the Ministry of the following :

The Federal Council has taken cognisance of the Arrangement on the establishment of a juxtaposed national control office at Bardonnex/Saint-Julien.

This Arrangement was signed on 2 September 1992 by the Director General of Swiss Customs, and on 30 March 1993 by France’s Director General of Customs and Indirect Taxation. The Arrangement reads as follows:

“In the light of Article 1, paragraph 3, of the Convention of 28 September 1960 signed between Switzerland and France concerning juxtaposed national control offices and controls on board means of transport during journeys, it has been agreed as follows :

Art. 1

1. A juxtaposed national control office has been established at Bardonnex/Saint-Julien, spanning the frontier on the RN 1 A/A 401 motorway.

2. The French and Swiss controls on incoming and outgoing commercial freight shall be carried out at this office.

Art. 2

1. The zone shall include all the installations intended for the control of commercial freight, and shall exclude the passenger control area.

The zone is delineated :

a. On French territory, for the performance of Swiss Customs controls :

- to the North, by the frontier;

- to the South, by the Northern edge of the viaduct;

- to the East and West, by the boundary fence.

b. On Swiss territory, for the performance of French Customs controls :

- to the North, by the “turn-back” lane (including that lane)

- to the South, by the frontier;

- to the East and West, by the boundary fence, including the buildings lying on the boundary.

2. The zone is divided into three sectors :

a. A sector used jointly by the officers of both States which includes – whether on Swiss or French territory :

the traffic lanes and the pavements alongside them, the parking spaces and the Customs bays;
in each of the main buildings, the area in the export office which houses the the enquiry desks and counters, and the access ways to that area;
the freight bays;
the weighbridges;
the parking places reserved for the duty officers’ private vehicles and for Customs vehicles;
in the main Swiss building :

. the ground floor corridor leading to the freight bays;

. the first floor toilets on the French Customs side.

b. On French territory, a sector reserved for Swiss officers, consisting of :

- in the main building :

. on the ground floor, an office for commercial operations;

. in the basement, a records room;

. in the freight warehouse : a locked storage area;

. at the entrance to the French Customs operational area : part of the covered shelter for commercial vehicles entering France.

c. On Swiss territory, a sector reserved for French officers, consisting of :

- in the main building :

. on the first floor : two offices for commercial operations;

. on the ground floor : an inspection office;

. in the freight hall : a locked storage area.

Art. 3

It has been agreed that, to facilitate the unrestricted use of the weighbridges located in the joint sector, the two Customs administrations shall grant each other access to the corresponding technical premises, which are located in their respective private sectors.

Art. 4

A plan³⁰ of the zones, in which :

the sector to be used jointly is coloured pink,
the sector reserved for French officers is coloured red,
the sector reserved for Swiss officers is coloured blue,

forms an integral part of the Arrangement.

Art. 5

Customs control officers of the two States may, when on their way to work in the zone or on their return, take the most direct route, on the territory of the neighbouring State, passing through the Saint-Julien and Perly Customs offices.

Art. 6

1. The Regional Customs Directorate of Léman in Annecy, and the VIth District Customs Directorate in Geneva, shall deal with the detailed arrangements, particularly those relating to traffic flows.

2. The officers on duty for the relevant administrations of the two States shall, by common consent, take such measures as may be necessary instantly, or for a short period, in order to deal with any difficulties arising in the course of their controls.

Art. 7

As the premises made available to officers of the administrations concerned are to all intents and purposes identical, there is no need to fix a fee for their use, nor to make arrangements for allocating heating and lighting costs.

Art. 8

This Arrangement may be denounced by either of the two Governments, subject to six months’ notice. The denunciation shall take effect on the first day of the month following the end of the period of notice.”

The Swiss Federal Council has approved these provisions.

The Embassy therefore proposes that the present Note, and the Note that the Ministry of Foreign Affairs is cordially invited to send to the Embassy in reply, should, in accordance with Article 1, paragraph 4 of the above-mentioned Convention of 28 September 1960³¹, constitute the Agreeement between the two Governments, confirming the Arrangement concerning the establishment of a juxtaposed national control office at Bardonnex/Saint Julien. The Embassy suggests that this Arrangement enter into force on 19 December 1994.

The Embassy of Switzerland seizes this opportunity to renew to the Ministry of Foreign Affairs the assurance of its high consideration.”

The Ministry of Foreign Affairs has the honour to inform the Embassy of Switzerland that the French Government approves the foregoing.

The Ministry of Foreign Affairs seizes this opportunity to renew to the Embassy of Switzerland the assurance of its high consideration.

WCO Tag	Name	Definition
e 3336	Consignor	Name and address of party which, by contract with a carrier, consigns or sends goods with the carrier, or has them conveyed by him
e 3337	Consignor, coded	Name and address of party which, by contract with a carrier, consigns or sends goods with the carrier, or has them conveyed by him, coded
e 3030	Exporter	Name and address of the person who makes - or on whose behalf '- the export declaration - is made - and who is the owner of the goods or has similar right of disposal over them at the time when the declaration is accepted
e 3031	Exporter, coded	Name and address of the person who makes - or on whose behalf - the export declaration - is made - and who is the owner of the goods or has similar right of disposal over them at the time when the declaration is accepted, coded
a 7002	Description of goods	Plain language description of the nature of the goods sufficient to identify them at the level required for banking, Customs, statistical or transport purposes, avoiding unnecessary detail (Generic term) for Goods declaration
a 7282	Tariff code number (Customs)	Code number of the goods in accordance with the tariff nomenclature system of classification in use where the Customs declaration is made
a 7124	UNDG Number (Dangerous Goods Code)	Unique serial number assigned within the United Nations to substances and articles contained in a list of the dangerous goods most commonly carried
a 7065	Type of packages identification	Identification of description of the form in which goods are presented
a 7224	Number of packages	Number of packages per commodity code packed in such a way that they cannot be divided without first undoing the packing.
a 6411	Measure unit qualifier	Indication of the unit of measurement in which weight (mass), capacity, length, area, volume or other quantity is expressed
a 6292	Total gross weight	Weight (mass) of all goods in declaration including packing but excluding the carrier's equipment
g 9958	Total invoice amount	Total amount of invoice price for the goods declared in one declaration
g 6345	Currency, coded	The name or symbol of the monetary unit associated with an amount involved in the transaction, coded
d 3334	Place of loading	Name of the seaport, airport, freight terminal, rail station or other place at which the goods (cargo) are loaded on to the means of transport being used for their carriage from the Customs territory
d 3335	Place of loading, coded	Name of the seaport, airport, freight terminal, rail station or other place at which the goods (cargo) are loaded on to the means of transport being used for their carriage from the Customs territory, coded
e 3127	Carrier identification	Identification of party undertaking or arranging transport of goods between named points
e 3128	Carrier name	Name of party undertaking or arranging transport of goods between named points
f 8260	Equipment identification number	Marks (letters and/or numbers) which identify equipment e.g. unit load device
f 8155	Equipment size and type identification	Coded description of the size and type of equipment
f 9308	Seal number	The number of a custom seal or another seal affixed to the containers or other transport unit
f 8270	Identification of means of transport crossing the border of the Customs territory	Identification of the active means of transport used in crossing the border of the Customs territory
f 9874	Nationality of means of transport crossing the border of Customs territory, coded	Name of the country in which a means of transport crossing the border of Customs territory is registered, coded
f 8028	Conveyance reference number	Unique reference given by the carrier to a certain journey or departure of a means of transport (generic term)
4215	Transport charges method of payment, coded	Identification of method of payment for transport charges
d 3097	Customs office of exit, coded	Customs office by which the goods leave or are intended to leave the Customs territory, coded
d 9847	Country(ies) of routing, coded	The country(ies) through which the goods are routed between the country of export and destination, coded
d 9860	First port of arrival, coded	Name of the (for air) first airport, (land) arrival at first border post and (sea) arrival at first port
c 9838	Date and time of arrival at first port of arrival in Customs territory, coded	Date and time / scheduled date and time of arrival of means of transport at (for air) first airport, (land) arrival at first border post and (sea) arrival at first port, coded
e 3132	Consignee	Name and address of party to which goods are consigned
e 3133	Consignee, coded	Name and address of party to which goods are consigned, coded
e 3020	Importer	Name and address of party who makes-or on whose behalf a Customs clearing agent or other authorized person makes- an import declaration. This may include a person who has possession of the goods or to whom the goods are consigned.
e 3021	Importer, coded	Name and address of party who makes - or on whose behalf a Customs clearing agent or other authorized person makes - an import declaration, coded. This may include a person who has possession of the goods or to whom the goods are consigned.
e 3180	Notify party	Name and address of party to be notified
e 3181	Notify party, coded	Name and address of party to be notified, coded
d 9971	Delivery destination	The location to which goods are to be delivered. Address, region and/or country as required by national legislation or according to national requirements
e 3196	Agent	Name and address of a person authorized to act on behalf of another party
e 9867	Agent, coded	Name and address of a person authorized to act on behalf of another party, coded
c 9816	Unique consignment reference number	Unique number assigned to goods, both for import and export

______

* See the SAFE 1.3.1.(Export Goods Declaration), 1.3.2.(Cargo Declaration), 1.3.3.(Import Goods Declaration), 1.3.6.(Time Limit) and the Data Element Annex to the SAFE. The Management Committee on the Revised Kyoto Convention should monitor future related revision of the SAFE to consider appropriateness of the linkage between the SAFE and this guideline.

[1]

[2] See also the exchange of letters appended hereto.

[3] See also Final Protocol appended hereto.

[4] See also Final Protocol appended hereto.

[5] RS 0.672.934.91/.92

[6] See also Final Protocol appended hereto.

[7] See also the exchange of letters appended hereto.

[8] See also the Final Protocol appended hereto.

[9] See also the exchange of letters appended hereto.

[10] See also the exchange of letters appended hereto.

[11] See also the Final Protocol appended hereto.

[12] See also the Final Protocol appended hereto.

[13] See also the Final Protocol to the Convention.

OC 1993

[14] Under the terms of Article 4, paragraph 1 of the Franco-Swiss Convention of 28 September 1960 (CC 0.631.252.934.95 ), the zone located on French territory, in accordance with the present Arrangement, is attached to the “commune” of Basle.

[15] CC 01.631.252.934.95

[16] [OC 1971 724, 1978 284]

[17] CC 0.631.252.934.95

[18] CC.0.748.131.934.92

[19] CC 0.631.252.934.95

[20] CC 0.748.131.934.92

[21] Not published in the Official Compilation.

[22] CC 0.748.131.934.92

[23] [OC 1971 724, 1978 284]

[24] CC 0.748.131.934.92

[25] CC 0.631.252.934.95

[26] CC.0.631.252.934.95

[27] [OC 1971 724, 1978 284]

OC 1995 4058

[28] Within the meaning of Art. 4, para. 1 of the Franco-Swiss Convention of 28 September 1960 (CC 0.631.252.934.95 ), the part of the zone which is situated on French territory is, for the purposes of this Arrangement, attached to the “commune” of Bardonnex.

[29] CC 01.631.252.934.95

[30] Not published in the Official Compilation (OC)

[31] CC 0.631.252.934.95

Chapter 4 - Duties and Taxes

CHAPTER 4

DUTIES AND TAXES

A

ASSESSMENT, COLLECTION AND PAYMENT OF DUTIES AND TAXES

4.1. Standard

National legislation shall define the circumstances when liability to duties and taxes is incurred.

4.2. Standard

The time period within which the applicable duties and taxes are assessed shall be stipulated in national legislation. The assessment shall follow as soon as possible after the Goods declaration is lodged or the liability is otherwise incurred.

4.3. Standard

The factors on which the assessment of duties and taxes is based and the conditions under which they are determined shall be specified in national legislation.

4.4. Standard

The rates of duties and taxes shall be set out in official publications.

4.5. Standard

National legislation shall specify the point in time to be taken into consideration for the purpose of determining the rates of duties and taxes.

4.6. Standard

National legislation shall specify the methods that may be used to pay the duties and taxes.

4.7. Standard

National legislation shall specify the person(s) responsible for the payment of duties and taxes.

4.8. Standard

National legislation shall determine the due date and the place where payment is to be made.

4.9. Standard

When national legislation specifies that the due date may be after the release of the goods, that date shall be at least ten days after the release. No interest shall be charged for the period between the date of release and the due date.

4.10. Standard

National legislation shall specify the period within which the Customs may take legal action to collect duties and taxes not paid by the due date.

4.11. Standard

National legislation shall determine the rate of interest chargeable on amounts of duties and taxes that have not been paid by the due date and the conditions of application of such interest.

4.12. Standard

When the duties and taxes have been paid, a receipt constituting proof of payment shall be issued to the payer, unless there is other evidence constituting proof of payment.

4.13. Transitional Standard

National legislation shall specify a minimum value and/or a minimum amount of duties and taxes below which no duties and taxes will be collected.

4.14. Standard

If the Customs find that errors in the Goods declaration or in the assessment of the duties and taxes will cause or have caused the collection or recovery of an amount of duties and taxes less than that legally chargeable, they shall correct the errors and collect the amount underpaid. However, if the amount involved is less than the minimum amount specified in national legislation, the Customs shall not collect or recover that amount.

B

DEFERRED PAYMENT OF DUTIES AND TAXES

4.15. Standard

Where national legislation provides for the deferred payment of duties and taxes, it shall specify the conditions under which such facility is allowed.

4.16. Standard

Deferred payment shall be allowed without interest charges to the extent possible.

4.17. Standard

The period for deferred payment of duties and taxes shall be at least fourteen days.

C

REPAYMENT OF DUTIES AND TAXES

4.18. Standard

Repayment shall be granted where it is established that duties and taxes have been overcharged as a result of an error in their assessment.

4.19. Standard

Repayment shall be granted in respect of imported or exported goods which are found to have been defective or otherwise not in accordance with the agreed specifications at the time of importation or exportation and are returned either to the supplier or to another person designated by the supplier, subject to the following conditions:

the goods have not been worked, repaired or used in the country of importation, and are re-exported within a reasonable time;
the goods have not been worked, repaired or used in the country to which they
were exported, and are re-imported within a reasonable time.

Use of the goods shall, however, not hinder the repayment if such use was indispensable to discover the defects or other circumstances which caused the reexportation or re-importation of the goods.

As an alternative to re-exportation or re-importation, the goods may be abandoned to the Revenue or destroyed or rendered commercially valueless under Customs control, as the Customs may decide. Such abandonment or destruction shall not entail any cost to the Revenue.

4.20. Transitional Standard

Where permission is given by the Customs for goods originally declared for a Customs procedure with payment of duties and taxes to be placed under another Customs procedure, repayment shall be made of any duties and taxes charged in excess of the amount due under the new procedure.

4.21. Standard

Decisions on claims for repayment shall be reached, and notified in writing to the persons concerned, without undue delay, and repayment of amounts overcharged shall be made as soon as possible after the verification of claims.

4.22. Standard

Where it is established by the Customs that the overcharge is a result of an error on the part of the Customs in assessing the duties and taxes, repayment shall be made as a matter of priority.

4.23. Standard

Where time limits are fixed beyond which claims for repayment will not be accepted, such limits shall be of sufficient duration to take account of the differing circumstances pertaining to each type of case in which repayment may be granted.

4.24. Standard

Repayment shall not be granted if the amount involved is less than the minimum amount specified in national legislation.

Guidelines to Chapter 4

Guidelines to the legal text

Chapter 4

DUTIES AND TAXES

1. General information

1.1. Introduction

In a modern global marketplace, Customs administrations should be responsive to the needs of the business community, through the introduction of procedures which expedite legitimate trade. Traditionally, goods have not been released until the Customs administration has received payment of the applicable duties and taxes. These Guidelines provide a framework of modern Customs processes and procedures, covering assessment, collection and payment (including deferred payment) and repayment of duties and taxes. The increased use of new and improved automated processes and information technology reduces paperwork and gives importers a quicker and more efficient service. This helps them to stay competitive in an ever-changing commercial environment, while maintaining Customs administrations’ ability to collect the revenue.

These Guidelines seek to introduce best practices, the application of which, while not obligatory, is highly recommended. This Chapter does not include provisions for duties and taxes on travellers and postal traffic. These subjects are dealt with explicitly in Specific Annex J on Special procedures. These Guidelines should be read in conjunction with the legal text contained in Chapter 4 of the General Annex. Therefore, for ease of reference, the appropriate Standards are indicated before each paragraph which deals with the particular subject matter of that Standard.

1.2. Background

The clearance of goods usually involves the lodgement of a Goods declaration with/without supporting documents (e.g. import/export permit, certificates of origin, etc.) and the payment of applicable duties and taxes. General release is granted as long as payment has been entered into the books of the importer. Most Customs administrations allow payment to be deferred and made on a transaction-by-transaction or periodic (usually monthly) basis, provided the importer/owner meets certain conditions. Security may be required to guarantee payment. The issue of security is dealt with in detail in Chapter 5 of the General Annex and the related Guidelines.

National legislation must outline the requirements for duties and taxes and the circumstances under which liability may be incurred. The requirements for assessment, collection and payment of duties and taxes are found in Standards 4.1 to 4.14, Part A of Chapter 4 of the General Annex. Part B of Chapter 4 includes Standards 4.15 to 4.17, which deal with deferred payment of duties and taxes for specified persons. Repayment of duties and taxes is governed by Standards 4.18 to 4.24, in Part C of this Chapter

Standard 4.1

National legislation shall define the circumstances when liability to duties and taxes is incurred.

Standard 4.1 of this Chapter indicates that the national legislation shall define the circumstances when liability to duties and taxes is incurred. Such circumstances arise when goods are cleared for home use after their arrival in the Customs territory or when they are cleared for home use from a free zone or a warehouse. Similarly other circumstances may also arise in administrations that have export duties and taxes when the goods are exported from the Customs territory. In addition, goods under a temporary admission procedure that are not exported within the stipulated time period may also be subjected to duties and taxes.

Under specific circumstances some goods may be cleared by Customs free of duties and taxes irrespective of their normal tariff classification or liability. Such relief from duties and taxes is covered in detail in Specific Annex B, Chapter 3, which deals with relief from import duties and taxes on goods declared for home use.

2. Essential features

2.1.Assessment and collection of duties and taxes

2.1.1. Assessment

Standard 4.2

Contracting Parties must ensure that their national legislation describes the point in time when duties and taxes are assessed. The assessment must follow as soon as possible after the Goods declaration is submitted or the liability is otherwise incurred. The final assessment must clearly indicate the total amount of duties and taxes owing for the transaction(s).

Standard 4. 3

The factors on which the assessment of duties and taxes is based and the conditions under which they are determined shall be specified in national legislation.

The definitions in Chapter 2 of the General Annex include the following : “assessment of duties and taxes” means the determination of the amount of duties and taxes payable. The assessment of duties and taxes are generally based on the following criteria :

- tariff classification;

- value and/or quantity, according to whether the duties and taxes applicable are ad valorem or specific or a combination thereof; and

- country of origin or consignment, where liability depends upon these factors.

Customs Administrations must ensure that these criteria are specified in national legislation. The rules for determining tariff classification, dutiable value or quantity and origin should be set out in explanatory notes drawn up by the competent authorities. National legislation must also specify the point in time when duty liability is incurred and the point in time to be used for determining the exchange rate. The determination of the “dutiable quantity” is more relevant to the application of specific duties.

Standard 4.4

The rates of duties and taxes shall be set out in official publications.

Imported goods must first be classified under a tariff heading that, with other factors, determines the amount of Customs duty payable. Goods are usually classified under the Harmonized Commodity Description and Coding System (HS), which is an internationally agreed tariff classification system developed under the auspices of the World Customs Organization (WCO). The HS performs a dual function of standardizing tariff classification and recording statistics. It does not, however, bind parties to tariff rates. Customs tariff levels are negotiated by members of the World Trade Organization (WTO) with the objective of ensuring progressive mutual reduction of their rates. National legislation determines the quantum of the duties and taxes.

For most commodities, the duty is expressed as an ad valorem rate (i.e. a percentage of the value), while for others, the rate is specific, e.g. so much money per litre. Occasionally, the rate is expressed as some combination of ad valorem and specific rates. The duties are generally found in the Customs tariff and, in some countries, in other legislation also. Various rates of duty may be indicated for each item. The appropriate rate depends on the item’s country of origin.

Contracting Parties must set out the rates in official publications. This requirement is harmonious with the Standards contained in Chapter 9 of the General Annex regarding Information, Decisions and Rulings supplied by the Customs. The publications which contain the rates should be easily accessible by clients and could be in the form of directive memoranda, electronic database publications, Internet web sites, etc. An example of an electronic publication is the TAPIN (Tariff and Precedents Information Network) searchable Customs database in place in Australia. TAPIN, which is accessible by their brokers, contains an electronic Customs Tariff, a History Tariff, the Brussels Explanatory Notes, a list of concessional items and a compendium of Valuation and Classification rulings.

Standard 4.5

National legislation shall specify the point in time to be taken into consideration for the purpose of determining the rates of duties and taxes.

The point in time used for determining the rates chargeable may, for example, be the time when the goods arrive, the time when the Goods declaration is lodged, the time when the declaration is accepted by Customs, the time when the duties and taxes are paid, or the time when the goods are released. Most administrations choose the time when the declaration is accepted by Customs. Whichever time is chosen, Customs must ensure that it is specified in national legislation.

In order for importers and brokers to be able to establish what the actual rate is on the determined date, there should be a published list of the rates for exchanging foreign currencies to the domestic currency on that particular day in question for each import transaction. Customs should not be arbitrary in preparing these lists and they should be market based, i.e., rates could be sought from the central bank of the nation.

Once the appropriate rate of duty is established, the basis on which the duty is calculated (value for duty) must be determined. Usually this is the price paid or payable. The Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT), generally known as the Customs Valuation Code (the Code), is the basis used for most domestic Customs valuation systems. Article VII of the GATT deals with the issue of valuation for Customs purposes by providing basic Guidelines for national legislation. The Code is based on the application of the transaction value method for determining the Customs value for imports which is the price the importer and exporter agree to pay for the particular import, subject to specified adjustments.

2.1.2 Self Assessment

In some modern Customs administrations the declarant may be authorized to assess the amounts of duties and taxes. Under this procedure, the Customs are not required to indicate the amount chargeable. However, the Customs administration has final responsibility for the assessment of the duties and taxes which can be established via audits, for example. Self-assessment is a recommended progressive procedure which can expedite the processing of goods through the border. Self-assessment involves the application of risk management principles, post-transaction auditing, administrative penalties, binding rulings, Customs responsibilities and red/green line lodgements. In some administrations, self-assessment is only permitted by certain clients. For instance, those with proven compliance records. For a full description of self-assessment, please see the Guidelines to Chapter 3 of the General Annex, Clearance and other Customs formalities.

2.1.3. Payment

Standard 4.6

National legislation shall specify the methods that may be used to pay the duties and taxes.

All forms of payment of the duties and taxes accepted by a Contracting Party and the criteria applicable to each must be identified in national legislation. To facilitate the accounting procedure, Customs should accept payment of duties and taxes in forms other than cash, such as travellers cheques, money orders, certified cheques, uncertified cheques (in specified circumstances), bonds, credit cards, securities, etc.

Customs authorities may make certain conditions to safeguard these alternative forms of payment. For instance, if allowing payment by cheques drawn on a foreign bank, the bank may need to have an office in the country of importation.

A modern practice which is highly recommended is that electronic funds transfer systems be established wherever possible, allowing for quick and efficient payment. This is especially useful for Customs brokers and traders who import/export frequently on a large scale, paying considerable amounts of duties and taxes on a monthly basis. The use of electronic data interchange (EDI) is also useful in expediting payment.

Standard 4.7

National legislation shall specify the person(s) responsible for the payment of duties and taxes.

It is necessary that national legislation specify the person(s) responsible for the payment of duties and taxes. It should stipulate whether it is the importer, agent, broker, or transporter who is accountable, to provide clarity for Customs and the trading community. In some instances two or more persons can be held jointly responsible.

Standard 4.8

National legislation shall determine the due date and the place where payment is to be made.

Contracting Parties must also specify in their national legislation the due date and place where payment of duties and taxes must be made. Due date is defined in Chapter 2 of the General Annex as “the date when payment of duties and taxes is due”. Usually duties and taxes are paid at the Customs office where the Goods declaration was lodged or in some cases where the goods are released. In some countries payment is allowed to be made through another agency (i.e., banks) or office designated by the Customs. In some cases, one Customs office may be selected for payment of all the transactions, regardless of where the transactions were cleared.

Standard 4.9

When national legislation specifies that the due date may be after the release of the goods, the date shall be at least ten days after the release. No interest shall be charged for the period between the date of release and the due date.

Many Customs administrations allow payments to be made periodically (usually monthly), as well as on a transaction-by-transaction basis. If periodic payment procedures are allowed, security deposits are usually required. Sometimes security level requirements can be kept to a minimum for traders who have a large volume of monthly transactions by allowing them to make interim payments throughout the month.

When Customs administrations allow periodic payment, they are advised to provide traders with daily and/or monthly statements listing all transactions accepted by Customs the previous business day or month. These statements should include the total amount payable for the transactions processed within the billing period, and indicate the date when payment is due. All interim payments made within the billing period should also be indicated in the statement. Statements can be provided either electronically or on paper depending on the systems in use. Once generated, the amount on the monthly statement should be paid in full. After that point, any outstanding amounts are usually subject to interest charges.

Duties and taxes must usually be paid at the time when a Goods declaration is lodged or accepted or before the goods are released. When national legislation specifies that duties and taxes may be paid after the release of the goods, the period allowed for payment must be at least ten days.

Standard 4.12

When the duties and taxes have been paid, a receipt constituting proof of payment shall be issued to the payer, unless there is other evidence constituting proof of payment.

A receipt must be issued to the payer unless there is other evidence constituting proof of payment. Often the receipt is given on the declarant’s copy of the declaration or, in the case of periodic payments, on the monthly statements. Sometimes the receipt may be issued by an authorized body other than a Customs office.

2.1.4. Collection

Standard 4.10

National legislation shall specify the period within which the Customs may take legal action to collect duties and taxes not paid by the due date.

When duties and taxes are not paid by the due date, it may be necessary for Customs administrations to take legal action to collect the duties and taxes. The period within which they may do so must be indicated in national legislation. Indication of this period within which legal action must be taken ensures that Customs take action in a timely manner and also provides certainty to the trade such as the period for retention of records. In addition legislation may provide that this time period shall not apply if there has been a criminal or illegal intent and empower the Customs to take legal action to collect the duties and taxes beyond this period.

Standard 4.11

National legislation shall determine the rate of interest chargeable on amounts of duties and taxes that have not been paid by the due date and the conditions of application of such interest.

Also, late accounting penalties may be levied in certain circumstances. The penalties should be applied for each transaction not accounted for in the time specified. The application of these penalties could vary depending upon the value of the shipment, e.g. higher penalties or shorter time limits for high value shipments. Importers and brokers should be made aware of any overdue releases by means of a daily report issued by Customs, such as an Outstanding Transaction Status Client Report.

Importers and brokers who, notwithstanding the levying of the initial penalty, still delay accounting for the payment of duties and taxes, may be issued with a notice as a final reminder to comply within a specified time. Failure to do so may subject the importer or broker to an additional penalty. Also, in the case of deferred payment regimes, a client who continues to delay in accounting for the payment of duties and taxes may loose future deferred payment privileges.

The cancellation of late accounting penalties should be considered when Customs errors, omissions or other failures have been the cause of the late accounting. For example, Customs may reject documents in error or not process them quickly enough, or there may be operational or transmission line failures in the Customs’ automated system.

Requests for the cancellation of late accounting penalties should be submitted in writing to the Customs office where the goods were cleared. In cases where late accounting resulted from neglect or lack of awareness on the part of the importer or broker, the request for cancellation should not be approved.

If there are further delays in payment, it may be necessary to apply a lien against the importer and a claim could be made against the security posted for the clearance of the goods prior to payment. In addition, if an importer or broker does not account on time, causing a transaction to move from one billing period to another, duties and taxes on that transaction should still be due as if the accounting had been done on time. Interest should then be charged from the next calendar day after the payment due date until the outstanding accounting is submitted. The conditions and rates of these interest charges must be indicated in national legislation.

Transitional Standard 4.13

National legislation shall specify a minimum value and/or a minimum amount of duties and taxes below which no duties and taxes will be collected.

With the advent of the next millennium the number of transactions that will occur over the Internet will increase tremendously in the next few years. Electronic commerce (E-commerce) has become a very convenient shopping choice for consumers. Normal duty and taxes systems will still be effective in the collection of the relevant duties and taxes on these transactions as these purchases will still entail the physical delivery of these goods at the border. Of course, the number of low value shipments and deliveries by couriers will increase along with the number of these electronic transactions. Customs must ensure that they are ready to respond to this flourishing trend.

However, the collection and payment of duties and taxes should not be required for negligible amounts of revenue that incur costly paperwork, both for the Customs administration and the importer/exporter. Customs administrations must establish and specify in national legislation amounts below which duties and taxes need not be collected or paid.

Standard 4.14

Sometimes errors will be discovered by Customs in the Goods declaration or in the assessment of the duties and taxes which will result or have resulted in an underpayment. If such errors are found, Customs must correct the errors and collect the amount underpaid. When the underpayment is determined to be the result of inadvertent errors on the part of the declarant, and there is no evidence of illegal intent, Customs may choose not to impose penalties. Some Customs administrations allow the declarant to pay the additional amount without having to amend the declaration. If the amount of the underpayment is less than the minimal threshold established by the Customs administration, the latter must not collect or recover it.

Normally most legislations provide a specific time period beyond which the Customs cannot take action to correct the errors and collect the amount of duties and taxes underpaid. However it is also normal to include a provision indicating that this period of limitation will not apply if there has been a fraudulent, deliberate or illegal intent to evade duties and taxes. In such instances Customs could take legal action to collect the duties and taxes beyond this specified period, but within a longer period that may be specified in national legislation.

2.2. Deferred payment

Standard 4.15

Where national legislation provides for the deferred payment of duties and taxes, it shall specify the conditions under which such facility is allowed.

Standards 4.15, 4.16 and 4.17 of this Chapter pertain to deferred payments and are a set which must be implemented as a whole. Standard 4.15 aims to encourage a move towards deferred payment, although it does not impose an absolute requirement for Customs to provide such a facility. The Standard indicates that where a Contracting Party does permit deferment, it must specify the conditions in its national legislation/regulations.

Standard 4.16

Deferred payment shall be allowed without interest charges to the extent possible.

The deferred payment system prescribed in Standard 4.15 could mean either deferring the payment of duties and taxes or in some cases, deferring the due date itself and the payment. However, distinction must be made between deferred payments and late payments. While late payments, even when approved by the Customs, could still be subject to interest charges, deferred payments may be subjected to interest charges only at the expiry of the deferment period. Some Customs administrations fix a date and then allow deferred payment, while others allow a date after release of the goods as a fixed date. This is not true deferment under the terms of the revised Kyoto Convention.

A previous study conducted by the WCO Secretariat has found that two ways were used by Customs administrations to defer payment. Some allowed the facility to all traders, while others restricted it to identified traders who met specified criteria. In the second case, the facility for deferred payment was usually linked to the facility for periodic lodgement of Goods declarations. An application form was usually required from a trader wanting permission to defer payment.

When deferred payment is allowed, interest is normally not charged during the period of deferment. However, in exceptional circumstances, such as when inflationary effects need to be accounted for in the provision of deferred payment, interest may be charged but it should be limited to the actual or anticipated rate of inflation.

Deferment, when it also includes a facility to off-set duty owing against repayments due, helps a trader’s cash flow.

Standard 4.17

The period for deferred payment of duties and taxes shall be at least fourteen days.

Currently, where deferment is allowed, the period authorized by most Customs administrations appears to be around ten working days. Standard 4.17 stipulates that the period for deferred payment should be at least fourteen days. This clause “at least fourteen days” can therefore be equated to ten working days and two weekends. Knowing that there is a specified time limit for deferment is useful for the business community, and setting it encourages harmonization of the very broad range that could otherwise result.

Different time limits may be fixed for each type of tax. Some countries may wish to restrict the privilege by holding certain traders to a shorter deferred time either on a trial basis or as a sanction. Customs may agree that the duties and taxes on imports during a given period are payable on a fixed date.

2.3.Repayment

“Repayment of duties and taxes” is defined in Chapter 2 of the General Annex. It means “the refund, in whole or in part, of duties and taxes paid on goods, and the remission, in whole or in part, of duties and taxes where payment has not been made” . For instance, remission of duties and taxes could occur when there is a system of deferred payment or where periodic settlement is available.

In the event that duties and taxes have not been paid, they may be remitted. A remission is a waiver, in whole or in part, of the Customs duties and/or taxes normally payable on imported goods. Remission programs are usually established in order to assist national industry and are usually subject to very restrictive conditions. The remission, in whole or in part, of duties and taxes covers the cases in which the Customs make remission of some and not all kinds of duties and/or taxes on goods which are subject to more than one kind of duties and/or taxes.

Standards 4.18 to 4.24 deal with repayment and are based on the generally accepted principle that the persons concerned must be able to obtain a refund, in whole or in part, as appropriate, when duties and taxes have been overpaid. Customs should establish procedures for repayment that are as simple and prompt as possible. The use of electronic funds transfer is also recommended in expediting repayments. The provisions of this Chapter do not apply to repayments made under the drawback procedure or to the refund of deposits taken as security for the payment of duties and taxes although security deposits should also be paid back promptly. The provisions relating to Security and Drawback are dealt with in detail in Chapter 5 of the General Annex and Chapter 3 of Specific Annex F respectively.

Refunds should not be made on transactions where duties and taxes have been paid back, i.e. in the case of a transaction under the provisions of re-importation in the same state. Please refer to Chapter 2 of Specific Annex B and the related Guidelines for further detail on this subject.

Repayment may be granted in respect of goods already released by Customs, provided that they are satisfied that there is an entitlement. Evidence of entitlement may be obtained from records or other documents produced by the trader or from physical examination of the goods if these are still available for inspection and have not been modified. The examination by Customs may be necessary to verify any alleged damage, deterioration, or destruction in order to establish the proper rate or amount of reduction, and to ensure that the goods in question are those specified in the invoice and accounting document. Should the importer/owner dispose of the goods prior to Customs approval of the refund claim, he would be responsible for establishing the bona fides of the claim.

Standard 4.18

Repayment shall be granted where it is established that duties and taxes have been overcharged as a result of an error in their assessment.

During the clearance procedure, or after the release of goods, it may be discovered, either by the importer/exporter or by Customs, that the basis upon which the duties and taxes were calculated was incorrect. This may be due to, for instance, an error on the part of Customs, the declarant or some other person (e.g. the consignor or shipper). The assessment may have been based on a value which is higher than the dutiable value, or an incorrect rate of exchange was used in the calculations, or goods were deficient in quantity or of inferior quality, or there may have been a mistake in the arithmetic or typing. As a result, the duties and taxes charged or to be charged are greater than those actually chargeable.

To facilitate processing, the refund application should be clear and concise in its description of the reason for the claim, and should refer to the transaction number of the accounting document on which the goods were cleared by Customs. If the claim is based on a clerical, typographical, or similar error, the refund application should identify where the error occurred, e.g. an extension error on a Customs invoice, a transposition error, a mathematical error, or other error which caused the duties to be paid or overpaid. If the error is not obvious, documentation may be required to confirm that it is clerical or typographical.

It may be necessary for Customs to make repayment subject to certain conditions or special safeguards against fraud or abuse. For instance, to ensure that refund claims are not being submitted on the presumption that there may be a discrepancy, such claims must include sufficient detail to satisfy Customs that the intention to file a refund claim is valid. Where the error is due to recklessness or repeated carelessness, Customs may decide to take action against the person concerned under appropriate legislation while nevertheless granting the repayment of duties and taxes

Standard 4.19

- the goods have not been worked, repaired or used in the country of importation, and are re-exported within a reasonable time;

- the goods have not been worked, repaired or used in the country to which they were exported, and are re-imported within a reasonable time.

Use of the goods shall, however, not hinder the repayment if such use was indispensable to discover the defects or other circumstances which caused the re-exportation or re-importation of the goods.

Goods may be damaged, destroyed or irrecoverably lost, by accident or through force majeure. This may also happen while they are still under Customs control (in transit, in bonded warehouses or under temporary admission procedures). In these instances, for reasons of equity, the duties and taxes already charged might be refunded in whole or in part.

Standard 4.19 of this Chapter is about repayment of duties and taxes for goods that are found to be defective or otherwise not in accordance with the agreed specifications at the time of importation/exportation. This provision only applies if the goods have not been worked, repaired or used in the country of importation or exportation, unless such use is necessary to detect the fault. The goods must be re-exported or re-imported within a reasonable time either to a foreign supplier or to another person designated by the supplier. Also, any sums chargeable as a result of repayment or remission of or conditional relief from duties and taxes or of any subsidies or other amounts granted in connection with exportation must be paid. The first indent of this provision deals with import duties and taxes. The second indent deals with export duties and taxes and does not apply to administrations that do not charge export duties and taxes. This provision only stipulate cases in which repayment of duties and taxes must be made, and the procedure to be used is left to the discretion of the Contracting Party.

Modern commercial practice often does not require the signing of a formal contract of sale. This Standard applies, therefore, as long as the Customs are satisfied that the goods are defective or otherwise not in accordance with the specifications which have been agreed between the supplier and purchaser. Customs usually require proof that this situation existed at the time of importation, and that the goods have not deteriorated after Customs clearance. This proof may be in the form of a statement from the carrier or warehouse operator giving the particulars of the damage, as well as an appraisal or credit note to indicate the loss in value of the goods.

In some cases, a notice of claim must also be submitted. This should contain a reference to the accounting document which effected release of the goods and a clear and concise explanation of the reason for the claim. Usually, if the claim involves perishable goods, the time allowed for submitting the notice of claim will be limited.

The refund provisions usually do not apply to goods which have exceeded their shelf life or their recommended storage-before-use period (e.g. expired food products).

The expression “rendered commercially valueless” which is found in Standard 4.19 means that the goods have been reduced to such a condition that they not only have no value in the commercial area for which they were originally intended, but also have no value in any other commercial area, so that they cease to have any revenue interest.

Standard 4.19 provides more liberal facilities than does a previous WCO Recommendation regarding repayment or remission of duties on goods refused by the importer as not conforming to contract. For example, whereas the Recommendation provided for either the return of the goods to the foreign supplier or for their destruction under official control, this Standard also provides for the goods to be returned to another person designated by the supplier or, at the discretion of Customs, abandoned for revenue purposes or rendered commercially valueless. Administrations may want to refer to the WCO Recommendation, Ref. T2-341, which is still valid and may provide additional guidance.

Transitional Standard 4.20

Transitional Standard 4.20 indicates that repayment should also be allowed in cases where goods are originally declared under one Customs procedure and are then placed under another that either reduces or eliminates the amount of duties and taxes chargeable. Normally, such permission would be sought within a short time of the original declaration, for example because an error was made in indicating the Customs procedure to be applied to the goods. In any case, if time limits for the acceptance of claims for repayment are fixed, the provisions of Standard 4.23 apply in determining whether a claim under this Standard will be accepted.

Standard 4.21

The decision on whether to allow repayment should be made in writing and the repayment made without undue delay. Standard 4.21 does not restrict the making of arrangements for periodic payments covering a specified period for claimants who regularly submit a substantial number of claims for repayment of import duties and taxes.

Most administrations establish set time scales for the rendering of a decision and/or repayment on the refund claim. Some administrations have established service standards or charters with their clients specifying the level of service they are committed to provide. One example is, 90 days from the date of receipt of the refund application. Where a refund is granted beyond that period, interest should be paid. For example, in the case of the 90 day time limit, interest would be payable on the 91st day after the application for refund is received and ending on the day the refund is granted.

Standard 4.22

Where it is established by the Customs that the overcharge is a result of an error on the part of the Customs in assessing the duties and taxes, repayment shall be made as a matter of priority.

If duties and taxes are overpaid as a result of an error by Customs in assessing the duties and taxes, Customs must repay or remit the amount overcharged as a matter of priority. This provision promotes the principle of fairness and ensures that, whether errors are committed by the trader or the Customs administration, they will be dealt with in an equally fair manner.

Standard 4.23

Customs administrations usually establish time limits for acceptance of repayment claims. Standard 4.23 also stipulates that these time limits should be of sufficient duration to take account of the differing circumstances for each type of case. Adequate consideration of the differing circumstances could be the type of cases where repayment claim is being made. These could refer to circumstances such as repayment of duties and taxes resulting from a request to place the goods under a different procedure, repayment arising when defective goods are returned to the sender, goods that have deteriorated or perishable goods, etc. Each of the circumstances could have a different time period within which the repayment claim should be made. Other differing circumstances could refer to the period specified in national legislation as the due date of payment of duties and taxes. The period of time for making a claim for repayment will commence after the point in time specified in national legislation when the final duties and tax liabilities are assessed or paid and would be different for goods under different procedures. It is only at the completion or termination of a procedure that a declarant will be able to accurately estimate whether there is a case for making a claim for repayment of duties and taxes. Differing circumstances in this type of case could be when assessment of duties and taxes done on the basis of a provisional declaration and the time period for making a claim for repayment would only commence after the provisional declaration is finalized. Similarly in the case of procedures such as inward or outward processing, procedures applied in a Free Zone etc. the time period would commence from the point in time when the procedure is terminated.

Usually the time limits for the acceptance of claims for repayment of import duties and taxes by Customs are the same as the statutory time limits for the collection of import duties and taxes.

Standard 4.24

Repayment shall not be granted if the amount involved is less than the minimum amount specified in national legislation.

Repayment, however, is not necessary when the amount of the overpayment is less than the minimum amount specified in national legislation. Some administrations may, however, choose to make the repayment as a service to the trader.

Chapter 5 - Security

CHAPTER 5

SECURITY

Legal Text

5.1. Standard

National legislation shall enumerate the cases in which security is required and shall specify the forms in which security is to be provided.

5.2. Standard

The Customs shall determine the amount of security.

5.3. Standard

Any person required to provide security shall be allowed to choose any form of security provided that it is acceptable to the Customs.

5.4. Standard

Where national legislation provides, the Customs shall not require security when they are satisfied that an obligation to the Customs will be fulfilled.

5.5. Standard

When security is required to ensure that the obligations arising from a Customs procedure will be fulfilled, the Customs shall accept a general security, in particular from declarants who regularly declare goods at different offices in the Customs territory.

5.6. Standard

Where security is required, the amount of security to be provided shall be as low as possible and, in respect of the payment of duties and taxes, shall not exceed the amount potentially chargeable.

5.7. Standard

Where security has been furnished, it shall be discharged as soon as possible after the Customs are satisfied that the obligations under which the security was required have been duly fulfilled.

Guidelines to Chapter 5

Guidelines to the legal text

Chapter 5

SECURITY

1. Introduction

A security or a collateral is frequently required by the Customs to ensure that the declarant discharges any obligations undertaken to Customs. The primary aim of security is to secure the payment of duties and taxes. In other instances security may also be required to secure the fulfilment of any other obligations the declarant or operator may have in regard to a Customs procedure or practice or any other requirements that may be specified by Customs. National legislation must therefore contain provisions that enable Customs to take a security under any appropriate procedure or practice. Since providing a security is often expensive and the costs of obtaining the security are normally added to the cost of the international movement of the goods, it is essential that provisions relating to security be clear and transparent for traders. This way economic operators will be informed of the requirements and the financial liabilities involved in any transaction.

National legislation should include provisions detailing the manner in which the amount of security is determined, the forms in which it may be provided and the discharge of the security once the obligations are fulfilled. Uniform provisions will also provide equality of treatment to all operators throughout the Customs territory.

When Customs require security to ensure payment of duties and taxes and any other obligations, the security is generally provided by the person who is liable or may become liable for these obligations. This is usually the declarant. However, in many circumstances Customs will allow security to be provided by another person, such as a third party who is authorised to deal with the Customs on behalf of the declarant.

The requirement for security to ensure the discharge of an actual or potential obligation to Customs is not obligatory in all cases, and there may be circumstances where this requirement is optional. When the requirement is compulsory, the amount required as security is usually equal to the actual or the estimated amount that may arise from the operator’s obligation to Customs. When it is optional, Customs would require a security only when they ascertain that the discharge of the obligations is not assured. Customs would normally take such a decision on a case-by-case basis and should likewise limit the amount of security to the actual obligation to Customs.

This Chapter contains the basic principles relating to security required by Customs.

2. Requirement and forms of security

Standard 5.1

National legislation shall enumerate the cases in which security is required and shall specify the forms in which security is to be provided.

This Standard requires that the cases in which security is required should be enumerated in national legislation. This legislation should also specify the forms in which security is to be provided.

Security is required by Customs to ensure that obligations deriving from a particular procedure will be fulfilled. This is essential, for example, where duties and taxes are deferred or where goods are provisionally released to the declarant pending final clearance. Provisional release may also be based on a provisional declaration or pending the production of certain documents which would permit a concessional rate of duties and taxes. The cases enumerated in national legislation will normally specify the range of situations where Customs require a security and the conditions under which such security will be required. The obligations to Customs may be broad and general or they may be specific.

Examples of a general obligation would be the requirement for security from a warehouse operator, an international transporter of goods or a person authorised for the inward processing procedure. Customs also normally consider an operator who carries out a number of transactions as having a broad or general obligation to Customs and will frequently accept a security covering all his operations.

The obligation is specific when the security is required on a transaction basis, such as release of goods on a provisional declaration. In this example the security would be specific to that particular declaration for the specific purpose of ensuring that the declaration is completed within a specified period.

The form in which security is usually provided is the deposit of cash or negotiable securities, or given by an approved surety (generally a bank or an insurance company). It may also be given in the form of a bond or, in exceptional cases such as importation by public institutions, government departments or local authorities, by a simple undertaking.

When national legislation stipulates that the security must be in the form of a cash deposit or payment deemed equivalent, the cash deposit would be required in the national currency. In most administrations a guaranteed cheque, or other means of payment recognised by Customs as equivalent, is acceptable in lieu of a cash deposit. When a security is given by cash deposit, it is the usual practice that Customs will not pay interest on the amount of the deposit when the security is discharged.

Where the security is given in the form of a surety, the guarantor undertakes, in writing, to be responsible jointly and severally with the declarant who is to discharge the obligation to Customs and to pay the secured amount of an undischarged obligation. The guarantor is normally a third party and is required to be established in the Customs territory and approved by Customs.

Customs always retain the right to refuse approval of the guarantor or the type of security proposed where they have a reasonable doubt that the obligation will be discharged within the prescribed period.

In addition to cash deposits and surety, the Customs may also accept other forms of security if these provide equal assurance that the obligations to Customs will be discharged.

In some administrations Customs allow what is known as a flat rate security. In this type of security a guarantor is allowed to furnish a single security for a specified amount laid down in national legislation. This flat rate guarantee covers the payment of duties and other charges which may become due in the course of a Customs operation carried out under the guarantor’s responsibility, irrespective of who the declarant may be. A flat rate security must normally be lodged with a specified Customs office that is responsible for acceptance of this form of security.

Once Customs accepts the guarantor’s undertaking, they authorise the guarantor to issue a flat rate security voucher or vouchers under the terms of the security to persons who intend to act as declarants in a Customs operation. The guarantor thus becomes liable to Customs for the amount laid down in national legislation in respect of each flat rate security voucher. The voucher is presented to the Customs office where the Goods declaration is lodged and it is retained at that office until the obligation is discharged. The guarantor is permitted to exclude certain Customs operations or certain goods, for example those presenting a higher risk of fraud, when issuing vouchers to a declarant. In such cases the guarantor is required to make a specific mention of these limitations on the vouchers.

Examples of other forms of security that may be acceptable by Customs are :

a mortgage, a charge on land or a right pertaining to immovable property;
the cession of a claim or the pledging, with or without surrendering possession, of goods, securities or, in particular, a savings bank book or entry in the national debt register;
the assumption of joint contractual liability for the full amount of the Customs obligation by a third party approved by Customs and, in particular, the lodging of a guaranteed bill of exchange; and
participation, subject to payment of a contribution, in a general guarantee scheme administered by Customs.

Customs will decide under what circumstances these types of security can be used.

3. Amount of security

Standard 5.2

The Customs shall determine the amount of security.

This Standard provides that it is Customs who will determine the amount of security. While the national legislation can enumerate the cases where security is required, whether such security is compulsory or optional, and the forms of security that are acceptable, the amount of security usually depends on the requirements and obligations that arise in each case. However, to ensure uniformity in determining the amount of security in various categories of cases, Customs must set out clear instructions on how the amount of security is to be calculated.

In cases where national legislation specifies that the security is compulsory, the Customs can fix the amount at a level equal to :

the precise amount of the duties and taxes due to Customs, where it can be established with certainty at the time the security is required;
any other amount specified in national legislation; or
the maximum amount, as estimated by Customs, of the obligations which have been or may be incurred.

National legislation usually will allow cases where no security should be required. These may be for certain operations or industries, for certain Customs procedures or practices, for certain types of goods or for certain levels of duties and taxes. Optional security would be required where Customs determine that other factors are present in these cases and the risk of the obligations being fulfilled is increased. For example, the goods may involve a high risk to the revenue, the person concerned may not be in good standing in meeting Customs obligations, or a one-time transaction may involve greater need for revenue control. Where national legislation stipulates that security is optional and Customs consider that a security is required, the amount determined should not exceed the level set out for compulsory security

In certain instances, even though a security is not required, Customs may still require an undertaking from the person concerned to ensure that the obligations which are legally required to be fulfilled are complied with.

Where Customs establish that the security provided does not ensure or is no longer certain or sufficient to ensure the discharge of obligations within the prescribed period, they would require the person to choose either to provide additional security or to replace the original security with a new one.

4. Choice of forms of security

Standard 5.3

Any person required to provide security shall be allowed to choose any form of security provided that it is acceptable to the Customs.

This Standard provides that the person concerned should be allowed to furnish security in the form that he chooses. This will normally be the form that is least expensive. However, the form of security must be one of those specified in national legislation, and the form of security must be acceptable to Customs.

Customs therefore have the right to not accept a form of security when they believe that this will not ensure the discharge of obligations to Customs within the prescribed period, or if it is incompatible with the proper functioning of the Customs procedure concerned. In normal practice, however, the cases where Customs do not accept a form of security selected by a declarant or operator is the exception rather than the rule.

In certain instances Customs may find it advisable to limit the forms of security that are acceptable based on the standing of the declarant or operator. In other cases, such as where the goods are considered a high risk to the revenue, Customs may require a cash deposit instead of a simple undertaking. However, Customs should usually accept an alternative form of security if it will ensure the discharge of the obligations at the same level. Customs may require the form of security selected to be maintained for a specific period.

5. Waiver of security

Standard 5.4

Where national legislation provides, the Customs shall not require security when they are satisfied that an obligation to the Customs will be fulfilled.

The person who is liable for the obligations to Customs is normally required to provide the security. This Standard provides however that, where national legislation allows, a security should not be required if Customs are satisfied that an obligation will be fulfilled.

In some countries a waiver of security may need to be specified in national legislation. Providing for a waiver of security, in either the national legislation or in other regulations, would facilitate trade by reducing the costs to traders that are incurred in arranging for security. Since these added costs would normally be reflected in the overall costs relating to the import/export of goods, a waiver could also benefit the national economy. Similarly a waiver of security in cases where there is a low risk of the obligations to the Customs not being met will not only benefit the national economy but also reduce the administrative costs to the Customs administrations.

Many national legislations therefore provide that if the party responsible for an obligation is a governmental body, security can be waived since there would be no danger that the obligation will not be met. Similarly, Customs are empowered to waive the requirement for security when it would be disproportionate to any real danger of failure to meet the particular obligation, for example when the amount at stake is very low or in certain circumstances subject to the declarant or operator meeting the requirements for a waiver, e.g., an authorised trader or for certain types of goods.

Many national legislations generally allow security to be waived for :

journeys by sea and air,
the carriage of goods on designated routes, including waterways,
carriage by pipeline, and
operations carried out by designated railway companies.

National legislation may also allow any person to apply for a security waiver from Customs for specified operations. The Customs would then consider granting a waiver to persons who :

are established in the Customs territory where the waiver is applied for;
are regular users of the Customs procedure concerned;
maintain a financial position that can meet their commitments;
have not committed any serious infringement of Customs or fiscal laws; and
undertake to pay any claims in response to the first written request from Customs.

Additional conditions may be stipulated in national legislation.

The security waiver does not normally apply for goods whose total value exceeds an amount specified in national legislation or which present significant risks because of high import duties and taxes involved.

The Customs office that grants the waiver can issue one or more copies of a security waiver certificate to each approved applicant.

Although waiver of security is recommended in many instances as a trade facilitation measure, in some instances providing security could actually offer a greater facilitation. For example where Customs administrations apply audit based controls for special procedures, the provision of security may actually improve trade facilitation by replacing the need for traditional physical controls. Certain traders or operators may be authorised to carry out operations substituting a security and selective audits of their records by Customs in place of physical controls to ensure compliance.

6. General security

Standard 5.5

This Standard provides for Customs to accept a general security instead of a separate security in each instance, especially from declarants who declare goods regularly at different offices in the Customs territory. Customs can also allow two or more operations to be covered by a general security. These facilities will enable declarants to reduce the costs of providing individual securities and will enable Customs to monitor the securities in a more centralised and efficient manner. If necessary, Customs can also take specific measures to temporarily disallow a general security when certain goods carry a strong risk of fraud.

Customs usually have a standard procedure for granting a general security in which they base the amount of the security on the volume of the operations carried out by the applicant and determine at which Customs office the general security is to be furnished. This office will determine the amount of the security, accept the guarantor’s undertaking, issue an authorisation to the declarant allowing him to carry out the Customs operations within the limits of the guarantee, and maintain the security. The authorisation may be withdrawn if the conditions under which it was issued are no longer met.

Normally any person who has obtained authorisation for a general security should be issued with one or more copies of a security certificate. Each Goods declaration submitted under this security would then include a reference to the security certificate. In some countries the Customs offices are responsible to carry out the necessary checks in order to satisfy themselves that security has been provided.

When the certificate is issued, or at any time during its validity, the declarant may be required to specify on it the person or persons authorised to sign Goods declarations on his behalf. The particulars should include the surname and forename of each authorised person and their signature. Each nomination of an authorised person must also be acknowledged by the declarant’s signature. The declarant can delete the name of an authorised person from the certificate at any time. Customs, when presented with a security certificate, should regard any person named on it as the authorised representative of the declarant.

A security certificate is only valid for a specified period, although the Customs office authorised to receive and maintain the security may grant an extension. In the event the security is cancelled, the person concerned is required to immediately return any valid security certificates to the designated Customs office.

The amount of a general security should only be fixed at a level equal to the full amount of duties and taxes when it is intended to cover Customs operations for goods presenting a high risk of fraud. In all other cases, Customs may set the amount of the guarantee at a lower percentage of the duties and taxes for persons :

who are established in the Customs territory where the security is provided;
who are regular users of the Customs procedure concerned;
whose financial situation is such that they can meet their commitments; and
who have not committed any serious infringement of Customs or tax laws.

Wherever possible, the general security should be kept to a minimum amount that will cover all the considerations of national requirements.

Where a security amount has to be determined for new operators, Customs should, in collaboration with the person concerned and based on available data, estimate the quantity, value and duties and taxes applicable for the goods to be placed under the Customs procedure over a given period. By extrapolation Customs can then determine the likely value of the duties and taxes due during a period that represents the average duration of stay of the goods under that Customs procedure.

When the general security applies to obligations that will vary in the amount of liability over time, the amount of the security should be set at a level high enough to enable the obligations to Customs to be covered at all times.

For a transaction covered by a general security, Customs may require additional security if it believes that acceptance of that transaction may place the revenue in jeopardy or otherwise hamper the enforcement of Customs law.

Customs should carry out regular reviews of the amount of each general security and should, if appropriate, adjust that amount.

7. Level of security

Standard 5.6

Where security is required, the amount of security to be provided shall be as low as possible and, in respect of the payment of duties and taxes, shall not exceed the amount potentially chargeable.

This Standard requires that the amount of security be kept as low as possible. This applies whether the security is general or specific, as described for Standard 5.5 above, and is based on the scope and risk involved in the obligations to be fulfilled and the amount of money potentially involved. It also specifies that when the security is furnished to secure the payment of duties and taxes, its amount must not exceed the amount potentially chargeable.

This implies that the basis used to fix the amount of security should not take into account any penalties potentially chargeable or include other concerns that would raise the amount of security unnecessarily. Similarly, the amount of security should not include interest for delayed payment that may be charged in the event of the declarant failing to fulfil all his obligations.

One of the methods that the Customs may use to determine the amount of the security for a single declarant or operator is to take account of the amount of duties and taxes paid during the previous period of the same duration by the person concerned. In the event of changes, for example, in the volume of importations or the rates applicable, the amount of the security may be adjusted accordingly. In certain cases, such as temporary importation of goods that are classified under different tariff headings and liable to different rates of duties, Customs can also determine the amount of the security on the basis of an average single rate for the duties and taxes. This single rate method of calculation can be applied for a number of Customs procedures and offers advantages to both Customs and the trade.

8. Discharge of security

Standard 5.7

Where security has been furnished, it shall be discharged as soon as possible after the Customs are satisfied that the obligations under which the security was required have been duly fulfilled.

This Standard requires that Customs should release the security as soon as the obligation has been discharged or can no longer arise. It does not, however, relate to any delays in the discharge of security for which Customs is not responsible, such as in a delay of the discharge of a guarantee by a bank.

If part of the obligation has been discharged, and the remaining obligation only applies to part of the secured amount, a commensurate amount of the security may be released if requested by the person concerned, provided the amount of security is sufficient to justify this action.

Chapter 6 - Customs control

CHAPTER 6

CUSTOMS CONTROL

Legal Text

6.1. Standard

All goods, including means of transport, which enter or leave the Customs territory, regardless of whether they are liable to duties and taxes, shall be subject to Customs control.

6.2. Standard

Customs control shall be limited to that necessary to ensure compliance with the Customs law.

6.3. Standard

In the application of Customs control, the Customs shall use risk management.

6.4. Standard

The Customs shall use risk analysis to determine which persons and which goods, including means of transport, should be examined and the extent of the examination.

6.5. Standard

The Customs shall adopt a compliance measurement strategy to support risk management.

6.6. Standard

Customs control systems shall include audit-based controls.

6.7. Standard

The Customs shall seek to co-operate with other Customs administrations and seek to conclude mutual administrative assistance agreements to enhance Customs control.

6.8. Standard

The Customs shall seek to co-operate with the trade and seek to conclude Memoranda of Understanding to enhance Customs control.

6.9. Transitional Standard

The Customs shall use information technology and electronic commerce to the greatest possible extent to enhance Customs control.

6.10. Standard

The Customs shall evaluate traders’ commercial systems where those systems have an impact on Customs operations to ensure compliance with Customs requirements.

Guidelines to Chapter 6

Guidelines to the legal text

Chapter 6

CUSTOMS CONTROL

1. Cross-reference table to the Kyoto Convention

Provision in General Annex	Section in Control Guidelines
Chapter 2, definition E3/F4	4.
Chapter 2, definition E21/F1	4.
3.4 and 3.5	8.5
3.16	7.1.1.2
3.25	7.1.1
3.31	5.
3.31	7.1.1.2
3.32	7.2.2
3.33	7.1.2
3.33	8.1 a)
3.34	7.1.2
3.35	3.
3.36	7.1.2
3.37	8.1 i)
3.37	7.1.2
3.38	7.1.2
3.38	8.1 c)
6.2	5.
6.3	5.
6.3	6.
6.4	6.
6.4	6.2.4
6.5	6.
6.5	7.
6.6	7.
6.6	7.2
6.7	8.1 f)
6.7	8.6
6.8	9.
6.9	6.2.5
6.10	7.
6.10	7.2.2
7	6.2.5
7.3	9.
7.4	8.1 f)
8.5	9.
9	9.

2. Executive summary

The Guidelines on Customs Control for the Kyoto Convention contain a comprehensive overview of best practices and other issues which a modern Customs administration’s control programme should address. The application of these Guidelines is highly recommended to achieve the simplification and effectiveness envisaged by the Kyoto Convention. The Guidelines contain the following principles :

Customs administrations should shift from exclusive movement controls to more audit-based controls, e.g. from the introduction of simplified procedures to authorization for trader self-assessment. This will enable Customs to manage the growth in world trade, and the increasing demand to reduce resources, as well as the need for greater trade facilitation.
Risk management is the key element in achieving this objective and should therefore be integral to the control programme of a modern Customs administration.
Customs administrations should implement compliance or performance measurements in their control programme to keep the programme effective and efficient.
Customs/Trade co-operation is essential. It creates awareness of changes in trade practices, provides important information for the evaluation and review mechanism within Customs and indicates the potential for greater voluntary compliance.
A modern Customs control programme needs continuous support from senior management, staff who are sufficiently trained, motivated and paid, and good legislation, organization and procedures.
Customs administrations should increasingly make use of mutual administrative assistance. This will help them to cope with the globalization of trade, markets and fraud, and form a basis for the "seamless flow of information" concept in international trade.
Customs administrations should make extensive use of information technology and electronic commerce, particularly in their clearance procedures. This is critical for effective and efficient control as well as trade facilitation.

3. Introduction

"Customs Control" is defined in the WCO Glossary of Customs terms as "Measures applied to ensure compliance with the laws and regulation which Customs are responsible for enforcing".

To ensure that Customs can appropriately apply these laws and regulations, all international movements have to be declared for a Customs-approved treatment or use.

Such laws and regulations apply to both the fiscal obligations involved in the international movement of goods and persons, and the prohibitions and restrictions applicable to goods, persons and means of transport.

Customs administrations have to apply efficient and effective controls by implementing risk management techniques, in order to simultaneously fulfil the responsibility to collect revenue, implement trade policy, safeguard the public, manage the increase in world trade and tourism, reduce Customs personnel, and offer trade facilitation to legitimate traders, travellers and carriers.

Regular review of these controls will keep Customs administrations up to date in meeting these combined objectives, despite the powerful challenges of rapid expansion in international commerce and continual shifts in trade and transport patterns and practices. Social pressures will dictate at least equally important changes and developments in control requirements. The assistance of legitimate trade in the risk management process is very important. Memoranda of Understanding with individual companies (as recommended in the WCO ACTION/DEFIS programme) can formalise this kind of Customs/Trade co-operation.

There are many ways of responding to these developments by improved facilitation and control within a set of modern Customs practices.

In order to facilitate legitimate international trade, Customs administrations are attaching increasing importance to export controls, adopting modern control and facilitation measures (e.g, risk management), and working more closely together on the basis of international standards and agreements. The introduction of innovative Authorized Economic Operator programmes (see Pillar 2 in the SAFE Framework of Standards) by many Customs administrations, and the mutual recognition of such programmes by other administrations, are perfect illustrations of this trend.

In this context, the electronic transmission of advance cargo information on exports helps Customs to make informed and timely decisions concerning their interventions, thereby constituting an essential component of these controls. Where data elements are concerned, Customs administrations are encouraged to use the WCO Data Model, SAFE Framework of Standard data sets as well as the UCR in order to facilitate the exchange of information and Customs co-operation.

One way of linking facilitation with control is by using a single competent agency to carry out a range of functions, such as phytosanitary or dangerous goods checks, which are currently performed by a range of different agencies, possibly at different locations. Customs, already present at all frontiers and with long experience of the operational requirements of international trade and transport, provide a logical, economical focus for such responsibilities (see General Annex, Transitional Standard 3.35).

The move towards electronic interchange of data will streamline the division of information previously condensed into one comprehensive declaration form. The information can be more easily broken into two databases, one dealing with control data to be scrutinised before the goods arrive at the border, and the other composed of transactional data which would be reviewed in an audit-based control exercise.

Such simplified procedures enable Customs to provide facilitation to compliant traders while keeping a sufficient level of control.

Another way of improving control and facilitation is by the use of electronic techniques for shared operation of a control procedure by more than one Customs administration or other official agency. This is being exploited by electronic transit systems in certain economic groupings, for example the EC and NAFTA, and by data exchange, among Australian, New Zealand, Singapore and US Customs, to replace paper certificates covering, for instance, sheep meat inspection and Multifibre Arrangement quotas.

Another, probably even more significant development, is the growing interest in having bilateral or multilateral Customs agreements instead of separate export and import control functions. Such agreements would require only one submission of minimal standard data for all official control purposes.

Control of passengers and their clearance time through Customs can also be much improved by innovative procedures based on electronic advanced passenger information systems.

These Guidelines provide Customs administrations with detailed information on control methods, procedures and implementation. They are not obligatory, but since they represent current best practice for a modern Customs administration, their application is highly recommended. Control measures specific to a particular Customs procedure will be included in associated Guidelines.

4. Definitions

To assist with the application of these Guidelines the following terms are defined :

Audit-based control : Measures by which Customs satisfy themselves as to the accuracy and authenticity of declarations through the examination of the relevant books, records, business systems and commercial data held by persons concerned (General Annex, Chapter 2, definition E3/F4).

Customs offence : Any breach or attempted breach of Customs law. (WCO Glossary of Customs Terms)

Document : Any physical or electronic medium designed to carry and actually carrying a record of data entries.

Mutual administrative assistance : Actions of a Customs administration on behalf of or in collaboration with another Customs administration for the proper application of Customs laws and for the prevention, investigation and repression of Customs offences (General Annex, Chapter 2, definition E21/F1).

Risk : The potential for non-compliance with Customs laws.

Risk analysis : Systematic use of available information to determine how often defined risks may occur and the magnitude of their likely consequences.

Risk area s : Those Customs procedures and categories of international traffic which present a risk.

Risk assessment : The systematic determination of risk management priorities by evaluating and comparing the level of risk against predetermined standards, target risk levels or other criteria.

Risk indicators : Specific criteria which, when taken together, serve as a practical tool to select and target movements for the potential for non-compliance with Customs law.

Risk management : The systematic application of management procedures and practices which provide Customs with the necessary information to address movements or consignments which present a risk.

Risk profile : A predetermined combination of risk indicators, based on information which has been gathered, analysed and categorised.

Systems-based control : Measures to ensure that a trader’s system contains the checks and controls necessary for compliance with Customs laws.

5. Principle of Customs control

(Standards 3.31, 6.2 and 6.3)

The principle of Customs control is the proper application of Customs laws and compliance with other legal and regulatory requirements, with maximum facilitation of international trade and travel.

Customs controls should therefore be kept to the minimum necessary to meet the main objectives and should be carried out on a selective basis using risk management techniques to the greatest extent possible.

Application of the principle of Customs controls will allow Customs administrations to :

focus on high-risk areas and therefore ensure more effective use of available resources,
increase ability to detect offences and non-compliant traders and travellers,
offer compliant traders and travellers greater facilitation and
expedite trade and travel.

6. Risk management in Customs

(Standards 6.3, 6.4 and 6.5)

For Customs administrations there is always an element of risk in facilitating the movement of goods and persons. The extent of controls to ensure compliance with the laws and regulations which the Customs are responsible for enforcing should be proportionate to the level of assessed risk.

Customs administrations today are required to provide extensive facilitation while maintaining control over the international movement of goods, means of transport and persons. The level of risk is determined in the context of the priorities of the Customs administrations e.g. whether the priority is collection of duties and taxes or checking prohibitions and restrictions or any other specific area that has been identified.

This section contains information on carrying out risk management, the basis for modern Customs control techniques.

6.1. Risk Management - The basic control philosophy

Risk management is successfully applied in the private sector, where insurance, banking, trade and industry find that it creates opportunities to improve business results. The use of risk management can also help the public sector to determine where the greatest areas of exposure to risk exist, and can support management in deciding how to allocate limited resources effectively.

In managing risk a balance must be struck between costs and benefits, as clearly it will not be cost effective to address all risks equally. Criteria are needed to decide what constitutes an acceptable or unacceptable level of risk.

6.1.1. An overview

The risk management process comprises the establishment of the risk management context, risk identification, risk analysis, risk assessment, addressing the risks and monitoring and reviewing the process through compliance measurement.

RISK MANAGEMENT OVERVIEW

6.1.2. The risk management process

(a) Establish the context

This step establishes the strategic and organizational context in which risk management will take place. Risk areas have to be identified and criteria against which risk will be assessed established and the structure of the analysis defined.

(b) Identify risks

Identify what, why and how risks can arise as the basis for further analysis. This step requires an in depth description of the current control process, to include :

participants/clients/stakeholders;

strengths and weaknesses;

where, when, how is the risk likely to be incurred and by whom;

what are the threats and their impact in case of circumvention;

why do opportunities arise for circumvention.

(c) Analyse risks

Determine controls and analyse risks in terms of likelihood and consequence. The analysis should consider :

how likely is an event to happen; and

what are the potential consequences and their magnitude.

Combine these elements to produce an estimated level of risk.

If the estimated levels are low, then risks may fall into an acceptable category and action may not be needed.

(d) Assess and prioritise risks

Compare estimated levels of risk against the pre-established criteria. Rank the risks to identify management priorities. There are different types of ranking systems. The assessment into HIGH, MEDIUM, and LOW is widespread. In complex environments a more detailed system may be needed, such as a range from 1 to 100. The latter also requires the determination of high and low risks but allows for more precision.

Risks must be continually monitored for any change in their nature, level or significance.

(e) Address risks

Accept and monitor low-priority risks. For other risks, develop and implement a specific management plan which includes consideration of resources (human, financial and technical).

(f) Monitor and review - Compliance measurement

Monitor and review the performance, effectiveness and efficiency of the risk management system and changes which might affect it.

(g) Documentation

There should be a risk register which gives the rationale behind selecting the risks, and records the assumptions on which assessments have been made, to establish an audit trail that ensures important information is not lost.

6.2. Risk management within Customs

6.2.1. The context

Risk management within Customs can be strategic, operational or tactical. It should be remembered that the risk management process can apply across all of these levels.

Strategic risk management - By studying comprehensive information, Customs administrations can identify areas of risk, sift out those of minor importance, and intervene only where experienced and practical judgement indicates it is necessary. Risk areas in the Customs context can include social issues ( exclusion of drugs, pornography etc ) , import/export prohibitions and restrictions ( eg CITES ), public health, environment, commercial policy measures (e.g. IPR, GSP), quotas, and duty and tax issues.

Operational risk management - is the determination of the level of control necessary to deal effectively with the assessed risk. An example of this is determining the audit controls applied to an importer or how to deploy limited staff and equipment effectively. Using this approach the Customs moves from being a "gatekeeper" checking every movement, to checking only selected movements which demonstrate the greatest risk.

Tactical risk management - is used by officers at their workplace in dealing with immediate situations. Using set procedures combined with intelligence, experience and skill, they decide which movements require greater controls.

6.2.2. Selectivity, Profiling and Targeting

Selectivity, profiling and targeting are integral parts of risk management.

Selectivity criteria for dutiable goods include the history of the importer, exporter, carrier, agent, etc., the origin and routing of the goods, and prohibitions or restrictions. Further examples can be found in the WCO Manual on Risk Assessment, Profiling and Targeting as well as in the WCO Handbook on Container Control.

Risk indicators are specified selectivity criteria such as : specific commodity code, country of origin, country whence consigned, licensing indicator, value, trader, level of compliance, type of means of transport, purpose of the stay in the Customs territory, financial consequences, or financial situation of the trader/person.

Risk profiling is the means by which Customs puts risk management into practice. It replaces random examination of documents and goods with a planned and targeted working method, making maximum use of Customs resources. A risk profile is a document which can be set out in a number of ways but it should be comprehensive and relevant to the traffic throughput in a Customs office.

The risk profile should contain a description of the risk area, an assessment of the risk, the counter-measures to be taken, an action date, the results and an evaluation of the effectiveness of the action taken. A risk profile can be kept in a binder or on a local computer and it should be as accessible as possible to Customs officers.

Once established, the profiles along with other information and intelligence will provide a basis for targeting potentially high risk movements of consignments, means of transport, or travellers.

- Quota	- kind of goods	- textiles under quota	textiles under quota AND/OR
- GSP	- country of origin	- specific country of origin	specific country of origin AND/OR
- CITES	- transport route	- unusual transport route	unusual transport route AND/OR
- Trader	- principal	- specific principal	specific principal
- etc.	- etc.	- etc.

6.2.3. Evaluation and review

To remain effective any system of risk management has to test the assessment of previously identified risks and be flexible enough to reflect newly identified risks. Evaluation of the effectiveness of risk management should be undertaken regularly at all stages. The success rate is an important criterion for evaluating the effectiveness of the risk profiles.

Evaluation and review should be carried out by Customs through a regular compliance measurement process. It can also be carried out through external government audits by statutory audit authorities, such as the Comptroller or Auditor General. Although the scope and methodologies of these reviews differ, their objective is to identify weaknesses in the control programme and to make recommendations for improvement.

Risk indicators are emerging all the time. Customs should keep them up to date by accessing various information sources such as the WCO Enforcement Bulletin, international databases on trader information (e.g. Dun & Bradstreet, Lloyd’s Shipping register), etc.

Risk profiles should be reviewed at regular intervals to ensure that they are always up to date, and to rid the system of information that is no longer relevant. It is important also to retain an element of surprise by carrying out random checks, because companies that are in regular contact with Customs will be aware of profiling methods or sometimes the profiles themselves. These random checks can also provide a cost effective means of identifying other types of risk and of monitoring or estimating their significance, or any changes in the risk pattern.

Review and evaluation within the risk management process should be incorporated into a regular review procedure to measure, assess and evaluate the effectiveness of the overall Customs control programme and should take into account the findings of external government audits.

Staff at all levels should be involved in these regular reviews. Feedback from staff is essential so that constant validation can take place and the necessary updating can be applied.

6.2.4. Compliance Measurement

(Standard 6.4)

Many Customs administrations have instituted a modern and philosophical approach to their mission which specifies that their ultimate goal is to achieve compliance. The measure of success is for their traders and for the imported and exported goods to be in full compliance with trade laws. Many Customs have also instituted a programme of “informed compliance” wherein their officers assist traders and industries to understand and apply the trade rules and to improve their internal company procedures to comply with import and export requirements.

“Compliance measurement” is a phrase used when statistically valid random sampling techniques are used to determine the degree to which traders, carriers, imported goods, etc conform to Customs rules and procedures. When designed in a systematic and appropriate manner, compliance measurement methodologies provide objective and statistically valid results. Compliance measurement can be used as a diagnostic tool to identify areas of non-compliance.

Compliance measurement as a diagnostic tool for Customs administrations should be used in conjunction with risk assessment, profiling and other targeting procedures. Used strategically, compliance measurement and targeting can provide the necessary balance to focus resources effectively in areas of concern to Customs. In addition, results of initial compliance measurements can provide important information to enhance the risk assessment methodologies.

The programme also provides a basis for Customs to assess its own performance for revenue protection and enforcement of laws, to improve its efficiency and effectiveness and to develop strategies to improve compliance.

6.2.4.1. Compliance Measurement Areas

Using the risk management programme, Customs should identify the priority areas to focus their resources. One approach is to consider that in some countries or economic unions, as much as 10% of the traders account for over 80% of the imports and exports. By focusing on the top 5-10% of these highest volume manufacturers, importers, exporters and commodities, Customs can ensure that those which have the most significant impact on the national economy are being reviewed most effectively.

The areas may include :

Documentary issues :

Proper tariff classification by traders,

Proper valuation by traders,

Country of origin.

Procedural issues :

Importation and exportation (from the goods declaration through revenue collection),

Transit operations,

Warehousing, Free Trade Zones, Processing.

Revenue issues :

Timely and accurate revenue payments,

Proper posting of securities.

Transport issues :

Accurate reporting of the quantity of goods,

Accurate description of goods on the manifest and/or transport document,

Accuracy of container quantities and identification numbers,

Transporter compliance.

Specific concerns :

Compliance by tariff number or range of tariff numbers,

Public health and safety issues,

Intellectual property rights and copyright issues,

Compliance with trade agreements,

Proper country of origin marking on goods,

High revenue commodities,

Selected traders.

6.2.4.2. The Measurement Process

Customs gathers data from a variety of sources, both internal and external, and through both manual and automated means. With the data (import and export records), the tools ( statistical analysis) and the methodology (systematic analysis of large traders or commodities), Customs can make reasonable, informed conclusions about the compliance rates of many entities. These rates can be determined for each step of a transaction process, e.g. for imports, from the manifest to the goods declaration to the collection of duty and taxes. The automated systems that Customs uses to evaluate high risk shipments can support the compliance review requirements for a scientific approach to accurate data collection, analysis and projections, although compliance rates can also be effectively measured without automation.

Customs should determine a designated universe of transactions and, using a statistically valid sampling methodology, select the specific transactions or entities from this universe for review or verification. Depending upon the results, the universe may be modified in many ways.

Customs must also determine the level of compliance which is acceptable. For example, a compliance rate of 95% of the transactions or entities reviewed in a given area may be the acceptable level for an administration. This can also be called the level of tolerance.

Some of the transaction processes for compliance verifications would be :

- Goods declaration compliance;

- Trader compliance;

- Transit compliance;

- Free zone or warehouse compliance;

- Manifest and transport document compliance;

- Transporter Compliance.

Below are a few factors that should be considered during a verification review for a selected example of these processes.

Goods Declaration Compliance

a) Is there evidence of documentation to support an accurate goods declaration?

b) Do the quantities declared match what is contained in the consignment?

c) Does the declared country of origin match the country of origin marking on the goods?

d) Does the declared description of the goods match the actual goods?

Thus, a typical Compliance Measurement review relating to Intellectual Property Rights for a selected commodity, at a tolerance level of 95%, might progress as follows :

a) Conduct a statistically valid random sampling of goods declarations for the selected HS number.

b) If the resulting compliance rate is less than 95%, conduct another measurement of the same HS number but stratified by selected countries of origin.

c) For countries of origin found to have a compliance rate of less than 95 %, conduct a measurement for each of the major importers.

d) For importers found to have a compliance rate of less than 95 %, Customs should seek to :

- Inform the importer (“informed compliance”),

- Establish profiles/targets for the identified areas of non-compliance,

- Conduct subsequent measurements to ensure that the importer has

corrected the problem,

- Conduct more reviews and/or examinations, and

- Issues fines or penalties, if appropriate, in cases of continued non-

compliance.

6.2.4.3. Use of Compliance Measurement Results within the Control Programme

As stated earlier, compliance measurement is part of an effective Customs control programme. The use of statistically valid compliance measurement procedures can be used in various ways :

- Define any revenue gap

- Prevent widespread commercial fraud

- Assess performance by major key industries

- Assess performance by major importers and exporters

- Increase commercial compliance

- Accurately measure international trade

The results of these measurements can help direct resources effectively. In determining compliance rates for individual importers, those found to have high compliance rates may have their goods examined less frequently, while those having low compliance rates might have their goods examined more frequently.

The findings of compliance reviews for commodities, traders and industries provide information to update the existing selectivity criteria used to target high-risk transactions as well as the overall effectiveness of an administration’s risk management programme. In addition, they contribute significantly toward determining trends and issues relating to specific industry sectors. The result should be that focused, up-to-the-minute analytical information is available to assist Customs officers in their daily activities.

6.2.5. Use of information technology for effective implementation of Risk Management

(Transitional Standard 6.9 and Chapter 7)

The use of information technology is an effective tool for risk management. It enables a more rapid analysis of selectivity criteria than would be possible manually. Automation allows Customs administrations to establish a national database of information on all transactions and movements which can be updated and used for rapid information sharing and identification of changing risk areas. It can also provide a database of all risk profiles which would form the basis for a selectivity module within an automated clearance system.

An automated system allows Customs administrations to subject declarations to a series of selectivity filters to determine which declarations may require further examination. Such a system may direct claims to different routes.

Detailed information on application of information technology in risk management is available in the "Guidelines on Information Technology".

6.2.6. Joint targeting and screening programmes

Joint control and targeting are activities that can be carried out by cooperating Customs administrations to increase their effectiveness in ensuring the security of shipments and in combating transnational crime. Rules and conditions for such joint efforts are normally established between Customs administrations. WCO tools such as the mutual administrative assistance instruments or the SAFE Framework of Standards contain provisions that support such international co-operation, providing in particular for the exchange of information between Customs administrations.

In that context, Customs control and risk assessment for security purposes is a shared process commencing at the time when goods are being prepared for export and, through ongoing verification of consignment integrity, avoiding unnecessary duplication of controls. To enable such mutual recognition of controls, Customs should also agree on a consistent approach to control and risk management as well as the exchange of Customs data and intelligence. Such agreements may also foresee the possibility of joint monitoring or quality control procedures to oversee compliance.

7. Control methods

(Standards 6.5, 6.6 and 6.10)

This section contains descriptions of the basic types of control methods. They can be applied to any size of trader from the small irregular importer and exporter to the multi-national business. They can also be applied irrespective of the value of the duties and taxes in question. The application of risk management will enable Customs to shift from exclusive movement controls to more audit-based controls. National legislation may provide that, when performing one of the following control measures, Customs administrations are entitled to every assistance by the persons/companies involved.

7.1. Movement controls

These controls are measures applicable to goods and means of transport before or upon arrival, departure or during a Customs procedure, until they are released. Commercial means of transport which stop only for a short time in the Customs territory without discharging or taking on passengers or cargo, are not normally subject to measures other than general supervision.

The selection of goods, means of transport, or documents for examination, should be based on risk profiles to target specific transactions (see Section 6.2.2). Such selectively based procedures should also permit a random selection based on statistical sampling or an officer's input based on experience or intuition. A transaction can be targeted on the basis of any of a number of risk profiles. Examples of risk profiles are contained in Section 6.2.2.

If a potential Customs offence is discovered during the movement control, there must be communication and co-ordination with the appropriate enforcement unit to start a formal investigation.

7.1.1. Documentary examination

(Standard 3.25)

The information gained from the examination of documents enables verification for compliance purposes and matching against risk profiles. The submission of the documents prior to the arrival/departure of the goods and means of transport allows the pre-selection of the movement for examination. It enables Customs to decide about the release of the goods and means of transport before they actually arrive in the Customs territory. Information presented in the documents when compared to information available to Customs can assist in targeting for special attention.

7.1.1.1. Documents prior to the submission of the goods declaration

In many cases Customs will receive a cargo declaration listing cargo carried by a commercial means of transport arriving in a Customs territory. Such documents do not constitute goods declarations since they do not identify the Customs procedure to which the goods will be submitted - they are simply a notification of goods arriving in the Customs territory. Nonetheless Customs may wish to use them as the first point in the audit chain for control of the goods, to ensure that all goods so reported are subsequently accounted for by receipt of a goods declaration from the importer assigning them to a Customs procedure.

In most cases, such cargo declaration information may be sufficient to allow provisional release of the goods. This means that they may move from their place of arrival and unloading to another approved location, such as the importer’s premises, pending final release after all documents have been submitted and approved, and all duties and taxes paid.

7.1.1.2. Checking the goods declaration and accompanying documentation

(Standards 3.16 and 3.31)

Review of the goods declaration and accompanying documentation is carried out in order to ensure compliance.

Checking the goods declaration is defined in the Kyoto Convention as the action taken by Customs to satisfy themselves that the goods declaration is properly made out, that the supporting documents required are attached and that they fulfil the conditions laid down as to their authenticity and validity. It is done to confirm that all the required information relating to the goods is given and is prima facie acceptable. Necessary details include the importer, description, quantity, valuation[1] , classification, supplier, origin and any licensing requirements. The goods declaration may be either a form conforming to an official model laid down by Customs or, in the case of simplified procedures, the commercial invoice.

The supporting documents include the commercial invoice, certificates of origin, preferential certificates, licenses, special permits and transport documents. For certain commodities (e.g. Chapter 39 H.S.) specific documentation may be required.

7.1.1.3. Other documents

The documents described in Section 7.1.1.2 above are directly linked to the goods declaration. Other documents which may be readily available could provide valuable information for the risk management process; for instance those linked to means of transport, such as container packing lists, or documents related to the trade transaction, like orders, contracts or conditions of payment. Review of these other documents could clarify questions arising from the normal documentary examination.

7.1.1.4. Simplified Procedures

Simplified procedures may be granted to economic operators. These procedures include lodging an incomplete declaration either on a commercial or administrative document, or a goods declaration containing minimal information and accompanied only by those documents which are indispensable for Customs clearance. Goods may go directly to or from the premises of economic operators, provided that they are entered into the records of the company. In all these procedures, a supplementary declaration must be lodged, which may be of a general, periodic or summary nature. Controls have to be applied when the simplified declaration is lodged or the arrival or departure of the goods takes place, to enable officers to decide if a physical inspection is necessary. Retrospective checks may also be conducted when the supplementary declaration is submitted to the Customs office.

7.1.2. Physical examination / Search

(Standards 3.33, 3.34, 3.36, 3.37 and 3.38)

The physical examination of goods and the search of commercial means of transport is undertaken to verify the nature and/or the relationship between the goods/means of transport and the documents presented. In addition Customs administrations may carry out checks to ensure that commercial means of transport fulfil the technical conditions laid down by certain international agreements for the international transport of goods. Where exercised, such physical examinations or searches should be carried out as rapidly as possible.

If the document review indicates that the movement is satisfactory and no discernible risks are present a physical examination is not normally necessary. If the documents however indicate the need for a physical examination of the goods, the extent of this examination will depend on the type of goods and the suspected Customs offence.

There are two levels of physical examination. The first, summary examination, includes examining the outside of containers and of packages for marks and numbers compliance, checking the integrity of any seal, and verifying other details on the goods declaration, where possible without opening the containers or packages. A second, detailed examination, may also be carried out on occasion. This involves opening the container or packages and examining the goods themselves in order to verify their description on the goods declaration as to value, origin, classification and duty rate.

As indicated above, the level and nature of the physical examination of goods should be determined by the information available on the consignment, the Customs procedure under which the goods are declared, provisions in international agreements, and any special nature of the goods (e.g. perishable cargo, live animals, dangerous goods, jewels, antiques, works of art, etc.). Other factors which can influence the decision are urgency and location, as well as the resources available to conduct the examination. Regarding commercial means of transport, Customs should take into account the type of the means of transport and the purpose of the stay in the Customs teritory.

If it is not possible during the physical examination to determine the tariff heading of the goods, samples could be drawn in order to expedite the release of the goods.

In order to increase efficiency in examinations, many administrations use modern technical equipment such as scanners or other specialized detection devices. The use of this type of equipment must be effectively deployed and must be based on selectivity and risk assessment, and where appropriate random controls. This generally forms part of a package of measures taken with a view to enhancing physical control over a greater number of containers while minimizing disruption to legitimate trade. The introduction of such equipment does require a large capital outlay and the process of introducing it impacts on all control sectors and may entail changes to the organizational structure and Customs operational activities. Customs administrations which are already using this type of equipment emphasize that planning for its introduction at an early stage is essential.

7.1.3. Identification of goods

To allow goods subject to certain Customs procedures, e.g. transit, transhipment, temporary admission, warehousing, inward processing, etc., to enter or move through the Customs territory without paying duties and taxes, specific measures are required to ensure their identification.

These measures may include affixing seals, stamps, perforations, identification marks, describing the goods, reference to samples, plans, sketches or photographs.

Any transport unit to which Customs wish to affix a seal directly, must be suitable for this purpose. The requirements for Customs seals are laid down in Standard 16 of Specific Annex E, Chapter 1 on Transit (an explanation of the use of seals as part of a seal integrity program may be found in Section 9).

Where the above is not feasible or sufficient due to specific exceptional reasons, transit procedures may prescribe an itinerary or allow transport of the goods under Customs escort. In the case of inward/outward processing it is possible to fix specific or standard rates of yield of the operation and to require specific documentation on the manufacturing.

In cases of temporary storage, warehouses or free zones, Customs may require the trader to identify the type of goods being stored as well as the location of the storage facility. It should be a supervised facility and where necessary secured by a double lock. Customs retains the right to take stock of the goods periodically.

7.1.4. Persons accompanying goods

Routine controls on persons arriving in a country are generally the responsibility of the Immigration service rather than Customs. Clearly, however, Customs’ risk management will be enhanced by information on persons accompanying goods arriving in a Customs territory.

Customs may therefore seek information on eg travellers and road vehicle drivers, for assessment against risk profiles, with a view to determining the extent and rigour of control on their baggage or goods. This information could include the person’s identity, journey details etc.

For checking travellers and their baggage arriving by air or sea, the control should be facilitated by the use of the dual-channel or red/green system. This system improves the flow of traffic without reducing the effectiveness of the control. Checks on travellers passing through the green channel should be carried out on a selective basis using risk management techniques. Travellers in the red channel have to fulfil all required formalities. Details of this system are contained in Specific Annex J, Chapter 1 on Travellers and the respective Guidelines.

Personal searches for Customs purposes should be carried out only in exceptional cases when the person is identified as a high risk or when there are reasonable grounds to suspect an offence. To preserve human dignity, physical searches should only be carried out by persons of the same gender as the person being searched, and medical examinations only by qualified physicians.

7.2. Audit-based controls

(Standard 6.6)

To manage the worldwide increase in trade and to provide traders with greater facilitation, Customs increasingly rely on audit based controls, using traders’ commercial systems. These controls may vary from a simple post-clearance audit to trader self-assessment.

Audit-based controls do not preclude physical examination of the goods.

To ensure the reliability of the traders’ commercial systems for these purposes, they must follow the generally accepted accounting principles (GAAP) within the country. These principles determine which economic resources and obligations should be recorded as assets and liabilities, which changes in assets and liabilities should be recorded, how the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed, and which financial statements should be prepared.

7.2.1. Post clearance audit

7.2.1.1. Introduction

Post-clearance audit focuses on persons involved in the international movement of goods. It is an effective tool for Customs control because it provides a clear and comprehensive picture of the transactions relevant to Customs as reflected in the books and records of international traders. At the same time it enables Customs administrations to offer the trader facilitation measures in the form of simplified procedures (e.g. periodic entry system).

7.2.1.2. Development of audit programmes

Customs administrations should identify post-clearance audit categories, e.g. importer/exporter, value, foreign trade zone, broker, and carrier manifest, and produce manuals to provide step-by-step guidance for carrying out audits.

7.2.1.3. Selection of persons/companies for audit

The selection of persons/companies for audit should be based on risk profiles (see Section 6.2.2). Audits should generally be conducted for compliance verification purposes in the areas of valuation [2] , origin, tariff classification, duty relief/drawback/remission programmes, etc., but other areas should be targeted as necessary. Depending on the profile of the auditee and its business (e.g. type of business, goods, revenue involved, etc.) the audit may be conducted on a continuous, cyclical or occasional basis.

7.2.1.4. Annual audit planning

Audit planning should take place every year, taking into account the availability of the auditor or audit team, in relation to work in progress and the start of new audits. Each audit area could be assigned standard hours of completion and each available auditor or audit team hour could be calculated in order to determine how many audits can be performed by each auditor or audit team in a given year. Alternatively, each stage of the audit activity could be broken down into time blocks in order to measure productivity against time spent. Both methods allow Customs to allocate resources effectively.

7.2.1.5. Audit process

Post-clearance audit places great emphasis on professionalism in the conduct of a review and the examination of the auditees’ books and records. From pre-audit planning to completion, it is essential to maintain communication and co-ordination with the auditee and with other interested parties in Customs. A report should be produced to ensure that all findings and other relevant issues are fully shared and discussed. Follow-up visits may be needed.

Audit phases

Pre-audit survey : The first step in the audit process is to assess and evaluate the strength and weaknesses within the commercial system of the auditee. Depending upon the size and location of the company to be audited, Customs may choose to perform an on-site survey or request corporate data of the auditee via a background questionnaire.

Such a survey may include gathering data regarding : corporate organization and structure, commodity information, methods of payment, value of commodities, costs associated with commodities, detailed product-cost information/submissions for analysis, related-party transactions, and record-keeping systems. This information may be commercially sensitive and should therefore, as with other information passed to Customs, be treated as confidential.

Initial importer contact : Before carrying out a routine compliance audit, Customs administrations should contact the auditee to request detailed information on the types of records and documentation needed.

These may include : commercial invoices, shipping records, purchase orders, delivery notes, accounts, records, contracts, royalty and marketing agreements, inventory records, journals, ledgers, business correspondence, records of payments.

Initial Audit conference : The initial meeting should be attended by the auditor or audit team, representatives of other Customs areas as needed, and representatives of the auditee (e.g. consultants, accountants, controllers, lawyers). The auditor or audit team will discuss the scope and objectives of the audit.

The auditee has a vested interest in acquiring and maintaining Customs facilitation, and therefore has a responsibility to ensure that the audit is carried out in a professional manner. Representation by a senior member of the company is invaluable to ensure a high level of co-operation. It is at this conference that the auditee should designate a representative to whom all requests for the production of documents (books, records, etc.) should be directed.

Audit questionnaire : Companies may be asked to fill out a questionnaire to obtain information about their structure, related-party transactions, commodities, methods of payment, valuation, manufacturing costs, sourcing and supply. In related-party transactions, the foreign parent company may also be asked to complete a questionnaire focusing on information regarding the relationship between the auditee and its parent company. Completion of such a questionnaire by the foreign parent company would be purely voluntary.

Internal corporate review : Customs administrations should encourage the auditee, where practical, to carry out a preliminary self-evaluation, review and analysis of its operations in relation to the audit.

Audit co-ordination : The auditee should be kept fully informed of any potential findings or other relevant Customs matters throughout the audit.

However, if a significant misrepresentation or potential Customs offence is discovered during the course of the audit, the audit team should communicate and co-ordinate with the appropriate enforcement unit who will decide whether to start a formal investigation.

The Customs administration may make information available to other revenue/tax agencies, in accordance with national laws on confidentiality.

Exit conference : A formal meeting should be held with the auditee to present the findings, and to provide an opportunity for the auditee to give any explanations needed, to assist preparation of the final report.

Final report : Customs administrations should prepare a final report and let the auditee have a copy, provided that national law provides for this. A copy should also be sent to the appropriate Customs office for resolution of any issue which has arisen.

Follow-up Visit : To conclude the audit process, Customs may carry out a follow-up desk audit to ensure that any findings and recommendations for changes are carried out by the trader.

7.2.2. Traders’ systems audit

(Transitional Standard 3.32 and Standard 6.10)

7.2.2.1. Introduction

Customs must carry out traders’ systems audit for control purposes, as a quid pro quo for greater facilitation, which can include a trader’s use of his computer systems for preparation and submission of single or periodic declarations, and for self-assessment.

The audit of traders’ systems aims to provide assurance that a particular activity or process is being carried out properly. Systems audit, as the name implies, means looking at the entire processing cycle rather than just the transactions themselves. It does not rely on a fully visible audit trail and substantive testing of all or a significant number of transactions, as in a manual system. Instead, systems audit uses the inherent properties of computer processing to provide user confidence.

If it can be established that the process itself is reliable and accurate and the controls which govern it are sound and complied with, then safe assumptions can be made regarding the quality of the output and facilitation measures can be granted.

The traditional method of checking the accuracy of the “books” on a transaction basis is not only inappropriate in a computer environment, but also probably impossible. Even advanced methods using file interrogation methodology are of little use unless the auditor or audit team understands how the computer and its associated manual procedures combine to produce the required information. This is where a systems audit is most effective.

The principal steps in a systems audit are as follows :

7.2.2.2. Planning

This initial phase, which is critical to the success and credibility of an audit, will define the direction, scope and ultimate goal against which to measure the effectiveness of the audit.

The planning stage will determine amongst other things :

the objectives;

the scope;

the risk areas;

the conduct of the audit including preliminary and exit meetings with the auditee;

the duration of the audit;

the necessary resources needed to undertake the audit;

the availability of key personnel for interview purposes; and

the extent to which changes to the system or the organization operating it have affected

previous audit knowledge.

When Customs is considering allowing self-assessment, the planning stage will include the establishment of criteria against which a trader’s systems should be judged. These will include his financial soundness and his capacity to :

- distinguish between import, export and domestic consignments, allowing appropriate allocation of duty and taxes,

- allocate and identify consignments to specific Customs regimes,

- identify consignments requiring a licence or permit,

- calculate tax and duty liability on consignments,

- regularly update commodity code and duty rate files,

- cross match commercial part numbers against commodity codes,

- use valuation calculation methods appropriate to the traders business transactions,

- issue management reports providing assurance of completeness of accounting,

- identify outstanding, unreported consignments,

- perform quality cross-matching of commercial transport and accounting information with statistical and accounting information declared to Customs,

- exercise quality control and management checking procedures to ensure the system is functioning correctly,

- retain historical data for long enough to comply with national legal requirements and

- use satisfactory back-up procedures in the event of a system breakdown.

7.2.2.3. Enquiry or fact gathering

By interviewing personnel at all levels in the management chain, both the application users and the data processors, the auditor or audit team can discover how the system actually works. The auditor or audit team will also refer to any material such as user guides, system specifications, which is available. The controls, or lack of them, both internal and operational can then be identified. Often the way the system works is at variance with how it was designed and implemented and how individuals, especially senior managers, perceive it to be working. The auditor or audit team can also deduce much from the state of system documentation, or the lack of it. For example, it may be out of date or incomplete.

7.2.2.4. Recording the system

The auditor or audit team will record the findings either by means of a narrative text or pictorially, by the use of flow diagrams, or both. The diagrams can be at different levels of detail, from a broad overview to actual stages in computer processing. They can cover the document flows before and after computer processing. At this stage the auditee will normally confirm the auditor’s or audit team’s understanding of the system, before moving on to the next phase.

7.2.2.5. Evaluation

By reviewing and evaluating the evidence gathered, the auditor or audit team will begin to discover actual or perceived weaknesses in the internal controls. They can then plan tests to measure the effectiveness of the controls and the credibility of the output.

7.2.2.6. Testing

Testing is carried out to some extent at various stages of the audit, for instance at the fact-gathering stage, by observation and as a result of evaluation. It can be by inspection of records, output reports, etc. or even re-enactment of the processing cycle. Using advanced techniques, i.e. file interrogation software, it is possible to test for unusual combinations of data which could lead to incorrect processing as well as for straightforward situations.

7.2.2.7. Report

The outcome of the audit will usually be a report to senior management which will make recommendations as to how identified weaknesses can be eliminated or controls tailored to be more effective. Controls can even be discarded if they are seen to be irrelevant in a particular situation.

7.2.2.8. Conclusion

Once a system has been recorded and evaluated and any amendments to improve control have been implemented, it can be expected to perform reliably until the next significant change is undertaken. However periodic audits need to be carried out to confirm that nothing has changed and that the controls which have been built in to the system continue to be administered and adhered to. The use of audit packs (a set of pre-programmed audit tests) can be used to automate this process.

7.2.2.9. Development Audit

Traders’ systems audit can also be of great benefit in the development stage of a new application. In the past the need to implement a new application as soon as possible has meant that suitability for audit has been overlooked or only partially addressed. The consequence of poor suitability means at best inadequate or at worst non-existent controls.

Part of the planning cycle of any new application should ensure the inclusion of controls and audit trails. This will enable the auditor or audit team to confirm the processing of data from inception to final recording. It will also enable the auditor or audit team to trace transactions in the reverse direction. If audit considerations are taken into account at the outset of a new system, the subsequent audit and control of that system will be much more effective and trustworthy.

8. Supporting infrastructure

This section contains information on the basic requirements for establishing modern Customs control methods.

The introduction of these methods may need changes to the existing legal, administrative and organizational framework of Customs administrations. The WCO "Customs Reform and Modernisation Programme" gives useful advice in this area.

8.1. Legal Authority

Besides the legal obligations laid down in the Kyoto Convention for companies/persons involved in international trade transactions, Customs administrations need legislation which will allow their officers powers to carry out the controls deemed necessary to ensure compliance with the laws and regulations which they are responsible for enforcing.

The adequacy of powers available to Customs administrations under national law needs to be kept under review and powers should be strengthened where necessary to deal with new threats or facilitation requirements.

As a general guide, national legislation should confer the following powers on Customs for the purposes of controls, although many such powers will only actually be invoked selectively in accordance with risk management :

(a) Examination

(Standard 3.33)

- to examine goods, means of transport and persons in a manner to be decided by the Customs administration with a view to using the most appropriate control methods,

(b) Right of access

- to access premises, vehicles, vessels or aircraft of companies/persons involved in international trade transactions, and

- to access all business records, including computer systems, relating to international trade transactions. The right of access includes the right to stop a person or vehicle to conduct a search.

(c) Sampling

(Standard 3.38)

- to take representative samples of goods at importation, post-importation and at export.

(d) Detention

- to detain goods imported or intended for export to establish their compliance with Customs laws and regulations.

(e) Post-clearance audit

- to conduct a retrospective audit of the business records, including bank records and computer systems, of any person or company involved in an international trade transaction.

(f) Exchange of information

(Standards 6.7 and 7.4)

- to exchange and share information on international movements with other Customs administrations for Customs control purposes.

(g) Information retention and submission

- to require the person/company involved in an international trade transaction to submit the information necessary, as previously defined and publicised by Customs, for the completion of Customs formalities according to the stipulated procedure and control method.

- to require that this information be kept by the person/company involved in the international trade transaction according to the generally accepted accounting principles within the country concerned,

- to allow for the periodic lodgement of declarations and to set up systems-based controls.

(h) Facilitation

- to ascertain the admissibility of movements in advance of their arrival or departure, e.g. pre-classification, pre-valuation or advance passenger information, and any exemption from the general obligation to produce the goods to Customs, e.g. provisional pre-arrival release of cargo.

(i) Authorisation to assist

(Standard 3.37)

- to authorise persons or third parties to assist Customs in performing certain Customs control functions.

If there are reasonable grounds for establishing a Customs offence, the Customs investigation unit should be brought in, since it has the powers necessary to carry out a formal investigation.

8.2. Organisation

Effective Customs control is a major feature of a modern Customs administration. It depends on a well-established control organization based on good co-operation and a comprehensive information flow between the various Customs units, as well as on having a risk management strategy to make the best use of available resources.

8.2.1. Resources

Customs should identify human, technical and financial resource needs for implementing control programmes by assessing and analysing current and potential international trading activities in their respective countries or regions.

8.2.2. Management Philosophy

Customs should develop an organizational risk management philosophy with the support of senior management. This could be done by training, education, and briefing of senior Customs management. The designation of a senior manager to sponsor the risk management initiative would be helpful. Building on the organizational philosophy, Customs should develop and document a corporate policy and framework for managing risks, which should receive endorsement by the senior management and be implemented throughout the organization.

The corporate policy may include the objectives and rationale for managing risk, the links between the policy and the management/strategic plan, the extent or range of issues to which the policy applies, guidance on what may be regarded as acceptable risk, who is responsible for managing risks, the support/expertise available to assist those responsible for managing risks, the level of documentation required and the plan for reviewing organizational performance.

8.2.3. Degree of Centralisation

Differences in countries’ traditions, legal procedures, volumes of trade, national priorities, geography and aims make it impractical to prescribe a uniform organizational structure for all Customs administrations. The deployment of resources devoted to risk management should be determined by the kind of controls to be employed and by the location of the control procedure. Such locations need not necessarily be at the frontiers.

The main difference in Customs administrations’ organization lies in their degree of centralisation. Centralisation may result from the need to limit dispersal of resources and to ensure the integration of risk management in the overall planning and management process. Decentralisation may result from the need to motivate local Customs staff by increasing their responsibility.

The optimal organization is balanced between centralisation, where Customs sets up a central office responsible for the risk management process and the Customs control programme, and decentralisation, where individual Customs officers have responsibility for the testing of risks, identification of targets and building of expertise in areas which require additional focus.

8.2.4. Headquarters

In all countries, the Customs Headquarters necessarily assumes overall responsibility for the risk management process.

The size and composition of the central risk management unit will vary from country to country depending on the national requirements and the degree of centralisation, but should always be staffed by officers with a variety of backgrounds, [e.g. inspectors, auditors, investigators, program analysts, etc.]. They should return periodically to their respective local offices to update themselves on any recent developments which may not have been brought to the attention of Headquarters.

Once the policy and framework for the risk management process have been established, the Headquarters should develop and implement an infrastructure to ensure that risk management becomes an integral part of the planning and management process of the entire Customs organization.

This may involve establishing a team of senior management personnel to be responsible for internal communications, raising awareness about managing risks, acquiring risk management skills, and developing the skills of staff through education and training, ensuring appropriate recognition, rewards and sanctions and establishing performance management processes.

The central risk management unit will carry out high-level risk assessment for the entire Customs territory, produce strategic information reports for local Customs offices and audit units; act as a point of contact with other agencies and international bodies; and interface with local Customs risk management teams and audit units.

The existence of a centralised intelligence unit would enable the collection and analysis of information which can be used to develop risk assessments on commodities, importers, industries, sources, etc. This would allow for more efficient targeting of shipments for examination at importation. This unit would also be responsible for developing information sharing networks with other Customs administrations and throughout the entire law enforcement community.

The establishment of properly trained audit units would enable officers to visit the premises of the auditee to verify declarations.

8.2.5. Local Customs offices

The main functions of the local offices are to ensure the effective operation of the risk management process by carrying out local risk assessment, producing operational information for local Customs officers responsible for import/export clearance, and for inspection teams, audit units and investigation units, interfacing with the central risk management unit.

Teams of Customs officers at local offices/ports specialising in the analysis of goods declarations and commercial documents such as invoices and transport documents, can target high risk consignments on which a physical examination should be made.

8.3. Procedures

Customs administrations should develop procedures to implement control methods to ensure uniform application throughout the Customs territory. In doing so, they should try to shift the emphasis from exclusive use of movement controls to greater use of audit-based controls, with a view to :

reducing delays during the movement of goods/persons,
increasing the use of periodic lodgement of declarations,
encouraging trader self-assessment,
enabling retention by the trader (instead of Customs) of accompanying official and commercial documents,
increasing the use of advance information submission and submission by electronic means,
increasing the use of the trader's commercial system and records instead of requiring the maintenance of designated Customs records,
encouraging greater compliance with Customs laws thereby giving the trading community a greater stake in working in partnership with Customs to reduce risk levels.

In order to optimise the application of modern control methods the use of automation is recommended.

Customs administrations should put in place appropriate analysis and review mechanisms for ensuring the effectiveness of the control procedures implemented throughout the Customs territory (see Section 6.2.4 on “Compliance measurement”). Procedures must be kept under review and adjusted, if necessary, to meet evolving demands.

8.4. Human Resource Development

Customs controls should be carried out by professionally trained Customs personnel. With the increased use of electronic record-keeping and the sophistication of global trade, the need for higher standards of training becomes increasingly important. Customs administrations should be committed to providing control officers with the levels of training necessary to equip them to perform their duties. The ability to draw on the following skills is important and will improve efficiency and effectiveness :

accounting techniques and principles, including GAAP,
auditing standards and procedures,
international trade/business including banking procedures,
Customs laws, regulations and procedures (valuation codes, origin, etc.),
electronic record-keeping and computer systems (I.T., EDI, etc.).

Customs recruitment and training should address these needs. The WCO has prepared a number of training modules which will be of value to Customs administrations in organising the training of its staff.

8.5. Juxtaposed Customs offices

(Transitional Standard 3.4 and 3.5)

The setting up of juxtaposed national Customs control offices can facilitate checks at the common frontier between two adjoining States. These offices, initially established to control road traffic, are becoming increasingly used in other circumstances too. The principle of juxtaposed controls is easily adapted to the environment of rail, inland waterways and air and sea traffic.

The establishment of juxtaposed national Customs control offices is generally provided for in bilateral agreements between adjoining States. For Customs, the advantages of juxtaposed national control offices are the following : more effective control of frontier traffic, mutual reduction of operating expenses and a better appreciation of each other’s Customs priorities, all creating increased co-operation in both facilitation and control.

However, still greater benefits could be obtained if single control were introduced on a more widespread basis in juxtaposed national control offices, at least for certain Customs operations, such as the control of goods in transit.

In some countries, travellers may be checked only by the authorities of the country of entry (Police, then Customs control) in juxtaposed national control offices, usually when the authorities of the country of exit have decided not to carry out their own controls as a matter of course.

8.6. Mutual administrative assistance

(Standard 6.7)

The increase in international trade and the newly developed methods of Customs control have highlighted the shortcomings of a system in which controls are based solely on goods declarations and supporting documents submitted after the goods’ arrival in the Customs territory. It may be desirable for Customs to receive such information at an earlier stage and to have access to further information, not available in their own territory.

To that end, Customs look to other Customs administrations to obtain pre-arrival information on goods bound for their Customs territory and for other types of assistance to ensure the proper application of Customs laws (including the collection of Customs duties) and to prevent, investigate and combat Customs offences. This is known as mutual administrative assistance.

Once the necessary basis for mutual administrative assistance is in place, the information exchanged can also assist in risk management. The information provided by other administrations either spontaneously or on request, is an extra and sometimes very specific source on which to base risk analysis.

Other provisions in mutual assistance agreements can be of direct benefit to control efforts where another Customs administration carries out certain controls on behalf of the requesting administration (e.g. verification of certificates of origin or transit documents, and cross-country audits,), or provides officials to assist in controls carried out abroad or to act as experts or witnesses. In case of juxtaposed offices Customs may even be authorised to assess and collect import duties and taxes on behalf of the other State (see Section 8.5).

The WCO has recently adopted a revised model bilateral agreement for the proper application of Customs law and for the prevention, investigation and combating of Customs offences. The Council has recently recommended this model as the basis for negotiations between Customs administrations (see Appendix I). The WCO also has a multilateral Convention on mutual administrative assistance for the prevention, investigation and repression of Customs offences (the "Nairobi Convention", June 1977).

9. Security and Facilitation of the international Supply Chain: Seals and their application for security purposes

Minimum standards for customs seals used in the application of Customs transit are laid down in Standard 16 to Specific Annex E, Chapter 1. This section of the Guidelines is intended to provide information to administrations on the various options of seals available and their use for security purposes.

9.1. Introduction

In a climate of increased focus on the security of goods moving in the international supply chain, a major concern has been the vulnerability of the goods container as a potential means of introducing high risk consignments into a country. Approximately 90% by volume of the world’s trade moves by containers – many of which are sea containers. High security manual or mechanical seals can play a significant role in a comprehensive container security program. But it is important to recognize that container security starts with the stuffing* of the container, and that seals do not evidence or guarantee the legitimacy of the container load.

Some administrations have developed seal integrity programmes, which encourage high security seals to be applied at the point of stuffing of the container. Such programmes include procedures for recording the affixing, changing and verification of seal integrity at key points, such as a modal change, to ensure a fully secure movement. A sequential analysis of possible elements of a seal integrity programme is annexed (see Appendix III, 15.3). In keeping with a basic risk assessment principle, that of offering greater facilitation to compliant traders, such seal integrity programmes are part of wider supply chain integrity or authorised programmes that provide facilitation benefits, such as ‘green lane’ facilities, to the importer. Such security programmes are not restricted to goods moving under Customs transit, but apply to container movements in general, irrespective of the Customs procedure used.

9.2. Principal types of seal

9.2.1. Mechanical seals

There are three major categories of mechanical seals – indicative, security and high security, which are intended to detect tampering or entry through the container doors. Indicative seals are constructed and manufactured of material that can be broken easily by hand or simple snipping tool or shear. This type of seal is currently used in many Customs administrations.

Security seals, however, add physical protection to tamper detection and are relatively more difficult to defeat. High security seals offer greater protection against intrusion and must

be removed by quality bolt or cable cutters. There are several types of high security seals, including bolt seals that can be either hardened or flexible, and cable seals.

The International Organization for Standardization (ISO) has developed an international standard for mechanical seals. At the time of writing (December 2003) these requirements are available as a Publicly Available Specification (PAS)* * – reference 17712. It is expected that the PAS could be confirmed as an International Standard (IS) within the next year or so.

In the Customs context, the ISO standard lays down particular criteria for customs seals such as independent testing and appropriate identification markings. Significantly, only seals classed as security or high security according to a number of specific tests are acceptable as customs seals under this PAS.

9.2.2. Electronic seals (e-seals) and other electronic security devices

Electronic seals, or e-seals, tend to combine physical seals and radio frequency identification (RFID) components, which can be passive or active. “Passive” e-seals do not have their own energy source. They can report whether they are intact or not when interrogated by a reader. “Active” e-seals have their own energy source and can thus detect tampering when it occurs and add it to a time log of events. If equipped or interfaced with Global Positionning System (GPS), they can also log the location. Active e-seals must also be interrogated by readers.

Container Security Devices (CSDs) also use RFID technology. Affixed to the the container rather than to the door locking mechanism where seals are affixed, such devices are also intended to detect intrusion through the container doors. CSDs also have to be interrogated by either fixed or handheld readers.

At present there is no international standard for e-seals or CSDs and they not widely used by customs administrations or private industry, inter alia, because of the current lack of global frequencies and technical specifications for e-seals. ISO is working towards developing a standard for e-seals that may also apply to CSDs.

Pilot projects to determine what role, if any, e-seals and/or CSDs may play to meet identified and agreed container security requirements are in progress in a number of administrations and these Guidelines will be updated from time to time to reflect developments.

10. Customs/Trade Co-operation

(Standards 6.8, 7.3, 8.5 and Chapter 9)

In a modern Customs administration there are a wide variety of complex control tasks to undertake and, increasingly, resources are limited. The Customs response has been to apply selection, targeting and risk management to maximise the effectiveness of these resources.

The increasing use of risk management techniques coupled with demands for greater facilitation, good communication, consultation and co-operation between the trade and Customs administrations is vital to achieve a satisfactory balance between effective control and facilitation. Customs administrations see legitimate traders as partners in this process.

It is important that all interested persons should be able to obtain information from Customs about procedures and control requirements (see General Annex, Chapter 9). Sources may include the Customs tariff, official gazettes, bulletins and notices. Customs should therefore ensure that these are readily available at their offices. Additionally persons may need specific information concerning a particular operation and the Customs administration should aim to supply this as completely and accurately and as soon as possible.

Customs administrations should also consider modern techniques for the dissemination of information, like the Internet with its World-Wide-Web (WWW). As an example under http://www.gov.sg/customs/ the Singapore Customs administration provides information on duty and tax rates, documentation, valuation, clearance procedures, security requirements and addresses of Customs offices.

Many Customs administrations now maintain formal consultative committees with traders, carriers, agents, banks, port and airport operators and their representative organisations. The role of such committees typically includes the discussion of projected changes in control requirements, identification of difficulties experienced by declarants in complying with actual or proposed procedures and arriving at mutually acceptable solutions. In addition some Customs administrations have introduced the idea of “client-co-ordinators” who keep contact with individual companies.

There should be continuous collaboration at all levels; at local/regional level between Customs officials and business and at national level between Customs administrations and business.

For the Customs administration such collaboration has the advantage of improving its knowledge of trading practices. Greater familiarity with the conditions of international trade means more effective risk management

In this spirit Customs administrations may consider inviting business representatives to spend short periods with the Customs service as a means of familiarising themselves with the regulations.

Co-operation is particularly valuable to a Customs administration in drug interdiction, CITES, dangerous goods, and hazardous waste control. It is increasingly encouraged and sustained through a range of Memoranda of Understanding in which trade organisations, nationally and internationally, sign general undertakings with the WCO and national Customs administrations, backed by detailed guidelines, specifying the practical improvements in information exchange, training and communications arrangements appropriate to each trade sector.

MOUs are also concluded in Customs-to-company memoranda and guidelines. The benefits to both Customs administration and the trade organization can be many; for Customs administrations they provide a further valuable source of information. In return, traders with a good record of co-operation may expect less Customs intervention .

11. Conclusions

Customs administrations should aim for a reasonable and equitable balance between ensuring compliance and minimising disruption and costs to legitimate trade and the public. Facilitation and control need not conflict. If managed well, facilitation can enhance the success of control procedures.

Customs administrations are encouraged to implement control procedures based on the use of risk management and profiling techniques as a means to identify reliable operators/persons who may then benefit from greater facilitation as opposed to those operators/persons which require higher levels of control.

Risk management is a basic principle of modern Customs control methods. It allows optimum exploitation of Customs' resources without threatening the effectiveness of controls, while relieving a majority of the trade/public from excessive bureaucratic constraints.

Procedures based on risk management techniques concentrate controls on areas of highest risk while leaving the bulk of goods/persons to pass relatively freely through Customs.

Customs administrations should put in place analysis and review mechanisms to ensure the effectiveness of control procedures throughout the Customs territory. Procedures must be kept under review and adjusted if necessary to meet evolving demands.

12. Example of a Customs control process

12.1. High-Level Scenario of a Customs control process - Diagram

12.2. Low-Level Scenario of a risk management process - Diagram

Reference : Based on Australian/New Zealand Standard “Risk management”, AS/NZS 4360:1995 p.11

12.3. Low-Level Scenario of a post-clearance audit - Diagram

13. Index

ACTION/DEFIS........................................... 6

Compliance................................... 12, 14, 32

Compliance measurement.................. 12, 32

Customs declaration.................................. 20

Customs procedure............... 7, 8, 19, 21, 41

Customs Reform and Modernization Programme.... 28

Customs seal............................................. 21

Documentary examination........................ 19

EDI............................................................. 32

Enforcement.............................................. 14

Facilitation.................................................. 36

Generally accepted accounting principles 22, 29

Identification of goods............................... 21

Information flow......................................... 29

Information technology.......................... 5, 18

Internet....................................................... 34

Investigation. 8, 19, 24, 29, 31, 33, 41, 42, 43

Manifest..................................................... 19

Movement controls.................................... 19

Mutual administrative assistance.......... 8, 33

Resources................................................. 29

Risk analysis................................................ 8

Risk area......................................... 8, 11, 12

Risk assessment................................... 8, 41

Sampling.................................................... 28

Selectivity.................................................. 12

Self assessment.......................................... 5

Simplified procedures................................ 20

Targeting.................................................... 12

Trade facilitation...................................... 5, 6

Training.............................. 30, 31, 32, 35, 41

Voluntary compliance.................................. 5

World Customs Organization........ 20, 23, 42

14. Bibliography

1. CCC - Handbook on the "International Convention on the simplification and harmonization of Customs procedures" - Kyoto, 18 May 1973, 1st edition, lastly amended 1990,

2. WCO - Customs Technique, Compendium of Recommendations, Resolutions, Norms, Glossary, Guidelines and Model legislation, lastly amended 1995,

3. WCO - Customs Reform and Modernization programme (CRM), Doc. 39.806

4. WCO - Manual on measures to combat commercial fraud, Doc. 38.080 Rev.1, lastly amended 1996,

5. CCC - Handbook on Customs Valuation Control - GATT Agreement,

6. CCC - Handbook on Container Control

7. CCC - Report on the 7th meeting of the joint expert group on Customs control, Doc. 35.918,

8. WCO - Manual on Risk assessment, profiling and targeting, Doc. 40.118,

9. Risk management - Australian/New Zealand Standard (AS/NZS 4360:1995),

10. Guidelines on risk analysis in Customs controls, European Commission, DG XXI, Doc. XXI/96/93 Rev.3.

11. International Convention on Mutual Administrative Assistance for the prevention, investigation and repression of Customs offences, Nairobi, 9 June 1977

12. WCO - Glossary of international Customs terms, 1995

13. WCO - List of training modules available at the WCO Secretariat

14. Advance Passenger Information (API) - Joint IATA/ WCO Guidelines for Customs administrations and air carriers

15. WCO Guidelines which may be applied to simplify and harmonize Customs formalities in respect of consignments for which immediate clearance is requested, 1994

16. WCO - Good Classification Work Model, Annex to Doc. 40.407

15. Appendices

15.1. Appendix I : CCC Recommendation on MAA

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL *

CONCERNING BILATERAL AGREEMENTS

ON MUTUAL ADMINISTRATIVE ASSISTANCE

THE CUSTOMS CO-OPERATION COUNCIL,

CONSIDERING that offences against Customs law are prejudicial to their economic, commercial, fiscal, social and cultural interests,

CONSIDERING the importance of accurate assessment of Customs duties and other taxes collected at importation or exportation and of ensuring proper enforcement of measures of prohibition, restriction and control,

RECOGNIZING the need for international co-operation in matters related to the application and enforcement of their Customs laws,

CONVINCED that action against Customs offences can be made more effective by close co-operation between their Customs Administrations based on clear legal provisions,

HAVING REGARD TO the relevant instruments of the Customs Co-operation Council, in particular the Recommendation on mutual administrative assistance of 5 December 1953, and Article 11 of the international Convention on mutual administrative assistance for the prevention, investigation and repression of Customs offences (Nairobi, 9 June 1977),

HAVING REGARD ALSO TO international Conventions containing prohibitions, restrictions and special measures of control in respect of specific goods,

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions should :

1. conclude bilateral agreements on mutual administrative assistance for the proper application of Customs law, and for the prevention, investigation and combating of Customs offences,

2. use the Customs Co-operation Council's Model Bilateral Agreement as a basis for the negotiation of any such Agreement,

3. use the Customs Co-operation Council as an intermediary, as necessary, for the conclusion of any such Agreement,

REQUESTS Members of the Council and members of the United Nations Organization or its specialised agencies, and Customs or Economic Unions which accept this Recommendation to notify the Secretary General of their acceptance, and of the date from which they will apply the Recommendation and the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members. He will also transmit it to any Customs administrations of non-Members and any Customs or Economic Unions which have accepted this Recommendation.

15.2. Appendix II : Methods of Application

15.2.1. Risk Management (United States of America)

Risk Management

(United States of America)

15.3. Appendix III : A sequential analysis of possible elements of a seal integrity programme

Importance of specifying security relationships

Greater clarity and consensus about the relationships among the parties in the movement of secure containerized goods, coupled with consistent application and enforcement of those relationships, will provide multiple benefits to all of those parties. These benefits include:

Improved security against acts of terrorism that exploit the global trade in goods.
Reduced risk of economic hardship caused by disruptions to or closures of trade in response to terrorist acts.
Improved security against theft and diversion of cargo, with consequent reductions in direct losses and indirect costs, such as insurance.
Improved security against illegal transport of materials such as narcotics and weapons, and of persons.
Improved security against the illegal movement of “black market” and “gray market” trade goods.
Reduced risk of evasion of duties and taxes
Increased confidence in international trading systems by current and potential shippers of goods.
Facilitation dividends, such as a reduced number of examinations (reduced border times) and access to simplified procedures.

Responsibilities along the chain of custody

A. Cross-cutting responsibilities

There are responsibilities and principles that apply throughout the life cycle of a containerized shipment of goods.

The emphasis is on the relationships among parties upon changes in the custody or possession of the container. That emphasis does not reduce and should not obscure the fundamental responsibility of the shipper for the safe and secure stuffing and sealing of the container.

Each party in possession of the container has security responsibilities while cargo is entrusted to them, whether at rest at a node or while moving between nodes. Each party with data that needs to be filed with the government for customs and security screening purposes has responsibilities. Those responsibilities include:

Protecting the physical goods from tampering, theft, and damage
Providing appropriate information to government authorities in a timely and accurate manner for security screening purposes
Protecting the information related to the goods from tampering and unauthorized access. This responsibility applies equally to times before, during, and after having custody of the goods.

Security seals are an integral part of the chain of custody. The proper grade and application of the security seal is addressed below.

Security seals should be inspected by the receiving party at each change of custody for a cargo-laden container. Inspecting a seal requires visual check for signs of tampering, comparison of the seal’s identification number with the cargo documentation, and noting the inspection in the appropriate documentation.

If the seal is missing, or shows signs of tampering, or shows a different identification number than the cargo documentation, then a number of actions are necessary:

The receiving party must bring the discrepancy to the attention of the party tendering the container and the shipper
The receiving party must note the discrepancy on the cargo documentation
The receiving party should notify customs or law enforcement agencies, in accordance with national legislation.
Where no such notification requirements exist, the receiving party shall refuse custody of the container pending communication with the party tendering the container and until such discrepancies can be resolved. Once discrepancies have been resolved, the receiving party shall affix a security seal to the container and note the particulars, including the new seal number, on all pertinent cargo documentation.

Security seals may be changed on a container for legitimate reasons. Examples include inspections by an exporting Customs administration to verify compliance with export regulations; by a carrier to ensure safe blocking and bracing of the lading; by an importing Customs administration to confirm cargo declarations; and by law enforcement officials concerned with other regulatory or criminal issues.

If public or private officials should remove a security seal to inspect the lading, they will install a replacement that meets the quality specified in paragraph 2, item B (see below), installing it in a manner that meets the requirements specified below, and note the particulars of the action, including the new seal number, on the cargo documentation.

B. Stuffing site

The shipper/consignor is responsible for securely stuffing the container and for the accurate and complete description of the cargo. The shipper is also responsible for affixing the cargo security seal immediately upon the conclusion of the stuffing process, and for preparing documentation for the shipment, including the seal number.

The cargo security seal should be compliant with the definition of high security mechanical seals in ISO Publicly Available Specification 17712. The seal should be applied to the container in a manner that avoids the vulnerability of the traditional container door handle seal location to surreptitious tampering. Among the acceptable ways to do this are alternative seal locations that prevent swivelling of an outer door locking cam or the use of equivalent tamper evident measures, such as cable seals across the door locking bars.

The land transport operator picks up the load. The transport operator receives the documentation, inspects the seal and notes the condition on the documentation, and departs with the load.

C. Intermediate terminal

If the container movement is via an intermediate terminal, then the land transport operator transfers custody of the container to the terminal operator. The terminal operator receives the documentation, inspects the seal and notes the condition on the documentation. Normally, the terminal operator sends an electronic notification of receipt (status report) to other private parties to the shipment. The terminal operator prepares or stages the container for its next movement, which could be by road, rail, or barge.

Similar verification and documentation processes take place upon pickup or departure of the container from the intermediate terminal.

It is rare that public sector agencies are involved in or informed about intermodal transfers at intermediate terminals.

D. Loading ocean terminal

Upon arrival at the loading ocean terminal, the land transport operator transfers custody of the container to the terminal operator. The terminal operator receives the documentation and normally sends an electronic notification of receipt (status report) to other private parties to the shipment. The terminal operator prepares or stages the container for loading upon the ocean vessel.

The carrier or the ocean terminal as agent for the carrier inspects the condition of the seal, and notes it accordingly; this may be done at the ocean terminal gate or after entry to the terminal but before the container is loaded on the ship.

Public agencies in the exporting nation review export documentation and undertake necessary export control and provide safety certifications.

The Customs administrations that require advance information receive that information, review it, and either approve the container for loading (explicitly or tacitly) or issue “do-not-load” messages for containers that cannot be loaded pending further screening, including possible inspection.

For those countries that have export declaration and screening requirements, the carrier should require from the shipper documentation that the shipper has complied with the relevant requirements before loading the cargo for export. (The shipper/consignor is, however, responsible for compliance with all prevailing documentation and other pertinent export requirements.) Where applicable, the ocean carrier must file its manifest information to those importing Customs agencies that require such information. Shipments for which “do-not-load” messages have been issued should not be loaded onboard the vessel pending further screening.

E. Transhipment terminal

The transhipment terminal operator shall inspect the security seal between the off-loading and re-loading of the container. This requirement may be waived for transhipment terminals which have security plans that conform to the International Ship and Port Facility Security Code ( ISPS Code produced by the International Maritime Organization).

F. Off-loading ocean terminal

The receiver/consignee usually arranges for a Customs broker to facilitate clearance of the shipment in the off-loading ocean terminal. Generally, this requires that the cargo owner provide documentation to the broker in advance of arrival.

The ocean carrier provides advanced electronic cargo manifest information to the terminal operator and to the importing Customs administration as required.

Customs may select containers for different levels of inspection immediately upon offloading or later. Customs may inspect the condition of the seal and related documentation in addition to the cargo itself.

If the container is to travel under customs control to another location for clearance, then Customs at the offloading terminal must affix a Customs seal to the container and note the documentation accordingly.

The receiver/consignor or Customs broker pays any duties and taxes due to Customs and arranges the Customs release of the shipment.

Upon pickup for departure from the ocean terminal, the land transport operator inspects and notes the condition of the seal, and receives documentation from the terminal operator.

G. Intermediate terminal

The processes in intermediate terminals in the importing country are analogous to those in intermediate terminals in exporting countries.

H. Unloading site

Upon receipt of the container, the consignee or deconsolidator inspects the seal and notes any discrepancy on the documentation.

The consignee unloads the container and verifies the count and condition of the lading against the documentation. If there is a shortage, damage, or an overage discrepancy, it is noted for claims or insurance purposes, and the shipment and its documentation is subject to audit and review.

If there is an anomaly related to narcotics, contraband, stowaways, or suspicious materials, the consignee Customs or another law enforcement agency must be informed.

Technology Evolution

The above description of roles and responsibilities relies heavily on a process of checking mechanical seals that are affixed by the shipper to a container. This reflects the current state of commercially deployed technology. Some governments and private parties are exploring the suitability of new technologies that may provide enhanced container security capabilities. If such technologies are approved and deployed, then procedures and requirements based on checking traditional mechanical seals should also evolve to reflect those technologies, so as to avoid redundant seal verification requirements.

___________________

[1] For the purpose of Customs Valuation Control the WCO has produced a Handbook which might be of value to Members to obtain further and detailed information on this matter

[2] For the purpose of Customs Valuation Control the WCO has produced a Handbook which might be of value to Members to obtain further and detailed information on this matter.

* In order to differentiate between the process of loading the container with shipments- a process known in the international liner industry as ‘stuffing’ – and the placement (or loading) of the container onto a conveyance for transportation, the term’stuffing’ throughout this document describes the first situation, and the term’loading’ describes the latter.

* * The ISO PAS is an agreement between technical experts in an ISO working group that has been approved by a majority of those members of the relevant ISO committee voting. It can be reviewed twice over a period of six years and must then either be confirmed as an ISO International Standard (IS) or withdrawn

* Customs Co-operation Council (CCC) is the official name of the World Customs Organization (WCO).

Chapter 7 - Application of Information Technology

CHAPTER 7

APPLICATION OF INFORMATION TECHNOLOGY

Legal Text

7.1. Standard

The Customs shall apply information technology to support Customs operations, where it is cost-effective and efficient for the Customs and for the trade. The Customs shall specify the conditions for its application.

7.2. Standard

When introducing computer applications, the Customs shall use relevant internationally accepted standards.

7.3. Standard

The introduction of information technology shall be carried out in consultation with all relevant parties directly affected, to the greatest extent possible.

7.4. Standard

New or revised national legislation shall provide for:

electronic commerce methods as an alternative to paper-based documentary requirements;
electronic as well as paper-based authentication methods;
the right of the Customs to retain information for their own use and, as appropriate, to exchange such information with other Customs administrations and all other legally approved parties by means of electronic commerce techniques.

Guidelines to Chapter 7

Guidelines to the legal text

Chapter 7

APPLICATION OF INFORMATION AND COMMUNICATION TECHNOLOGY

1. Management Summary

1.1. Background

The purpose of these Guidelines is to focus the attention of Customs administrations on the impact of Information and Communication (IC) technologies on their business They outline how Customs can use these technologies to enhance program delivery and plan improvements in their services to clients and trading partners. They do not pretend to provide hardware and/or software solutions.

The wide-spread use of IC technologies, or electronic service delivery, had its roots in the early 1960’s, when many businesses began to develop private, closed networks using electronic data interchange (EDI), and large banks started to implement electronic funds transfer (EFT) systems. Most of these early applications concentrated on automating existing business processes. It was natural that Customs, with their key responsibilities for goods control, revenue collection and border enforcement, should have used automation systems, initially, to control inspection and examination of goods, and collection of associated revenues.

Customs administrations then began to use IC to shift the focus of inspection from goods to relevant information on paper-based import and export declarations. They found they could also reduce obligations on traders to submit numerous copies of “original” paper documents, as key information was being captured by an automated system, which could not only validate and process data but also stock them at much below the cost of storing paper records.

Nevertheless, in the then rudimentary state of IC technologies, Customs still needed the physical presentation of paper by declarants or their representatives, at a place and time convenient to, and specified by, Customs.

The later use of enhanced IC technologies, originally by business, and shortly afterwards by Customs administrations, and the possibility of instant, direct communication, finally displaced paper documentation and transformed procedural structures and rules. Customs could now meet their own needs and those of their commercial trading partners by separating release from clearance. EDI transmissions, received well in advance of the goods could give Customs all necessary physical control information. IC technologies enabled them to postpone the collection of fiscal data and associated revenue for days or weeks after the physical release of the goods at export or import.

While many Customs administrations were beginning to apply IC technologies to support administrative and operational needs the United States Defense Department established the Internet as a closed network for secure communications. This evolved, rapidly, into an open (public) network (the WWW, or World Wide Web) with cheap, universal access.

These Guidelines present the Internet as one of a range of IC technological resources that a Customs administration can use to meet its business needs.

They deal with “e-commerce” as “the process of electronically exchanging information to facilitate the trade of goods and services, and using appropriate technologies to integrate business procedures.”

E-commerce can be more broadly defined as the delivery of information, products, services and payments using any kind of automated media, ranging from telephones to computers and beyond. While, in more technical terms, e-commerce can be seen as commercial activity conducted over closed or open networks linking electronic devices, usually computers, it has now acquired a wider sense of the use of electronic technology for all business needs.

Given their close operational links to national trading communities the phenomenal growth of e-commerce has put strong pressures on Customs administrations to use IC technologies to:

≡ improve revenue collection and trade policy administration at import and export;

≡ offer accelerated release of export and import consignments and other premium procedures to those clients they identify as most reliably compliant and so presenting least risk to revenue collection and other Customs responsibilities;

≡ respond to governmental and public concern for effective controls of prohibited goods, endangered species, intellectual property rights, etc; and

≡ ensure integrity and effectiveness in handling the movement of goods and passengers.

Modern Customs administrations need to respond to, and assist, a wide range of international trade innovations based on IC applications, including express delivery and other global multi-modal delivery services, and an increasing network of global supply, production and distribution systems relying on just-in-time logistical networks.

Keeping Customs practice in tune with such commercial developments will call for equally innovative changes in basic administrative management.

While many administrations are either using, or plan to use IC technologies to enhance their operations, most existing Customs procedures are still based on receiving the electronic equivalents of old documentary exchanges. Paper declarations have simply been replaced by EDI messages.

Administrations currently considering either the development or the enhancement of IC applications should be able to move a further step forward by taking account of the fact almost all the data needed by Customs are already present in the commercial information systems that have been used to service the business transaction.

They should determine how far their own needs for control data can be met from the information systems of their trading partners, once these have been audited to ensure that they are secure, can reproduce data accurately and have proper data retention and archiving facilities.

If, as is now commonplace, these IC systems are shown to provide more accurate and readily usable data for Customs purposes than traditional paper-based exchanges, Customs administrations will be able, increasingly, to rely on audited automated systems of accredited commercial trading partners for their own revenue, trade and other data needs.

Most Customs administrations are currently obliged to handle a growing workload in processing goods and passengers with only existing or even reduced staffs. Many have already proved that recourse to IC technologies has improved the quality of information capture and handling and freed scarce resources to concentrate on primary enforcement tasks, especially identifying and processing suspect consignments and persons.

These Guidelines recommend that Customs using IC technologies should observe relevant international standards. It is essential any such standards actually employed in automated applications should be easily identifiable and available for any necessary exchanges with other administrations.

Before adopting any IC application administrations should consult potentially affected and interested parties, including especially other government departments and traders, carriers, agents, port and airport operators, to ensure the chosen solution will be easily usable by all concerned. Continued consultation, with such partners, at all later stages of system development, will enable and encourage them to design and adapt their own systems to make and offer the best use of Customs innovations.

While the primary purpose of this Guideline is to focus the attention of all Customs administrations on the use of IC technologies in their own operations, administrations will need to follow, and take full account of, relevant parallel applications, linked to rapidly changing business practices, that have had, and will continue to have, profound world-wide effects on day to day government.

1.2. Future Trends

While, in the past, the WCO has concentrated its attention on the use of IC technologies in conventional Customs operations, recent discussions have begun to explore their effect on the total Customs function.

It is now obvious that Customs will have to move away from the “one size fits all” mentality attaching to electronic data exchange (EDI), the initial medium for automated commercial data collection and communication, towards an open system philosophy in which they will be able to exchange information, electronically, by a range of different means with employees, commercial and non-commercial clients and, nationally and internationally, with other relevant government departments and agencies.

In planning such a migration Customs will have to take account of the fact that between one third and one half of all international trade now consists of intra-company transactions, in which materials, components, and partly processed and/or finished products, are being moved across national frontiers, within integrated commercial management systems and increasingly diminishing and demanding time-frames.

Other business sectors, engaged in traditional sale/purchase trading are seeking the advice and help of logistical-chain service suppliers to emulate these highly efficient seamless transaction management systems.

Customs, everywhere, still treat such movements as a series of separate export or import operations. Every administration only sees and treats one half of each international transaction.

The key to greatly improved Customs control, based on a major innovative response to now well-established and rapidly spreading commercial practice lies in the design and implementation of bi-lateral and multi-lateral agreements for Customs-to-Customs mutual assistance to provide and apply unified management of an overall set of controls and, procedures.

Several Customs administrations have embarked on pilot and prototype projects, in co-operation with selected, interested traders, to explore and test the necessary data sets and communication standards, identify legal obstacles and evaluate practical cost/benefits for all participants.

Experience in these projects, so far, has shown that while necessary technologies are already available, existing international and national legal frameworks, governing the movement of goods and information will need review and eventual revision.

Just-in-time techniques have inevitably resulted in a multiplication of small, repetitive and frequent consignments. As, for Customs purposes, each consignment has to provide its own packet of relevant control data, this could have posed serious information processing problems.

Fortunately specialist carriers, in all traffic modes, are already using IC technologies to maximise logistical efficiency and Customs, using appropriate e-commerce (EC) systems and an expanding range of electronic data interchange (EDI) techniques, can take advantage of these well-managed data flows to feed their own risk-assessment and release procedures.

New technologies and telecommunications infrastructures, such as those offered by Internet, offer Customs low cost means of receiving and disseminating information including XML, database publishing, document publishing and electronic forms. Appropriate consultation with trading partners, will allow Customs to offer their commercial communities a wide range of information exchange options. Some of these are set out Appendix 1.

Work on standards for Internet-based data exchange is continuing. The ebXML initiative, endorsed by UN/CEFACT and the WCO, is designed to provide a full range of standards for electronic business.

UN/EDIFACT standards, defining data structures for virtually every type of business and government document used in the course of international trade, still have unique global authority.

The commercial sector is constantly driving new developments in e-commerce technologies, for example, Internet-based “peer-to-peer” arrangements allowing the creation of trade communities using real-time information exchange between authenticated systems and end-users, with open links to other, outside interests.

The Internet may provide a solution for the problems posed for Customs control if relevant information originates, or is stored, outside their national jurisdiction, as, given agreement from the declarant, it can provide access to information irrespective of where it may be held. Furthermore the declarant, who may wish to take advantage of relevant procedural simplicities, for example integrated international control, can use the Internet to send his own data directly to a foreign Customs authority.

All such advances will require and assist Customs and other tax or law enforcement agencies to extend and strengthen arrangements for international co-operation.

Growth in “virtual shopping” on the Internet may bring about a substantial increase in the volume and number of small cross border consignments. This could oblige administrations to review and possibly re-deploy resource requirements by traffic mode and to adjust procedures to accommodate transactions so different in nature from classical export/import movements by “professional” traders and agents.

Many Customs services have adopted, or will implement, EDI applications using standard message formats, principally UN/EDIFACT. In order to ensure these messages are compatible, it is recommended that all EDIFACT systems should be developed on the basis of the EDIFACT maps in the WCO Data Model.

Administrations should be aware that while some small or medium sized trading partners have been reluctant to adopt EDI because of its perceived complexity and the high costs of building and maintaining automated systems, there are now numerous alternative technical EDI solutions, such as the use of electronic forms through the World Wide Web and Internet and of standardised eXtensible mark-up language (XML) messages.

Customs use of these other information delivery mechanisms will help to decrease paper piles and can offer cost-effective solutions for these small and medium sized client businesses. Once XML is in general use it will open up the possibility of a single global Customs Document / Document Type Definition / schema, in a central, international repository, which could be downloaded from the WWW anywhere in the world for use by all Customs partners.

1.3. Scope

This Guideline has been prepared to assist Customs decide how they can use IC technologies to improve their services to clients and trading partners. It identifies the main areas in Customs program delivery where the application of IC technologies is most likely to prove most rewarding. It suggests and describes possible trading partner interfaces, and outlines a number of factors that administrations will need to consider when developing the use of IC technologies. These factors include legal issues and requirements, security aspects and client consultation. It gives a brief explanation of various communication protocols.

IC technologies enable Customs to improve control while, at the same time, enhancing facilitation. To maximise such benefits any Customs administration planning to apply IC technologies will need to undertake a preliminary review of its current programme delivery procedures, bearing in mind that IC can only provide tools to support substantive activities. It is assumed that procedures and processes will already have been re-engineered in line with the revised Kyoto Convention standards, annexes and guidelines.

This Guideline does not cover hardware and/or software solutions, which must be selected by each individual administration keeping in mind its own special needs and the related requirements of its trading community.

The Guideline has been designed:

≡ to encourage Customs administrations to investigate and make use of IC technologies solutions to support their current Customs procedures and controls;

≡ to advise and encourage Customs administrations that are considering the use of automation to follow a pre-defined process/plan covering all their needs;

≡ to promote the use of international standards in the interchange of electronic data among Customs and their trading partners; and

≡ to advise Customs administrations on current and possible future developments which could improve Customs automation.

2. Benefits of Information and Communication (IC) Technology

(Transitional Standard 6.9, Standards 7.1 and 7.3).

2.1. Introduction

This section outlines the main procedural areas where the introduction of IC technologies by Customs will benefit Customs and their trading partners, bearing in mind that this step can have a major influence on Customs/trade working relationships and that many of the benefits which Customs can derive from the introduction of IC technologies will require full understanding by, and co-operation from, their trading community.

Automation planning and development should include, and be preceded by, a detailed cost-benefit analysis, in consultation with relevant commercial interests, to check that projected solutions will be worthwhile and effective for all concerned. It has to be remembered that the introduction of certain IC technologies, for example EDI, by Customs, can oblige traders to invest resources in the development of the necessary interface software in their own systems, with associated additional expenditure in, for example, network traffic charges.

Bringing trade representatives, as appropriate and necessary, into the Customs planning and decision-making process can take a number of forms, but the most common measures include the establishment of a trade/Customs consultative group, supported by public meetings, information packs and newsletters. The consultative group is very important because it can enable those outside Customs who are directly affected by the proposed system influence its implementation and, incidentally, to acquire a sense of ownership of the eventual outcome. Such a group should be set up very early in the planning stage of the project and should meet regularly throughout its full lifecycle.

Public meetings, open to all individual traders as well as their institutional representatives offer useful means of passing information to, and receiving views from, a wide commercial constituency. They should be supported by publicly available information packs, describing the proposed system and the ways in which it could affect and change trading operations, with details of relevant trader system requirements.

2.2. More effective Customs controls

The main Customs functions are the application of effective control to prevent duty/tax evasion, repress fraud and smuggling, apply trade policies and enforce a range of public protection requirements.

In order to comply with these responsibilities Customs are obliged to intervene, routinely, in the movement of goods across national frontiers in order to examine them and/or relevant associated information.

Given limited Customs resources and the exigencies of modern trading timetables it is normally impossible for them to produce a no-risk situation by stopping and examining every consignment that enters or leaves their territory. Customs in leading trading nations have, therefore, become expert practitioners of modern risk management techniques, carefully designed and operated to select and target suspect consignments and persons.

Risk assessment and selectivity routines to identify consignments for documentary and physical examination can be applied in a manual system, but they can be carried out on a much more consistent, reliable and better informed basis by administrations who have automated their passenger and cargo control and/or goods declaration processing.

Fresh intelligence, gathered by Customs, can be fed into the computer system to supplement basic historical data including compliance records and guide selectivity and targeting. Such systematic, accurate and timely analysis of files can greatly increase Customs chances of detecting and repressing fraudulent practices. One incidental benefit is that automation can also help identify import transactions in which the declared value of products falls outside predetermined parameters.

2.3. More efficient Customs clearance

Automation of passengers and goods processing provides:

≡ increased productivity for both Customs and trading partners;

≡ better use of official and commercial resources;

≡ stimulate competitors to improve their own the necessary safeguards to offer highly-compliant traders premium procedures which will improve their business operations and compliancy performance;

≡ reduction in costs to Customs and trading partners by

≡ expedited release of goods;

≡ more accurate and timely information;

≡ more reliable enforcement capabilities;

≡ reduced congestion at ports and airports.

Automation of Customs procedures and electronic exchange of information, such as cargo data and goods declarations, opens the way for pre-arrival and/or pre-departure information processing. The capture and verification of regulatory information in advance of the arrival of export or import consignments, at the point of physical Customs control, offers administrations time to carry out an initial risk assessment, and give electronic notification of decisions on the release status of the goods immediately on their arrival.

The skilled use of information and communication technology in co-operative arrangements between Customs, other regulatory agencies and declarants, can enable all parties to an import/ export transaction to use a Single Electronic Window process by which relevant official border agencies can share prescribed control data to provide traders with streamlined ‘one stop shop’ release/clearance processing.

2.4. Uniform application of Customs law

The regulations governing Customs powers and responsibilities are constantly increasing in quantity and complexity. In a manual environment Customs can find it difficult to be certain that they have taken all existing regulations into account when processing each individual import and export consignment. A well-constructed automated system, however, fully programmed with respect to all relevant regulatory requirements, can ensure that all transactions are processed in comprehensive and consistent accord with all appropriate legal requirements. This ensures a uniform application of national laws to all trading partners. Customs can also use international data standards and business modelling techniques to provide the same uniformity and equitable treatment within the business rules so that when the law changes the rules themselves are changed.

2.5. More efficient revenue collection

In many countries, import duties and taxes are the major source of government revenue and efficient, timely accounting and collecting processes are vital to the national economy. Customs automation can help meet these requirements. In a manual environment reconciliation of revenue due and paid can be slow and error-prone. Automation can identify and quantify outstanding and bad debts instantly, and at any time, for prompt appropriate action.

2.6. More effective data analysis

Customs are the primary source of international trade data, required by governments for economic analyses and trade policy negotiations and relied on, by businesses, to aid market surveys and guide sales strategies.

Such detailed Information, collected and held in paper-based manual systems is bulky and time consuming to evaluate and organise properly. Extracting useful related data is very labour intensive.

Automation produces up-to-date trade information as a virtual by-product of export and import processing. Customs can offer the resulting benefits to all subsequent users and can apply Management Information Systems (MIS), to interpret and manipulate this information to improve their own operations at national and local level, especially in respect of effective post-audit control.

Traders using IC technologies can send error-free, timely data to Customs who can then rely on their accuracy at this and any subsequent stage of data analysis, by reason of validation and credibility checks built into the automated capture process.

2.7. Efficient production of external trade statistics

Almost all Customs administrations are responsible for the collection of trade data used as the basis for compiling national external trade statistics and informing a wide range of important political and economic decisions. The necessary data are generally extracted from import and export goods declarations. In an automated system they can be presented immediately in a prescribed structure and format, and to a very high-degree of accuracy, while, in manual systems, they only become available at some later stage in the clearance process. Statistics produced in automated cost-effective Customs routines facilitate prompt action by other government agencies.

2.8. Improved quality of data

Data validation and credibility checks at capture enable Customs to resolve discrepancies while goods are still under their direct control and ensure the reliability of the basic raw data entering the Customs computer system for all subsequent purposes

Data Validation, protecting a computer application from incorrect information application, is of paramount importance. Once invalid data enter the system, the results of any processing are worthless and associated investment of financial and other resources is wasted.

3. The decision to computerise

(Transitional Standards 7.1)

Why does a Customs administration, or for that matter, any organisation, wish to computerise its operations? To increase efficiency, solve an existing problem or meet a new requirement, in Customs, for example, implementation of the revised Kyoto Convention, are some of the most usual answers. All and any of these are perfectly sound reasons for computerisation.

There are many others, some less easy to admit and formulate, but at least equally valid, such as the improvement of professional integrity.

All computerisation projects should be approached with great caution in view of the serious financial and other losses that can result from mistakes in planning and management. This warning is not intended, in any way, to deter administrations from introducing computer systems, only to alert them to possible pitfalls so that, by taking care to avoid these sufficiently early in the project planning process, they can move forward with justified confidence.

Automation, from the moment senior management decides in its favour right up to commissioning and live operation calls for intensive, expert planning and control, regardless of whether the new system is being developed in-house or by external consultants.

Given the large expenditure on equipment, services and manpower invariably associated with the development and implementation of a Customs automated system as well as concomitant major changes in basic procedures and operating methods, every such project is a high-risk venture.

Careful planning and control are essential to identify and evaluate the risks and uncertainties, reduce or eliminate them where possible and ensure smooth implementation without serious time or cost over-runs. Good control, the basis for sound, comprehensive planning, should enable managers to recognise any deviations very promptly and to take rapid corrective action.

3.1. Change Management

In modern social structures all organisations, whether governmental, profit, non-profit, health care or educational, are having to face mounting pressures of change and are expected to:

≡ Do more with less;

≡ Do it faster;

≡ Be flexible; and

≡ At the same time, maintain or improve the quality of product or service or both.

In 10 years, at least one fourth of all current knowledge will be obsolete. The life span of new technologies is 18 months and this is rapidly decreasing. The older methods of recycling, revamping or revising conventional wisdom, no longer work. Customs administrations, in particular, must change if they are to give reasonable responses to the massive, changes in international trade patterns and practices.

They need to answer four basic questions:

1.What do the clients (importers/exporters/carriers/brokers) really value?

2. Does the administration need change to accommodate those values?

3. How will change benefit the administration?

4. How will changes in Customs meet broader government needs?

3.1.1. Ten Steps in Change Implementation

Step One: Focus on the business process and not on the function

It is critical that Customs identifies the functions arising from its responsibilities, but once this has been done, focus must shift to the processes required to perform those functions, because they are the means by which the organisation interacts with its clients.

Step Two: Development of a process profile

Most processes within an organisation are not documented, which makes it extremely difficult to assess improvement opportunities accurately. In documenting processes, Customs wants to aim for the 80 – 20 rule. The application of this concept is extremely powerful when applied to improvement initiatives because:

≡ 20% of the processes consume 80% of the resources;

≡ 20% of the activities within a process generate 80% of the results; and

≡ 20% of the problems within a process represent 80% of the opportunities for improvement.

The organisation can quickly identify the vital few resource-consuming processes by developing a process profile, with diagrams of activities and process flows,

Step Three: Process mapping

Have the processes been designed or have they evolved? In most Customs administrations, the business and processes business processes were designed years ago and there has never been time to go back and review or redesign. Anything documented has long since changed. As a result most employees have never seen a visual representation of their work and don’t know what is done before or after their work. They don’t know how they fit in the big picture. A process map is a visual image of the way work is performed, showing:

≡ How inputs become outputs;

≡ Who performs what activities;

≡ Work flow and rework loops; and

≡ Decisions made and supporting information.

Step Four: Measure the processes

Process measurements allow Customs to determine current performance levels and establish quantifiable improvement targets. There are seven quantitative measures for determining the effectiveness of most business processes:

1. Process cost; The total cost of each activity in a process.

2. Unit cost of process outputs; The cross-functional cost of producing tangible outputs.

3. First pass yield; The percentage of transactions that make it through the process without being reworked, revised or rejected.

4. Cost of rework; The cost of the alternate flow associated with fixing the revised, reworked or rejected.

5. Process Cycle Time; The length of time required to generate a deliverable, such as minutes, days, weeks or months.

6. Actual Cycle time; The length of time spent generating an output with no waiting or rework.

7. Hands–off; The number of hands an item goes through and the activity at each hand.

Step Five: Study other Customs Administrations processes

Ideas or proven processes in other Customs administrations can provide invaluable information and save time and possibly avoid mistakes.

Step Six: Process redesign

Using the information gathered from the previous five steps, Customs can now map out the new processes, eliminating redundancies and duplicate work activities.

Step Seven: Balance processes and technology

In most organisations, information systems are very closely tied to the way work is performed, but technology should be seen as a tool and not, in itself, a driving mechanism for change. Automating a manual process will not necessarily make a Customs administration more productive and automating an ineffective process will simply get poor results faster. Customs should ensure that in improving processes and exploiting technology, the process review should come first so that technology recommendations can be based on its findings.

Step Eight: Manage process change

Customs should manage change by prior identification and assessment of associated risks. There are many possible effects from change, and Customs should concentrate on those that are:

≡ Highly desirable but unlikely without specific actions

≡ Highly undesirable, but very likely without sufficient attention

Step Nine: Prepare people (staff and clients) for change

There is NO organisation/administration so bad that somebody doesn’t like it the way it is. Most people resist change out of fear of what the future will bring, rather than any positive attachment to the current process. The role of those who lead change is difficult and thankless, little training is available and there are few available role models for guidance and advice. Employees may need to be led through a three-stage process before unconditional acceptance of a change initiative:

1. head:

People intellectually understand the need to change based on supporting data. As much participation as possible will aid understanding.

2. heart:

People are emotionally engaged in change because they see the performance possibilities.

3. feet:

People take personal action as a participant, not an observer.

The length of each stage will vary with the individual person and the situation.

Step Ten: Continue Process Improvement

Business process re-engineering is time-consuming, costly and strenuous. Although change is sometimes mandatory, a culture of continuous process improvement will ensure that small improvements happen all the time and big changes happen infrequently. The job tasks of every employee should include:

≡ Continuous assessment of the situation, measuring the process from the client’s viewpoint

≡ Identification of improvement opportunities, concentrating on high-leverage improvements yielding the greatest return.

≡ Prompt action when improvement opportunities are identified and offer quick tangible results.

≡ Measurement of results, translating change initiatives into quantifiable results.

There are no magic formulae or quick fixes for creating and maintaining good change management. Customs should be constantly alert on the path to improvement with day -to-day challenges and opportunities.

3.1.2. Why Change Fails

Changes take too long and cost too much – When change is spread over a long period of time, it looses focus, funding, and momentum.

The risks are unknown - All significant changes have risks. If the risks are not clearly identified, it will create a sense of uncertainty, ambiguity, and a fear of failure.

The methodology is unproven - Change is difficult and complicated, it is unlikely that change will be successful if the change process is unknown and the agents of change are learning as they go.

The resources are insufficient - Successful change requires a Resource Management Plan to ensure that the number of required resources are identified, and a Recruitment Plan to ensure the best available resources can be brought in. These resources, however, are sometimes the most difficult resources to obtain.

The focus is internal - Many changes are driven by internal, not external factors. Without focus on the external clients’ requirements, there is very little chance of success.

The change is disruptive - In the past, some organisations could put some operations on hold while they implemented change. Today, however, with the unrelenting pace we are all expected to operate at, it isn’t possible to stop business while changes are being implemented. This means that resource planning is critical to ensure there are sufficient resources to maintain the status quo while the new work goes on as well. No organisation (Customs administration) will succeed if change disrupts the status quo and productivity suffers, or if the employees are not involved in the change to the extent where they are not able to do either the old or the new job process well.

3.1.3. How To Ensure Change Succeeds

Accelerate the pace - People who are driving the change, as well as people being impacted by it, must see tangible results quickly.

Use a proven methodology - A proven methodology with experienced change agents removes the guesswork from the change process. The benefits are clearly defined and communicated, and people work harder to overcome barriers to change when they see their efforts result in tangible benefits.

Focus on the client - The client will be your administration's biggest critic, so if the client sees value in your change, it will succeed.

Ensure the disruption is minimised - Change not managed and not resourced can be so disruptive it can paralyse an organisation’s ability to function.

In summary, in order to make sure any change that is being introduced will succeed:

≡ Articulation of the administration’s need for change;

≡ Use of a structured framework;

≡ Creation of top notch teams to manage and implement the change;

≡ Selection of the right business processes for change;

≡ Understanding the risks and preparation of contingency plans; and

≡ Involvement and education of staff and clients in the change process.

3.2. Who should develop the system?

The introduction of automation into a Customs administration is a complex and highly specialised task. Assuming that there may be a lack of suitably qualified and trained staff within the department very careful consideration will need to be given to the question of who will actually do the job.

There are usually three possibilities - to recruit suitably qualified staff, train existing Customs officials or engage external consultants. There are pros and cons for each of these choices.

The recruitment of qualified computer staff presents many problems but it enables work on the project to get under way relatively quickly. Salary scales will need to be at a level that will attract personnel of the right calibre. This can be a source of tensions between the new computer experts and existing operational staff that could have a damaging influence on the success of the project.

Training of existing Customs officials as computer systems analysts, programmers and operators may offer a better solution as they will be able to bring their Customs background to bear on the problems they will encounter. It may be difficult, however, to retain such staff once they have qualified as computer professionals after considerable public expense on recruitment and training. An appropriate salary policy will be needed to prevent the drain of this expensive expertise to private companies.

The final possibility is to contract a firm of external consultants for advice and assistance in feasibility studies, equipment selection and systems design and programming.

Organisations faced with automation for the first time often opt for a “turn key” solution and seek competitive tenders, based on a Feasibility Study, for a complete operational system.

Administrations with their own specialised IT staff may call for tenders to supply hardware, systems software and communications but could prefer to develop their own application software.

In this situation tenders would be invited from:

≡ Computer manufactures with software capabilities

≡ Computer manufactures without software capabilities

≡ Software houses

≡ Systems houses

≡ Batch bureaux

≡ Time sharing bureaux

≡ A combination of the above.

The tenders to be submitted should include:

≡ An estimate for the cost of carrying out the detailed system design

≡ An estimate for the cost of the computer programming work

≡ Training costs (for users of the system maintenance)

≡ Hardware costs

≡ Communications costs

≡ Maintenance costs

≡ A timetable for implementation

≡ Details of company background and experience.

Customs managements will then need to evaluate the various proposals and select a company to design, program, test, install and implement the new system. Control by a Steering Committee is vital at each stage during the development process. The best choice to install a "turn-key" system will usually be a well-established company with an international reputation. While the "turn-key" option is likely to be expensive results will probably appear earlier than with the two other in-house solutions.

It is usually wise to establish an IT Section within the administration even when automation is being developed by external consultants on a turn-key basis. This Section, staffed by Customs officials, should link the consultants and Customs field staff. Once the system is installed and the consultants have left, the IT Section will be responsible for maintenance, so it is important Section staff receive appropriate IT training from the external consultants or another suitable source.

3.2.1. Choosing a consultancy company

Where Customs decide to employ consultants the selection process will demand careful consideration. A mistaken choice could commit the administration to a lengthy contract, returning very bad value for money. Most international management consultancy firms now provide computer consultancy as part of their services and such firms probably provide the safest option. Their main work is advisory, helping to choose a particular system and possibly writing the software themselves. They can also assist with putting contracts out to tender and evaluating responses. They help with staff recruitment and may arrange to stay with the administration until the system is finally implemented.

External consultants, being outsiders, can avoid getting mixed up in the internal politics of an administration which can often hamper and delay the work of internal system development teams.

Good consultants are not cheap, but they can provide good value for money to administrations without the necessary in-house skills. The terms of their contract should ensure that, by the time they leave, staff within the administration's IT Division will have been trained to replace them.

3.3. The Steering Committee

One essential component in the planning process is a Project Steering Committee to initiate, guide and review automation projects. It should comprise line management representatives from all areas of the administration likely to be affected. The data processing manager, if one is available within the administration, should be a member, along with a senior manager from the department’s financial and accounting branch. The Chairman of the Steering Committee, preferably the Director General of Customs or his deputy, should be drawn from senior management, as automation decisions must be understood and supported at the very highest level if they are to be implemented satisfactorily.

In many administrations management representatives on the Steering Committee may not have any detailed technical knowledge of data processing problems and requirements. It may be desirable, therefore, for senior staff to attend formal IT training sessions, specially designed for management and personnel in user areas, to help them appreciate the nature of the problems likely to occur in IT operations. It may also be necessary to engage an independent consultant to sit on the Steering Committee in order to advise management at various stages of system development.

3.4. Types of planning

In most organisations, including Customs, planning for IT purposes can be divided into three categories:

1. Strategic planning (paragraph 3.4.1.)

2. Project planning (paragraph 3.4.2.)

3. Business Continuity Planning (paragraph 3.4.3.)

3.4.1. Strategic planning

In every Customs administration there is a common set of business rules reflecting the Customs business processes. These business rules determine the execution of every process and influence the organisational set-up of the Customs administration.

The organisational set-up must guarantee that all business rules are performed in a well-controlled manner i.e. business controls, financial controls, personnel controls, PKI organisation etc. The organisational set-up influences the ICT security of the Customs administration.

Strategic planning will be concerned with the development of the administration’s long-term computerisation plan. Individual applications can be automated without any long-term plan, but there can be no guarantee however that they will solve the administration's problems in the most effective manner or be compatible with any other internal systems that might be developed in future. Once an administration has embarked upon a particular course and become increasingly dependent on a computer-based system, it may find it very difficult and costly to change direction. As, in most administrations, the introduction of computers will affect more than one part of the organisation, an integrated policy is essential if automation is to proceed in a logical and coherent manner, avoiding overlapping systems and minimising cost.

The administration's long-term or strategic plan, usually part of the Feasibility Study or following immediately on its conclusions, should be submitted to the Steering Committee for comment and approval. Once it has approved the plan, the Committee will be responsible for monitoring and guiding implementation. It will assign priorities to individual project items and assess user requests for amendments or the inclusion of new projects.

The plan will set out the administration’s IT policy objectives and identify the automated applications required to achieve that objective, together with a logical sequence for their development and a description of their boundaries and mutual interfaces. Technical aspects of hardware, programming languages, etc., will also be specified.

3.4.2. Project planning

The long-term or strategic plan will comprise several projects, each of which will require individual planning and control. Projects will usually be assigned to individual project teams with leaders reporting periodically to the Steering Committee. Some Project Committees may work under the chairmanship of the Project Leader who will report to the Steering Committee. When a Project Team has completed one long-term plan/project they will be assigned a new project by the Steering Committee.

Planning for individual projects is needed to:

≡ define precisely the objectives of the project and identify any constraints

≡ establish the boundaries of the project

≡ identify its relationship to other projects or systems whether existing or proposed

≡ establish a timetable specifying what has to be done, by whom and when, and what it will cost

The easiest way to plan and control a computerisation project is to divide it into more easily manageable phases. Most computerisation projects will consist of three essential phases:

1. project initiation phase

2. development phase

3. post-implementation phase

The initiation phase generally consists of the Preliminary Study and the Feasibility Study described in Chapter 5. This phase ends when the Steering Committee gives the go-ahead for the Project.

The development phase consists of the following steps or stages:

≡ detailed investigation and analysis of the current system (paragraph 5.1)

≡ detailed system design (paragraph 5.2)

≡ programming (paragraph 5.3)

≡ hardware procurement and installation (paragraph 5.4)

≡ system implementation (paragraph 5.5)

≡ evaluation (paragraph 5.6)

Many of the steps mentioned above are carried out sequentially, others are handled in parallel. Hardware procurement and testing, for example, will take place during the detailed design and programming phases, though hardware procurement and installation may be an individual project in its own right.

The post-implementation phase covers on-going maintenance of the system and the post-implementation evaluation.

Effective planning of a computerisation project requires an estimation of the resources to be allocated to each step and should include agreed time scales and resource allocations for completion. Progress is reviewed against the project plan at key points throughout project development. Any deviations from the plan are identified and measure taken to rectify them. The Project Leader (or Project Committee) will constantly measure progress against the plan and report to the Steering Committee at previously agreed intervals. In some instances the Steering Committee may only commit further resources to the project if the previous phases have been completed correctly and on time.

Planning a computerisation project is not any easy task. It is especially difficult in organisations introducing IC techniques for the first time. Any administration, which undertakes computerisation without a clear plan of action, both for the long-term and at individual project level, will very quickly find that it has lost its way and squandered a considerable amount of public money. While planning and control of projects will not guarantee success, they permit management to maintain a tight control on allocated resources and minimise the risk of serious cost or time over-runs.

3.4.3. Business Continuity Planning

Business Continuity planning is the overall process of developing an action plan to ensure the continuation of business in the event of unexpected unavailability of a crucial system or facility. For Customs it means the ability of an administration to maintain collection of duties and taxes, the control of goods and people crossing the border and the uninterrupted and speedy clearance of goods and people in international trade and travel.

Customs Administrations ought to worry about business continuity at all times. If Customs IT systems or processes are unable to function:

≡ Uncleared goods may clog vital parts of a country’s infrastructure

≡ Loss of risk assessment possibilities may pose a specific risk to society

≡ There may be increased attempts to import restricted goods

≡ Public and traders may be unable to obtain the information they require

≡ Tariff Calculations may be inaccurate

≡ There may be errors in revenue and duty collection and accounting

For these and many other reasons Customs Administrations need to have robust continuity plans in place. Otherwise disruption for industry and the community at large could damage the national or regional economy and restrict law enforcement and the availability of essential goods to the public.

Although business continuity planning should, as a matter of course, be an integral part of the management of a Customs administration, not every administration has such a plan in place.

A business continuity plan will require a set of contingency plans for each core business process and infrastructure component. Each plan should provide a description of the resources required, staff roles, procedures and timetables needed for its implementation. The process covers four key stages.

Initiation

Business Impact and Risk Analysis

Development of individual plans

Management of the plans

Stage 1: Initiation

- Obtain commitment from Senior Management

- Set policy and scope for business continuity management

- Establish a Business Continuity Planning Project work group

- Develop a master schedule and milestones

Stage 2: Business Impact and Risk Analysis

- Define possible failure scenarios

- Define the minimum acceptable levels of outputs for each core business process

- Assess potential business impacts and risks of these scenarios

- Identify and evaluate options

Stage 3: Develop individual plans

- Identify and document contingency plans and implementation modes

- Define triggers for activating the plans

- Assign resources for each core business process

- Obtain management approval and allocation of resources

Stage 4: Management of the Plans

- Distribute the plans to all relevant stakeholders

- Maintain strategy, plans and procedures

- Look at education and awareness, review plans and risks, test the plans and control changes to the strategy and the plans so these remain consistent with each other

- Train staff to produce the strategy and plans as well as to undertake the actions embodied within the plans

- Assure the quality and applicability of the plans in respect of adaptability, completeness, data quality, efficiency, friendliness/usability (very important as the plan will only be used in a time of chaos or disaster), maintainability, portability, reliability, resilience, security, testability and timeliness and management approval.

Customs Administrations need to obtain the commitment of Ministers and Heads of Department to the essential elements of Business Continuity Planning.

There has to be a contingency Planning Manager with overall responsibility for the business continuity plan. As the plan affects the survival of the whole organisation, this needs to be a senior person with sufficient authority to ensure things are done, to obtain and deploy required resources and co-ordinate the recovery effort. The detail of the plan must be provided from the individual business areas.

It may be necessary to assign regional or area co-ordinators to manage the recovery effort at a local level if and when the Business Continuity Plan is invoked. Individual plans will prescribe actions to counter specific risks. It is advisable to identify individuals, with the appropriate technical skills, to manage these.

Detailed Guidelines on how to undertake business continuity planning can be obtained from the WCO Business Continuity Planning Guidelines.

4. The importance of consultation

(Transitional Standards 6.10, 7.1)

Customs automated systems cannot be developed successfully without the co-operation and goodwill of a large number of people. It is particularly important to consult two groups before, during and after the development of a Customs system - .the trading community and Customs staff who will use the new system.

4.1. The trading community

As most Customs automated systems will have a major impact on trade users consultation with them is essential to secure maximum benefits. A formal Consultative or Advisory Committee can b formed to advise on practical issues and keep trade partners informed of Customs plans. Other interested government departments, importers, exporters, carriers, freight forwarders, Customs agents (brokers), port/airport authorities, etc., should be represented on this Committee.

4.2. Customs staff

Any new computer system can encounter user resistance based on a natural human reaction that resists change and tries to preserve the status quo. This is best overcome and the full effectiveness of the system is best obtained by ensuring the participation and co-operation of users at all introductory stages. If a new system is wrongly used it is usually because the users do not understand it properly or do not want it to work.

If the users feel that the system does not meet their needs the cause is usually inadequate system investigation, or poor perception of user needs by the systems analyst. User participation in the development of the system is therefore of crucial importance since it promotes effective systems analysis and design, facilitates user understanding and confidence and can highlight potential areas of difficulty. While the need for user participation is clear, achieving it is much less straightforward.

If users are to co-operate effectively they must know that their jobs are secure. Any anxieties on this account must be allayed at the outset. Users must trust the systems analyst and have confidence in his ability. In return, the systems analyst must trust the users and be prepared to accept their ideas.

Users must be kept informed of developments. Lack of information encourages rumours and discontent, hardly the most suitable environment for the introduction of a new computer system.

Regular contact is needed to secure user confidence and co-operation. Users should be adequately represented on project teams and committees. There should be regular working group meetings to encourage users to participate in the design of the new system. Their in-depth knowledge and understanding of existing manual systems will enable them to make important contributions in several areas, for example office layout, form design, error procedures, screen layout and report layout.

Education is also an important element in boosting user co-operation and confidence. User education can be divided into two categories, firstly general education on information technology and the basic concepts of computing and secondly detailed training on the particular system being developed. Where an external firm is developing the system, user training should be part of their responsibility.

The success or failure of a system can depend largely on user co-operation. If users are informed and re-assured and brought into the design of the system chances of success are correspondingly improved. If they are alienated the system is doomed to failure.

5. The system development process

(Transitional Standards 1.3, 6.8, and 7.3)

Once a particular course of action on the basis of the Feasibility Study has been decided and necessary financial authorisation has been obtained, the project moves into the development phase and develops from a concept into a system that is ready to operate. The decision on who carries out the system development phase will depend on existing IT personnel arrangements within the administration (see 5.1).

During this phase, as at all other stages of system development, management must exercise close control through the Steering Committee, to ensure that the project is progressing in accordance with agreed time scales and within budget. It must maintain that control over the completed development phase product, that is the computer programmes and their supporting documentation.

The computer programmes will reflect, in minute detail the procedures that are currently carried out in the manual environment so it is vital that the necessary steps are taken to ensure that they accurately reflect those procedures otherwise the final system will not meet the users' needs.

This phase of project development should be broken down into sub-phases to facilitate user participation and management control. The results of each sub-phase should be reviewed by the Project Committee and Steering Committee before approval is given to proceed to the next sub-phase. The various stages in this process are described later in this Chapter.

5.1. Detailed investigation and analysis of existing system

This investigation of existing procedures does not imply that the earlier enquiry, carried out as part of the Feasibility Study, was inaccurate, but will need to go into much greater depth to provide the basis for detailed analysis and design of the new system.

In this detailed investigation the main tasks of the systems analyst will be to interview staff at all levels within the administration and to consult procedure manuals and any other relevant and available documentation. Once in possession of all the facts, he will analyse the information he has gathered and produce a User System Specification for submission to the Project Committee and, ultimately, the Steering Committee. This document will describe, in layman's terms, the main features of the new system and how it will affect management and staff.

At this point the Project Committee will need to bring users of the system fully into the development process, to check that the information gathered by the systems analyst is accurate and that the detailed design of the new system can proceed without any need to introduce amendments at a later date. In effect the end-users of the system will have to tell the analyst whether the system he is designing meets their needs.

The User System Specification should be approved by the Steering Committee before commencement of detailed design work and, once the contents have been agreed it should not need to be updated. The User System Specification is often the users’ last opportunity to request changes where the design fails to meet their requirements. Once the Specification has been accepted, it is often "frozen" so that no amendments can be accepted during the remainder of the project.

5.2. Detailed system design

Detailed system design begins once, following analysis, the Steering Committee authorises the development of a new system.

Authorisation will be based on the outline design of the system contained in the Feasibility Report together with the expanded statement of user requirements in the User System Specification. The design will include detailed specification of computer and manual processing requirements, inputs to and outputs from the system, computer files used to store information and segmentation of the processing into programs.

The systems analyst will produce the results of this design work in a series of documents, namely:

≡ Program Suite Specification

≡ User Manual

≡ Operations Manual

≡ Test Data

≡ Changeover Instructions

The Program Suite Specification provides the computer programmers with all the information about the computer functions that they need to write the programs.

The User Manual will instruct user departments in the clerical operations required for the successful operation of the system and the actions to be taken in the event of failure or error. The User Manual must be accessible for reference purposes throughout the operational life of the system It should always reflect the current state of the system and will, therefore, require updating when changes are made which affect user procedures. Users who have not had previous experience of computer-based systems are not usually aware of the importance of strict adherence to the instructions contained in the User Manual. Care should be taken to ensure such awareness.

The Operations Manual is the permanent reference document relied on by the computer operations department, for information on the system to be implemented and the tasks to be carried out for its routine operation.

Once the programs have been written and users are familiar with the new procedures, the system will need to be tested to ensure that it will operate successfully under all the likely conditions and that it will produce the expected results. Test Data will be required to test that the completed system satisfies developers and the users alike.

Finally two sets of changeover instructions will be required; one for user departments and one for computer operations. These will specify, in detail, the procedures required for the changeover from the old to new systems.

All of these documents will be reviewed by the Project committee and Steering committee before approval is given for the commencement of programming.

5.3. Programming

The programming task will include designing the program structure, designing and documenting the detailed logic of the program, coding, preparing a test plan and test data, testing (technical part) and debugging the programs and preparing final documentation.

The starting point for programming is the Program Suite Specification which has been prepared as part of the detailed design of the system. The programmer will test his own programs to some degree but the entire system, including all the programs, will need to be tested for the functional part for user acceptance and finally approved by the Project Committee and the Steering Committee before the system can go live (see Chapter 12). From a management point of view it is vital to ensure that the computer programs are fully documented. Undocumented programs should not be accepted under any circumstances. Without supporting documentation, programs are virtually unreadable and cannot be modified except by the person who wrote them.

It cannot be stressed too strongly that documentation is a fundamental part of any program suite. There is an equal need for programmers to adhere to agreed programming standards otherwise maintenance can become a problem. It should be stressed to programmers that what is required are programs that work well and can be easily modified should the need arise.

5.4. Hardware procurement and installations

5.4.1. Procurement

Computer hardware on which the new system will be run has not been mentioned in depth so far. Computer procurement should not take place before the Feasibility Study or the detailed analysis are carried out or after the system has been designed and programmed. If new computer hardware is required, procurement is usually carried out in parallel with the system design phase.

Administrations should not fall into the trap of acquiring expensive hardware prior to conducting a detailed examination of their computing requirements. The likelihood is that it will not meet their needs and will simply be an expensive millstone around the administration’s neck. Equally it is not prudent to delay acquisition until after the system has been programmed. This will simply prolong the implementation schedule for the automated system. Most organisations aim to have the computer hardware available and installed to coincide with the programming phase since it is at this point that the computer will be required.

Administrations should therefore undertake the process of hardware procurement in sufficient time to ensure timely availability. Acquiring a computer system means buying three basic components (hardware, software (systems and application) and communications). Some Customs administrations (especially those encountering IC technology for the first time) will opt to install an entire automated system on a “turn-key” basis. The process of acquiring hardware, system software and communications is discussed here independently of the application software and not as part of an overall package implicit in the “turn-key” approach.

5.4.2. Request for Proposal (RFP)

In order to procure the necessary equipment it is usual for government agencies to issue a Request for Proposal (RFP) to a list of vendors identified as likely to be capable of submitting a serious bid. Before that can be done however, it will be necessary to prepare a document specifying the functions that the equipment must be capable of performing. This document is known as a Functional Specification. In some cases the Feasibility Study Report may already contain sufficient detail. If it does not however it will be necessary to supplement it to ensure that it contains the following minimum information:

* Mandatory Requirements

A list of all requirements which the computer system must be capable of performing including requirements for meeting computer standards; compatibility requirements - if the system is to be used in conjunction with another system; upgrade capability - if the workload is likely to increase over the life-cycle of the system; system recovery requirement in the event of system failure; security requirements, etc.; compilers, assemblers, other utilities.

All system software requirements should be itemised.

* Detailed Workload Requirements

A description of the processes that will be performed; input volumes; processing volumes; volume of storage; type of storage (on-line, off-line); length of storage; peak activity volumes (for on-line systems); response time requirements (for on-line systems); turnaround time (for batch systems).

* Vendor Support

A statement of all the support requirements to be met by the vendor. This includes site planning, electrical installations, air conditioning, fire prevention, auxiliary power supply, installation schedules, pre-installation computer time, line test demonstration, on-site support personnel, training needs, and very importantly - maintenance requirements.

* Reliability

Reliability is usually expressed in terms of a percentage of scheduled operating time. If this requirement is very high, 99 %, for example, the vendor will probably have to propose a dual system. This will mean a very large cost increase, especially if the contract includes a substantial penalty clause for excessive downtime. It is therefore best to determine the amount of downtime (downtime to maintain the system excluded) that would be tolerable within the criteria for a responsive operating system. It is important to include penalty clauses in the contract to ensure that the vendor will provide adequate maintenance and equipment to stay within those established reliability criteria.

* Contractual arrangements

This should specify the formal contractual obligations, which will be entered into between the administration and the chosen vendor. It will specify such things as exact delivery dates, payment dates, penalties, resolution of disputes, after sales service, etc.

In addition to the Functional Specification which contains all the above requirements, it will be necessary to submit a number of "bench-mark" problems to potential suppliers to ensure that the equipment which is proposed to be supplied actually meets the performance standards required. A bench-mark problem is a simulated version of a typical computer application which the vendor can run on the computer to be supplied. The results will form part of his final proposal.

5.4.3. Evaluation of responses to RFP

The proposals received from the potential suppliers are evaluated by the Steering Committee (if necessary with professional advice from a consultant specialising in tender evaluations) under the following headings:

≡ Technical evaluation

≡ Cost evaluation

≡ Benchmark evaluation

Technical evaluation will call for the examination of the proposals to ensure that they meet the mandatory requirements set out in the Request for Proposal.

Cost evaluation will compare the offers of suppliers for the cost of outright purchase, lease and lease with option to purchase. The various acquisition options for each supplier need to be examined in detail in order to identify the most cost-effective solution. Live tests and demonstrations should be arranged with each supplier who passes the technical evaluation. During such live tests the benchmark data should be processed and the results should be collected and evaluated.

Only the suppliers whose equipment passes the benchmark tests and meet the mandatory technical requirements should be considered when awarding the contract. Negotiations should be undertaken with each of these suppliers with a view to assuring the best possible price.

After a thorough evaluation of all proposals, the administration should be in a position to choose a supplier and an equipment configuration. When the time comes to prepare the contract, the administration should insist that all special circumstances and offers of technical assistance and support as well as equipment maintenance are incorporated in it. If the successful supplier has promised additional support in post-installation phases, this should also be carefully defined and included.

While the normal method of paying for computer equipment has been by leasing from the manufacturer, purchase plans and various forms of lease-back arrangements with independent leasing organisations are also available. Senior financial officers should carefully examine the financial impact on the organisation of these various options. In addition, the contract should be reviewed by a legal officer to ensure that it provides adequate protection of the administration's interests.

5.4.4. Installation

Installation of the computer can be a complex and time-consuming project. It is easy to underestimate the time and resources required to carry it through successfully. Computer manufacturers can often provide a comprehensive checklist of the actions that will need to be carried out prior to delivery of the hardware. Using this as a basis, a plan should be established for the necessary pre-installation activities showing their any relevant inter-dependencies. These activities include:

≡ site preparation plan

≡ staffing plan

≡ data communications plan

≡ delivery schedule

≡ logistical support plan

Site preparation planning includes determining computer centre and tape library floor space requirements, defining heat and humidity requirements, defining electrical and telephone requirements, and defining all special computer facility requirements such as sprinkling systems, electrical interference safeguards, electronic security safeguards, auxiliary power supplies, etc. It also includes identification of such support requirements as desks, tape racks, carpets, observation decks for supervision, report preparation equipment, etc.

The staffing plan identifies all of personnel required to operate the computer centre, shows when they will be needed and what actions are required to obtain them. Personnel requirements for a data processing centre normally include a data centre manager, computer operators and supervisors, support software programming staff, data preparation personnel, technical control personnel (if the computer application includes extensive data communications) and data entry machine operators.

The staffing plan also shows when recruitment action will begin for newly hired personnel, when retraining will begin for personnel that are being retrained from existing staff, when personnel will actually be brought on board and when and how they will begin performing their jobs. The staffing plan must be co-ordinated with the computer system procurement to ensure that the personnel are available when needed.

The data communications plan depicts data transmission requirements and shows when and how the data circuits, modems and concentrators will be installed in order to support operation of the system.

A logistical support plan is prepared to show what support will be required and when to deal with personnel (recruitment), transportation and removals, installation of equipment, legal assistance, etc.

System Installation is normally the responsibility of the computer supplier. Site preparations, however, are normally the sole responsibility of the Customs administration and if the site is not ready, the computer supplier will not be liable for delay in the installation date. Also, if site preparation is not in accordance with the supplier's environmental specifications and the differences are significant, the vendor will usually not install the computer system until site corrections have been completed.

Once installed, the computer will not be considered operational until a series of tests have been carried out to ensure that it performs at a satisfactory level for a stipulated period. This acceptance testing is a critical activity requiring highly skilled personnel. Unless such personnel exist within the administration it is advisable that the task be contracted to an independent consultant. Once the computer has passed the acceptance tests it is declared "operational".

5.5. Implementation of the System

The system development process has now reached the point where the computer has been installed and programs have been written. The next phase of the process is "implementation". This is, in effect, composed of a number of activities or stages:

≡ System testing

≡ File conversion

≡ User training

≡ Changeover

5.5.1. System Testing

When the programmers have completed their work the programs and documentation will be handed over to the systems team for testing the technical part. The major objective of systems testing is to find and correct any bugs (faults) which may remain in the computer programs. Some faults may be due to misunderstandings between the analyst and the user or the analyst and the programmer. If many bugs are due to incorrect specification it is a sign that the investigation, analysis and design tasks were not carried out with sufficient care or thoroughness.

A plan and a work programme for systems testing should be draw up by the systems analyst and approved by the Project Committee. Where the system is being developed for Customs by external consultants, Customs staff must be fully involved to ensure that the system meets their needs. The test data, which have been prepared by the systems analyst during the system design phase, and which will simulate as closely as possible, actual operating conditions, will be processed by the computer. The results of testing the functional part will then be compared with the expected results and any discrepancies will be followed up until the results are clean and error-free. Even when all the systems tests have been carried out to everyone's satisfaction, it may still be necessary for further testing to be carried out in a live environment.

5.5.2. File Conversion

This is the task of converting manual files into computer files, in other words converting reference and other data e.g. the Customs tariff, into computer readable form. This is a major task.

Examples of the types of computer files that might be established in a Customs system are:

≡ Tariff file

≡ Quota file

≡ Currency file

≡ Country file

≡ Importer file

When these files are established they will require constant updating until the system goes live and must continue to be updated throughout the life of a system.

The process of file conversion will usually require the transcription of the source data into a suitable form for input to the computer. After the files have been set up they must be checked for accuracy since nothing can upset the start of a new system as much as bad master file data. This entire process, which is expensive and time consuming, should be planned carefully as it is critical to the success of the whole system.

5.5.3. User training

For any system to prove effective, the people who will operate the system must be adequately trained. The analogy of "the weakest link in the chain" is most appropriate here.

Training of users may be the responsibility of the systems team (where the system is developed in-house), it may be shared with the personnel department of the administration or it may be the responsibility of external consultants engaged to develop the system.

Two types of user instruction are required:

1. Education in computers generally.

2. Training in the use of the new system.

Where users have no previous automation experience, their general education should begin as early as possible (when the Feasibility Report is approved). Training on the use of the new system should be as late as possible so that new forms and techniques will not be forgotten before implementation. The recommended maximum duration between technical training and use of the skills is two weeks.

Training in the actual use of the new system should include:

≡ General overview of the system logic

≡ Completing input

≡ Interpretation of output

≡ Limitations and constraints of the system

≡ Action to be taken on receiving error indications

≡ Practice using test data and test files

5.5.4. Changeover strategy

The system has been designed, programmed and tested, the files have been converted and user staff has been trained. It is now time for the system to be used in a live situation.

There are three basic strategies for changing over to live running:

1. Parallel running

2. Pilot running

3. Direct changeover

Parallel running is often the method of choice for a computer system that is replacing, in all essential functions, a manual paper-based system. The manual system continues to operate unchanged when the computer system is first installed. The output of the two systems is compared, item by item, until all discrepancies are resolved. This method is only possible if the two systems are identical in all major output, and if staff are available for carrying on the old system while at the same time preparing the input for the new one and checking the results.

Pilot running is often the preferred method if the new system is eventually to be installed in a number of different locations - as occurs very often in Customs. One typical location is chosen for the pilot run, where the data processing department, especially, the systems team can concentrate their resources until the system has been proved under real life conditions and all major problems have been solved. The system can then be progressively introduced in other locations.

Direct changeover is the only alternative, if none of the other methods are suitable, to end the old system the one day and begin the new one the next. If this is to be successful, there are two prerequisites. The first is that the computer system has been very thoroughly tested before being allowed to operate on live data. The second is that there are plans for what to do if the new system fails. This may include such precautions as keeping copies of input data, listing all master files at each update, and retaining staff in the user department until the new system is proved to be reliable.

There are advantages and disadvantages with each approach. While the cost of user effort and systems effort for direct changeover is usually very low the consequences of failure can be catastrophic. The risk of failure with parallel running and pilot running is considerably lower, but both methods require more system and user effort. It may be advisable, when implementing a large system to implement it by parallel running at a single pilot location. This is probably the safest option in a sensitive area where the cost of failure could be high. Parallel and pilot running offer a low risk opportunity for testing those parts of the system which have not been tested already viz. the operator's procedures, data preparation procedures, user department procedures, etc. These procedures will have been set out in operator and user manuals by the systems analyst during the design of the system and will need to be tested under live operating conditions. When the new system (both computer and manual sub-systems) has operated satisfactorily for a reasonable period the Steering Committee will give the instruction to discontinue the old manual system.

5.6. Post-implementation evaluation

(Transitional Standards 7.1)

A post-implementation evaluation is an essential follow-up to any computerisation project. The main reasons for conducting such evaluations are:

≡ to determine how far the automated system has achieved its intended objectives

≡ to ensure that the expected tangible and intangible benefits have been realised;

≡ to compare actual costs and benefits with those projected at the Feasibility Study stage;

≡ to identify any weaknesses in the system and recommend any necessary improvements.

Post-implementation evaluation is a vital element in effective project control. It provides Customs management with an independent justification of development costs together with a related certification of benefits realised.

Post-implementation evaluations are usually conducted on behalf of the computer Steering Committee by the Project Committee although, in some instances, an independent evaluation team may be engaged or the task may be carried out by some other Government Agency, such as the Ministry of Finance or the Treasury, that may require formal justification for the expenditure of resources. Typically, a post-implementation evaluation should be carried out approximately 6-9 months after the system has gone live. This gives sufficient opportunity for any teething troubles to be sorted out and for users to become accustomed to the changed procedures. Such evaluations should not be confined to a single occasion but should be repeated at 2-3 year intervals so that the operation of the system is kept under constant review.

Although minor design changes, improvements or adaptations can sometimes be recommended following post implementation evaluation, it is rare for projects to be abandoned or fundamentally changed unless the planning and control mechanisms have not been implemented properly.

Certain problems may be encountered during evaluation, which may make the evaluator's task more difficult. Firstly there is often a lack of proper, well-documented historic data about the old manual system against which the performance of the new systems can be measured. Some information about the manual system will be contained in the Feasibility Study Report but this is frequently inadequate. Another difficulty may arise from user's unrealistic expectations of the new system. If not properly educated in computing basics, users may sometimes believe that computers can solve all their problems at the push of a button. This rarely happens in reality. Changing user requirements may also cause difficulties. Users sometimes fail to appreciate that the computer system can only be designed on the basis of the situation as it exists at the time. If the requirements change, then computer system must be changed or redesigned.

A further problem often arises regarding the quantification of certain benefits of the system. For example, it would be difficult to quantify the benefit of Customs computerisation to the economy of a country as a whole even though it is safe to assume that some benefit will accrue. Finally, where the system is being assessed by an independent evaluator who is not part of the Customs administration, a problem may arise from lack of familiarity with the functional area under review. This can sometimes lead to misunderstandings and care should be taken that no errors of fact are contained in the evaluator's report.

In spite of the difficulties, a post-implementation evaluation brings a number of benefits. Firstly, it gives users a chance to air their views on the system and to state whether or not their needs are being met. If they have justified criticisms, the evaluator's report will provide a basis from which to rectify any shortcomings of the system. It will also provide an opportunity to examine the merits of future enhancements to the system and to assess priorities for future developments. Finally, it will provide an independent justification for development costs.

5.7. System maintenance

5.7.1. Reasons for maintenance

Nothing is permanent, especially when it comes to computers or computer systems. Changes will be required from the first day of operation. Possible reasons include:

* Previously undetected bugs are inevitable. Even if a system has been running smoothly for a number of years, there is no guarantee that no bugs exist. It could be that the particular combination of circumstances, that will bring the bug to light, just have not occurred yet. There may be a bug in year-end routines, which takes 12 months to show itself. In a new system some bugs are bound to show up for the first few cycles.

* After running and observing the system in live operation a few times, systems staff or the computer operator may be able to suggest changes to make it run faster and more cheaply. The user may find, in the light of actual practice, that forms and procedures could be improved, to make them easier to use.

* The most radical change would be the acquisition of a new and different computer, in which event a system may have to be rewritten. It is more likely that it will make sense to change the system to take advantage of a new kind of peripheral, or a new software feature.

* Changes in the volume of transactions to be processed over and above those expected. These may require hardware upgrade.

* Legislative changes; for example changes in duty rates, tariff changes (the introduction of the Harmonised System will mean extensive changes to existing systems), new trade policy (quotas, restrictions), new taxes (such as VAT) at importation or exportation.

* Implementation of related systems, for example if an administration that is already operating and entry processing system wishes to introduce a cargo control system, the entry processing system will need to be partially redesigned to include the necessary interface.

5.7.2. Types of maintenance

Almost all system maintenance work can be described in terms of the following categories:

≡ Modifications (emergency or non-emergency) requiring no major change to the logic of the system.

≡ Revisions requiring new design and programming e.g. changes to input or output specifications - new input forms, new reports.

Redevelopment requiring new systems design and extensive programming and testing, e.g. major changes to the processing logic as a result of new requirements. It might be inappropriate to deal with this under “Maintenance” as such redevelopment should go through all the phases of a new project (from feasibility to implementation).

Even minor modifications to the system should be thoroughly tested before being released for live use.

5.7.3. Responsibility for Maintenance

Where Customs systems are developed by external consultants the contract for the system should specify maintenance support at least in the short term. Customs staff (from the IT Division) should work closely with the consultants during the project development in order to ensure that they are fully conversant with all aspects of the system. The IT Division will then be responsible for routine maintenance of the live system.

For more extensive redevelopment it may be necessary to engage external consultants once again unless the IT Division is, by then, sufficiently experienced and staffed to undertake the work.

Where Customs systems are developed in-house, the Customs IT Division will usually have sufficient knowledge and experience to maintain any system they have developed.

5.8. Set up of a Help Desk

5.8.1. Customs client service commitments

Who are our Clients? It is fairly easy to identify customs clients. The importers, exporters, customs brokers, passengers and warehouse keepers, carriers etc obviously come to mind. However, a rigorous approach to identifying the clients involves examining the customs data set. The WCO customs data set contains a section called “persons and parties” which is only a partial list of customs clients. The Other Government Agencies (OGA) and more importantly, the internal clients are also to be included. While it is good to be able to offer service to all clients, it helps to identify the priority areas.

Service Requirements and Delivery Channels: Service requirements identification begins on the drawing board when the services are being modelled in the design-time. Some of the ‘actors’ in the use-case diagrams are the recipients of the service while there are others that are its producers. The client service requirements and the corresponding means of meeting these requirements can be captured in the use-case specifications.

For example, the importers, exporters and their agents/brokers seek information on the cargo logistics, release and other commercial information (service requirement), which they want to be delivered electronically (means of service delivery). The electronic service delivery channels that Customs administrations normally use are provided in the Kyoto ICT Guidelines. The help desk is one of the service delivery channels. It works in conjunction with and often in support of the other channels.

Service Areas and Service Requests: Customs have a large clientele and an equally large responsibility. It is therefore necessary to break-up the entire domain into Service Areas. Each Service Area would attract a usual list of ‘Service Requests’, which would have to be mapped against “Assignees” who will process these Requests. Here are a few examples to illustrate this:

While import, export and transit could be different Service Areas; a delay or a problem in receiving a drawback claim would be a Service Request.

The IT infrastructure is usually supported though a helpdesk. The IT infrastructure comes into play for ensuring that the completion of a service delivery cycle (such the issue of a release notification against a client’s declaration). The entire infrastructure can be divided into service areas each of which can be mapped to a Service Request.

Service standards and Service Commitments: It is fairly easy to identify service requirements when the standards of service are known/established. Standards of service are generally derived from the client’s expectations. Service standards are usually the measurable parameters of the service offering - such as waiting time for a documentary examination or time for obtaining a refund. Others service standards are intangible - such as quality of information on the website and the courtesy extended by the Customs Inspector. However, all service standards are measurable behaviour of the individual, group and systems. It is often said that service standards drive the systems design. The converse is equally true. The established systems could limit the capabilities of customs to respond For instance, a manual procedure cannot be expected to deliver as fast as an automated system. Thus, Customs should declare its service commitments keeping in mind the limitations of its systems. Some administrations do publish their service commitments in their Citizen’s Charters .

5.8.2. Does Customs need a help desk?

All organizational models that contemplate remote service delivery require remote support resources. With the induction of ICT into customs, most Customs Organizations need a help desk of some magnitude. The kind of helpdesk (size and output characteristics) is determined by the estimates of the level of service demands and complaints. It is normally easy to estimate the requirements of client service by category. However, it is appreciated that service levels have a certain impact on the compliance behaviour of the clients. Can Help Desks increase the effectiveness of service delivery? Surely, an effective helpdesk would alter the client’s perception of the customs service offerings.

The monopolistic position of Customs implies that it does not have “business retention” issues (unlike the normal business organizations). Our clients cannot be lost to competition. However, our effectiveness could enhance our client’s productivity and increase confidence of the businesses in the operating environment. If a piece of equipment or a part of the network becomes inoperative, it could lead to loss of productivity. The help desk could formally track this loss in order to improve productivity of the asset base both for internal and external clients.

5.8.3. Various dimensions of help desk

5.8.3.1. Concept of Helpdesk:

The term ‘help desk’ refers to the concept of having a single point of interface within an organization to handle service requests. In every service set-up, there would be the ‘front-stage’ operations and the ‘back-stage’ operations. The back-stage is usually a complex web of operations involved in the creation and delivery of services and is normally not visible to the internal and external clients. To the clients, the consumption of services has to be made a pleasant and fulfilling experience. The help desk, being the first contact voice, is front stage of the service that captures client requests, translates them into technical and business problems for which solutions have to be found. Thereafter, the helpdesk chases the solution by peeping into the backstage to produce the output against the request and communicates this output to the client in a language that is familiar to the client. The helpdesk activity is productive if it can resolve and close the request to the client’s satisfaction. The help desk is the friendly face, which spans the boundaries of the ‘business process core’ of the organization. In a way, it is a communications and knowledge transfer centre.

5.8.3.2. Service Encounters and Moments of Truth:

The Customs organization, as a tax collecting authority and an enforcement agency is not given to please. However, it does face its ‘moments of truth’ in the various points of contact with its clients in the day-today operations. These ‘moments of truth’ constitute the overall service experience of the client. It is within the powers of the help desk staff to produce and control the service experience and level of satisfaction of the service encounter. Indeed, as the customs organization launches its automated systems to enable its services to be accessed from a remote location by the members of the trade and its internal users, helpdesk is the first and last line of defence against service failure. In the event of a service failure, usually, it is beyond the helpdesk to deal with the situation and the senior management has to step in to carry out the damage control or ‘service recovery’ operations.

5.8.4. Help desk as a vehicle of value delivery

Like the nature of service itself, the worth or value of the helpdesk to Customs service delivery is also is hidden and intangible. It is difficult to measure, but linkages can be established with measurable factors such as (i) business continuity (ii) complaints (iii) preferences in service options (iv) improvements in cycle times (v) loss of productivity due to technical issues.

The efficacy of the helpdesk is integral to the image of Customs as an effective service. The relevant processes and functions that are related to helpdesk but are integral to service delivery are:

≡ Web content management: With the popularization of the Internet as a medium, it is the administration’s communication tool of the first choice for developing the informed client. It is asynchronous – the client can use it at will and on his/ her own without having to speak to anybody. The helpdesk operations and processes should complement the website and be a part of the communications mix along with the web-content and other elements of the media/publicity plan. Help-desk is often the last line of defence in a service delivery strategy but could continuously add to the FAQs and “do-it-yourself” part of the service offering.

≡ Client self-learning: Very often, customs administrations have had to struggle while introducing new remote services such as EDI or remote filing. Regardless of the training inputs given and workshops organized to train the users, there are always initial errors that cause service failure. The self-learning by clients happens in cycles of continuous learning and improvement. Client self-learning is a goal and helpdesk an integral part of the strategy.

≡ Change management: Helpdesks can play a frontline role in change management. Technology and business process guidance in a changed scenario is a challenge. Whenever it is necessary to deploy new technology/business process, the helpdesk agents would remain the centrepieces in the strategic planning activity and the overall client assistance plan. The helpdesk could work proactively in order to minimize service activation risks even as only tested service released. Helpdesks play an absolutely vital role in the building and testing of new services and the “release to production” event. Helpdesks are able to report gaps in the end-to-end service that may have been planned.

≡ Knowledge management: Helpdesk is both a knowledge acquisition facility as well as a solutions sounding board. If a question such as “Which are the top three irritants that the users face?” is floated through the helpdesk, the problems facing the services would be known immediately. The call management facility can handle the number and level of calls in different service areas. Requests can be categorized and “solutions that worked” can be documented in the helpdesk database. This could save time for helpdesk agents and Customs clients by direct access to solutions knowledge-base.

≡ Service levels management: While helpdesk is a critical part of service-levels reporting, it often works in conjunction with other tools and sources that gather information regarding service discontinuities. Very often, automated tools are deployed to monitor the availability of the ICT devices, services and processes. They come in handy in putting together, the big picture that depicts service levels.

5.8.5. How to set up a help desk?

A helpdesks requires five components:

(1) The ICT Component: To activate the help desk, some Information & Communication Technology components are required. These components enable the helpdesk agents to access information that is relevant in servicing the requests in a timely manner. Today, most hardware and software components provide a facility for remote monitoring. Additionally, there is a need for telephone lines with interactive voice response (IVR) in the front end, which would be backed by a call agent. To handle proper routing of calls and management of call volumes, there are a number of call centre solutions available, which ensure call agent productivity. These solutions are a mix of hardware and software. Calls are to be logged, resolved and monitored for effective resolution.

(2) The Human Component: Providers of helpdesk service are personnel that would come in contact with the clients to deliver information and services. There are two ways in which providers can be procured. (a) Outsourcing, which implies entering into contract with a service provider who specializes in help desk design and implementation. It is usually referred to as Business Process Outsourcing (BPO). It is also often aligned with a strategy of outsourced facilities management and managed services. (b) If the services are provided by the internal staff, it is called in-sourcing.

Customs, the world over, are using increasing levels of ICT for gains in productivity and opportunity for redeployment of manpower. This opportunity could be used in establishing a helpdesk function within the organizational structure. The IT wing can make a beginning by providing the helpdesk function on IT services. Later on, the entire clientele (both internal and external) could be covered.

(3) The Knowledge Component : Information about the critical processes that contribute to service delivery cycles must be available remotely at the helpdesk. Incidents that can lead to service failure should be mapped on fishbone diagrams (ichikawa cause effect charts) and all causes of service failure that arise out of equipment and software failure must be monitored and serviced remotely from the helpdesk. Over a period of time, call resolution cycles lead to the creation of a knowledge base of successful solutions, which could be made use of in future incidents of like nature.

(4) A helpdesk model : The uppermost concern in building a helpdesk model is the business-helpdesk alignment. The help desk model must be based on the client service premise that users must have a single point of contact (SPOC) that understands the client’s needs and service objectives (which should be documented). The client may have a business issue or a communication issue and the help desk should be able to handle both

(5) Training: SPOCs need to be trained so as to be credible, patient and capable of remaining poised and calm in stressful situations, particularly when dealing with an irate client. Training should include proper scripting of service encounters so that call resolution is properly directed and resolution times are reduced. Specialists may back SPOCs as the last line of defence. Logging of calls would be the last option to be used by the specialists and only in cases where their real-time efforts have failed. The help desk model must include the call flow, the support matrix and the call escalation matrix.

Capacity planning of the helpdesk requires consideration of both call variety and call volumes. The “variety” factory is dependent on the services portfolio (business needs) and specialization needed among the agents but can sometimes be dealt with if the agents are multi-skilled. Multi-skilling of agents would lead us to the homogenous desk handling both business and technical issues. Call volumes however, are difficult to predict, as are call arrival patterns. Normal rules of sizing for service counters apply equally to determining the number of helpdesk seats, except that users have low tolerance to waiting times in a remote servicing environment. Spikes (sudden increase) in call arrivals, hours of coverage, situations of new business processes and technology induction has to be factored in.

The helpdesk architecture could be centralized or distributed. However, the agents running the helpdesks should be able to track and manage the client’s requests submitted by phone calls, email, the web and wireless devices (PDAs). The agents should be provided with a simple work process that is easy to manage. The workflow should be governed by automated business rules and support tasks since timely response to clients is of the essence. The information desired by the clients or needed for client servicing should be available in ready clicks of the button and should as far as possible be aligned with web-based self-service, where the clients choose either to service/solve their own problems or contact the helpdesk. The IVR could similarly be configured.

5.8.6. How well is the help desk doing?

The performance of the helpdesk is very difficult to measure as we are dealing with several intangible and momentary events in remote service delivery. However, we need to measure the degree of success of the helpdesks. Objective and result-oriented metrics need to be developed to gauge the helpdesk success factors. Here is an illustration:

	METRIC	METHOD OF MEASUREMENT
1.	Credibility, Sincerity & Politeness	Surveys among Clients
2.	Response times	Call sampling, call routing and monitoring
3.	Call resolution times	Number of calls/ incidents Number of resolutions Time spent on calls Number of unique clients handled Gross number of first contact resolutions From time-stamps in Call Management and call logging databases.
4.	Call duration Vrs idle time	Same as above
5.	Effective utilisation of client training opportunities	Call agent reports Surveys among Clients
6.	Promotion of client self-learning	Number of FAQs; reduction in calls on the subject.

5.8.7. Impact of help desk on Customs operations

There is a need to integrate the Client Assistance programs with the helpdesk as informed clients support and enhance voluntary compliance. A professional and structured client support service can improve the levels of compliance simply by making it that much more easy for the clients to comply. Clients would then know that they have a voice and that there is someone that listens to them. Technology today can bring all information to the client’s desktop but the simple reality is that clients still want to contact and communicate with human beings that can empathise and resolve their issues. The concept of a help desk always follows the need to improve support and can be used as the cutting edge for change management.

6. Overview of main application areas

(Standard 7.1)

6.1. Introduction

There are many areas in which the introduction of IC technology can benefit Customs. The following section outlines the principal Customs processes and procedures on which IT can have a very significant impact. The main areas are:

≡ Cargo Inventory Control;

≡ Goods Declaration Processing (import and export, transit, inward processing etc.);

≡ Release Notification;

≡ Customs Enforcement;

≡ Selectivity;

≡ Advance Passenger Processing (Traveller Processes);

≡ Revenue Accounting;

≡ External Trade Statistics;

≡ Management Information Systems (MIS); and

≡ Reporting;

≡ Data Storage;

≡ Trader Partner registration;

≡ Office Automation;

≡ Customs Intra- and Extra-net.

Ideally, a Customs automated system should be capable of performing all these functions. Some countries have implemented comprehensive systems of this type, but in many others only a few functions have been automated or automation is confined to a limited number of high-volume ports, airports, etc. Many of the applications listed have a bearing on other applications. For example, data captured from goods declarations in a goods declaration processing system might be used by a revenue accounting system to produce accounts and by an external trade statistics system to produce statistics. Similarly, information stored in an enforcement system could be used by a cargo inventory control system, a goods declaration processing system or a passenger processing system for Customs control purposes. In many cases systems share hardware (central processor, VDUs, printers, telecommunication network) and computer files.

It is not always feasible or practical to develop a comprehensive Customs computer system covering all processes and procedures at once. However, when a system is being designed, every aspect needs to be identified, including processes, databases, interactions between different processes and data. The system should be designed on a modular basis. This enables distinct parts of the system to be developed at different times and integrated with other parts or other systems, as necessary.

6.2. Data validation

Computer systems must:

≡ identify and report critical errors; and

≡ identify and report possible errors (i.e. apply judgmental criteria to the data).

Errors can be detected at two stages:

≡ The first is at input. This is sometimes referred to as the data validation or vetting stage and normally deals with absolute errors;

≡ The second is at updating when, as well as detecting absolute errors, the system may perform some credibility checking using master file data for comparison purposes.

It is possible to combine these two stages but for this the master files must be on-line at data capture.

Typical input stage checks:

Type	Explanation	Examples
Presence	Checks that all the necessary or mandatory fields are present. This is especially important if there are optional fields which may become mandatory if certain other optional data are supplied	The “trading partner’s number” must be present if duty deferment is claimed
Size	Checks that the correct number of characters is present in a field	If the field “tariff code number” has a fixed field length of 8 characters, then the data in this field will be rejected if there are not 8 characters present
Conformance check	Checks that numbers or codes are contained within the prescribed code-list	If a list of codes has been allocated in the range 7000-7999, then anything outside this would be rejected. Country of Origin must conform to ISO 3166 Country Codes.
Character check	Fields are checked to ensure they contain only the correct type of character	If the data element “country of origin” should be in two-character alpha format, the data will be rejected if any numeric characters are detected
Check-digits	This is a self-checking number created by a mathematical formula or algorithm often known as a modulus. It is used to identify either false numbers or numbers which have transcription or transposition errors.	A trading partner registration number can be checked for validity by subjecting it to the same calculation that created the original check-digit
Reasonableness	Before processing, quantities are checked to see if they are abnormally high or low.	Is it reasonable for a super-tanker carrying crude oil to declare 100 tonnes?

The following checks can be done at updating time:

New records	If a complete new record is being input to the master file, there will be a check to ensure there is no duplication.
Deleted records	If a record is marked for deletion, there will be a check to see if the record exists. If it does not an error will be signalled.
Consistency	Before a master file is amended, there will be a check to ensure that the new data are consistent with those already held on the master file. For example, when the payroll master file is updated with overtime payments, a check will be made to see if the employee is entitled to overtime pay.

Other checks known as credibility checks (reasonableness is one example), which rely on pre-set parameters, are used to determine the quality of the input. These are generally comparison checks which attempt to identify incompatible data (e.g. a ship sailing from New York is unlikely to discharge its cargo at Heathrow; price of a certain commodity from a particular country lower than expected, etc.).

When an error is discovered, the normal procedure is as follows. At input to the system, errors will cause rejection and will have to be corrected and re-input. Credibility checks are not always fatal and processing is usually allowed to continue but the situation is reported for further investigation before final acceptance or rejection. An automated monitoring sub-system may be included to ensure that reported errors are addressed within a specified time-scale. The system may also automatically reject or accept any reported errors not addressed within the specified time-scale and produce audit reports on errors and how they were resolved.

6.3. Cargo inventory control

The control of cargo from time of arrival until duty has been paid or secured and the goods cleared presents many problems for administrations. Customs must ensure that all cargo arriving in its territory can be properly accounted for. The process of manually matching paper-based records for this purpose is cumbersome, error-prone and labour intensive. In an automated cargo control system, manifest data and Customs declaration data can be matched automatically. Data may be amended in order to record any overages or shortfalls following Customs examination of the consignment. Cargo data may be screened against predetermined selectivity criteria in order to alert Customs officers to high-risk consignments. Following presentation of the goods declaration for the goods in question the computer will automatically write-off the cargo inventory record or produce a discrepancy report for follow-up action. Reports of cargo not entered within predetermined time limits are usually produced for further investigation.

In certain circumstances Customs do not maintain their own computerised cargo inventory control system but rely on the automated systems of carriers, port authorities, etc. Customs maintains control over such systems by means of supervisory audit. This approach to cargo inventory control can provide a cost-effective solution for Customs, particularly as the majority of carriers and port authorities are automated.

Accepting automated pre-arrival cargo manifest information into the Customs system enables Customs to make an initial risk assessment. In many cases, where the goods are low value or unrestricted, no further assessment may need to be carried out.

6.4. Goods declaration processing (import and export)

(Transitional Standards 3.18 and 3.21)

The processing of goods declarations for import and export is one of the major tasks facing any Customs administration and many administrations have realised major productivity gains by automating this process.

Data can be captured in the following ways:

≡ keying of data by Customs officers;

≡ keying of data through Direct Trader Input, by trading partners or bureau services; and/or

≡ using data transmission.

Once the goods declaration data have been entered into the computer system, they will be subjected to a number of processes. The core processes are:

≡ data validation (see 6.2 above);

≡ classification and origin;

≡ value control;

≡ duty calculations;

≡ duty collection (customs duties, VAT, excise, etc.)

The implementation of an integrated tariff database will enable any restrictions or preferences linked to the declaration to be quickly and accurately identified and ensure that the correct duty rates are applied.

The accurate valuation of goods, including national and international measures, is the basis for correct duty calculation. A valuation database with up-to-date data can be used to identify acceptable values for specific goods from particular countries. The database can also highlight valuations that fall outside acceptable ranges.

Once the duty has been calculated (including currency conversion), the information can be transmitted to the revenue accounting system.

During the course of this processing the user will be notified of any errors by system-generated messages and will have an opportunity to make corrections. He will also be notified of any supporting documents which may be required before the goods can be cleared, e.g. licences, certificates of origin, etc. When Customs formalities are complete, the system produces a release note (see also 6.6). Where the cargo inventory control function is also automated, the cargo data and goods declaration data can be reconciled and the cargo inventory written off.

Goods declaration processing systems can also produce periodic reports for trading partners. These may show the amounts owing under deferred payment so that funds can be transferred electronically from the trading partner's account to Customs.

Accepting automated pre-arrival/pre-departure Customs declaration information allows Customs to carry out all the necessary processing, including accounting for duties in advance of the goods arriving physically in the Customs territory or, in the case of exports, the goods leaving the Customs territory. Any errors can be notified to the trading partner in advance, thus allowing corrections to be made and reducing potential release time delays.

Pre-arrival/pre-departure Customs declaration information is processed using the same routines as for normal declarations. Generally, the goods are not granted release status until the manifest details (incoming/outgoing) have been entered into the system, thus proving that the goods have actually arrived in (will leave) the Customs territory. In some cases release status may be held back to reduce the possibility of fraud, such as the switching of the goods at the last moment. However, where a trading partner is authorised (this would normally be indicated in the trading partner profile held on the Customs system), it may be possible to indicate release status before the goods arrive. Release status is not normally notified until after a waybill has been issued by the carrier.

6.5. Data reconciliation

For Customs, automated data reconciliation or matching is one of the most important system processes, for example, between cargo inventory control and goods declaration processing systems. Any discrepancies between the matched data can be highlighted and a report on over- or under-declarations generated.

Computerised data reconciliation techniques can also be applied to the Customs procedure of “temporary admission subject to re-exportation in the same state”.

As part of the automation of the revenue accounting system, the reconciliation of actual duties owed, as extracted from the goods declaration information, can be matched against receipts to produce timely and accurate accounting information. Where drawback is concerned, the accounting system can be used to validate claims.

6.6. Release notification

(Transitional Standard 6.9)

While goods declaration processing is definitely an area suitable for automation, electronic release notification can be implemented as a separate initiative. There is much to be gained by interfacing with existing automated release systems and capturing the release for distribution via the Internet or electronic mail to one or more trading partners. Moreover, an electronic release notification system can be implemented even if all the transactions are processed on paper. The timely distribution of electronic releases can bring benefits for both Customs and its trading partners, in terms of faster release times.

6.7. Customs enforcement

(Transitional Standard 6.9)

The advantage of using IC technologies for control purposes is the ability to make information easily available to all authorised Customs officials. Automation opens up the possibility of accessing information held on databases maintained by other law enforcement agencies, such as police records, immigration files, etc. The application of IC technologies also allows Customs officials to assess various data, such as selectivity criteria, speedily and accurately, in order to identify their usefulness and helps them to react quickly to changing circumstances. However, an optimum balance needs to be struck between the need to enforce regulations against non-compliant trading partners and, on the other hand, the need to ensure maximum transparency for the rest.

In ensuring compliance with Customs regulations, in order to make efficient use of scarce resources, Customs must employ selectivity and risk assessment techniques. While these techniques are not necessarily dependent on information technology for their implementation, they cannot really be applied efficiently and consistently without it. In an automated environment the same selectivity and risk assessment principles can be applied to both goods and persons.

6.8. Selectivity

This is the process that will determine whether or not a particular consignment or person needs looking at more closely. In an automated environment four selectivity filters can be applied, namely international, national and local profiles and a random selection system.

The first two of these are based on a system of profiles built up from the (international) Customs knowledge base and by using data analysis systems to assess the risk of loss and non-compliance. Artificial Intelligence and Expert systems such as pattern recognition can be of great help in supporting risk assessment and profiling policy. (The identification of risk and the typical data elements used in profiles are covered in detail in the WCO Guideline on Customs Control.)

The system designer should be aware that for building up a set of profiles the system needs to be flexible and capable of handling not only simple individual data elements but relatively complicated combinations of data elements as well. Using combinations allows Customs to fine-tune its targeting capabilities. Thus, Customs might, for example, only want to select a particular commodity if it comes from a particular country and not if it comes from any other country. Appendix 2 and Appendix 3, to this document outline the conceptual approach of a selectivity system.

The principal difference between international/national and local profiling is that international/national profiles are mandatory for all Customs offices whereas local profiles only concern a single Customs office or a small group of offices. However, information from local profiles should be used as part of the general risk analysis, and where appropriate, upgraded to national status. All profiles should be reviewed on a regular basis. For security purposes, steps should be taken to identify those authorised to change profiles, at both levels.

The random selection system uses an algorithm to select a declaration for further examination by Customs.

It is also important for the system to allow for monitoring of the co-ordinated interaction between the three levels of selectivity so that the overall target for examinations is not exceeded.

The system will also have to be designed to ensure that all the data go through the international/national profiles but only the declaration data relevant to a specific region or Customs office go through the local profiles for that region or office. Facilities are often included to enable profiles to be switched off temporarily by authorised managers.

6.8.1. Risk Management

Risk Management is fundamental to the effective targeting of consignments for examination. (Methodologies needed to conduct risk management are outlined in the WCO Guideline on Customs Control).

Selectivity profiles are only as good as the information they contain. Regular review of profiles will tell Customs officials which data elements and combinations of data elements have successfully detected non-compliant declarations. Analysis of the declaration information itself will also afford clues to trends and identify potentially high-risk consignments.

6.9. Advance passenger processing

Advance Passenger Information (API) allows Customs to expedite passenger processing. The full benefits of API cannot be obtained nor can it be used efficiently without co-operation between the border control agencies (Customs, police, immigration) and the carriers (airline and shipping companies, etc.). The Joint IATA/CCC (International Air Transport Association/Customs Co-operation Council) Guidelines on API specify the maximum data requirements Customs should request and the standards to be used. International standard messages that allow for the exchange of API data already exist.

6.10. Revenue accounting

For many Customs administrations revenue collection is one of their primary functions. Therefore the automation of the revenue accounting process is an essential part of any integrated Customs IT system. A revenue accounting system must:

≡ account for all duties collected and refunded;

≡ provide a mechanism for the collection and refund of duties at the time of clearance;

≡ provide a mechanism for the deferment of duty payments for a specified period.

The application of a deferred payments system requires the establishment of a trading partner registration system. This controls the guarantees and identifies the revenues payable over a specified period of time. Details of a trading partner registration system are set out in section 6.13 of this document.

In a revenue accounting system the following tasks are ideally suited to the application of IT:

≡ automated control of duty security;

≡ maintenance of the trading partners' deferred payment accounts; and

≡ production of fast and accurate revenue accounts.

At the time of clearance, duty can be collected by accepting cash, cheques, bank drafts, credit cards and debit cards from the declarant and/or by using real-time electronic funds transfer (EFT) payment methods.

Customs must be able to reconcile the actual duties collected with the total duties calculated by the goods declaration system. Typically, the system should record the actual duty amounts collected for each transaction together with the Customs applied declaration number and the means of payment. Normally, the type of duty (excise, Customs duty, export tax, etc.) with the corresponding amount is also recorded, thus allowing the Customs authority to determine for each declaration how much duty is collected for each duty type.

The acceptance of payment cards means that Customs must install the necessary technology linking the Customs offices to the banking system, in order to validate the details on the card and ensure acceptance of the total duty amounts.

The application of a deferred payments system differs significantly from the collection of duty at the time of clearance. Such systems are based on maintaining individual accounting information for each approved declarant or trading partner. Normally, a maximum limit on deferred duty is agreed between the trading partner, Customs and the trading partner’s bank through the issuing of a guarantee. Details of this amount, together with details of each transaction (Customs declaration number and duty payable), are maintained on a database, which is linked to the trading partners registration system. Operating and maintaining a manual system requires extensive resources and is more open to fraud and error. Moreover, it is not practical to operate a manual deferred system on a national basis (i.e. one account per trading partner to cover transactions for every location). However, with the implementation of an automated revenue collection system, a national deferred payment system can be easily administered.

In an automated environment the latest deferred account balance is always available, whereas in a manual environment this cannot be guaranteed. Furthermore, in a manual environment there will always be a risk of the deferred duty amounts exceeding the guarantee. This could expose the Customs to revenue loss. An automated revenue accounting system, on the other hand, will not allow the trading partner to exceed the guarantee limit. If the duty amounts for a particular transaction are greater than the balance of the guarantee, the system will alert Customs.

Where information is exchanged electronically, the Customs system will send a response message to the trading partner indicating that duties cannot be deferred due to insufficient credit. The trading partner would normally be able to submit a request for information concerning the deferred account balance or a statement of the account.

When the duty becomes payable, the total amounts owed by each approved trading partner together with their bank account details (account number, branch sort code, etc.) should be transferred to the relevant bank. The question of agreement between Customs and the banks on the information exchange standard and the medium (EDI, tape, disc, Internet) will need to be addressed. International standard messages designed for use in the EDI environment are available for the transmission of payment information.

6.11. External trade statistics

As the declaration database will also be the primary source of external trade statistics data, these requirements will need to be considered during the database design phase.

6.12. Management Information Systems (MIS)

Once data is held electronically, it is can be analysed using proprietary software or programs written in-house. Before choosing one of these options it is essential to undertake an analysis of the types of queries and reports required. Data analysis tools can be used to do simple things like extracting every occurrence of a name or for complex processing like merging related pieces of data from various files to produce a report not otherwise readily available.

These techniques are of great value in enforcement and fraud investigations. However, MIS can also be used by management to ensure that resources are used efficiently. Reports can be produced on the number of declarations processed in a particular Customs office, the identification of peaks and troughs in the work flow, types of consignments, etc.

6.13. Reporting

In building a Customs automation system, administrations need to develop a facility that allows for the automated production of pre-formatted batch reports on a daily, weekly, monthly, or annual basis. It may also be useful to develop an ad-hoc reporting tool that allows staff and management to create their own reports. A well-designed reporting facility allows Customs to build its own reports based on the various types of data contained in the Customs systems.

6.14. Data storage

Administrations need to take into consideration the legal requirement for storing data. Stored data can also facilitate the reporting system designed, as well as being useful for building risk assessment and enforcement tools.

There are many ways to store data, including on magnetic disks such as hard disks and on magnetic tape. New technologies also allow data to be stored on optical disks (CD and DVD).

6.14.1.Data retrieval

A retrieval system allows Customs on-line access to historical entry data. Entry data that were keyed or transmitted by EDI can be viewed on line at the header/trailer, sub-header and entry line levels. A good retrieval system will allow a user to view all versions of the entry data with the current version being displayed first.

6.14.2.Data mining

Data mining can best be described as a business intelligence technology that employs various techniques to extract comprehensible useful and hidden information from a population of the stored data.

Data mining makes it possible to discover hidden trends and patterns in large amounts of data and for that reason is very useful for risk assessment. The output can take the form of trends or patterns that are implicit in the stored data.

6.15. Trading partner registration system

Trading Partner Registration Systems are often developed as part of a deferred accounting system but can be used for other purposes, for example, to identify which special facilities the trading partner has been allocated by Customs. Such a system will typically hold basic trading partner details such as:

≡ trading partner unique registration number (common across all agencies, where possible);

≡ trading partner details (name, address, telephone number, etc.);

≡ bank account details (bank name, address, account number);

≡ guarantee amount (the maximum monetary amount guaranteed by the trading partner’s bank);

≡ duty debit date (date when the duty should be debited from the trading partner’s bank account);

≡ special Customs procedure facilities (periodic declarations, bonded warehouse, etc.);

≡ a list of relationships with a parent company and/or branches, where these exist.

The declarant will be required to quote the registration number on each declaration. Then duty details can be matched against the correct deferred account or a particular facility or Customs procedure can be activated. Each individual account should hold the declaration number and date together with the total duty amount for the declaration. A running balance of the current guarantee amount should also be maintained.

The trading partner registration system should be accessible only by other Customs systems and in view of the significant privacy implications, Customs access should be strictly controlled with appropriate security and privileges.

6.16. Customs Transit

The basic principle of Customs transit is to permit goods to move from one Customs office to another in the same Customs territory or another Custom territory without collecting the duties and taxes that may be applicable under the condition that all the requirements concerning Customs seals, time limits or security etc are met.

Electronic Data Interchange would improve efficiency and effectiveness of Customs Transit. Transit and transhipment movements can be more easily controlled in an automated environment. The declaration information can be captured at entry and matched and written-off when the goods leave the Customs territory. Basic validation and credibility checks are carried out on the data and a unique declaration number is allocated by the system. At the point of departure Customs access the original details using the unique declaration number.

The use of automation allows any incomplete or mismatched transit movements to be identified in a timelier and more efficient manner.

Transit control could benefit greatly from the exchange of information between Customs administrations. The timely sharing of such information would help to reduce the opportunities for transit fraud. The benefits of using IC Technology in national transit equally apply to international transit.

Currently there are on going developments concerning the use of EDI in the transit procedures. Two recent examples are the EC’s New Computerised Transit System (NCTS) and the system being developed by the International Road Union the Safe TIR.

6.17. Other applications

(Transitional Standards 9.3 and 9.4)

In addition to the application areas already mentioned, other Customs functions that can be automated include:

≡ the refund of Customs duties already paid (drawback);

≡ quota administration;

≡ administration of Customs fines, penalties, etc.;

≡ binding tariff information (BTI);

≡ classification decisions;

≡ warehousing,;

≡ clearing of declarations (manifest lines cleared by subsequent declarations, transport declarations cleared by arrival, etc.).

6.18. Office automation

Like all organisations, Customs must carry out a number of administrative functions. Office automation provides uniform support for the more general and routine office processes listed below:

Basic process	Office process	Support
Registration of letters, documents, etc.	Data registration Data collection	Database package Tracking software
Storage and distribution	Archives Retrieval Reproduction Word processing Verbal communication	Scanning/key word generator optical disk/database storage Key word search on optical disk/database access Electronic distribution using external e-mail, fax, production of optical disk, automatic printing on network printers Word processor Telephone
Communication and planning	Data communication	E-mail and electronic agenda, fax, telephone
Information usage	Information analysis Arithmetic functions	Query-tools spreadsheet
Presentation	Data presentation	GUI (Graphic User Interface) Integrated software packages

Office automation must include a balanced package of tools, selected to meet the requirements of the end user. It is important to introduce a standard office automation environment, normally consisting of, at least, a Graphical User Interface (GUI), a word processor, and a spreadsheet package.

The telephone as an IC technology tool can be of great value. More and more Customs administrations are introducing telephony infrastructures to support their program delivery and provide their customers with answers to program-related questions. This is a valuable technological tool that can be introduced into a program without major costs to an administration.

6.19. Customs Intra- and Extra-net

The emergence of e-commerce has also had an impact on the Customs service itself. Customs is becoming increasingly part of the e-Government concept by offering all its services to its customers through the Internet. e-Government is about internal as well as external communication and has great potential for significantly rationalising the dissemination of official information, both internally and externally. If implemented properly the concept of online Customs could significantly improve the service to traders and the general public. However, as with the introduction of information technology in general, the full benefits of an automated system can only be realised if the internal procedures and processes are reviewed and, where necessary, amended or even abolished prior to its implementation.

A Customs Internet web site with general public access will help the administration to facilitate access to, and dissemination of, Customs regulatory information in the public domain, particularly for travellers and participants in international trade. The web site will also ensure that the relevant regulatory information is being made available to the public in a cost-effective and easily accessible manner.

An organisation-wide Intranet will ensure access to all systems from a single terminal (PC) and central access management for all relevant tools and databases. The Intranet, where all the information and documentation received and prepared by the organisation is electronically available, will reduce the paper flow and paper storage requirements and improve the internal workflow.

In 1999, the WCO Council adopted a Recommendation on the use of the World Wide Web for Customs. This was a very important first step in the process of encouraging Customs administrations to get on-line (see Appendix 10). As of November 2003, the WCO web site had established links to more than 140 Customs administrations world-wide.

7. Outsourcing in Customs

7.1. Overview

Outsourcing occurs when an organisation purchases products or services or delegates some of its functions to an external entity, rather than performing the same work within its own facility. Such entities are usually specialists for such outsourced service or product or activity.

7.1.1. Outsourcing, off-shoring and in-sourcing

Off-shoring is another term used in the context of outsourcing, when the activity identified for outsourcing, is performed in another country. Outsourcing can be done within as well as outside the country.

Any function that is not a core competency could be sourced to others that have such competencies. Sometimes, in order to prevent loss of control of an activity, organisations induct external resources on a contract basis that then become part of the team. The objective in such a situation is to use the skills of the external resource who, while not on the department’s payroll, is likely to share the department's values and culture and will be deeply involved on a day-to-day basis. Such activity is called in-sourcing, which is different from outsourcing. It is commonly held that activities or services that are outsourced should not have a strategic value to the organisation and to attract competencies that have strategic importance, in-sourcing is a better idea.

7.1.2. The growth in outsourcing

The growth in outsourcing in recent years is partly the result of a general shift in business philosophy, prompted in good measure, amongst other things, by the advent and use of Information and Communication Technology and the need for an ‘IT specialist’ who may not be part of the main or primary function of the organisation.

Consequently organisations have tried to identify a "core competence", a unique combination of experience and expertise that relate to the main business of the organisation. All operational aspects of the organisation are aligned around the core functions and any activity or functions that are not necessary to sustain the core business are then outsourced. Today, outsourcing is embraced not only by industries and companies but has also entered the field of government business.

The functions of an organisation can be outsourced either entirely or selectively. Total outsourcing may involve dismantling entire departments or divisions and transferring the complete responsibility for a product or service or function to an outside vendor. Selective outsourcing on the other hand may target a single task or function, for which better skills exist outside the organisation and can therefore be handled more efficiently by an outside specialist.

The decision to outsource is a strategic one as it impacts the organisational design and identifies the basic organisational choice of the functions for which internal expertise is developed and nurtured and those for which such expertise is purchased. The reasons for outsourcing may not only include reduction of costs, but also re-orientation of resources to areas that are of prime concern of the organization and aligned with existing and core competencies. For non-core functions it makes business sense to utilise better skilled human resources available outside the organisation in the interest of effectiveness and efficiency.

In fact, it is said that the real benefit comes from being able to redeploy the resources functions of higher value to Customs and perhaps by focusing on the core competencies of Customs officers

7.2. Outsourcing in Customs: Potential Areas of Outsourcing: Core versus Non-core Activities

The role of Customs in International Trade has been an evolving one. Increasingly global trade relies upon the rapid movement of goods and service across borders. Trade facilitation is seen as an important element of a country’s economic policy.

Use of advances in Information and Communication Technology allows business processes to be rearranged in a flexible manner. Trade expects better services with the ability to conduct businesses from their offices.

Customs plays a pivotal role in the International Supply Chain. The need to reduce transaction costs and just in time inventory management, so as to ensure competitiveness, is increasingly expected from Customs. Customs has to fulfil these expectations through delivery of services in a timely, efficient manner.

In recent years, the growing emphasis on the need for security and for ensuring secure trade has compelled Customs to redefine its ways of conducting business. Customs therefore have to evolve a methodology not only to meet the divergent demands of enforcement and facilitation in a most cost effective manner, but also to deliver quality, problem free service to the international trading community and ensure seamless movements of goods and service across borders. Customs’ role therefore has been enlarged to include that of a service provider.

While Customs is not expected to outsource its core functions relating to security, enforcement of restrictions and prohibitions, protection of society, collection of revenue; for the delivery mechanisms, outsourcing can be a supplement to in house capabilities. Most delivery of service entails use of ICT requiring the need of IT professional skills, which is not the area of Customs’ expertise. In fact outsourcing as an option becomes necessary where quality of service is paramount. Outsourcing in such a context not only ensures efficiency but also value additions for Trade. Some of the Customs’ activities which can be outsourced leaving customs to concentrate on its core functions could be the following:

a) Management & Operation of the Customs IT Infrastructure

b) Information dissemination

c) Website maintenance

d) Facilities Management

e) Application management and maintenance

f) Call Centre and Helpdesk services

g) Publicity and Public Relations

h) IT Security & Audit in the areas of security assessments, security policy and managed and monitored services and security of buildings

7.3. Benefits of Outsourcing

7.3.1. Back to core business

By outsourcing non core functions to an external entity, Customs can focus on its areas of core competence and fulfilment of its mandate to manage enforcement and facilitation. It enables use of knowledge and expertise not available in the department and contributes directly to the quality and efficiency of service that is expected by the international trade community.

7.3.2. Accountability

Outsourcing is predicated on the understanding -shared by business and vendor alike-that such arrangements require quality service in exchange for payment. This accountability, defined through service level agreements is both practical and legal, with financial implications. The same is not possible when the service is provided by internal resources.

7.3.3. Quality

By not committing internal resources to tasks for which in house skills are not available, issues of poor attitudes and poor performance are avoided.

7.4. Challenges of Outsourcing

7.4.1. Quality of Service issues

In any situation where tasks or activities are outsourced, the danger of poor quality control is always present. This is particularly true if an activity is to be carried out both by Customs and the vendor and responsibilities are divided. Outsourcing works best when an activity, complete in itself is outsourced so that the responsibility rests with only one agency. More importantly, a vendor’s flexibility to quickly adapt to changes in law and procedure arising out of policy announcements affects both the delivery of service as well as the cost of service. The challenge lies in determining the sort of outsourcing relationship which will best meet needs and specifying it in terms of service level agreements.

Another important aspect of outsourcing, generally overlooked, is that the overall responsibility for the service delivered by the vendor remains with Customs. There is no abdication of responsibility simply because the task has been handed over to another agency. The vendor is providing the service to the clients on behalf of Customs and close involvement between Customs and the vendor is essential for maintenance of delivery standards. Regular performance assessment of the vendor has to be a recurring exercise.

7.4.2. Human Resources issues

There are arguments against outsourcing from a human resources perspective. There is a fear that outsourcing will result in a loss of institutional knowledge and decrease staff loyalty. Unless the outsourced service is a commodity -a regularly available, or an easily substitutable service- doing it within the organisation is preferable.

If human resources are key to the organisation's success there is every reason to invest in them. Investment in re-training of staff is worth more than the savings that will be generated out of reduced costs in outsourcing. Trained and aware human resources will keep alive the knowledge of operations within the organisation.

It is further argued that in-sourcing options could be considered where there is temporary unavailability of skills.Both outsourcing and off-shoring also present a challenge from the point of view of the flight of jobs across national borders.

However, outsourcing can also reduce the workload on employees, particularly when Customs are constantly faced with an increase in responsibilities without an increase in human resources. By freeing the Customs’ Officer from tedious tasks, more career development opportunities are possible

7.4.3. Security Issues:

Outsourcing of services creates flows of information and knowledge out of the organisation. Security concerns arise when sensitive client data or information is passed without authorisation in violation of domestic legislation. Protection of data and privacy may not be a violation of the same gravity in the offshore site. Theft of data could cause monetary harm to the client and may impose unacceptable legal liability to the outsourcing organisation, including outright fraud. Limiting access on information resources to the vendor poses a technical challenge. Compromises may lead to unacceptable harm to the organisation.

It is necessary that logical access to information be restricted to identified personnel and should be relative to their responsibilities. Appropriate controls need to be carefully calibrated to ensure access on a need-to-know basis i.e the principle of denial of access to all information unless absolutely for the performance of the vendor’s personnel should be followed rigidly. Access to information also needs to be periodically monitored and audited.

7.5. Conclusion: Finding the right balance

With the constant increase in responsibilities, the constraints of costs and human resources, the need for specialised technical skills required to deliver quality service, and the opportunities presented by advances in Information Technology, outsourcing is the way for the future.

For successful outsourcing, it is necessary to define the Department’s needs and to identify a vendor that can effectively integrate all the outsourced business functions so that there is no need to find individual vendors for each function. Outsourcing should not be looked as merely a task delegated to an external entity but a mutually beneficial partnership, where both Customs and the vendor are involved on a day to day basis in ensuring delivery of services in terms of predetermined standards on a sustained basis.

The outsourcing contract should clearly define responsibilities and performance criteria, outline confidentiality rules and ownership rights to new ideas or technology. Service Level Agreements (SLAs) are one tangible measure of job performance. The contract should also include the means of severing the relationship if the service does not meet expectations

8. Interfaces between IT applications

Customs should develop information systems on the basis of an integrated information architecture that could consist of the following application sub-systems and relevant databases.

Application sub-systems :

≡ Import declaration processing system

≡ Export declaration processing system

≡ Transit declaration processing system

≡ Excise declaration processing system

≡ Excise movement and control system

≡ Drawback system

≡ Risk management system

≡ Enforcement system

These information systems support the basic Customs procedures for goods processing. Interfaces are needed to enable them to communicate with each other. For example, transit systems need interfaces with the export and import systems.

Administration databases

≡ Trading partner registration database

This database may consist of trading partner data, guarantees given – for what purpose, up to what amount, by which bank – and special Customs arrangements, such as simplified procedures

≡ Integrated tariff database (nomenclature)

Including national and international measures

≡ Revenue accounting database

≡ Selectivity database

≡ Declaration databases

≡ Deferred payment database

The information architecture should guarantee the common use of stored data within Customs. Each database may be used by several application sub-systems.

For the purposes of database management it is recommended that data which are closely related to each other be stored in a single database. This means that the primary data and the relevant management data should be stored in the same administration database, wherever possible. The identification of data relationships and data organisation should be part of the initial systems analysis.

It is recommended that in developing information systems the logistical part of the Customs procedures (processing) be separated from the data relating to the Customs application (files, databases). This facilitates the re-use of functional components and makes the maintenance of the information systems more efficient and effective. Appendix 4 gives an example of the relationships between some of the main processes and databases.

9. Information exchange

(Standards 3.11 and 7.2)

9.1. Information exchange with trading partners

The principal information exchanges between Customs and its trading partners relate to the importation and exportation of goods. In the current EDI scenario this information is supplied to Customs using such international standard messages as:

≡ CUSDEC: UN/EDIFACT Customs Declaration Message

≡ CUSCAR: UN/EDIFACT Customs Cargo Report Message

≡ CUSREP: UN/EDIFACT Customs Conveyance Report Message

≡ CUSRES: UN/EDIFACT Customs Response Message

≡ CUSEXP: UN/EDIFACT Customs Express Consignments Message

To facilitate electronic processing, the trading partner needs on-line access to virtually the entire database of Customs information. Using Internet techniques it is easy to give the trading partner exclusive access to his own domain in the Customs database. Information can be provided by the database publishing method. Typically, access to the following data will be allowed:

≡ trading partner registration database (the balance of the current guarantee amount, party name and address details)

≡ administrative messages (information about system changes, updates, etc.)

≡ goods status (goods released, held for examination, request for more information, uncleared declarations)

≡ anti-dumping/countervailing duty rates

≡ error statistics

≡ currency rates

≡ tariff database (nomenclature and harmonised tariff schedule details)

≡ quota rates

≡ region/district/port codes

≡ country codes

≡ foreign port codes

≡ amount and status of refund

≡ Customs fines and penalties (paid over a certain period)

≡ binding tariff information (for goods subject to import/export)

However, before access to this information is allowed, a number of issues need to be addressed, particularly the question of copyright and fees.

The issue of copyright, in the information made available to the public, is very important, especially with regard to such information as harmonised tariff schedules. Individual Member administrations will need to address the question of the right to publish updated tariff schedules. Customs should also ensure that they have permission to publish information received from other organisations. Internet technology makes it possible to hyperlink from the Customs web site to the web sites of other (government) agencies.

The question of collecting or charging fees for making certain information available should also be addressed. For example, most national administrations charge trading partners for their tariff schedule publications and updates. In an electronic environment administrations will have to decide whether or not such fees should be charged. Before Customs disseminates information free of charge it should take into account the origin of that information and whether its owner normally charges for its dissemination.

Allowing Customs to access trading partners’ databases can increase the efficiency of cargo and passenger processing. Accessing an airline’s passenger database, for example, can help to identify passengers for further control prior to their arrival. Similarly, accessing a shipper’s database will allow Customs to identify high-risk consignments.

9.2. Information exchange with other government agencies

(Standard 7.4)

Many kinds of data flow between Customs and other government agencies, for example, trade statistics and information on quantitative quotas, restrictions, preference agreements, etc. Where government offices cannot be co-located, computer interfaces can reduce delays in exchanging information.

Where trading partners can electronically submit import/export licences, sanitary/phytosanitary certificates, etc. issued by other agencies, the computer interface enables instantaneous communication of the approval of those permits to Customs.

A “Single Window” scenario for trading partners, with all regulatory data being transmitted once only to a single regulatory entry point, would expedite the clearance process for all consignments. However, to ensure the success of such a scenario the trading partners would have to have access to all the related regulatory requirement information and it would have to be exchanged electronically. Therefore, when designing IT systems, Customs should consider not only the interfaces with trading partners but also those with other government agencies.

The development of Customs/trading partner interfaces and Customs/government administration interfaces can be facilitated by using international standards for information exchange. If trading partners operate the same standards, the software costs associated with electronic information exchange will be considerably reduced.

In the EDI environment there are currently several international UN/EDIFACT messages available for use, for example, CUSDEC and GESMES (for statistics), PAXLST (for crew/passenger lists) and SANCRT (for various licence and certificate requirements).

9.3. Information exchange with other Customs administrations

(Standard 7.4)

There is one further option which EDI offers Customs and that is the capability of exchanging data with other Customs administrations.

For example, one country's export cargo declaration data could be used as the basis for another country's import cargo declaration. This improves control and facilitates rapid clearance. Customs-to-Customs mutual assistance can be of great value if administrations have an understanding as regards the mutual recognition of goods examinations, etc. The exchange of trade statistics between administrations can help to improve their accuracy. For example, the import trade statistics from Country A could be used as the export trade statistics for Country B.

Transit control could benefit greatly from the exchange of information between Customs administrations. The timely sharing of such information would help to reduce the opportunities for transit fraud. The logical extension of applying IC technology to the national process is to exchange information with other Customs as well.

The UN/EDIFACT messages mentioned in paragraph 8.1 can also be used for the exchanges mentioned above.

The use of the WCO Unique Consignment Reference (UCR) number for Customs could also be of great help in facilitating international information exchange (see Appendix 9). As the name suggests, this reference number would be carried right through the life-cycle of a transaction and would provide a unique key for the identification of that transaction by all the trading partners. Customs should consider making provision for this data field when designing their transaction databases.

International information exchange may raise certain legal and procedural issues which may need to be addressed. Administrations who embark on such projects should involve the relevant national legal experts at an early stage to ensure that any legislative changes required are introduced in good time.

10. Communications

(Standard 7.2)

Customs engaged in the process of introducing an electronic information exchange system should recognise that success will depend on its availability and accessibility. This can only be guaranteed through the use of fully recognised international standards at all appropriate levels of system development. There are four areas of interest relating to international standards.

10.1. Data transfer options

There are three main data transfer options:

1. physical delivery of magnetic media such as tapes and disks via postal/courier services;

2. point-to-point data transmission;

3. communication networks, which provide store and forward and other value-added services.

Tape/disk

This method is slow as it requires the media to be physically exchanged by post, or by the trading partner calling at the Customs office. Media exchange can be seen as the first step toward the implementation of EC. International standard messages, as outlined in the WCO Customs Data Model, can still be used. Implementing such a system can give Customs and its trading partners valuable practical experience in the application of electronic commerce.

Point-to-point

Modems are used to connect two computers over telephone lines or satellite links so that they can communicate. Traditional telephone lines are intended for voice rather than for computer communications. Consequently, modems and telecommunications software are required before information can be exchanged.

If dedicated leased lines are used instead of regular dial-up telephone lines, the sending and receiving computers may use a communications controller instead of a modem. The essential difference between having a dial-up line and a leased line is speed. Dial-up has a much slower transfer rate, which makes it suitable for low-volume use only.

Communication networks

The typical scenario for a communication network is for each of the trading partners wishing to exchange information to have an electronic mailbox, managed by the communication network. Electronic messages are transmitted over the communication network from mailbox to mailbox. This means that, unlike point-to-point, where both systems have to be available and open to receive data at the same time, the transmission and temporary storage of information is separated from the application system. If for some reason the Customs system is not operational, trading partners can continue to send information to the Customs mailbox.

A Value Added Network (VAN) is a third-party communication network that can accept a message from any computer hardware and software configuration and deliver the message to a receiver that uses different hardware and software. A VAN can provide not only communication services but also EDI translation and security services. Most VANs can support a wide range of communications protocols. Since the technology of communications and protocol conversion can become extremely complex, a VAN offers a true value-added service by handling this aspect of the communications between pairs of trading partners, or within groups of trading partners, with dissimilar computer configurations.

Customs will need to examine the most effective ways in which to receive information. Many countries lack VAN services but do have Internet services. These tend to be cheaper than VANs but for the time being there are security implications and service-level concerns to be considered. Administrations are already turning to the Internet and World Wide Web (WWW) as a means of making vital information concerning regulatory requirements available to their trading partners.

10.2. Telecommunications

At the telecommunications level, Customs needs to ensure that the protocols used for physical connectivity are recognised ones, such as International Standards Organization (ISO) X21, X25, X400, etc. Standards also exist for Internet protocols such as TCP/IP and Hyper Text Transport Protocol (HTTP). National telecom companies, VANs and Internet service providers generally apply these standards. However, if administrations are employing private telecommunication network suppliers, they should make sure that ISO standards are being used.

10.3. Messaging

(Standards 3.11 and 7.2)

The issue of electronic information standards is one on which Customs has been able to exert a more direct influence. For a number of years Customs has been engaged in the development of electronic message standards through the United Nations. These UN/EDIFACT messages have become the international standard used in EDI. The WCO is developing the WCO Customs Data Model based on the G7 Customs Data Harmonisation Initiative. Customs should use the WCO Customs Data Model as the base document for the implementation of these message formats.

UN/EDIFACT and other EDI messages can be sent over the Internet as attachments to standard Internet e-mail using Simple Mail Transfer Protocol (SMTP). These e-mails can be secured through digital signatures using Secure/Multipurpose Internet Mail Extensions (S/MIME).

The development and rapid expansion of the Internet has opened up new possibilities for information exchange. Consequently, new information exchange formats will become de facto international standards through global use, for example, electronic forms, hypertext mark-up language (HTML), eXtensible Markup Language (XML) and a global repository, open document architecture (ODA), etc. While many of these are still under development, Customs looking at future electronic information exchange will need to take these formats into account in their business strategies.

The Internet enables SMEs to inquire about the goods status and/or the status of their goods declaration at Customs, while creating opportunities for e-pay and the archiving of electronic documents.

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Attachment A to Section 9.3 Messaging

General

In the WCO Customs Data Model (CDM) Version1.1, attentions are drawn to how to fill the EDIFACT messages corresponding to Goods Declaration and Cargo Report. From CDM Version 2.0 and beyond, focus should be shifted to the high-level semantic meaning of data and how to interoperate with other government agencies as well as industries. This Annex to section 9.3 introduces the three levels of abstraction about a data model and why the focus should be drawn to the highest level of abstraction. The artifacts included in the CDM that corresponding to each level of abstraction are referenced, wherever feasible.

External Model, Physical Model, Conceptual Model

The least abstract models, called External Models, describe specific implementations of a Goods Declaration and the reporting of a Manifest. Typical examples are the CUSCAR message conforming to CDM Version 1.1, and a WCOCAR message conforming to CDM Version 2.0.

Physical Models are more general because they describe a set or class of instances, but they still capture the technology in which the instances were implemented. A typical example is the Message Implementation Guide (MIG) for implementing a CUSCAR message, which is included in the WCO Customs Data Model Handbook Version 1.1 released in November 2003.

Conceptual Models remove the implementation technology to emphasise the concepts and meanings that define some classes of document instances. This highest level of abstraction is newly introduced in CDM Version 2.0. Typical examples are the UML Class Diagrams for all document types, the UML Class Diagrams for a single document type, and the inventory of all 250 data elements collectively known as the CDM Data Set.

Necessity of the Conceptual Model

Customs business, like most other business areas, does not change as rapidly as technology. If the CDM is only described in any specific technology (e.g. through a Physical Data Model such as EDIFACT), it will be necessary to define the CDM in each upcoming technology. Even then, it will be very difficult, if not impossible, to guarantee that the Physical Data Models in different technologies are equivalent.

By establishing a Conceptual Model and capturing all business rules in the Conceptual Model, Trade will be able to implement customs documents in whichever technologies (i.e. Physical Data Models) that fit its needs.

Other benefits of establishing a Conceptual Model

There should be less confusion because the semantic meaning and presentation rules of a data element are preserved in different Physical Models, which are derived from the same Conceptual Model. For example, the class “Transport Equipment” means “the physical resources needed to contain or restrain consignment(s) for transportation” and includes the same class attributes whether the class is used in Import Declaration, Export Declaration, Export Cargo Report, Import Cargo Report, Conveyance Report and Transit Report.

Interoperability with data models of Other/Participating Government Agencies and Trade is much easier by having one single meaning for each data element across all customs documents. For example, the UN/CEFACT TBG3 transport term “Transport Equipment” can be directly mapped to the CDM Version 2.0 class “Transport Equipment”.

10.4. Codes

(Standards 3.11 and 7.2)

The WCO recommends the use of international codes, such as ISO country and currency codes, UN transport codes, the WCO Convention on the Harmonised Commodity Description and Coding System, etc. (see Appendix 9). The use of available international codes will maximise the openness and accessibility of Customs systems. The harmonised use of codes at application level will do much to facilitate international trade. It will help simplify systems development for trading partners and other government agencies that wish to communicate with Customs. It will also make the exchange of information between Customs administrations more viable.

11. ICT Security

The business conducted by government and industry has changed dramatically over the past 10 years. Use of the Internet and community access to low-cost ICT are opening up systems to communication with a broader range of people with a growing knowledge of how to use and manipulate ICT.

While these changes have brought many benefits in terms of speed and access, they have also heightened awareness of the security risks to which our communications, our systems and our holdings are exposed.

The growing incidence of computer fraud and the possibility of systems being sabotaged or accidentally breaking down are some of the challenges that any administration employing ICT must face in managing its systems and associated business processes. Corruption or breach of Customs ICT systems can cause serious disruptions to trade and revenue collection. In more extreme circumstances they have the potential to compromise national security.

It is particularly important for Customs administrations to identify the risks and develop an integrated approach that addresses not only the physical and technical vulnerabilities but also the question of governance (i.e. procedures and business arrangements) needed to assure a high standard of ICT security.

11.1. ICT Security – Definition and goal

ISO 17799:2000 (Information technology - code of practice for information security management ) defines Information Security as the

“…preservation of confidentiality, integrity and availability of information”

where confidentiality is “ensuring information access only to those authorised”; integrity is about “safeguarding the accuracy and completeness of information and processing methods”; and availability ensures only “authorised users have access to information and associated assets”.

11.2. ICT security policy

One way of achieving this goal is to publish an ICT security policy so as to ensure that every member of the staff is aware of the issues involved and of his or her personal responsibilities.

The policy should demonstrate the management’s approach and commitment to ICT security and spell out what the administration expects of its staff. The roles, responsibilities and obligations of users should generally also be defined.

Although it is possible simply to inform clients of ICT policy, it may be more appropriate to develop user agreements that clearly set out the client’s obligations and responsibilities.

However, the ICT security policy will not in itself deliver “confidence, integrity and availability”. In any developed ICT installation, a complex set of procedures, technical solutions, legal requirements and policies, management processes and business considerations will be required to underpin the administration’s general ICT security policy.

11.3. ICT Security – Considerations

ICT security covers all the following aspects of a Customs administration’s activities:

≡ ICT organisation/operation,

≡ assets,

≡ people,

≡ access,

≡ environment,

≡ communications and operations management

≡ systems development and maintenance,

≡ continuity

≡ compliance.

These aspects are thoroughly covered by ISO 17799:2000 and it is recommended that Customs administrations carefully examine the considerations and explanations contained in that standard.

The following headings, drawn from ISO 17799:2000, will help to identify the broad areas that should be considered within any ICT security framework.

Organisational security

Organisational security is the management framework for initiating and controlling security within the administration.

It involves both the establishment of an internal management infrastructure to assign and maintain security responsibilities and roles and the consideration of specific controls that may be involved in addressing risks associated with third party access. It also covers service providers, for example, outsourced ICT service provision.

Asset classification & control

To protect its ICT assets, including information holdings, the administration needs to have both a means of accounting for assets and information and a means of classifying them in order to establish appropriate levels of protection.

Assets may include both the physical infrastructure and the databases, files and software applications that may be housed in the physical assets.

Information needs to be classified not only in terms of its security treatment but also in terms of its security rating. This rating will determine the protection afforded to the information (such as by whom and under what circumstances it may be viewed) and may even determine the types of physical assets (hardware, installations, etc.) in which it can be stored or through which it can be transmitted.

Staff security

Security clearances and staff training are important to assure an appropriate level of trust and sound practice. In addition, confidentiality agreements and specific terms and conditions of employment may need to be considered, depending on the nature of the information and the access that employees have to the system.

Compliance with security requirements should be assessed under procedures for monitoring and reporting security breaches.

Access control

Control over access to information is the key to establishing secure and trusted systems.

Access needs to be based on the administration's business requirements to ensure that only those with appropriate authority are able to view or transmit certain information. These requirements are generally documented as part of an “access control policy” which establishes the terms and criteria for determining access to systems and information.

In addition to the way in which access controls are to be administered, agencies will need to address:

≡ who is responsible for authorising access

≡ the rules governing the granting of access

≡ the levels and types of access to be made available, and

≡ the privileges associated with the various levels and types of access.

Access management rules may also be needed to decide such matters as the time that can elapse before an idle session is automatically closed, the preconditions for accessing areas of the system and even changes in permissions, which may be automatic or subject to management decision.

Network access controls and monitoring of access are also important because network connections can represent a significant risk to security. Important aspects of network access include the means by which:

≡ users are authenticated

≡ terminals and other entry points are identified and logged, and

≡ pathing of users is enforced.

A detailed discussion of the authentication of users and the options in common use can be found in Section 10.4 - Authentication.

Physical and environmental security

In developing a physical and ICT security policy, it is essential to include any possible physical risks to which buildings housing ICT, the ICT equipment itself or the ICT working environment may be exposed.

Countermeasures may range from the establishment of perimeter security to security check points, clear desk and screen policies, power supply backup, secure cabling, security measures and procedures for off-site equipment. The selection and use of any countermeasure will depend on the specific risks, the mix of equipment and the physical environment.

Communication s and operations management

To ensure that the Customs administration’s processing facilities are properly secured, it is essential to establish appropriate procedures.

This covers a broad range of issues, including:

≡ documentation and application of operating procedures

≡ change control

≡ procedural measures needed to separate different ICT environments such as testing and production environments

≡ separation or segregation of duties

≡ forward planning for capacity, acceptance of new systems or upgrades

≡ protection against malicious software

≡ housekeeping

≡ network management and controls

≡ media handling, including media storage and disposal and security of system documentation, and

≡ protection of information or software during transmission.

Further details concerning information and software exchange are provided in Section 10.4 – Authentication, which covers many of the factors that agencies need to analyse in order to assure the integrity of the information and establish the identity of the communicators.

11.3.1.Systems development and maintenance

Security should be intrinsic to systems design. This includes infrastructure, business applications and supporting business procedures.

Audit trails (or activity logs) and data validation should be a design feature. These are generally based on the administration’s business requirements and may relate:

≡ to its need to identify whether a piece of information has been changed or corrupted or to the quality and admissibility of evidence;

≡ to the administration’s electronic evidence in a court of law.

Establishing means of validating user identity is equally important for managing evidence. Cryptographic controls and user authentication are aspects that should be considered at the systems development stage.

When changing, selecting or accepting software, precautions include avoiding covert channels (a hidden “access door” that would allow unauthorised access) and Trojan codes. Access control for code changes, use of trusted suppliers, code inspection and product testing are just some of the possible strategies.

Business Continuity Management

The consequences of failure, whether by security lapse or disaster, should be considered before a business continuity plan is developed and tested.

As with any aspect of security planning, the business continuity measures adopted will depend on the risks identified, the likelihood of those risks materialising and the consequences for administration business. For many Customs agencies, a failure in the delivery of services might not only disrupt trade, but could impair national security by weakening targeting, screening, profiling and communication facilities.

Compliance

Measures for ensuring that the administration complies with any laws or requirements to which it may be subject should be considered, as well as compliance with its internal security policies and frameworks.

Relevant considerations include copyright, protection of organisational records, management of records as admissible evidence and monitoring of audit logs. (More Information Required).

11.4. Authentication

11.4.1.Why authenticate?

Within the paper-based world, there are long-accepted processes and conventions for authenticating identity and documents. For example, written signatures, witness signatures and seals are methods that have been used to authenticate identity. While not foolproof, legal and forensic methods of “proving” the authenticity of an entity’s identity and association with its transactions have developed over a long period of time and have been well tested through national judicial systems.

These methods are not necessarily transferable to the electronic world, and new methods of authentication need to be assessed and adopted.

The challenge of authentication is even greater in the electronic world because of:

≡ the breadth of access provided by ICT

≡ the increasing volume of transactions, and

≡ the ‘distance’ from the client (both geographically and in terms of relationships) that electronic transacting encourages.

This is particularly significant for Customs administrations in their compliance and enforcement roles. Any failure to link an individual firmly to his electronic identity, documents or declarations would undermine the standing of evidence in legal proceedings. It might also expose Customs systems to the potential for fraud or misuse of identity, thereby undermining confidence in an organisation’s systems and standing.

11.4.2.The electronic alternatives

There is a wide array of options available for authentication purposes. These vary considerably with respect to the degree of assurance of identity offered and the degree of reliability with which a party can be linked to its message.

Authentication methods range all the way from a simple password system to the complex systems provided by public key cryptography. Each method or technology has its own strengths and weaknesses. The various methods available are briefly surveyed below.

Passwords, PINS and User IDs

The commonest method of authentication for computer systems today is the password. It is estimated that in 2002 more than 90% of IT systems still relied on passwords or personal identification numbers (PINs) as the primary means of authentication. A roughly similar percentage of e-business sites use passwords as the primary method of customer authentication.

The password relies on being a secret known only to the holder and issuer with access being allowed only where the user’s password matches the issuer’s records. As with many authentication systems, it depends on users maintaining security around their online identity – their password.

From a technical perspective, the password model is susceptible to “brute force” or “dictionary” attacks. These usually involve repeated and automated attempts at gaining unauthorised access through trial and error. For this reason, password systems are reliant on the security of the channels through which the password is communicated and on the security practices and arrangements of the issuer.

At best a password system authenticates the identity of the user. It does not authenticate the material being sent or address the integrity of the message content.

While password systems have the advantage of low-cost implementation, they are best suited for one-off use or for use in circumstances where the data or system to be protected has a low security threshold.

Password systems can be made more secure by combining them with other security and authentication methods such as encryption, user IDs or challenge and response.

Good password management practices are essential. Management policy decisions will determine the effectiveness of any password system and the degree of support that is needed to maintain users. These decisions may include simple security policies on such matters as:

≡ the length, composition and life span of passwords

≡ the number of failed log-in attempts permitted

≡ the procedures and processes for issuing, reissuing and suspending passwords, and

≡ ensuring that users are kept aware of the need to protect their

password properly.

One-Time Use Passwords

One-time use passwords get around the main drawback of conventional password systems, namely, the fact that the password can be lost, stolen or sometimes cracked and then used repeatedly without authority.

A one-time password system generates a unique password for each session. This is normally achieved through a connected piece of hardware that automatically generates a password. The Customs administration’s system knows which passwords or sequences are associated with which users and will allow access only where there is a match.

This approach has the disadvantage of requiring all users to purchase, or be supplied with, the necessary hardware and software. A broad-based roll-out could be expensive and might be more suitable for discrete groups of users. A weakness that this system shares with other authentication systems is that it too relies on the security practices employed by the users to maintain control over their password device and the means of accessing it.

Challenge & Response Systems

Challenge and response is commonly used in combination with other methods such as passwords.

The concept involves the user providing answers to a question or a series of questions to which only the user is likely to know the answer. In some versions of this approach, the user may even be asked to suggest the question. The questions are then used to “test” the identity of the individual when, for example, user records need to be amended or a new password needs to be issued. Challenge and response can also be used as an additional authentication check when logging on.

Depending on the administration approach and requirements, challenge and response can prove complicated in operation. The management process for dealing with it may involve significant cost and have ongoing resource implications for the administration.

Cookies

Cookies are tokens placed on a user’s computer that can be used to recognise a user’s machine.

As a means of user authentication, cookies work on the assumption that each machine is only used by a single entity. They cannot therefore be viewed as a reliable means of authenticating a particular identity.

Because cookies can be used to track an individual’s browser habits, there may also be serious privacy issues that emerge where they are misused. Cookies can also be stolen and used to gain access to an administration's systems by fraud. Moreover, they have low levels of user acceptance.

Biometrics

Most authentication methods do not associate a physical identity with the user when he or she accesses the administration’s systems. Biometrics seeks to address this by providing a direct link between the known physiological or behavioural characteristics of an individual and the user.

Digitally encoded and unique voice patterns, finger or palm scans, retina scans or face scans, for example, are compared each time a user seeks access to the system.

Biometrics relies on the user having access to scanning hardware each time he accesses the administration’s systems. It also relies on the security of the digital code that represents the individual’s identity.

Apart from being expensive, the broad application of biometrics might encounter difficulties in gaining user acceptance of some of the biometric scanning methods employed – for example, in many cultures, iris scanning can be viewed as intrusive.

Conventional Encryption

Conventional cryptography is commonly known as “symmetric cryptogaphy”. Symmetric algorithms involve the sender and receiver using the same key (a computer file with a unique identifying code also known as a secret key). In a very simple example, if the message to be transmitted was the number 20, the sender and receiver could agree that the algorithm that they would use would be to subtract the key from the message. Both parties might then agree that the key would be the number 2. The sender encrypts the message to the number 18, sends it, and the receiver decrypts it by adding the key to obtain 20 again. As long as a strong algorithm is used and both parties keep their keys safe, good levels of confidentiality can be attained. Symmetric algorithms also provide fast processing times.

Figure 2: Elements of a system using symmetric keys

The principal weakness of this system, however, is in the issue and distribution of the keys that identify the user and the issuer to each other. Not only must a separate set of keys be agreed with each user, but the keys need to be physically provided to the client to maintain some certainty of identity. Where courier services and third parties are used to deliver the key, the security of identity can be compromised. While symmetric algorithms provide fast processing times for encryption and decryption, the key management needed to assure authentication can prove costly and inconvenient for broad-based use.

Public key cryptography (digital certificates)

The problems of key distribution associated with conventional encryption are solved by public key cryptography. Public key cryptography uses separate pairs of keys for authentication (or signing) and encryption (or confidentiality). The key pairs are referred to as public keys and private keys. Public key cryptography is often referred to as ‘asymmetric’, as the public and private keys are different.

The private key is known only to the owner, whilst the public key can be published and known by anyone. A message encrypted using the public key of the receiver can only be decrypted using the corresponding private key. In the RSA standard (named after the inventors), the keys are constructed by manipulating two very large prime numbers but the mathematics behind the algorithm are too complicated to be discussed here. Thus, anyone can encrypt a message to the intended receiver, as long as they know his public key. The drawback with using asymmetric rather than symmetric keys is that the computations take longer.

Workflow of a public key encryption system

1 = Document in clear text not electronically signed

2 = Private key of A to encrypt the control value of data + time stamp (= digital signature) (Integrity)

3 = Document in clear text electronically signed

4 = Symmetric algorithm to encrypt the content (Confidentiality)

5 = Document encrypted and electronically signed

6 = Document equals 5

7 = Symmetric algorithm to decrypt the content (Confidentiality Check)

8 = Document equals 3

9 = Calculate control value of data + time stamp; public key of a to decrypt received control value; match both values (Integrity Check)

10 = Document equals 1

Figure 3: Workflow of a public key encryption system

While asymmetric cryptography solves some of the problems that may be encountered with key distribution, it still relies on the user maintaining proper security over his keys. It also raises questions about how user identity is validated at the time the key is issued.

Public Key Infrastructure

Public Key Infrastructure (PKI) seeks to address unresolved problems in conventional asymmetric cryptography. Using asymmetric cryptography as its technical base, PKI provides a framework for securing message content, authenticating the sender and validating his identity.

These goals are achieved through the introduction of a digital certificate. A digital certificate is an electronic document signed by a trusted Certifying Authority, which identifies the key holder and the business entity (where appropriate) he represents. It binds the key holder to a key pair by specifying the public key of that key pair.

PKI involves a complex of legal and organisational elements to operate effectively. These, together with the working of PKI, are considered in greater detail in section 10.9.

PKI offers strengths in the areas of authentication, message integrity, confidentiality and non-repudiation within a single solution.

One area of vulnerability, however, is the reliance on third-party processes for checking identities and issuing certificates based on those checks. This can be remedied by tightening specifications or performing the function within the administration, but only at extra cost.

Another weak spot is the certificate holder’s own security and management practices. If the owner loses (or allows others to use) his certificate, then its authentication can no longer be relied upon.

Secure Sockets Layer (SSL)

The Secure Sockets Layer (SSL) protocol is a set of rules governing the authentication of servers (such as web servers) and encrypted communication between clients and servers. The protocol was developed to secure the transmission of data over the Internet. The authentication process under SSL uses public key encryption and digital signatures to confirm that a server is the server it claims to be. It does not authenticate the user. Once the server has been authenticated, the client and server use symmetric key encryption techniques to encrypt the information they exchange. A different session key is used for each transaction. This impedes a hacker’s ability to decrypt messages.

It should be stressed that SSL and Transport Layer Security (TLS) only provide confidentiality and integrity for the server. They do not provide non-repudiation and unless supported by a combination of appropriate private key protection and user willingness and ability to validate digital certificates, they do not provide effective authentication. SSL is well known because of its use in Netscape Navigator and Internet Explorer web browsers.

In May 1996, development of SSL became the responsibility of an international standards organisation, the Internet Engineering Task Force (IETF), which develops many of the protocol standards for the Internet. TLS, an enhanced version of SSL, was released in early 1999. SSL is a widely used technology and versions of the product may be suitable for use by Customs agencies.

11.4.3.Which Method?

“Which authentication solution is required?” is an important question, but there is no single correct answer. The approach adopted should be determined by the outcome of a risk assessment and made subject to the preparation of an associated business case. The choice of any method or combination of methods will depend on the risks and consequences that an administration may face if an identity should prove false or if transactions and information are repudiated. It will also depend on the relative costs and the business environment within which the administration operates.

11.4.4.Acceptable Risk

There are already a number of well developed processes for identifying, assessing and managing risk. One of the first of these was the Australia and New Zealand standard AS/NZS4360.1999 (www.standards.com.au ). There may be other national standards available and it is recommended that agencies consider referring to these documents when assessing their risks.

To identify and assess risk in context, agencies should consider:

≡ the environment within which they operate – including any political, economic, technical, business and legal aspects that affect their operations

≡ their clients and their relationship with them

≡ the types of transactions undertaken, and

≡ their business requirements and operations.

In this way the administration will gain a broad picture of where its risk areas lie. For example, the political environment may require the administration to provide the public with broad access to on-line transactions. The administration will therefore need to deal with different groups of clients, including some with whom it has long-standing compliance arrangements and others who may only transact once. A regulatory administration’s legal environment may oblige it to rely on its transactions as legal evidence for prosecution purposes, thereby imposing a non-repudiation requirement. The weaknesses and threats identified in the light of these considerations are effectively the risks that the administration will need to assess.

The assessment of the risks identified generally involves considering the consequences of each risk and the likelihood of its being realised – the more serious the consequences and the greater the likelihood of realisation, the less acceptable the risk will be. After that, risks can be prioritised, existing counter-measures can be assessed and new ones identified as necessary. The complete elimination of risk is unlikely and prohibitively expensive. The assessment must recognise that not all authentication solutions are totally reliable and secure. Every method of authentication can be compromised given sufficient skill and resources, or due to poor security procedures, practices or implementation.

Setting up a highly secure, but expensive, automated system may in fact buy only a marginal advantage over other alternatives in terms of deterrence or risk reduction and may not justify the extra cost.

The aim is to ensure that risks are reduced to acceptable levels and threats are deterred by the measures adopted. For example, an administration may have found that in its electronic transactions it is potentially exposed to the risk of repudiation because it is unable to assure itself of the identity of the entity with which it is communicating. It believes that the consequences could be serious – identity fraud, loss of revenue and illicit trade. Deciding that it needs the highest level of authentication and security available, the administration considers a PKI solution but with strengthened evidence-of-identity requirements and tighter controls over certificate revocation. However, the digital certificates are now four times more expensive, few vendors will consider supporting the administration’s requirements and the administrative effort and cost are significantly increased.

On looking more closely at the likelihood of the risks being realised, the administration notes that its client groups have different characteristics and represent different aspects of its business. It notes that most of its transactions are with trusted clients with whom it has strong compliance arrangements and transparent procedures. For these clients at least the administration can address its risks by taking a far less costly and elaborate approach.

11.4.5.Comparing Authentication Methods

In identifying appropriate solutions for managing risk, agencies will need to assess and compare authentication methods. A number of these methods are identified in paragraph 10.4.2, where their respective strengths and weaknesses are also indicated.

In comparing these and other methods it is important to keep in mind that there is no single solution and that it is possible to use a combination of methods to achieve higher levels of authentication and security. For example, in conducting simple low-value financial transactions it is not uncommon to use PIN and passwords in combination with some form of cryptography. Similarly, challenge and response is often used not as a primary means of authentication but rather as a secondary check when updating user information in low to moderate risk transactions.

Each method should be measured against the administration’s requirements and the risks identified. An appropriate method can then be selected based upon how accurately it meets the administration’s requirements and how well it reduces the administration’s risk to an acceptable level. Alternatively, several methods may be used at the same time, in which case it will also be necessary to determine how well they operate in combination.

11.5. Non-Repudiation

Non-repudiation is an issue of particular concern to Customs agencies, which usually have regulatory, revenue collection and border management roles. Reports, declarations and the production of documents are often required under force of law and penalties for breaching the provisions are often prosecuted in court.

Customs agencies therefore need seriously to consider the extent to which they are able accurately to associate transactions and message content with a particular sender. They also need to consider how they can ensure that once under their control the information is not corrupted or transformed in a manner that would make it inadmissible as evidence.

11.5.1.Non-repudiation defined

There is an inherent and often unarticulated problem with the notion of ‘non-repudiation’. In a technical sense, the word is taken to mean the use of cryptographic procedures by a relying party to provide evidence that a message could only have been sent by the signatory and nobody else. This generally means that technical procedures must be used to identify the signatory, ensure the integrity of the message and establish a link between the signatory and the message. This process can also be extended to include linking the message to the recipient. However, from a legal perspective, the concept of non-repudiation does not exist. In certain circumstances, irrespective of the evidence gathered by such cryptographic procedures, it is still possible for a person to deny the legal consequences of a transaction. In effect, it is only possible to limit the opportunities for repudiation.

Despite these anomalies, non-repudiation can generally be defined as: “the reasonable assurance that an entity can be clearly linked to a transaction for the purposes of binding it to the legal consequences of that transaction.”

The purpose of non-repudiation is to ensure technical and legal certainty. While technical and business requirements may drive the development of non-repudiation policies, it is also a legal issue. Non-repudiation should be considered in the light of the possible future legal consequences.

11.5.2.Non-repudiation is not a stand-alone issue

Non-repudiation is only one of the issues which an administration will need to consider in developing a transaction system or conducting electronic transactions. Non-repudiation policies and processes should be regarded as part of a risk management approach which addresses a number of other, equally important issues including (but not limited to):

≡ privacy

≡ cost (to the Customs administration and to clients)

≡ usability

≡ security

≡ national legal requirements applying to government agencies in general (for example, any general legislation covering privacy, freedom of information, record keeping, etc.)

≡ legal requirements applying specifically to Customs (e.g. legislation relating to Customs and Excise or, in some cases, national security).

The specific non-repudiation policy and legal/technical solution adopted by an administration will depend on that administration’s requirements in relation to these issues.

11.5.3.Legal consequences of repudiation

There cannot be a single non-repudiation policy or a single legal, business or technical solution to limit repudiation that applies to all agencies. The architectures, policies and processes which agencies adopt to avoid repudiation will vary depending on their business requirements and the kind of legal consequences they intend their transactions to have.

Broadly speaking, the legal consequences of transactions will fall into four categories, all of which have application to Customs agencies:

Criminal Offences:

Applicable to regulatory or compliance transactions. Agencies will need to consider the criminal standard of proof (beyond reasonable doubt), the requirement for trial by jury, and the specific forensic requirements of criminal prosecutions.

Civil Proceedings:

Applicable to commercial transactions (i.e. the administration is either buying or selling goods or services). Usually these will be proceedings under the law of contract, although other remedies might apply, e.g. some countries may have specific legislative trade provisions. In cases of this type, agencies may be able to specify alternative forms of dispute resolution such as arbitration or mediation.

Administrative Law Proceedings:

Applicable where the transaction leads to a decision being made against the client. Some countries may have appeal tribunals or courts that review such decisions. Issues such as the need to ensure natural justice for the client will be relevant here.

Executive Action:

Sometimes the Customs administration's most effective remedy may be to deny the client the opportunity to deal with it electronically in the future. This does not rule out repudiation of the particular transaction. However, in some cases the prospect of losing access may deter clients from attempting to repudiate. The client may not have any right of appeal against the administration, but where appeal tribunals, ombudsmen or other legal review bodies exist, administrations must be able to justify their actions.

An administration must take into consideration the level of acceptable risk of repudiation for the transactions it manages. In assessing that risk, consideration should also be given to the balance between cost and the effective delivery of business objectives.

The solution will vary considerably depending on the types of transaction involved and the associated risks. With simple financial payments there may be little need for non-repudiation, demonstrating remittance and receipt being the two main risks. The need for non-repudiation will be much greater when accepting security or declarations in which the entity must be specifically bound.

Similarly, solutions will differ markedly depending on the technology adopted by the Customs administration. An administration using PINs and passwords, for example, may need to undertake its own authentication involving internal procedures and rely on a single agreement with users. On the other hand, an administration using PKI is more likely to be reliant on third parties and will use a complex set of agreements extending beyond the user.

11.5.4.Assurance

Essentially, non-repudiation is an exercise in risk management. The level of assurance that an administration requires with respect to identity, content or process is a reflection of the risk of a client repudiating a transaction and the consequences that repudiation might bring.

Successful enforcement of an electronic transaction will require evidence to be gathered (in a form admissible in court, where necessary) regarding many aspects of the transaction, including:

≡ the evidence of identification (EOI) process

≡ how the identity of the sender of an electronic transaction was assured (e.g. access controls-pins, private keys, etc.)

≡ whether the administration imposed any conditions of use

≡ the information provided to clients regarding access controls and possibly education and other representations or instructions

≡ the particular authentication technology used (archiving, legacy systems may be required)

≡ the version of the end user software used by the client

≡ the way the software was being implemented at that point in time, and

≡ evidence of the time at which the transaction took place.

11.5.5.Grounds for repudiation

The grounds on which a client might attempt to repudiate a transaction can be categorised as follows:

≡ Electronic transaction-specific grounds : Client claims that the transaction, or part of it, occurred without his or her knowledge or approval (i.e. forgery). This usually involves a challenge to the integrity or appropriateness of the procedures or the technical infrastructure within which the transaction was conducted.

≡ General legal grounds : Client admits that the transaction has occurred but claims that he or she is not legally bound by it.

Electronic transaction-specific grounds may include allegations that:

≡ the transaction has been forged or altered in transit by a third party – either by crypto-analytic attack or through loss or compromise of client’s key, token, etc.

≡ the transaction has been forged or altered after receipt by the administration or by a rogue employee or external attacker gaining access to the administration’s system

≡ the client’s identity is false due to failure of the registration/EOI process.

The general legal grounds on which a client may attempt to repudiate a transaction will depend on the kind of legal effect the administration intends the transaction to have. Some examples are given in Attachment A to this chapter.

It should not be assumed that for electronic transactions non-repudiation requires only technical solutions. For example, it may be appropriate for a transaction to be designed with off-line steps to minimise the risk of repudiation. Thus, a client might be required to print a form from a web site, complete it and mail, fax or deliver the completed form to the administration concerned.

One likely general legal ground for repudiation is that the client was not fully aware of the content of the transaction to which he or she allegedly assented. To a significant extent, the solution to this lies in the technical design of the system, which must allow content to be fully displayed and, if necessary, scrolled through before the client can push an “agree” or “send” button.

11.6. Identity Assurance

Evidence of Identity

While the issue is essentially one of authentication, the evidence used in establishing an electronic identity (EOI) and the processes used in verifying that evidence form the indispensable basis for linking an entity to its transactions. Failure at this primary level increases the risk of transactions based on identity being successfully repudiated.

The administration should assess the EOI requirement against its own need to authenticate identity and avoid the repudiation of transactions. As the consequences of repudiation become more serious, higher levels of validation and evidence will be required.

A further complication arises when authentication methods involving third parties (such as under a PKI) and specific agreements are needed to establish a third party's liability for assurance of identity. However, these issues are addressed under the Gatekeeper Framework for the operation of Certification Authorities.

Evidence of Authority

Evidence of authority to undertake transactions is particularly important where agents or employees of an entity carry out transactions. It is easy to repudiate a transaction when there is no clear link between the electronic identity and the authority for its use.

The use of legal agreements to establish an electronic identity is important in this respect. At what point they are established, whom they bind and the form they take are all influenced by the type of transaction and by the administration’s particular business processes and system choices.

The Framework

Assurance of identity relies on clients having appropriate control of verification tools (such as pins or private keys) and on access to these being restricted to the proper person. In this respect, the question of responsibility for the use of identity needs to be considered, both in terms of the owner's responsibility for securing his identity and in terms of the safeguards which an administration’s systems and procedures provide for protecting that identity. These responsibilities are commonly established in agreements between the parties.

How identities are stored (e.g. on dedicated tokens such as smart cards or directly on computer disk drives, where applicable) and client awareness of the need to ensure records are securely stored are other issues that agencies should consider.

11.7. Content Assurance

Assurance of Integrity

During the life of a transaction the content will be accessed, manipulated, actioned and stored. Throughout this life-cycle, the originator's content needs to be identifiable and reproducible as the original transmission. If an administration is unable to reproduce the content and demonstrate its integrity through the processes it used to conduct the transaction, its actions may be open to challenge and the content subject to repudiation.

Of critical importance is the link between the electronic identity and the content of a transaction. Without this, any attempt to limit repudiation for a transaction will fail. How this is managed will depend on the technical solution adopted by the administration. An electronic certificate forming part of an e-mail with an attached content could easily be separated and administrative procedures may be required to ensure that the original and complete communication is preserved. A completely automated transaction process may simply require the maintenance of detailed electronic logs of transmissions, access and authorised changes.

Keeping the parts together

Transactions may often involve a number of component electronic communications and decisions. It is important that all components of a transaction are tracked and remain linked to that particular transaction. Where not all the components can be retrieved to provide evidence of the entire transaction, the integrity of the transaction may be called into question and part or all of it may be repudiated.

Appropriate procedures, such as logging and annotation, need to be considered.

Storage and Reproduction

There are a number of issues connected with the storage and reproduction of transaction material that affect repudiation.

The integrity of the storage facility, the form in which a document is stored, the management and updating of cryptographic mechanisms, where these are used, and the relationships maintained between data being processed all have a bearing on the strength of the evidence limiting repudiation.

11.8. Process integrity

Management Framework

The design of any business process includes elements which assure the quality and hence the integrity of both the process and the material being processed. These correspond to the points in the process most relevant to limiting repudiation. Commonly they involve matters of governance such as the identification of decision-making responsibilities and the processes for authorising and reviewing access.

As these processes concern the integrity of the transaction, they are central to the assurances needed to avoid repudiation and will constitute an important source of evidence if the administration is required to defend itself against claims of internal fraud or negligence.

System Rules and Architecture

When considering the reliability of material, courts may examine the integrity and capabilities of the electronic systems used. In this context, the range of issues important in limiting repudiation will include the system rules, software rules and architecture.

Electronic systems operate within a framework of rules – predetermined decisions that affect the action taken in connection with each transaction. These rules may address matters ranging from the terms and scope of access through to what is logged or archived, when and in what form. They will need to be reviewed from the perspective of the assurances they provide.

11.9. Public Key Infrastructure (PKI)

PKI is one of the more complex methods of authentication. As the name implies, PKI is less a “single solution” than an “infrastructure” centred on public key cryptography and involving both an organisational structure and a legal framework. Therefore, unlike many other solutions, PKI aims to offer a “complete” package, integrating technologies and processes in order to assure authentication and integrity and reduce the potential for non-repudiation.

While it has yet to enter into common use, it is emerging as one of the stronger solutions for organisations that require high levels of assurance. As Customs agencies are very likely to have such a requirement, PKI has been selected here for separate and detailed discussion.

11.9.1.Background

The decision of a Customs administration to enable traders, customs brokers, carriers and other regulatory agencies to carry out their import and export clearance tasks securely over the Internet or with the help of value added network service providers (VANs) involves issues of IT security discussed in the preceding sections.

The Internet is an inherently open system. Its strengths are built around this openness and its low cost and ease of access, which make it an inexpensive medium for transacting Customs compliance-related business. However, its openness can also be a major threat for users.

The open nature of the system makes it relatively easy for web-sites and Internet communications to be compromised and the IT assets of a Customs administration used for EDI messaging are exposed to such threats. In considering mitigation strategies, it is necessary to refer to the standards which various bodies are developing. Doing business on the internet poses four generic kinds of risk. These pertain to (a) the privacy of the message, (b) its authenticity, (c) its integrity and (d) non-repudiation. Public Key Infrastructure (PKI), based on the technology of public key cryptography, provides a means of mitigating these risks.

The EDIINT standards were developed by the Internet Engineering Task Force (IETF) to address issues relating to secure communication techniques for EDI messaging over the Internet. These standards identify PKI as one of the technology enablers for addressing these security concerns.

11.9.2.PKI Defined

Public Key Infrastructure (PKI) can be defined as the architecture, organisation, techniques, practices, and procedures that collectively support the implementation and operation of a certificate-based public key cryptographic system. It includes a set of policies, processes, server platforms, software and workstations used for the purpose of administering digital certificates and keys. A public key cryptographic system works with the help of asymmetric crypto-systems algorithms.

11.9.3.Conventional and digital signatures compared

The challenge for PKI is to translate the trust conventions of the physical world and make them work in online transactions. Signatures are not the substance of the transaction. Signatures only represent an event in a transaction. Signatures impart certain characteristics to the objects involved in the transaction. More precisely, a paper signature authenticates the signer (or signatory) and the signed document. Thus, the signer leaves a distinctive mark and his writings become the signature, which then becomes the evidence connecting the signer and the signed document. The signer of a paper document is aware of the significance of the act of signing and the finality associated with the event of signing. By common law and custom, the very act of signing implies that the signer duly approves the contents of the document being signed. Signed documents represent distinct “states” or “final stages” in a transaction and the convenience associated with having crossed through certain final stages or states.

Conventional signatures are paper-based and therefore, in the absence of paper, the characteristics of the paper-based signature have to be built into the digital signature. PKI technology enables the generation of signatures, the verification of signatures and archiving of the verified documents/records, as well as providing evidence whenever necessary. An actual PKI implementation must therefore address these aspects.

11.9.4.The operating life-cycle of a digital certificate

Under PKI a person may apply for a digital certificate by first generating a key pair comprising a public key and a private key. He or she must then fill out an application form for a digital certificate for signature and/or authentication purposes and send it to a Certificate Authority

The Certificate Authority receives the application form, verifies whether the key pair submitted by the applicant forms a valid cryptographic key pair, checks the correctness of the information supplied by the applicant and then issues a digital certificate, which is signed by the Certificate Authority itself.

The public key is published in a directory, which will usually comply with the International Telecommunications Union (ITU) X.500 standard. The applicant keeps the corresponding private key secure for use in connection with encryption and/or signing and/or verification operations.

The certificate will be valid only for a certain period of time and may therefore require periodic renewal. For certain specified reasons – chiefly the reported misuse or compromise of a private key - the Certificate Authority may suspend or revoke a digital certificate. The operating life-cycle is described in form RFC 2527 of the Internet Engineering Task Force (IETF).

11.9.5.Important considerations in implementing PKI-based solutions

In view of the advantages offered by PKI technology, Customs administrations may wish to consider using PKI-based systems in designing and implementing their EDI messaging solutions. This involves providing comprehensive capability for handling digital certificates and signatures in Customs business processes and IT systems.

PKI implementation has the potential to build capacity in connection with the secure storage of electronic data as well as the transmission of electronic information using digital (signature) certificates. However, before proceeding to implementation, agencies should first consider the scope for their PKI. This normally involves preparing a “scoping document” that lists the objectives, assumptions and goals and any limitations that need to be placed on the project.

It is important to consider limitations to avoid the project expanding unnecessarily into areas the administration has already ruled out for implementation. The scoping document may include illustrative scenarios showing how the administration might use digital certificates for authentication, secure messaging and signature purposes. For a simple illustration see figure 6 below.

Specifically, steps should be taken to ensure that the overall e-commerce and EDI solution implemented by the administration is PKI compliant and PKI compatible.

Source: Australian Customs Administration 1999

Figure 6: "Alice and Eddie"

11.9.6.Using digital signatures in EDI and XML messaging

The World Wide Web Consortium (W3C) and the Internet Engineering Taskforce (IETF) are working on a digital signature standard for Extensible Markup Language (XML) messaging. UN/CEFACT and OASIS are working on integrating SOAP (Simple Object Access Protocol) with Attachments specifications into the ebXML specifications (www.ebxml.org ). This will result in an open, global standard for reliably transporting electronic business messages over the Internet.

The ebXML messaging specifications themselves encompass a set of services and protocols that allow a client to request services from the servers over commonly used application level transport protocols such as Simple Mail Transfer Protocol (SMTP), Hyper Text Transfer Protocol (HTTP) and others. EbXML allows for a general-purpose message involving a message header that supports multiple payloads, while providing for digital signatures within and among related digital messages of any specification.

UN/EDIFACT messaging provides for the use of digital signatures along with the electronic messages. In addition, the UN/EDIFACT messages provide for import and export of public keys (provided for by the UN/EDIFACT KEYMAN messaging format). As with other forms of messages, administrations will need to consider the issues involved in the logging and archiving of these messages, so as to maintain data security in order to manage the consequences of repudiation

11.9.7.Certificate Authority and the Legal Framework

After deciding on a PKI-based solution, the Customs administration would have to consider several technical and legal issues that arise in the course of any PKI implementation. As indicated above, PKI requires a system for the generation and maintenance of digital certificates. This is normally achieved through the establishment of a Certificate Authority.

A Certificate Authority is an entity that attests to the identity of a person or an organisation. The Certificate Authority's chief function is to verify the identity of entities and issue certificates attesting to that identity. Digital certificates are a way of verifying a person's (or a company's) identity. The digital equivalents of identity cards, they help to establish the desirable security characteristics for transactions over the Internet.

The national legislative framework available in respect of PKI, which should specify the technical as well as the legal requirements, has an important bearing on:

≡ the manner in which digital certificates are issued by a Certificate Authority

≡ how a Certificate Authority manages the life-cycle of a certificate, and

≡ what technical standards have to be applied.

For a model legislative framework, administrations might like to consider the guidelines presented in the UNCITRAL model law on the subject (http://www.uncitral.org/en-index.htm ) UNCITRAL Model Law on Electronic Signatures with Guide to Enactment 2001).

Among other things, the legislative framework might cover:

≡ the manner in which digital information is to be authenticated by means of digital signature and the admissibility of such signatures as evidence in a court of law.

≡ the process of creation of a digital signature

≡ the process of verification of digital signatures

≡ the technical standards applicable to these processes

≡ the licensing of Certificate Authorities, and

≡ the security policy guidelines applicable to the operation of a Certificate Authority.

In the absence of a general, overarching legislative framework, administrations might consider entering into bipartite or tripartite agreements with users and service providers, very similar to the agreements in vogue in the VAN environment but with account for the PKI enabled technology platform.

11.9.8.PKI and Customs: The Key Issues for Consideration

Administrations might wish to consider whether they are in a position to perform the functions of a Certificate Authority or whether any other public/government or private agency offers public certification services of acceptable quality. Different countries have different models enabling Certificate Authorities to function, subject to their respective legislative frameworks, as chains (or hierarchies) of trust. Irrespective of the model selected, and the choice of Certificate Authority, there are several decision points that are likely to emerge in accepting the digital certificates issued by a Certificate Authority.

These decision points arise out of a Certificate Practice Statement (CPS), which is a statement issued by a Certificate Authority specifying the practices that the Certificate Authority employs in issuing digital certificates. With respect to the content of the CPS, a de facto standard exists in terms of standard RFC 2527 of the Internet Engineering Task Force (IETF). Thus, if an administration decides to accept digital certificates issued by a Certificate Authority, it must endorse or place confidence in the Certificate Practice Statement of that Certificate Authority after giving careful consideration to the following issues addressed in the CPS:

≡ How does the Certificate Authority manage the complete life-cycle of the digital certificates it issues? The history of a digital certificate begins with the receipt of the application, continues with the verification of the applicant’s identity and the issuing of the certificate itself and ends with its suspension, expiration or revocation. All these services will have to be provided in a manner that inspires confidence in the users of the certificates. Although these tasks are of a routine and repetitive nature, they have to be carried out to very high standards of promptness, diligence and integrity. Of particular importance is the strictness with which the Certifying Authority authenticates the entities receiving certificates. Different types or “classes” of certificates are issued by a Certificate Authority. Roughly speaking, these are comparable with the classes of credit cards issued by a credit card company. Customs administrations have always had yardsticks for determining how much verification needs to be done before registering an entity for doing business involving compliance with Customs law and procedures. These issues should be revisited by the Customs administration when PKI is implemented, more specifically when certificates issued by a Certificate Authority are accepted.

≡ Ideally, a Certificate Authority should offer its services universally to all Customs community clients; the nature and extent of the coverage offered should be consistent with the general policy of the Customs administration in this regard. Some Customs clients may object to being left out due to the unwillingness of a Certificate Authority to reach out to its geographical region. Therefore the Customs administration may need to ensure that the reach of the Certificate Authority is universal.

≡ The obligations, responsibilities and liabilities that the Certificate Authority, the relying parties and the subscribers (to the certification services) offer to undertake are important from the standpoint of the reliability of the Certificate Authority’s services. The legal issues relating to the interpretation and enforcement of the obligations, responsibilities and liabilities the CA promises to undertake should be noted.

≡ Fee-related registration, renewal, access to repository and re-key are also important considerations as they have a bearing on the cost of compliance with Customs processes. Issues concerning the publication of repositories, compliance audit and the obligations of the Certificate Authority with respect to the maintenance of confidentiality should also be considered.

≡ The technical and security controls that the Certificate Authority must employ while running its various technical processes must meet the required standards. Normally, these standards are statutorily prescribed. Technical procedures may also involve the handling of the certificates, including generation, issue, use, revocation and renewal. In this regard, the requirements of the relevant PKI standards and those published by the International Telecommunication Union (ITU)/ISO should be considered. Procedures relating to physical and personnel security controls are equally important.

≡ it is better to inform the users of certificates of the available standards on secure methods of handling certificates than to bind them to specific commercial products claiming compliance with the desired standards. In any case, the end user feels more comfortable if appropriate products are approved for use. However, recommending specific products also entails responsibility for developing and testing them before they are recommended for use.

≡ Sequences involving “sign”, “encrypt-and-sign”, and “sign-encrypt-sign” may also have to be prescribed. The options pertaining to the safe handling of digital certificates and private keys are also matters that concern the user community. The issues relate to the encryption of the messages using the Customs public key with subsequent decryption using the Customs private key upon receipt. These options include web-browser based storage, external storage on a smart card and USB token-based facility.

≡ In operational terms, the handling of the Certificate Revocation List that stores an updated list of invalid, suspended and revoked certificates may involve a number of decision points such as the cost of access to such lists and the frequency with which they are checked. There is also the issue of time-stamp services and whether time-stamps are to be mandated for every single transaction or can be restricted. Events in the certificate life-cycle such as issue, revalidation, suspension and revocation, etc. should also be addressed.

≡ The content of the certificates, normally the ITU-T Rec. X.509:1997 | ISO/IEC 9594-8 (1997) http://www.itu.int/rec/recommendation.asp?type=folders&lang=e&parent=T-REC-X.509 , offers choice and variations and can be an important item for consideration.

A generic description of the X.509 Certificate has already been provided in document PM0083E. More technical descriptions can be found at the following web site:

http://java.sun.com/products/jdk/1.2/docs/guide/security/cert3.html#inside
and the relevance of the certificate to the entire PKI framework can be appreciated from a detailed reading of :

- http://www.ietf.org/html.charters/pkix-charter.html

- http://www.ietf.org/rfc/rfc2459.txt

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Attachment A to Chapter 10

Examples of legal grounds for repudiation in Australian criminal and civil proceedings

1. criminal

1.1 Forensic failure (probably the most common cause of failure in criminal prosecutions) - either:

sufficient persuasive evidence is not available (failure of logging, archiving, etc.); or evidence is inadmissible (problems with investigative or evidence-gathering activities, or legal problems with the admissibility of computer records).

1.2 Lack of mental element:

Individual (applicable to general offences such as fraud - may not apply to agency-specific statutory offences, e.g. under the Customs Act); or

Corporate - if applicable, corporate intent must be inferred from the intent/conduct of officers and agents.

1.3 Defences such as insanity, automatism (unlikely in this context).

1.4 Defendant is under the age of criminal responsibility (10 years old in NSW) (unlikely - indicates serious EOI failure).

1.5 Allegation of identity theft (which has occurred regardless of the implementation of appropriate registration/EOI processes).

2. civil

(Note: The following examples relate to the scenario of a contract between agency and client. There are other possible civil actions, e.g. an e-mail giving bad advice leads to an action in tort for negligent misstatement, but these seem unlikely in the context of agency transactions.)

2.1 Failure to form binding contract (failure of click-wrap process) or insufficient evidence of process. Includes:

- client assent not clearly demonstrated by process; or

- terms and conditions not adequately disclosed.

2.2 Failure to form binding contract for non-process related reasons, including lack of consideration or lack of intention to create legal relations. May also include remedies allowing rescission without fault, e.g. mutual mistake (but unlikely).

2.3 Wrongdoing by receiver (or in some cases a third party). Various remedies allow a court to set aside a transaction, including duress (physical or economic), unconscionable conduct, misleading or deceptive conduct (TPA s. 52), Yerkey v. Jones, etc.

2.4 (Individual client only) Consumer protection remedies such as NSW Contracts Review Act.

2.5 (Organisation client only) Individual representative/agent has acted without authority.

2.6 Identity theft (same as 1.5).

2.7 Client is under 18, or otherwise lacks contractual capacity.

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12. Legal issues

(Standard 7.4)

12.1. Introduction

It is not possible to give specific guidance on legal issues that will be equally valid for every Customs administration because each administration operates under a different legal system and on a different legal basis. The guidance offered here is intended to give the reader an initial understanding of the commonest legal issues. Guidance on the legal implications of automating Customs procedures should be sought from the relevant experts in the early stages of a project.

When dealing with legal issues, remember that laws have different areas of applicability, for example:

≡ International Conventions (e.g. the revised Kyoto Convention);

≡ Supranational laws (e.g. EC legislation, with implications such as direct applicability and primacy);

≡ National laws with general applicability, which can affect entities inside and outside the Customs domain (e.g. privacy laws, e-commerce laws, digital signature laws, data protection laws);

≡ National laws with specific scope, such as national Customs law, which affects only those within the Customs domain; and

≡ Customs procedure law, which is limited to a Customs procedure (e.g. there may be a Customs transit law).

Legal issues are occasionally cited as insurmountable obstacles to the implementation of some proposed system option. An increasing number of member administrations has found that changing the legal requirements need not be a difficult and lengthy process.

12.2. Suitability of existing legislation

When a Customs procedure is to be computerised, the vast majority of existing legislation is unlikely to require amendment. However, automation may have the effect of simplifying the procedure, which may need to be reflected in the legal provisions. Definitions of responsibilities may need to be changed, including the point at which payment is due, when a declaration is considered to have been made, etc.

12.3. Types of legal issues

In an electronic environment, the legal issues that need to be taken into consideration when a new system is introduced can be divided into groups, for example, as indicated below. It should be noted that groups of this kind are always artificial and are created only for presentation purposes. In practice, the grouping does not have any legal value and issues overlap from one group to another.

≡ EDI issues (formalistic requirements, i.e., provisions requiring the use of paper, a document, a signed document, etc., and requirements relating to the use and acceptance of electronic data as evidence);

≡ Security-linked issues (format and media for storage of data, authentication, integrity, non-repudiation, acknowledgements, etc. and also evidential issues);

≡ Data protection issues (restrictions on data access, restrictions on the transfer of data between agencies, etc.);

≡ Other issues, such as confidentiality, operational responsibilities and obligations due to the use of the electronic data exchange system, fall-back provisions, legal provisions which prevent the use of encryption, etc.;

≡ How to introduce the new system, whether by means of an agreement (e.g. an Interchange Agreement, which raises other contractual issues) or on the basis of the administration’s status as an authority by establishing provisions to be obeyed and accepted.

12.4. Signature

Despite the existence of sophisticated data exchange systems, the import/export process sometimes remains at least partly paper-based due to the legal and operational requirements of national Customs authorities. In some existing Customs IT systems, signature requirements necessitate the presentation of hard-copy declarations to Customs in addition to electronically transmitted data, thereby blocking the advance towards a "paperless" environment. Such legal barriers need to be overcome if the full benefits of Customs automation are to be realised.

Effective techniques are available for replacing the hand-written signature in a Customs automation environment. Passwords, personal identification numbers, identification cards or badges, etc. and digital signatures can be used to authenticate an electronic message and identify its origin. They are already being used extensively in other sectors, such as banking, as well as by an increasing number of Customs authorities.

There are two possible approaches to digital signature law:

≡ specify the precise technical mechanisms to be used (e.g. which algorithm, how it is to be applied, etc.); or

≡ specify that the choice of a suitable mechanism is the responsibility of the Customs.

The second option has the advantage of not requiring changes in the legislation if Customs decides to switch from one mechanism to another.

12.5. Admissibility

Legal obstacles still exist with regard to the admissibility of computer-readable data as evidence in court proceedings. The WCO, in a resolution passed in 1986, called on its member administrations to put pressure on the appropriate national authorities in order to bring about the necessary legal changes. These would not only provide for the admissibility of computer-readable data as evidence in courts of law but would also make provision for the authentication of such computer-readable data by means other than hand-written signature (see 11.4 above). These legal reforms are necessary not only from the Customs viewpoint but also from the viewpoint of the trading partners in general.

Where such legislation is introduced, steps should be taken to ensure that the automated system is capable of providing evidential material in the manner prescribed.

12.6. Data protection and privacy

Although enforcement systems are generally exempted, Customs IT systems usually fall within the scope of data protection and privacy laws, which may apply to natural persons only or to both natural persons and legal entities.

When privacy and data protection legislation is being drafted, Customs administrations should try to ensure that its provisions do not compromise their ability to protect revenue, trade or other State interests by restricting their powers to retain information and exchange it with other interested parties (both national and international). Privacy considerations will become important once Customs begins to deal over public communications networks, such as the Internet, and share information on its clients with third parties.

It is also in the national interest that Customs should have the right of access to trading partners' computer systems for verification and audit purposes. Customs should ensure that this right is not restricted by new legislation.

When new IC technology is being introduced, privacy and data protection legislation should be examined to ensure that the proposed system will satisfy all the requirements.

13. Audit of Internal Controls in Information Systems

(Transitional Standard 6.9)

13.1. Background

Computer systems audit provides assurance that a particular activity or process is performing as intended. Systems audit, as the name implies, means looking at the entire processing cycle rather than just at the transactions themselves. It does not rely on a fully visible audit trail and substantive testing of all or a significant number of transactions, as in a manual system, to provide assurance about the workings of a particular application or installation. Instead, systems audit attempts to use the inherent properties of computer processing to maintain user confidence.

If it can be established that the process itself is reliable and accurate and that the controls which govern it are sound and being complied with, then safe assumptions can be made regarding the quality of the output. The great strength and, paradoxically, weakness of computer systems is that once set up, they perform the same task in the same way every time until a change is made. Thus, if they have been programmed correctly, the output will always be accurate, and if not, it will always be wrong!

Customs can apply computer systems audit techniques both to external trading partner systems and to its own in-house applications. Using these methods provides assurance with respect to the integrity of the systems and identifies weaknesses, which must be addressed in order to restore confidence. The following section concentrates on Customs in-house systems audit.

13.2. Development audit

Computer systems audit can be of great benefit in the development stage of a new application. In the Customs environment there will always be a need to implement new applications as quickly as possible because of new legislation. However, the requirement for speedy implementation has sometimes led to auditability being overlooked or only partially addressed. Poor auditability means at best inadequate or at worst non-existent controls and hence unreliable data.

Therefore, whenever a new application is introduced, the planning team should ideally include a computer auditor to ensure that the question of controls and audit trails is not overlooked. This auditor can provide test data upon which realistic testing of the system can be based. Subsequently, auditors will always be able to confirm the processing of data from inception to final recording and to trace transactions in the reverse direction as well. Thus, if audit considerations are taken into account when a new system is first installed, the subsequent audit and control of that system will be much more effective and reliable. It will also be more cost effective to build these features in from the outset than to attempt to introduce them at a later stage.

The principal steps that make up the systems audit approach are outlined in the following paragraphs:

13.3. Planning

Planning is critical to the success and credibility of an audit. It gives direction and identifies the scope of the audit or the ultimate goal against which to measure its effectiveness. Where new systems are concerned, there is usually a preliminary feasibility stage. The basic question that a feasibility study has to answer is: Can it be done?

Thus the planning stage will determine amongst other things:

≡ The objectives; the auditor must have a clear idea of what his involvement is intended to achieve. It must also be clear to those to be audited and fellow members of the development team.

≡ The scope; this sets the boundaries of the audit by specifying which areas and which systems will be included.

≡ The risk areas; this should attempt to identify areas where failure could create significant or catastrophic consequences and on which the auditor can target his or her efforts.

≡ The conduct of the audit, including preliminary and exit meetings with the auditee; the ground rules should be set out in advance to prevent misunderstandings or problems during the audit and let the auditee know what to expect at the audit’s conclusion.

≡ The duration of the audit; a specified period of time should be allocated to the audit so that the auditee can organise his/her work around it.

≡ The resources needed to undertake the audit; an appropriate number of auditors should be assigned to the audit, depending on the size and/or location of the system(s) to be audited and the availability of key personnel.

≡ The availability of key personnel for interview purposes; it is even more important to ensure that key personnel are fully aware of when the audit is due to take place and when the auditor will need to speak to them. Thus, their agreement should be sought well in advance of the audit, whenever possible.

Finally, the auditor should ascertain the extent to which changes in the system, or the operating organisation, have affected previous audit knowledge. For existing systems there is likely to be a store of audit information which can provide the auditor with useful knowledge about the system and its performance in the past. If, however, there have been significant changes, the reliance that can be placed on this previous information will be much diminished.

13.4. Enquiry or fact gathering

These tasks can be performed by using a combination of methods, mainly the following:

13.4.1. Interviewing

By talking to personnel at all levels in the management chain, including application users, data processors and system designers, if possible. From these interviews the auditor can determine how the system:

≡ is perceived to work (usually a management view)

≡ actually works (people using the system)

≡ is supposed to work (designer/user specification)

13.4.2.Examination of documentation

The auditor may refer to:

≡ user specifications, which detail what the user wanted the system to do

≡ design/system specifications, which detail the solution provided by the design team

≡ test schedules: used to record the range and scope of testing. To ensure that a system is able to cope in all circumstances, is accurate, robust, has the appropriate capacity to deal with unexpected peaks and has effective error trapping and reporting mechanisms

≡ trial/parallel running results: these are the findings recorded during the live running of a new system, either at a pilot site or in parallel with an existing system

≡ user guides: these are instruction manuals on how to use the system and should be easy to read and comprehensive in scope

≡ fallback/security measures: these should specify the procedures for disaster recovery and protection of the system at both application and hardware levels

≡ archiving policy: this will specify how often data should be backed up (security copies), how long it should be kept, and where and how it should be stored, e.g. off-site in a fireproof cabinet

This evidence, which is not exhaustive, can identify both internal and operational controls, or the lack of them. The auditor can also deduce a great deal from the state (or even the lack) of system documentation, which, for example, may be out of date or incomplete. Proper configuration management and document management controls can provide the auditor with further evidence concerning the health of the system and the amount of confidence that can be placed in it.

13.5. Recording the audit results

The auditor will record his findings by using narrative text and diagrams. There are many flowcharting conventions and standards, each usually designed to portray a particular aspect. They include:

≡ program flowcharts

≡ system flowcharts

≡ overview or block diagrams

≡ database schemas

The auditor will often compare his own flow diagrams with the site flowcharts to detect any omissions or anomalies. Typical diagrams might look like the extracts in Appendix 5 and Appendix 6. This stage usually concludes with the formal confirmation, by the auditee, of the auditor’s understanding of the system, before the process moves on to the next phase.

13.6. Evaluation

By reviewing and evaluating the evidence gathered the auditor can begin to detect actual or perceived weaknesses in the internal controls. The evaluation process will enable the auditor to plan tests and determine the areas in which to apply them. This will help to establish the effectiveness of the controls and the credibility of the output.

13.7. Confirmation of audit findings

This activity is carried out at every stage of the audit. Confirmation can be obtained in the fact gathering stage by observation; as a result of the evaluation stage; by inspecting records, output reports, etc.; or even by re-performing the processing cycle.

The inspection of documentation, whether computer-generated or manual transaction records, will include confirmation of completeness, accuracy and authority. Where there is a visible audit trail, it will be followed to ensure that there are no breaks.

Where there is no audit trail or where it is impractical to follow the trail because of the volume of transactions, advanced IC techniques can be used. These advanced techniques include writing special programs to interrogate data held on magnetic media. The programs can be written on an ad-hoc basis using the same language as the application software, or proprietary file interrogation software can be used.

In addition to straightforward testing and confirmation of transaction totals, tax calculations, discounts, etc., the uses of these methods also include testing for unusual data combinations, which would be almost impossible using manual techniques. Often auditors will leave a set of test programs, sometimes known as audit packs, on the system to be run on each audit. These packs can be adapted by changing the parameters, etc. but only have value if the system remains unchanged.

These advanced methods are mainly employed in those situations in which an error could have significant consequences, such as a serious shortfall in duty or tax payments or incorrect statistical information leading to balance-of-payments problems, etc.

13.8. Report

The outcome of the audit will usually be a report to senior management which will make recommendations as to how identified weaknesses can be eliminated or controls can be tailored to make them more effective. Controls may even be discarded if they are seen to be irrelevant in a particular situation.

Recommendations are not mandatory but are usually, even if eventually rejected, given very serious consideration since in certain circumstances the consequences could be disastrous.

13.9. Post audit review

After implementing a new system or making a significant change to an existing one it is customary to review how the system is working. This review is carried out after an agreed period and is intended to show if the system is working as specified and designed or if there are shortcomings and lessons to be learned for future projects. Similarly, if a computer system has been audited and particular recommendations were made concerning its operation, a post audit review will determine whether or not those recommendations have been implemented. If the recommendations have been implemented, it will determine their effects and if they have not, then the reasons why not.

13.10. Conclusion

Once a system has been recorded and evaluated and any amendments to improve control have been implemented, it may be expected to perform reliably until the next significant change is made. Periodic audits should be conducted to confirm that nothing has changed and that the controls built into the system continue to be administered and applied.

14. E-commerce and Customs

14.1. Definition

What is e-commerce? For the purposes of this section, e-commerce is defined as “The process of electronically exchanging information to facilitate the trade of goods and services. An essential component of this process is the integration of business procedures with the appropriate technologies.”

The term "electronic commerce" has come into use relatively recently leading some to suppose that it is a new way of conducting business. However, many organisations, including Customs, already utilise aspects of "electronic commerce" in their current operating environment. Information is routinely exchanged electronically between business partners using EDI, e-mail, fax, etc. Essentially "electronic commerce" means doing organisational business electronically. It may perhaps be defined more formally as "a way of conducting business by utilising computer and telecommunications technology to exchange data between independent organisational computer information systems".

14.2. Background

Electronic commerce covers EDI, but it also goes beyond that to encompass all other available technologies that can be utilised for transferring information from one trade participant to another. It is important to remember that information consists of structured data (using standard message formats, direct database record transfer, bar codes), images (unstructured text and pictures) and sound (voice mail, etc.). Today's Customs administrations need to examine the impact that these other technologies can have on their operations. In particular, they need to determine if the use of these technologies can provide cost effective solutions and a more facilitative and flexible service for both the trading community and the other agencies with which they may need to exchange information.

Electronic commerce has already taken a solid hold within Customs. The extensive use of EDI techniques by administrations relates principally to the clearance of goods for import and export. The large-scale transfer of cargo information and goods declaration data from traders to Customs is ideally suited to the application of EDI techniques. It is envisaged that this application of electronic commerce will continue to show a strong growth pattern over the coming decade. However, as the role of Customs expands and as new ways of performing old tasks emerge, there will be an increasing need to exploit some of the other possibilities afforded by the use of electronic commerce in its broadest sense.

14.3. Technologies

A number of technology options and issues have evolved from the emergence of the Internet and the World Wide Web (WWW). The shift from EDI to broader-based e-commerce technologies has developed as a result of Customs administrations looking for ways to connect the widest possible user base to their systems. This has obliged Customs to move towards an open system philosophy that enables the large as well as the small and medium-sized trader to exchange information electronically.

One of the major characteristics of modern e-commerce is the use of open networks, in particular the Internet, as a delivery mechanism for electronic information. This is in contrast to closed or virtual private networks (e.g., EDI value-added networks) and locally based trade community networks. The use of open networks introduces additional standards and alternative solutions for communication, messaging and data transmission protocols. Moreover, a new set of security risks needs to be addressed as a result of the fact that in an open network some components of the information system (as well as the actual data) are exposed.

As a global, widely dispersed open network, the Internet, unlike most private value-added networks, offers no guarantee of “up time” and electronic data delivery. On the other hand, the Internet offers freely accessible and usually considerably cheaper alternatives to value-added networks as a delivery mechanism for electronic data. In addition to this, a wider range of free (or cheap) user-friendly software is available for Internet messaging and data exchange based on well-established Internet protocols.

The key factors contributing to the increase in Internet-based e-commerce use include ease of network access, easily available software solutions, and low cost. Individuals and small and medium-scale enterprises are far more likely to have access to the Internet than to private or value-added networks. Accordingly, Customs administrations seeking to expand their user base will need to provide Internet-based e-commerce options for these additional users.

14.4. Scope

In the current global debate, the word “e-commerce” is being used as an umbrella term to describe various electronic relationships, all with their own rules and characteristics. The wide range of possible configurations includes business-to-consumer (B2C), business-to-business (B2B), and the three e-government issues, namely, government-to-business (G2B), government-to-citizen (G2C) and government-to-government (G2G). While administrations will have to look at all of these aspects of e-commerce and identify the challenges and potential solutions involved in order to arrive at a comprehensive approach to e-commerce for Customs, the initial focus is likely to be on G2B, G2G and G2C. Later, Customs may seek ways of integrating with B2C and B2B processes for trade facilitation, enforcement, audit and revenue collection (e.g., duty or GST/sales tax) purposes.

Customs administrations will also need to separate national from international processes. They will need to determine what they can do on their own, in partnership with the private sector, in partnership with other local government agencies and with the co-operation of foreign governments.

The potential scope for e-commerce use by Customs is very extensive and in order to define it more clearly it is useful to categorise the electronic interactions with external parties according to three criteria:

≡ Party interacting with Customs

≡ Local (in-country) or international (cross-border)

≡ Type of interaction (legal transaction or information request)

14.5. External Parties

Transactions and information exchange between parties conducting e-commerce are often classified according to the type of parties involved. While B2C and B2B are used for business-to-consumer transactions and logistics, the three e-government issues (G2B, G2C, and G2G) directly involve Customs and/or other government agencies. In addition, these parties may be located inside or outside the country of the Customs administration concerned.

Some of the various parties that could have e-commerce dealings with a Customs administration are listed below:

¨ Inside the Country (Domestic)

G2B
Import/export declarants
Manufacturers/producers
Customs brokers/agents
Carriers/logistics
Port/airport authorities
Banks
Parcel/postal carriersG2C
Citizens/consumers
National travellersG2G
Permit issuing agencies
Regulatory agencies
Statistics agencies

¨ Outside the Country (International)

G2B
Foreign/multinational manufacturers/producers
International carriers/logistics
International banks
International parcel/postal carriersG2C
Foreign citizens/consumers
International travellersG2G
Other Customs administrations (Customs-to-Customs or C2C)
International regulatory/enforcement agencies (e.g., WTO, Interpol)

In addition to this, there are the business-to-consumer (B2C) and business-to-business (B2B) e-commerce channels used to conduct the actual business transactions and logistics operations and to provide information, within the country and across national borders.

E-commerce activities generally involve:

≡ Legal transactions used to carry out business transactions and logistics operations

≡ Requests for and provision of information

≡ Actual electronic goods/service transfers (e.g., downloaded software, market research reports, etc.)

It is also worth noting that electronic data interchange (EDI), as one component of e-commerce, has traditionally focused only on the first of these e-commerce activities, namely, transmitting and responding to legal transactions. These Customs EDI interfaces were mainly designed to allow trade users to submit import and export data and to receive release permission electronically. It is no exaggeration to say that this investment has successfully transformed the way in which Customs interacts with the trading community. The emphasis today is firmly on rapid release and clearance of consignments in a paperless (or at least “less paper”) environment. EDI is expected to continue to be a widely used method of Customs transaction processing for the foreseeable future.

14.6. Legal Implications

There are legal implications which must be considered. Thus, not all parties may be able to conduct legal transactions with each other, and this also applies to parties that interact with Customs. For example, only certain authorised parties may submit Customs declarations or transmit payment credit advices for duties paid using EFT. On the other hand, nearly all parties have an interest in requesting and obtaining information from Customs agencies. For example, a national consumer may wish to know what the import/export duties and restrictions are on goods that are ordered electronically from a foreign manufacturer. A Customs administration, within its legal capacity, may also wish to request information from various parties for pre-clearance or enforcement purposes.

14.7. Driving Factors

A number of factors, both internal and external to administrations, are driving the need for Customs to investigate ways of improving electronic service delivery. Each administration may experience differing levels of pressure from these driving factors, depending on the national and international trade environment. These factors include:

≡ Client expectations (e.g., improved service levels and information access)

≡ National economic and security interests (e.g., increased trade competitiveness through faster goods clearance, enhanced revenue and border protection)

≡ Customs operations streamlining (e.g., automation of routine processes, focused enforcement and compliance checking, improved working environment and job efficiency)

To accommodate the needs of both Customs and external parties, administrations will be expected to enhance and/or re-engineer their internal processes in line with the driving factors listed above. As well as providing new opportunities, this can pose a very difficult challenge. Customs will need to have the necessary community consultation, human resource capability, operational capabilities, and information systems infrastructure in place.

14.8. Potential Impact of e-Commerce on Customs

In assessing the impact of e-commerce on Customs it is necessary to differentiate between transactions which lead to the delivery of actual goods and those that involve only electronic transmissions. The former could be defined as indirect e-commerce, because the Internet is only being used to order the goods and in that respect the transaction is very little different from traditional distance selling. The latter could be described as direct e-commerce, because the entire trade transaction is completed electronically. In addition, the impact of e-commerce on Customs as an organisation, i.e. e-Government, needs to be examined.

In attempting to identify the best possible way of responding to the impact of e-commerce on Customs, administrations also need to look at the impact Customs has on trade and the development of e-commerce. It will therefore be important to find solutions that strike a balance between the interests of Customs and those of trade.

The problem of a steadily increasing number of consignments and hence potential congestion of the clearance process can only be handled by applying simplified procedures and a comprehensive automation strategy. Simplified procedures would enable Customs, through a pre-certification process and regular audit-based controls, constantly to assess the compliance rate and trustworthiness of a company. Customs would then be able to:

≡ reduce the data requirements for the release of the goods to a minimum

≡ offer clearance on the trader’s premises

≡ offer period entry arrangements

≡ offer self-assessment schemes

≡ explore duty payment schemes for the vendor in the exporting country.

The availability of information in electronic form prior to the arrival of the goods would also allow Customs to run their risk assessment and, where possible, even inform the trader of their decision electronically before the goods arrive.

More and more relevant information is being stored centrally outside the jurisdiction of the respective Customs administration. The Internet enables Customs to regain control and obtain access to that information regardless of where it is held. Of course, there has to be an obligation on the company to provide instant access to the information, but it will also be necessary for Customs and other tax or law enforcement agencies to strengthen their international co-operation.

The increase in small consignments also represents a challenge for the control and enforcement services. The vast number of small consignments and the obligation under the revised Kyoto Convention to exercise selectivity based on risk management mean that Customs will have to measure compliance in order to ensure well-informed profiling and targeting. In addition, business partnerships embodied in Memoranda of Understanding (MOUs) encourage traders to establish internal compliance programs, which should have a positive impact on the outcome of the risk assessment.

14.9. Potential Benefits

There are a number of reasons why Customs administrations should consider new technologies to facilitate electronic service delivery. One of the main incentives, however, is the considerable cost saving over manual information processing for both Customs and members of the trading community. At the same time, for automated administrations the advantage of a single point of access to their system, as opposed to the costs involved in managing a large population of data entry terminals, is very significant. Customs has also been motivated by a growing emphasis on providing a high standard of service to its clients in the trading community. E-commerce technologies provide a trade facilitation tool capable of achieving immense savings for traders.

The emergence of world-wide standards has given a tremendous boost to e-commerce expansion. Organisations such as UN/CEFACT and the WCO actively support the adoption of new common standards (e.g., the WCO Data Model). The growth in Internet usage and the increasing reliability of Internet services have also made an important contribution to the spread of e-commerce.

The e-commerce approach means that Customs will show much more concern and flexibility in its dealings with its client base. This has led a number of Customs administrations to regard "electronic commerce" as a means of facilitating their clients’ business as well as providing productivity gains for the administrations themselves.

14.10. Issues

Issues to be considered from the national/international perspective include:

≡ client expectations

≡ whether electronic products are goods or services, and whether they should be taxed

≡ trade statistics

≡ compliance/enforcement verification issues, such as the identity and location of the sender of Customs data, electronic record-keeping standards and location of records, accessibility and reliability of electronic records, etc.

≡ use of e-cash

≡ workload management based on potential volume increases

≡ some other solutions that could be explored/suggested include Customs access to domain registries, web-crawler software, trade treaties, etc., and

≡ security issues.

14.11. Recommendations

To implement e-commerce successfully, in addition to its information systems infrastructure, Customs will need to have the necessary community consultation, operational and human resource capabilities in place. Firstly, the Customs administration will need to have a very clear picture of its internal capabilities as well as the expectations of external parties. This will require consultation with the various departments that make up the administration and with those external parties that will eventually participate in e-commerce with the Customs. Secondly, after reviewing the legal and policy implications, the Customs administration should draw up an e-commerce strategy and a draft implementation plan for endorsement by its top management and the external parties involved.

15. Common Problems

15.1. Introduction

Prior to the implementation of any automated system consideration should be given to those areas which might become problematic during the development of the project. Strategies should be developed to ensure that potential problems, whether organisational, procedural or resource-related, do not cause a project to fail.

Any automated process implemented by any Customs administration will need to be supported. Administrations that are considering developing automation may also wish to create an appropriate organisation to support any initiative they undertake. All the activities and related costs associated with managing and directing information technology initiatives; designing, developing and implementing new or enhanced automated applications; and operating, maintaining and supporting these automated applications are important and should be taken into account. See appendix 8: Information Technology Function Logic Chart.

15.2. Cultural resistance

The Customs community may view automation as a potential threat to their jobs and resist implementation. Through suitable education, training and incentive programmes Customs can eliminate this resistance and turn the Customs community into a more effective workforce. Ensuring that information about project plans, scope, etc. is made generally available at a very early stage will help prevent rumours from spreading and reduce uncertainty. This can be achieved by publishing regular project reports and involving those personnel who will be directly affected by the project.

15.3. Automation of source data

Lack of automated source data may make automation unattractive to certain Customs trading partners. For example, if the commercial documentation has not been transmitted electronically, then the trading partner cannot use this information as a basis for the Customs declaration. A possible solution to this problem is the use of service bureaux for data input. These bureaux could be run either by Customs or by private companies. In the case of private companies the bureau service should be sanctioned by Customs to ensure that data capture standards meet requirements. Another solution might be to purchase all the equipment for trading partners, as well as Customs, through a supplier credit programme, which could include a substantial discount for the purchase of hardware and equipment.

15.4. Lack of infrastructure

An inadequate telecommunications infrastructure could pose a problem for automation. In such a situation, data could be exchanged by disc rather than over public networks. The potential for using satellite communications should also be examined.

Access to an uninterrupted power supply may also be problematic for some administrations. In those cases in which systems must be available all the time, the cost of installing a power generator should be included in the project resource requirements.

15.5. Customs legislation

Instability in the Customs legislation could make full-scale Customs automation impractical in a single project. Rather than automate an entire system, which might soon be obsolete, it is better to take a modular approach by automating activities and adding them to a core system as needs dictate or as legislative stability allows. An example might be the initial implementation of a duty payment and collection system to which other systems could subsequently be added. Resources could also be dedicated to streamlining an existing manual process to eliminate redundancy in the system.

15.6. Resource and expertise limitations

If resources are limited, projects should be prioritised according to productivity and efficiency gains in order to optimise resource expenditure. For example, Customs might consider automating the most labour-intensive procedure first to increase productivity.

A Customs authority may not have the in-house expertise required for project implementation. Engaging outside experts requires planning in terms of costs and, perhaps more importantly, in order explicitly to define the role of the consultant(s).

16. Cross reference table to the Kyoto Convention

Provision in General Annex	Section in IT Guidelines
3.11	8, 9.3, 9.4
3.18	6.4
3.21	6.4
6.9	2, 6.6, 12.
6.10	4
7.1	2, 3, 4, 5.6
7.2	8, 9.3, 9.4
1.3, 6.8, 7.3	2, 5
7.4	8.2, 8.3, 11
9.1, 9.3	6.14

Appendix 1 - Information and Telecommunications Structures for Electronic Commerce

Appendix 2 - Local Selectivity Process

Appendix 3 - Selectivity Profile Filter System

Appendix 4 - Example Customs Process/File Access

Appendix 5 - Program Flowchart

Appendix 6 - Computer Run Chart

Appendix 7

application	A program or suite of programs written for a specific user activity.
authentication	In data security, controls that either prevent or detect the tampering and/or accidental destruction of data, including message sender and receiver identity.
biometrics	Biometrics are automated methods of recognising a person based on physiological characteristics (www.biometrics.org )
block diagram	A diagram of a system in which the principal parts are represented by suitably annotated geometric figures to show both the function of components and their inter-relations.
central processor	The unit containing the circuits that control and perform the execution of instructions.
cookie	Tokens placed on a user's computer that can be used to recognise a user's machine. (www.techweb.com/encyclopedia )
communication network	A system of interconnected communication facilities.
communications controller	An intelligent unit which provides line oriented interface functions, e.g. error detection, synchronisation, between a group of modems and a computer or communication network processor.
computer interface	A shared boundary between two related components.
countermeasure	An action taken to counteract a danger, threat, etc.
CPS	Certificate Practice Statement
cryptography	The conversion of data into a secret code for transmission over a public network. (www.techweb.com/encyclopedia )
data capture	The act of entering data by means of peripheral devices e.g. a keyboard.
data processors	Someone who performs operations on data to achieve a desired objective.
database	A collection of inter-related data stored so that it may be accessed by authorised users with simple user-friendly dialogues.
database schema	A map of the overall logical structure of a database.
dial-up line	A telecommunications line for computer to computer communication which requires the sender to physically dial a telephone number before communication between the two systems can be initiated.
digital signature	A property private to a user or process that is used for signing messages over a communications link.
Direct Trader Input	A system in which declarations are input into the Customs computer system by the declarants themselves, from terminals normally situated in their own offices or via commercial third-party networks.
document	Any medium (including magnetic tapes and disks, microfilm and EC messages) designed to carry and actually carrying a record of data entries.
DTI	See Direct Trader Input.
EC	See Electronic Commerce.
EDI	See Electronic Data Interchange.
EDI translator	A device that converts information from application format to the agreed EDI format for sending and vice versa for receiving.
EFT	See Electronic Funds Transfer.
Electronic Commerce	A way of conducting business by utilising computer and telecommunications technology to exchange data between independent organisational computer information systems
Electronic Data Interchange	The transmission of data structured according to agreed message standards, between one computer system and another, by electronic means.
electronic forms	A document in which certain items have been pre-coded and into which variable information is entered.
Electronic Funds Transfer	An automated system for transferring funds from one bank account to another using electronic equipment and data communications Examples: e-money, debit card, credit card, Electronic Bill Presentment Payment (EBPP)(www.ebilling.org)
Electronic Funds Transfer security / protocols / systems	Secure Sockets Layer (http://home.netscape.com/eng/ssl3/ssl-toc.html ) Secure Electronic Transaction (www.setco.com ) or (www.setco.org ) I-Pay (www.I-Pay.com ) MicroPayments (www.w3.org/ECommerce/Micropayments/#About ) Open Electronic Wallet System (www.PCSCworkgroup.com )
electronic mailbox	A place to store message packets at intermediate points prior to further transmission. Incoming messages are stored in the addressee’s mailbox and retrieved later by the addressee.
encryption	Reversible transformation of data (called "plaintext") into a form (called "cipher text") that conceals the data's original meaning to prevent it from being known or used. (www.techweb.com/encyclopedia ) (http://www.sans.org/resources/glossary.php )
feasibility stage	The stage in the implementation of a system in which the proposed system is evaluated for technical and financial considerations. It is used as the basis for deciding whether to proceed to the next stage.
flowchart	A pictorial representation of a process (logical or physical).
Graphical User Interface	A program interface that takes advantage of the computer's graphics capabilities to make the program easier to use. Well-designed graphical user interfaces can free the user from learning complex command languages. On the other hand, many users find that they work more effectively with a command-driven interface, especially if they already know the command language. Microsoft Windows is an example.
GUI	See Graphical User Interface.
hardware	Physical equipment such as disk drive, PC or printer.
HTML	See HyperText Markup Language.
HyperText Markup Language	The language used to create pages on the Web. Pages are written in regular text and then HTML tags are applied to format the text to display it with WWW browser software. Tags include formatting options, links to other pages, graphics. HTML is machine independent.
ICT	See Information and Communication Technology
IETF	Internet Engineering Task force (http://www.ietf.org/ )
information exchange	In the context of this document it is the electronic exchange of information between computer systems.
Information and Communication Technology	The management, acquisition, processing, storage and dissemination of vocal, pictorial, textual and numeric information by a micro-electronics based combination of computing and telecommunications.
integrity	The preservation of programs or data for their intended purpose against loss or corruption.
international standard	A formally recognised global standard agreed through a recognised international standard setting body, e.g. ISO, UN/ECE, etc.
Internet	An international open computer network environment linking computers from educational institutions, government agencies, industry etc.
ISO	International Standards Organisation. (www.iso.org)
IT	See Information and Communication Technology.
leased line	A line hired by a subscriber for his or her exclusive and permanent use.
Management Information System	A system designed to provide management and supervisory staff with required data that is accurate, relevant and timely, sometimes on a real-time basis.
MIS	See Management Information System.
modem	MOdulator-DEModulator - a device that modulates the transmitted signal and demodulates the received signal, e.g. a modem is used to convert a digital signal from a computer into an analogue signal for transmission, usually over a telephone network.
non-repudiation	The ability to prevent a sender or receiver of a message denying responsibility for sending or receiving the message.
ODA	See Open Document Architecture.
on-line	A system in which the data or instructions are inserted directly from the point of origin and the output data is transmitted directly to the appropriate recipient.
Open Document Architecture	Architecture aimed at ‘blind information interchange’ This means that two systems can interchange documents, maintaining their layout and revisability without any prior knowledge other than that both systems support a particular standardised profile of the international ODA standard. ODA offers an architecture, which can cope with the majority of documents likely to be found in office environments.
PIN	Personal Identification Number
PKI	A PKI is an automated system that manages the generation, maintenance, and delivery of encryption and digital signature keys. Both key types, encryption and digital signature, have two related components: a public‑key component that is accessible to all users, and a private-key component that must be secured from access by others. The public key and other identification information are stored in a digital certificate that is digitally signed by a Certification Authority (CA). The digital signature of the CA on the digital certificate binds the identity of the end-entity with its public-key. It also guarantees that the public key has not been tampered with.
protocol	A formally specified set of conventions governing the format and control of inputs and outputs between two communicating systems.
secure sockets layer	See SSL
SMIME	Secure Multipurpose Internet Mail Extension (www.ietf.org/html.charters/smime-charter.html )
SMTP	Simple Mail Transfer Protocol (http://www.techweb.com/encyclopedia/)
software	The programs, procedures, routines and possibly documents associated with the operation of a data processing system.
source data	An invoice, form, voucher or other form of written evidence of a transaction from which the basic data is extracted for processing.
SSL	Secure Sockets Layer. A protocol developed for transmitting private documents via the Internet. (http://www.sans.org/resources/glossary.php )
telecommunications network	See communication network.
TLS	A protocol that ensures privacy between communicating applications and their users on the Internet. (www.sans.org/resources/glossary.php )
transport layer security	See TLS
trojan codes	A malicious code hidden inside a legitimate piece of software.
turn-key system	A complete system of hardware and software delivered to the customer ready-to-run. This normally includes the installation, adjusting and testing (technical) of the system by the supplier. Just "turn the key" and go.
UN/EDIFACT	United Nations/Electronic Data Interchange For Administration, Commerce and Transport.
UNCITRAL	United Nations Commission on International Trade Law. (www.uncitral.org)
user specification	The formal report identifying, in detail, all the requirements specified by the user of a computer system under development.
Value Added Network	A communication service using communications common carrier networks for transmission and providing added data services with separate additional equipment. Added services may include store and forward message switching, terminal and host interfacing.
VAN	See Value Added Network.
VDU	See Visual Display Unit.
virtual shop	A shop that may not exist in reality but made by software to appear to do so.
Visual Display Unit	A device which permits the user to input information to a computer via keyboard, light-pen or touch-screen facilities and to view the computer output, text or graphics on a cathode-ray tube screen.
World Wide Web	The graphical layer applied above the Internet. Where the standard Internet is text only, the Web is graphical in nature. Text and graphics, stored on servers, are transmitted via the network to client browsers where they are displayed.
WWW	See World Wide Web.
X.21	General purpose interface between data terminal equipment and data circuit terminating equipment for synchronous operation on public data networks.
X.25	An interface between data terminal equipment and data circuit terminating equipment for terminals operating in the packet mode on public data networks.
X.400	Message handling facility.
X.509	A certificate (see PKI) used to verify certain information exchanged over a network (e.g., the internet). It contains the key holder's public key and some identifying information which confirms that both the key holder and certificate issuer are who they say they are. Certificates are stored on publicly accessible directories, like the X500 directories
XML	eXtensible Markup Language (www.xml.org )

Appendix 8 - Information technology function logic chart

TRIGGERS

Government & Customs Administration direction
Evolution in IT industry
Internal client expectations
IT workforce conditions

New and/or modified service delivery requirements
New and/or modified business process requirements
New and/or modified management requirements
Legislative changes

Systems failures
Hardware & software replacement requirements
New and/or modified technological solutions/opportunities
User queries/problems

MANAGE

BUILD/ENHANCE

IMPLEMENT

OPERATE/SUPPORT

ACTIVITIES

Develop IT strategy
Develop business/ operational plans
Determine budget and source of funding
Identify and research technology opportunities
Maintain set of modern approaches, standards & tools
Plan for disaster recovery
Monitor and evaluate

Project planning/management
Define business specifications
Define systems specifications
Design data, network, hardware & software architecture
Determine network, hardware & software requirements
Evaluate technology options
Integrate 3rd party software
Program and test applications
Document processes

Document user & technical specifications
Train users & operators
Procure, evaluate & deploy infrastructure & applications
Migrate applications & data
Release management

Enable/activate applications
Establish & monitor IT performance and service level agreements
Schedule systems operations
Ensure adequate capacity & balance use
Provide user & technical support
Track and monitor problems
Repair/replace/upgrade infrastructure components
Ensure continued security
Recover from failures/disasters
Manage assets and data

OUTPUTS

Performance measurement
IT strategies & plans
Qualified workforce
Policies standards and practices

Updated Architecture
New/modified applications
New/modified infrastructure

Products & services contracts
Trained user & operations staff
Release plans & execution
Implemented applications & infrastructure

Systems availability
Service Level Agreements
Systems fixes & problem resolution
Recovery from failure/disaster
Updated data repositories

IT FUNCTION OBJECTIVES

Satisfy partner & client requirements

Produce IT products and services in a cost-effective and timely manner

Provide high level of systems availability

Maintain integrity and security of information resources

Maintain qualified and productive IT workforce

Provide innovative technology options to clients

CONTRIBUTION TO CUSTOMS BUSINESS GOALS

Enable service delivery, client education, revenue collection, enforcement, border protection and fair administration

Develop knowledgeable, skilled and productive staff

Enable improved efficiency and effectiveness of business and support functions

Provide systems solutions which produce

cost savings/cost avoidance

Ensure continued operation of automated processes

Appendix 9 - WCO Recommendations on IT

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE UNIQUE CONSIGNMENT REFERENCE NUMBER (UCR) FOR CUSTOMS PURPOSES

(30 June 2001)

THE CUSTOMS CO-OPERATION COUNCIL,

HAVING REGARD to the globalization of international trade

DESIRING to contribute to the facilitation of the international movement of goods through Customs

DESIRING to increase the effectiveness and efficiency of Customs Administrations in dealing with international trade transactions

RECOGNIZING the increasing importance for international Customs co-operation to ensure better Customs compliance and facilitation of legitimate trade

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should adopt and implement a Unique Consignment Reference Number (UCR) in close consultation with their trade bodies which should be,

used for all international trade transactions
used only as an access key for audit, consignment tracking, information and reconciliation purposes, and should not be the source of any information about the consignment itself
able to uniquely identify a consignment at both the national and international level
applied at consignment level, with a consignment being identified as "the total number of items specified in the contract of sale between the seller and the buyer"
issued as early as possible in the international transaction process by the "seller"a reference number for Customs use and may be required to be reported to Customs at any point during a Customs procedure.

FURTHER RECOMMENDS that the Unique Consignment Reference Number be structured as follows:

have a maximum of 35 alphanumeric characters in length
the first character being reserved to identify the year within a ten-year period, and have the values from 0 to 9 (It is considered that this will give uniqueness to the consignment reference over time sufficient to meet legal requirements for storing data for audit)
the next two characters being reserved for the ISO alpha-2 country code and be the identifier of the location of the seller (It is considered that this will give uniqueness to the consignment reference geographically to country level)
should use the remaining 32 characters to contain an officially recognized national company identifier and an internally applied company reference.

REQUESTS Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions which accept this Recommendation, to notify the Secretary General of the Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions that have accepted this Recommendation.

Appendix 10 - WCO Recommendations on the use of web sites by Customs administrations

CUSTOMS CO-OPERATION

TC2-3855

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE USE OF WORLD WIDE WEB SITES BY CUSTOMS ADMINISTRATIONS

(26 June 1999)

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate the international movement of goods and people through Customs,

DESIRING to facilitate access to, and dissemination of, Customs regulatory information in the public domain, particularly for travellers and participants in international trade,

CONSIDERING the importance of making relevant regulatory information available to the public in a cost-effective and easily accessible manner,

HAVING REGARD to the widespread acceptance of the Internet and World Wide Web (WWW) as a means of communication and information dissemination,

HAVING REGARD to growing use of the Internet and WWW by Customs administrations,

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should implement a Customs World Wide Web site for their administration,

FURTHER RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should make available on Customs administration web, sites, where practical or feasible, the data content as specified in the Annex to this Recommendation,

REQUESTS Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions which accept this Recommendation to notify the Secretary General of the Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions that have accepted this Recommendation.

Annex to the Recommendation on Customs Web Sites

Basic information to be made available on Customs web sites

Information for travellers

General overview of Customs
Comprehensive details of duty-free allowances
Comprehensive details of prohibited goods for import and export
Information about Customs channels (dual-channel system)
Penalties for Customs offences
Contact information (including e-mail address) for further information
Links to other relevant sites, especially immigration and agriculture
Multiple language versions of the information.
Access to official publications

Comprehensive details of duty-free allowances

Details on duty-free allowances should cover all products, including quantities and maximum values. The conditions under which duty-free privileges are given should be covered such as origin of the journey, length of stay, the age of the traveller, etc. In some cases, especially where economic zones are concerned, different allowances are available depending upon where the journey has originated and these differences should be clearly indicated.

Comprehensive details of prohibited goods for import and export

Goods that are prohibited or restricted should be clearly identified, e.g. arms and ammunition, live animals, certain types of plants, ivory, currency, etc. Penalties for breaches of the legislation should also be highlighted.

Information about Customs channels (dual-channel system)

Information on how the dual channel system works and how passengers declare goods to Customs on arrival should be presented. This should include examples of Customs forms to be completed.

Penalties for Customs offences

A comprehensive set of information should be given, indicating what penalties a traveller should expect to receive if caught deliberately breaking the law.

Contact information (including e-mail address) for further information

Customs contact information for travellers, especially a public e-mail address, should be given to allow the public to make specific enquiries.

Links to other relevant sites, especially immigration and agriculture

Links to other government web sites such as immigration, tourism and agriculture should, where possible, be established to help visitors obtain complete information on all regulatory requirements necessary upon arrival in the country.

Multiple language versions of the information

Tourism is a very important part of the economy for many countries. Significant numbers of visitors may not speak the native language of the country they are visiting. The Customs administration should have information available for travellers in a number of other languages.

Access to official publications

Access to various official publications, brochures, etc. should be made available for downloading or ordering through the web site. Consideration should be given to the format used for documents being made available for downloading.

Information for traders

General overview of Customs
Overview of Customs procedures and legislation
National legislation including Customs regulations on all the Customs procedures
Tariff and duty information
Currency rates of exchange
Details of prohibitions and restrictions
Details of how to complete a Customs declaration
Classification decisions
Penalties for Customs offences
Contact information (including e-mail addresses)
Links to other government agencies
Access to official publications

Overview of Customs procedures and legislation

This section would give a general overview of the various Customs procedures and the legislation under which they operate. It should be considered as a broad introduction to Customs business. Links to the more detailed explanations of particular procedures or sections of national legislation should be established.

National legislation including Customs regulations on all the Customs procedures

Placing the texts of national legislation covering international trade (imports, exports, transit, etc.) on the WWW is a basic requirement of a Customs web site. However, in most cases the legislation is in plain text without any hypertext links. To make this more useful to traders, Customs administrations should establish, where possible, hypertext links to important references throughout the body of the documents.

Search engines should also be made available on the web site to allow users to conduct key word searches.

Tariff and duty information

Basic information on tariff and duty rates for various classes of goods should be made available. Access to a complete electronic version of the national tariff would be the most useful. However, at the minimum a copy of the paper version of the tariff should be made available in a “pdf” format (portable document format). This would allow the trader to download the document for viewing and printing only.

Currency rates of exchange

A list of the official currency rates of exchange for Customs purposes should be a basic element included on the web site.

Details of prohibitions and restrictions

Details of prohibited or restricted goods, goods covered by quota and similar prohibitions or restrictions should be highlighted. Special conditions for the importation or exportation of such goods should be clearly indicated.

Details of how to complete a Customs declaration

A user guide on how to complete a Customs declaration is most useful to traders and improves the quality of data input to Customs systems. Most Customs administrations already have this type of guide in paper form. Customs administrations should convert this guide into a format that could be placed on the web, and such a “training guide” should be developed into a comprehensive interactive programme.

Classification decisions

Traders frequently need information about classification issues. All official classification decisions therefore should be made available on the Customs web site, thereby reducing the need to directly contact Customs officials for the information.

Penalties for Customs offences

A comprehensive set of information should be given indicating what penalties a trader should expect to receive if caught deliberately breaking the law.

Contact information (including e-mail addresses)

As with the information for travellers, contact details (including e-mail addresses) for Customs officials dealing with specific issues should be given.

Links to other government agencies

Links to such other web sites as the Ministries of Trade and Finance and the national Chamber of Commerce should be included.

Access to official publications

Developing computer applications on the web

The information being made available to traders and travellers may become static, i.e. the readers can receive the information and print it, but generally cannot integrate it into their own applications. Customs administrations should develop interactive applications that can be used either by external clients or internal staff members.

Appendix 11 - WCO Recommendations on the WCO Data Mapping Guide

CUSTOMS CO-OPERATION

TC2-3845

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL * CONCERNING THE USE OF THE WCO DATA MAPPING GUIDE FOR CUSTOMS UN/EDIFACT MESSAGES

(21 June 1995)

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate the international exchange of data between Customs administrations and between Customs administrations and trade users,

CONSIDERING that UN/EDIFACT messages can be used independently of the application area and that their widespread use in international trade will greatly facilitate movement of cargo,

FURTHER CONSIDERING that it is desirable that an internationally agreed and universally applicable set of rules for the usage of Customs UN/EDIFACT messages be applied in Electronic Data Interchange,

RECOMMENDS that Members of the Customs Co-operation Council and all members of the United Nations Organization or its specialized agencies and Customs or Economic Unions should adopt the WCO Data Mapping Guide for UN/EDIFACT messages as the standard reference document for the development of all Implementation Guides for UN/EDIFACT messages utilized by Customs in exchanging data electronically between Customs administrations and between Customs administrations and trade users,

REQUESTS Members of the Customs Co-operation Council and members of the United Nations Organization or its specialized agencies and Customs or Economic Unions which accept this Recommendation, to notify the Secretary General of the Customs Co-operation Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Customs Co-operation Council. He will also transmit it to the Customs administrations of the members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions that have accepted this Recommendation.

* Customs Co-operation Council (CCC) is the official name of the World Customs Organization (WCO)

Appendix 12 - WCO Recommendations on data requirements for API

CUSTOMS CO-OPERATION

TC2-3844

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING ADHERENCE TO STANDARDS IN RELATION TO DATA REQUIREMENTS FOR ADVANCE PASSENGER INFORMATION (API)

(6 July 1993)

THE CUSTOMS CO-OPERATION COUNCIL,

NOTING the compliance risk posed by airline passengers especially with regard to drug trafficking and international terrorism,

NOTING the use of Electronic Data Interchange (EDI) by both carriers and Customs authorities and the potential benefits that use of this technology can bring,

RECOGNIZING that the electronic transmission of passenger-related data can result in the more rapid clearance of passengers and can have important control benefits for Customs authorities,

HAVING REGARD to Annex J.1. of the Kyoto Convention which requires, inter alia, computer applications implemented by Customs authorities to use internationally accepted standards,

DESIRING specifically to simplify and harmonize interface arrangements between (air) carriers and Customs authorities, particularly as regards the use of standard data elements, codes and message syntax,

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies and Customs or Economic Unions, should adhere to the standards set out in the Joint CCC/IATA Guideline on Advance Passenger Information, and any future updated or revised versions of these standards, for the electronic exchange of passenger data,

REQUESTS Members of the Council and members of the United Nations Organization or its specialized agencies and Customs or Economic Unions which accept this recommendation, to notify the Secretary General of the Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions that have accepted this Recommendation.

Appendix 13- WCO Recommendations on the use of the UNTDED

CUSTOMS CO-OPERATION

TC2-3842

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE USE OF THE UNITED NATIONS TRADE DATA ELEMENTS DIRECTORY (UNTDED)

(26th JUNE 1990)*

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate the international exchange of data between Customs administrations and between Customs administrations and trade users,

CONSIDERING that it is desirable that internationally agreed and universally applicable data element names, data element descriptions and character representations should be used in such trade data exchange,

CONSIDERING that it is desirable that the same names, descriptions and representations should be used for data elements irrespective of the context in which trade data is being exchanged (e.g. between exporter and carrier, exporter and importer, importer and Customs, etc.),

NOTING that these standard data elements can be used with any method of data interchange, on paper documents as well as with other means of data communication, can be selected for transmission one by one, or used within a particular system of interchange rules, e.g. UN/EDIFACT,

FURTHER NOTING that a subset of UNTDED constitutes the EDIFACT DATA Elements Directory (EDED) also recommended by the Customs Co-operation Council specifically for use in electronic data interchange (EDI),

CONSIDERING that the Directory has been accepted by the International Standards Organisation as an international standard, Sections 1, 2, 3, 4 and 9 of the Directory constituting International Standard ISO 7372,

RECOMMENDS that Members of the Council and all members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions should use the data element names, descriptions and character representations contained in the United Nations Trade Data Elements Directory (UNTDED) and future updated versions of this Directory in trade data exchange between Customs administrations and between Customs administrations and other trade users.

REQUESTS Members of the Council and all members of the United Nations Organization or its specialized agencies and Customs or Economic Unions which accept this Recommendation, to notify the Secretary General of their acceptance, of the date from which they will apply the Recommendation, and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members. He will also transmit it to any Customs administrations of non-Members or any Customs or Economic Unions which have accepted this Recommendation.

* Note : This Recommendation supersedes the Council Recommendation of 21 June 1988 concerning UNTDED.

Appendix 14 - WCO Recommendations on the use of EDIFACT rules

CUSTOMS CO-OPERATION

TC2-3841

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE USE OF THE UN/EDIFACT RULES FOR ELECTRONIC DATA INTERCHANGE

(26th JUNE 1990)*

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate the international exchange of data between Customs administrations and between Customs administrations and trade users,

CONSIDERING that it is desirable that an internationally agreed and universally applicable set of rules for the structuring of such data should be used in the electronic data interchange,

NOTING that the United Nations Economic Commission for Europe (UN/ECE) has developed a comprehensive set of standards, directories and guidelines for use in electronic interchanges known as UN/EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport) and defined in the Annex to this Recommendation,

AWARE that the UN/EDIFACT standards, directories and guidelines can be used independently of the application area and that their widespread use in international trade will greatly facilitate the movement of cargo,

NOTING that certain elements of the UN/EDIFACT rules are in the nature of standards which must be strictly adhered to for successful data interchange to occur (e.g. the EDIFACT Syntax Rules),

FURTHER NOTING that certain other elements of the UN/EDIFACT rules are in the nature of guidelines, use of which is highly recommended (e.g. message design guidelines),

RECOMMENDS that Members of the Council and all members of the United Nations Organization or its specialized agencies and Customs or Economic Unions, should apply the UN/EDIFACT rules as defined in the Annex to this Recommendation, and future updated versions of these rules for the preparation of electronic messages to be interchanged between Customs administrations and between Customs administrations and other trade users,

REQUESTS Members of the Council and all members of the United Nations Organization or its specialized agencies and Customs or Economic Unions, which accept this Recommendation, to notify the Secretary General of their acceptance, of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members. He will also transmit it to any Customs administrations of non-Members or any Customs or Economic Unions which have accepted this Recommendation.

* Note : This Recommendation supersedes the Council Recommendation of 21 June 1988 concerning the EDIFACT Syntax rules.

DEFINITION OF UN/EDIFACT

UN/EDIFACT: United Nations rules for Electronic Data Interchange for Administration, Commerce and Transport. They comprise a set of internationally agreed standards, directories and guidelines for the electronic interchange of structured data, and in particular that related to trade in goods and services, between independent computerised information systems.

Recommended within the framework of the United Nations, the rules are approved and published by the UN/ECE in the United Nations Trade Data Interchange Directory (UNTDID) and are maintained under agreed procedures.

UNTDID includes:

- the EDIFACT Syntax rules (ISO 9735);

- Message design guidelines;

- Syntax implementation guidelines;

- the EDIFACT DATA Elements Directory, EDED (a subset of UNTDED);

- the EDIFACT Code List, EDCL;

- the EDIFACT composite data elements Directory, EDCD;

- the EDIFACT standard segments Directory, EDSD;

- the EDIFACT UNSMs Directory, EDMD;

- Uniform Rules of Conduct for the Interchange of Trade Data by Teletransmission (UNCID);

- Explanatory material, as appropriate.

Appendix 15 - WCO Recommendations on the use of codes for data elements

CUSTOMS CO-OPERATION

TC2-383

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE USE OF CODES FOR THE REPRESENTATION OF DATA ELEMENTS

(20 June 1996)*

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate the interchange of data among Customs administrations and between Customs administrations and participants in international trade,

CONSIDERING that it is desirable that internationally agreed and universally applicable codes should be used for the representation of data elements in such interchange of data,

HAVING REGARD to and supporting International Standards adopted by the International Organization for Standardization (ISO) concerning the use of codes or coding structures for the representation of data elements,

HAVING REGARD to and supporting Recommendations adopted by the Working Party on Facilitation of International Trade Procedures of the Economic Commission for Europe (ECE/UN) which recommend the use of codes or coding structures for the representation of data elements for international trade purposes,

CONSIDERING that the codes or coding structures referred to in the Annexes to this Recommendation provide a suitable basis for the representation of data elements in the interchange of data,

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should use the codes or coding structures specified in the Annexes to the Recommendation and future updated or revised versions of these codes or coding structures for the representation of data elements in the interchange of data among Customs administrations and between Customs administrations and participants in international trade whenever there is a need for a coded designation,

POINTS OUT that acceptance of this Recommendation requires the acceptance of the Recommendation and of at least one Annex thereto, and that each Annex shall be taken to be a separate Recommendation,

REQUESTS Members of the Council and members of the United Nations Organization or its specialized agencies and Customs or Economic Unions, which accept this Recommendation, to notify the Secretary General of the Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions which have accepted this Recommendation.

* This Recommendation supersedes the Council Recommendation of 22 May 1984 on the use of codes and incorporates Recommendations T2-3831 (ISO-aplha-2 country codes) and T2-3832 (Mode of transport codes)

ANNEX I

Persons

1. Recommended coding structure

With regard to the design of a code for persons (e.g. suppliers, consignors, exporters, consignees, importers and declarants, etc.), the general guidelines concerning the coding of persons which have been prepared by the CCC Working Party on Customs applications of computers should be used.

These general guidelines, which have been developed in order to provide practical assistance to Customs administrations at the national level and which are compatible with International Standard ISO 6523 (Data interchange - Structure for the identification of organisations), are contained in the File on the computerisation of Customs operations.

2. Summary description

The general guidelines promote the use of a uniform approach to the coding of natural and legal persons involved in international trade operations and of interest to Customs (e.g., importers, exporters, Customs clearance agents, etc.). In particular, the guidelines deal with the function of codes, persons identified, the choice of codes, the length and format of codes, the identification of other elements, the identification of foreign suppliers, the use of check characters, and criteria and systems considerations to be taken into account in the development of codes.

As indicated above, the guidelines are compatible with International Standard ISO 6523 which specifies the following structure for identifying organisations for data interchange purposes: (a) an International Code Designator (ICD) (fixed-length four-digit code); (b) an organisation code; and (c) an organisation name. The organisation code consists of up to 14 characters that uniquely identify an organisation within an organisation coding scheme. The organisation code can involve the use of alphabetic, numeric or alphanumeric characters and it is recommended that the code should contain a check character which can be included within the organisation code or in a separate field.

ANNEX II

Container identifiers

1. Recommended codes

Attention is drawn to the ISO code contained in International Standard 6346 (Freight containers - Coding, identification and marking) for the representation of data concerning freight containers used in modes of transport other than air transport, and to the code developed by IATA for the representation of data concerning air freight containers.

Whenever container identification data are captured and processed by Customs, it is recommended that 17 characters should be provided for in ADP systems and associated documents in order to accommodate the ISO code (a possible total of 17 characters) and current and future versions of the IATA code (9 and 12 characters respectively).

2. Summary description

A. ISO code

International Standard 6346 establishes a 17-character alphanumeric marking code system for freight containers and provides unique international identification by means of an owner code, a serial number, and a country code, a check-digit system for verifying the accuracy of the recording of the owner code and serial number, and information concerning container size and type characteristics.

B. IATA code

The code developed by IATA for the representation of data concerning airfreight containers currently comprises 9 alphanumeric characters (unit type, size and compatibility, serial number, and owner code). In 1990, the IATA code will consist of 12 alphanumeric characters including a check digit.

ANNEX III

Dates

1. Recommended code

The representation provided for in ECE Recommendation No. 7 (Numerical representation of dates, time, and periods of time) which is based upon, inter alia, International Standard 2014 (Writing of calendar dates in all-numeric form) and 3307 (Information interchange - representations of time of the day) should be used for the representation of calendar dates and the time of day (e.g. departure date and time, arrival date and time, contract date, exchange date, Goods declaration acceptance date, clearance date, etc.).

2. Summary description

ECE Recommendation No. 7 (Numerical representation of dates, time, and periods of time) is based upon, inter alia, International Standards ISO 2014 and 3307.

ISO 2014 concerns the writing of dates of the Gregorian calendar in all-numeric form, signified by the elements year, month, day, and recommends that all-numeric dates should be written in the following order: year-month-day (i.e. YYYYMMDD) and should consist of four, two, and two digits to represent the year, month and day respectively.

ISO 3307 is designed to establish uniform time representations based upon the 24-hour timekeeping system. It provides a means for representing local time in digital form for the purpose of interchanging information among data systems. Local time is defined as clock time in public use at the point of origin. In the 24-hour timekeeping system, local time may be expressed by combinations of the time elements hours, minutes and seconds, for example, hours and minutes (HHMM).

With regard to calendar dates, attention is drawn to the fact that ECE Recommendation No. 7 recommends the use of only two characters to represent the year (i.e. YYMMDD).

ANNEX IV

Currencies

1. Recommended code

The ISO three-letter alphabetic currency code contained in International Standard 4217 (Codes for the representation of currencies and funds) should be used for the representation of currencies.

2. Summary description

ISO 4217 provides the structure for a three-letter alphabetic code and an equivalent three-digit numeric code for the representation of currencies and funds.

The first (left most) two characters of the alphabetic currency code in ISO 4217 provide a code unique to the currency authority to which it is assigned. Wherever practicable, it is derived from the ISO alpha-2 country code contained in ISO 3166 (Codes for the representation of names of countries) which is recommended by the Customs Co-operation Council and by the Working Party on Facilitation of International Trade Procedures of the Economic Commission for Europe (ECE/UN). The third (right most) character of the alphabetic code is an indicator, preferably mnemonic, derived from the name of the major currency unit or fund. In non-banking applications, the first (left most) two characters are sufficient to identify a currency. The numeric currency code is derived, where possible, from the United Nations Standard Country or Area Code.

Recommendation No. 9 adopted in February 1978 by the Working Party on Facilitation of International Trade Procedures of the Economic Commission for Europe (ECE/UN) recommends the use of the ISO three-letter alphabetic currency code for the representation of currencies for international trade purposes.

ANNEX V

Country Codes

1. Recommended codes

The International Standards ISO 3166 alpha-2 codes for the representation of countries, referred to in UN/ECE Recommendation No. 3, should be used for the representation of countries in international trade.

However, it should be noted that acceptance of this WCO Recommendation does not preclude the use of other codes referred to in ISO 3166 for the representation of names of countries for certain applications (for example, the ISO alpha-3 country code for machine readable passports, as laid down in the CCC/IATA Advance Passenger Information Guidelines). Acceptance of the Recommendation also does not preclude the use of non-ISO codes for national purposes or for internal purposes in the case of countries belonging to a Customs or Economic Union.

2. Summary description

The ISO alpha-2 country code consists of a two letter alphabetic code.

ANNEX VI

Descriptions of goods and tariff or statistical headings

1. Recommended coding structure

The Harmonized Commodity Description and Coding System should be used.

2. Summary description

The Harmonized Commodity Description and Coding System is a six-digit multipurpose nomenclature for transportable goods, which meets simultaneously the needs of Customs authorities, statisticians concerned with external trade or production, carriers and producers. The Harmonized System is suitable for automatic data processing and transmission and provides a common terminology and code specifically identifying 5019 groups of goods resulting from a detailed expansion of 1241 four-digit headings. The latter result from a very extensive revision and updating, not only in detail but also in structure, of the Customs Co-operation Council Nomenclature (CCCN). The Harmonized System can be further subdivided, where necessary, to meet national or international requirements.

ANNEX VII

Customs procedures

1. Recommended code

The general guidelines and one-digit code developed by the CCC Working Party on Customs applications of computers should be used for the representation of Customs procedures. The general guidelines and the one-digit code are contained in the File on the computerisation of Customs operations.

2. Summary description

The code for the representation of Customs procedures developed by the CCC Working Party on Customs applications of computers is a broad level one-digit code within which the principal Customs procedures are identified and within which users can develop unique codes to meet national or international requirements.

ANNEX VIII

Units of measurement

1. Recommended codes

The codes contained in ECE Recommendation No. 20 (Codes for units of measurement used in international trade) should be used for the representation of units of measurement.

2. Summary description

The unit of measurement codes developed by the ECE consist of a fixed-length (three letter) alphabetic code, and a fixed-length (three-digit) numeric code.

ANNEX IX

Mode of Transport Code

1. Recommended codes

The codes contained in ECE Recommendation No. 19 (Codes for mode of transport and the corresponding means of transport used in international trade) should be used for the representation of modes of transport.

2. Summary description

The mode of transport codes developed by the ECE consist of a single digit numeric code. However, provision is made for the possibility of a second numeric digit where the basic code needs to be sub-divided.

Appendix 16 - WCO Recommendations on customs information processed by computer

WORLD CUSTOMS ORGANIZATION*

RECOMMENDATION OF THE WORLD CUSTOMS ORGANIZATION CONCERNING THE ELECTRONIC TRANSMISSION AND AUTHENTICATION OF CUSTOMS AND OTHER RELEVANT REGULATORY INFORMATION

(16 June 1981 revised 24 June 2005)

THE WORLD CUSTOMS ORGANZIATION,

DESIROUS of enabling Customs administrations and international traders to make greater use of their computer systems, by making it possible for declarants to transmit Customs information to the Customs by electronic or other automatic means,

CONSIDERING that automated data processing, e-commerce incl. Electronic Data Interchange (EDI) and security techniques make it possible to transmit, validate and authenticate computer processed Customs regulatory information (such as Goods declarations, manifest data, licence information, etc.) other than by paper documentation and a handwritten signature; that these methods include the use of unique passwords linked to the declarant and transmitted with the information, software keys for the encryption of data and the generation of electronic signatures; that, in accordance with the provisions of national legislation or under the terms of an undertaking signed by the declarant, the use of such security techniques for the transmission of Customs information may be regarded as just as binding upon the declarant as a handwritten signature on paper documentation,

TAKING INTO ACCOUNT the "Recommendation on the authentication of trade documents by means other than signature", also adopted in March 1979 by the above-mentioned Working Party, which points out that the general adoption of electronic or other automatic means of data transfer require changes in existing national laws and international Conventions and in current commercial practice concerning signature,

AND FURTHER TAKING INTO ACCOUNT the “Model Law on Electronic Commerce” of the United Nations Commission on International Trade Law (UNCITRAL), adopted by the United Nations in December 1996 and the UNCITRAL “Model Law on Electronic Signatures” adopted by the United Nations in December 2001 as useful references for the development of national e-commerce and digital signature legislation,

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should:

1. Allow, under conditions to be laid down by the Customs authorities, declarants to use various electronic media (including values added networks, Internet, wireless networks, disc, tape, etc.) for the transmission of Customs regulatory information to the Customs authorities for automatic processing and to receive an automatic response to such information, from the Customs;

2. Accept, under conditions to be laid down by the Customs authorities, Customs regulatory information from declarants and other government agencies, which is transmitted by use of electronic media, validated and authenticated by security technology, without the need to produce paper documentation with a handwritten signature;

3. Ensure, where governments do not operate an electronic “Single Window” for declarants to submit regulatory information for international cross-border transactions only once to a single access point, that requirements and technical specifications concerning the authentication of electronic exchanges of regulatory information are co-ordinated among all government agencies involved;

4. Accept, where legal recognition of electronically transmitted Customs regulatory information is not yet resolved, that the Customs should authorize declarants, under conditions to be laid down by the Customs or other competent authorities, to produce Customs regulatory information on plain paper;

5. Accept, where EDI security and automated processing techniques are used but where, due to legal constraints, the production of paper documentation and hand written signatures are still required, the periodic submission of paper documentation or their storage on the premises of the declarant, under conditions laid down by the Customs;

* Established in 1952 as the Customs Co-operation Council (CCC).

Appendix 17 - WCO Recommendations on the use of CCC/IATA standards

CUSTOMS CO-OPERATION

TC2-3843

COUNCIL

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE USE OF THE CCC/IATA DATA INTERCHANGE STANDARDS

(21 June 1988)

THE CUSTOMS CO-OPERATION COUNCIL,

NOTING the high level of automation in the airline industry and the increasing number of Customs administrations which are introducing computer techniques,

NOTING the growing use of Electronic Data Interchange (EDI) in world trade and the benefits of a paperless trading environment,

AWARE that the interfacing of the automated systems of airlines and Customs administrations results in the reduction of the paper burden,

RECOGNIzING that the interfacing of automated processing of cargo-related data can result in rapid clearance of air consignments and have important benefits from the Customs control point of view,

HAVING REGARD to Annex J.1. of the International Convention on the simplification and harmonization of Customs procedures (18 May 1973) which requires, inter alia, computer applications implemented by Customs authorities to use internationally accepted standards,

DESIRING specifically to simplify and harmonize interface arrangements between airlines and Customs authorities particularly as regards the use of standard data elements, codes and message syntax,

RECOMMENDS that Members of the Council and members of the United Nations Organization or its specialized agencies and Customs or Economic Unions, should use the standards set out in the CCC/IATA Data Interchange Standards Manual and future updated or revised versions in establishing interfaces between the automated systems of Customs and airlines,

REQUESTS members of the Council and members of the United Nations Organization of its specialized agencies and Customs or Economic Unions which accept this Recommendation, to notify the Secretary General of the Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions that have accepted this Recommendation.

Chapter 8 - Relationship between the customs and third parties

CHAPTER 8

RELATIONSHIP BETWEEN THE CUSTOMS AND THIRD PARTIES

Legal Text

8.1. Standard

Persons concerned shall have the choice of transacting business with the Customs either directly or by designating a third party to act on their behalf.

8.2. Standard

National legislation shall set out the conditions under which a person may act for and on behalf of another person in dealing with the Customs and shall lay down the liability of third parties to the Customs for duties and taxes and for any irregularities.

8.3. Standard

The Customs transactions where the person concerned elects to do business on his own account shall not be treated less favourably or be subject to more stringent requirements than those Customs transactions which are handled for the person concerned by a third party.

8.4. Standard

A person designated as a third party shall have the same rights as the person who designated him in those matters related to transacting business with the Customs.

8.5. Standard

The Customs shall provide for third parties to participate in their formal consultations with the trade.

8.6. Standard

The Customs shall specify the circumstances under which they are not prepared to transact business with a third party.

8.7. Standard

The Customs shall give written notification to the third party of a decision not to transact business.

Guidelines to Chapter 8

Guidelines to the legal text

Chapter 8

RELATIONSHIP BETWEEN THE CUSTOMS AND THIRD PARTIES

1. Introduction

This Chapter of the General Annex concerns third parties and their relationship to Customs. A third party is defined in the Kyoto Convention as "any person who deals directly with the Customs, for and on behalf of another person, in connection with the importation, exportation, movement or storage of goods".

Examples of third parties covered by Chapter 8 are Customs agents and brokers, freight forwarders, modal and multi-modal carriers and delivery services. The most common of these are Customs brokers or Customs agents who are essentially concerned with presenting and processing Customs documentation on behalf of importers or exporters.

Third parties are not persons who deal with Customs in their own right. For example a port authority who is responsible only to present goods to Customs for physical inspection on behalf of an importer or exporter or a bank that is responsible for producing an original bill of lading to comply with documentary credit arrangements are not third parties as defined for the purposes of the Kyoto Convention.

The facilities granted to third parties in this Chapter offer advantages to all concerned. Importers and exporters are able to employ specialists to deal with complicated and detailed Customs procedures that may be unfamiliar to them and who can act on their behalf at times and places which they themselves would find inconvenient. Carriers and delivery services are able to expedite the movement of goods in their charge through Customs controls and to service the steadily growing proportion of time-sensitive consignments. Customs are able to more steadily and predictably clear goods, thereby better managing their own resources and the release times for the trade. In some countries, Customs also benefit from dealing with agents and brokers who are often more expert at handling the requirements for Customs procedures than some of their customers.

Standard 8.1

Persons concerned shall have the choice of transacting business with the Customs either directly or by designating a third party to act on their behalf.

This Standard gives the “person concerned”, who is usually the exporter or importer and the owner of the goods, the option of either dealing directly with Customs or designating a third party to deal with Customs. Other “persons concerned” could also include sellers, buyers, consignors or consignees, depending upon the particular transaction. The third party is thus the person who is designated by the “person concerned” to transact business with the Customs on the latter’s behalf.

While some Customs administrations are liberal in their dealings with third parties, some have imposed certain restrictions on third party transactions. These restrictions are to ensure that the third party acts with a certain degree of professionalism and responsibility, thereby allowing Customs to fulfil its own responsibilities to ensure compliance with Customs law. Some administrations require third parties by law, regulation or Customs ruling to be licensed. These licensing requirements may stipulate specified criteria that the third party must meet such as age, education, professional competence or moral and financial integrity. Additional criteria generally are that the third party have a registered business premise and meet professional standards for record-keeping. In some countries, third parties must pass qualifying examinations to meet these requirements. Customs’ authority in approving third parties is covered by Standard 8.2.

2. Conditions and Liability

Standard 8.2

This provision calls for the national legislation to specify the conditions for persons to act as third parties and to stipulate their liability to Customs. This ensures that Customs can safeguard the revenue and other control requirements as thoroughly in dealing with the intermediary as with his principal.

In particular the relevant national legislation should cover the third party's liability for any duties and taxes and for any irregularities in compliance with Customs requirements.

In some countries third parties and the persons they represent may be held jointly and severally responsible to Customs for duties and taxes and any irregularities, as well as for any concomitant fines or penalties.

In enforcing these and other regulations involving third parties, Customs may wish to take account of certain practical differences between a principal, that is, the direct declarant, and someone acting on his behalf. The principal usually has a closer knowledge of and a clearer responsibility for the accuracy of the information set out in the declaration or other submission to Customs than does the agent, broker or representative. Thus while Customs should hold third parties firmly accountable for all duties and taxes, they could give sympathetic consideration to lifting or mitigating certain penalties. For example, if the infraction is a misstatement and a similar offence that arose solely from defects in the data supplied by the principal, and the third party can show that he had taken reasonable steps to provide accurate and correct information, Customs could take these factors into account before deciding to impose a penalty.

Standard 8.3

Standard 8.3 requires Customs to treat principals and their third parties equally. Customs must not impose more stringent requirements on anyone preferring to deal directly with Customs rather than employ a third party for any particular transaction or in general. This is to prevent discrimination in Customs’ relationships with third parties and those who chose not to use a third party. With the growth of electronic commerce in international trading, with many Customs administrations developing more client-oriented service relationships with the trade, and with increasingly transparent Customs procedures and practices, many principals such as multinational corporations are choosing to deal directly with Customs.

However, this does not mean that Customs treatment has to be exactly the same for a direct principal as for an authorized third party. For example, the granting of deferred payment facilities by Customs to third parties who regularly clear substantial volumes of goods will not necessarily create a precedent which, under this Standard, would then be automatically available to direct principals with only occasional transactions or poor compliance records.

3. Third party rights

Standard 8.4

A person designated as a third party shall have the same rights as the person who designated him in those matters related to transacting business with the Customs.

This Standard similarly guarantees third parties the same rights as their principals. This can include the right to use modern communication and automated systems to fulfil Customs formalities, and the right of access to Customs information on legislative or procedural changes. Third parties should also not be required to retain more records for audit and inspection by Customs than those necessary to ensure that they have carried out their duties in a legal and responsible manner. This is particularly important when certain third parties, such as freight forwarders, may carry on other domestic businesses unrelated to international trading. Customs should not impose requirements on those unrelated records. Furthermore, like all parties who deal with Customs, third parties must also be allowed recourse to appeal procedures.

4. Trade Consultation

Standard 8.5

The Customs shall provide for third parties to participate in their formal consultations with the trade.

This Standard supplements Standard 1.3 of the General Annex that calls for Customs to establish and maintain consultative relationships with the trade, by requiring Customs to include third parties in their formal consultations. The inclusion of third parties with other traders in carefully managed consultative processes is a feature of modern, effective Customs administration. All parties, including Customs themselves, will benefit from timely, friendly and regular consultation on any matters affecting the movement of goods in international trade. This includes, as an example, proposed legal or procedural changes, especially when these may require substantial changes to the computer and information technology systems of traders. Likewise commercial plans to relocate major operational centres which could entail corresponding redeployment of Customs human and technical resources, as well as those of traders, should be the subject of prior trade consultation.

Co-operation and consultation may be managed through formal Joint Customs/Trade Committees at all national, regional and local levels. At the national level this co-operation is often supplemented by concluding Memoranda of Understanding (MOU’s) between Customs and trade representative bodies or between Customs and individual companies. MOU’s have been found particularly useful in some countries for assisting Customs to combat fraud and drug smuggling, and they have brought advantages to the trade in the form of reduced Customs interventions at the frontier. These Memoranda often include joint training and awareness programmes. Such exchanges provide real practical benefits to both sides in terms of better compliance, improved facilitation and more effective resource management.

The consultative process should particularly be encouraged at regional and local levels. By communicating directly at the time and place of trading operations, many problems can be avoided or solved for all parties concerned. Some countries have established regional and local Customs Liaison Committees which deal with day-to-day issues successfully and timely. (See the Guidelines to Chapters 1 and 3 of the General Annex for other examples of the benefits of consultation and communication with the trade).

5. Customs decision not to transact business

Standard 8.6

The Customs shall specify the circumstances under which they are not prepared to transact business with a third party.

There may be circumstances when Customs will refuse to transact business with a third party. Standard 8.6 requires Customs to state the reasons when this would occur. These exceptional circumstances must be clearly prescribed in national legislation, regulations or Customs rulings and provided to third parties. The reasons or circumstances would include :

- Conviction of a serious Customs offence within a specified recent period, or

- Consistent failure by the third party to fulfil responsibilities to the principal or to Customs, including repeated instances of gross negligence or infringement of Customs rules.

Unless a third party has committed a very serious offence, Customs should issue written warnings for reprehensible actions or omissions by the third party in dealing with them before Customs decides to suspend or revoke any license or authorization or to refuse to do business with the third party.

Standard 8.7

The Customs shall give written notification to the third party of a decision not to transact business.

The decision not to transact business with the third party is a very important one and Customs should study the implications of such a decision before it is taken. Once Customs decides to withdraw a third party's facility to transact business with them, Standard 8.7 requires Customs to give written notification of their intention and the reasons for it. This notification should be furnished within a reasonable time in advance of the actual withdrawal or final decision.

What constitutes a reasonable time is dependent upon the cause of the action and the immediate impact to the third party and his principals. For example if the third party has other transactions pending with Customs and Customs can be assured that these will be properly completed, they should provide a window of several days or weeks before the decision will take effect. This would allow the third party sufficient time to conclude his current business and not incur new obligations to principals. The benefit of this “grace period”, provided that Customs is satisfied that no further loss or offences would be incurred, is for the benefit of innocent principals as much as for the third party or Customs. In such instances the principals concerned who designated the third party in question should be notified of the revocation and informed of any alternative means that may be available for them to carry on their dealings with Customs.

The third party should also be given the opportunity to appeal against the withdrawal by Customs. This may be allowed before the final decision is made depending on the particular circumstances involved. (See Standard 10.2 of the General Annex). However, in cases where the third party has committed a criminal offence, the authorization to transact business with Customs should be revoked with immediate effect.

Refusal to do business with a third party should be open to reconsideration, upon request, after a certain period of time from the original cause of refusal.

Chapter 9 - Information, decisions and rulings supplied by the customs

CHAPTER 9

INFORMATION, DECISIONS AND RULINGS SUPPLIED BY THE CUSTOMS

A

INFORMATION OF GENERAL APPLICATION

9.1. Standard

The Customs shall ensure that all relevant information of general application pertaining to Customs law is readily available to any interested person.

9.2. Standard

When information that has been made available must be amended due to changes in Customs law, administrative arrangements or requirements, the Customs shall make the revised information readily available sufficiently in advance of the entry into force of the changes to enable interested persons to take account of them, unless advance notice is precluded.

9.3. Transitional Standard

The Customs shall use information technology to enhance the provision of information.

B

INFORMATION OF A SPECIFIC NATURE

9.4. Standard

At the request of the interested person, the Customs shall provide, as quickly and as accurately as possible, information relating to the specific matters raised by the interested person and pertaining to Customs law.

9.5. Standard

The Customs shall supply not only the information specifically requested but also any other pertinent information which they consider the interested person should be made aware of.

9.6. Standard

When the Customs supply information, they shall ensure that they do not divulge details of a private or confidential nature affecting the Customs or third parties unless such disclosure is required or authorized by national legislation.

9.7. Standard

When the Customs cannot supply information free of charge, any charge shall be limited to the approximate cost of the services rendered.

C

DECISIONS AND RULINGS

9.8. Standard

At the written request of the person concerned, the Customs shall notify their decision in writing within a period specified in national legislation. Where the decision is adverse to the person concerned, the reasons shall be given and the right of appeal advised.

9.9. Standard

The Customs shall issue binding rulings at the request of the interested person, provided that the Customs have all the information they deem necessary.

Guidelines to Chapter 9

Guidelines to the legal text

Chapter 9

INFORMATION, DECISIONS AND RULINGS SUPPLIED BY CUSTOMS

1. Introduction

The availability of information on Customs matters to interested persons is one of the key elements of trade facilitation. This information, which must be furnished by Customs, may be general or specific. Persons often need specific information about a particular operation they intend to carry out. Sometimes the decision whether or not to proceed with the operation may depend upon the information supplied by the Customs. When such information is requested, it is the responsibility of the Customs to provide it completely and accurately and as soon as possible.

This Chapter applies only to information supplied by the Customs and relates to information of general application, information of a specific nature, and to the particular procedure by which persons may obtain tariff classification information which is binding upon the Customs. These Guidelines also contain examples of methods of application by some administrations. These are found in Appendix II to this document.

2. Information of general application

Standard 9.1

The Customs shall ensure that all relevant information of general application pertaining to Customs law is readily available to any interested person.

The first provision (Standard 9.1) stipulates that the Customs must ensure that relevant information of general application is readily made available to all interested parties. The interested parties are trade and industry groups, forwarding agents, freight forwarders, shipping agents and major companies who transact business regularly with the Customs. Information of general application should also be furnished to other national authorities who are associated with the movement of goods to and from a Customs territory and who work in partnership with the Customs in the clearance of goods, i.e. the port, civil aviation, health and other authorities. Information on Customs requirements that is of interest to the general public, namely travellers and persons who send or receive postal articles, should be easily available.

Such information would include the tariff classification of goods, rates of duty and taxes, valuation of goods for Customs purposes, information relating to exemptions, prohibitions and restrictions, Customs administrative arrangements and requirements, and any other pertinent information which will be of interest to the relevant interested parties.

The information is usually made available :

in publications such as the Customs tariff, official gazettes, bulletins and public notices;
at appropriate Customs offices;
at strategic locations where it is likely to be needed. For example, information on Customs formalities and exemptions from duty and tax allowed to travellers may be made available on ships, aircraft, international trains, or at places of international arrival and departure;
in embassies and trade missions abroad, with supplies of notices for intending exporters and visitors in a variety of languages if necessary;
by display in public offices such as major post offices, tourist centres, etc.;
by publication in relevant newspapers and journals or by the issue of press releases; and
through regular magazine-type publications or newsletters produced by administrations for the trade to provide news and articles on major developments and changes.

2.1. Quality of information

It is important that Customs administrations not only make available a wide variety of information, but also that it is of high quality. Administrations should seek to ensure that the information which it makes available is accurate, relevant and prompt.

2.2. Clarity of information

Public Notices, whether in paper or electronic form, should be :

written in plain language, easy for the intended reader to understand;
clearly laid out, using large print and flow diagrams where relevant;
logically presented, clearly illustrating procedures or requirements;
specific to one particular topic or procedure (classification, valuation, preference etc);
up-to-date, prompt and relevant to important issues;
issued in response to identified user needs;
easily available at, for example, ports and airports (for travellers), in local Customs offices, from Helplines/Helpdesks, sent automatically by subscription, routinely issued to trade representative bodies; and
published in other languages where appropriate.

2.3. Trade consultation

Properly organised trade consultation can be a most effective means of communicating information to a wide audience and obtaining feedback.

Consultation may be instigated by :

Customs administrations,
traders and their representatives,
trade representation bodies, trade associations, product associations, importers and exporters associations.

It may take a number of forms :

formal Customs/trade consultative committees. (See the Guidelines on relationships between the Customs and third parties);
bilateral discussion between Customs and individual traders on specific points of concern or interest;
education projects and seminars;
surveys of trade opinion.

2.4. Exhibitions

Customs may be invited to attend exhibitions and other public events, or may ask to attend if they believe their presence will be particularly useful :

to provide general information, advice or helpdesk facilities to interested parties, to hand out leaflets, notices or brochures;
to promote specific policies in relation to important topics such as drugs, endangered species or other prohibited or restricted articles of trade;
to advertise and promote new information, procedures or initiatives; and
to canvass views on particular issues.

Some administrations have established public relations offices or units to handle such events. Customs administrations that do not have such an office or unit will need to have responsible persons who can :

identify suitable events such as trade exhibitions, transport shows, freight forwarders’ events and conferences;
identify Customs issues suitable for promotion at such events;
arrange liaison and contacts with organisers;
arrange for suitable personnel to attend; and
arrange for suitable display stands, materials and transport.

2.5. Enquiry offices

Special enquiry offices or enquiry desks in larger Customs offices can provide a valuable information service. Staff in these offices should be sufficiently trained to deal with the range of questions they may be asked. They should also have speedy access to the sources of information so that they can provide a comprehensive service. Use of information technology clearly adds to the efficiency, effectiveness and economy of this important service.

2.6. The Customs tariff

The Customs tariff is the primary source of general information made available by Customs. It typically contains :

a complete commodity listing based on the Harmonised System,
duty rates applicable to those commodities,
the full range of measures applicable, such as tariff quotas and ceilings, preferential duty rates, prohibitions and restrictions or special exemptions, and
a commentary giving details of the principal Customs regimes and procedures.

2.7. Liability for information provided

Customs must ensure as far as possible that the information they provide is accurate by giving adequate training to the staff concerned and keeping information systems up-to-date. Otherwise the Customs may be liable for any errors made based on the information they provide. Customs liability for an error should be limited if it has been made on the basis of inadequate or incorrect information furnished by those seeking a decision. Customs may not be liable for providing incorrect information if no loss or damage occurs as a result. The question of liability is best left to be decided on a case-by-case basis in accordance with national laws on negligence. However, Customs should refrain from imposing penalties in circumstances where they have not provided accurate information whenever they have discretion in the matter.

2.8. Updated information

Standard 9.2

Information made available by Customs will need to be updated in line with changes in legislation, policy or other national considerations. Frequent changes are made to rates of duties and taxes, quotas and administrative arrangements and requirements.

When such changes are made that have a bearing on the information made available to interested persons, it is essential that they be communicated to them as quickly as possible. Standard 9.2 refers to these requirements. Quick dissemination of information will enable the interested parties to take account of the changes and comply with the new requirements or make other arrangements. It is therefore essential that Customs administrations have mechanisms in place which allow changes to be communicated to users, both within the administration and externally, with the minimum of delay.

Customs tariffs and public notices should be subject to regular review, amendment and reprint. Customs staff, especially those in enquiry offices, should be able to access up-to-date information. Information technology is particularly useful for rapid amendment and communication of changes to all interested persons.

2.9. Setting standards

Transitional Standard 9.3

The Customs shall use information technology to enhance the provision of information.

Administrations may consider setting published aims to monitor and improve the quality of the information they provide. For example, one aim would be to provide notices and leaflets containing up-to-date information about the full range of taxes and duties administered and to ensure that these are readily available. Another would be to reply to written requests for information within 10 working days. Managers may review results (e.g. the percentage of decisions given within the set timescale) to enable them to evaluate the success of such initiatives and, if necessary, find ways to improve it.

Standard 9.2 also requires Customs administrations to communicate information in good time before the changes take place. It should be noted, however, that some administrations may classify information on tax rate changes, prohibitions and restrictions as restricted or even as secret until the changes are notified. (See also the Guidelines in sub-heading 3.3)

Standard 9.3 specifically provides for Customs to use information technology to enhance the provision of information. Customs administrations should consider using techniques such as the World Wide Web for all general information as well as non-restricted technical information, or producing their tariffs and other relevant information in an electronic form which can be rapidly accessed and amended (See Appendix I for the WCO Recommendation concerning the use of World Wide Web Sites by Customs Administrations). The use of information technology is covered in detail in the Guidelines to the General Annex, Chapter 7 on Application of information technology.

Chapter 10 of the General Annex on Appeals in Customs matters and Chapter 1 of Specific Annex H on Customs offences contain further information and should be consulted.

3. Specific information, decisions and binding rulings

Standard 9.4

Interested parties often need information or decisions about specific activities which they are considering or intending to carry out. Sometimes the decision whether or not to proceed may depend on information supplied by Customs. Standards 9.4 and 9.8 require Customs to provide such specific information or decisions as quickly as possible and with sufficient detail.

While information and advice of a specific nature may be given verbally or electronically, Customs administrations normally require requests for decisions to be in writing so that the facts are clearly established and recorded. Customs should accept and use correspondence by fax and other electronic means in nearly all situations.

Requests for information and decisions should be made to designated Customs officers or offices at publicised addresses. The Customs should ensure that specialist staff deal with requests for specific information and decisions. Time limits should be set within which to respond to written requests. Customs administrations should consider publishing results regularly to show how well the deadlines have been met.

3.1. Types of information and decisions

The following are typical subjects on which Customs may be asked to supply specific information :

- tariff classification of goods and rates of duties and taxes applicable to them;

- rules of origin and information necessary for their interpretation;

- exemption or relief from duties and taxes;

- valuation ‑ general principles and practices for the calculation of value for Customs purposes and specific information showing how the value for goods has been calculated;

- eligibility for treatment under specific Customs procedures, particularly those offering relief from duties and taxes such as processing, temporary admission, warehousing or drawback;

- repayment arrangements;

- procedural and administrative arrangements, such as Customs approved routes, opening hours of Customs offices;

- security and acceptable methods for providing security for duty and taxes; and

- documentation requirements.

3.2. Supplementary information

Standard 9.5

The Customs shall supply not only the information specifically requested but also any other pertinent information which they consider the interested person should be made aware.

In addition to the information specifically requested, Standard 9.5 requires Customs to provide "other pertinent information". This would be information that relates to the matters raised by the interested person. For example, if a request is received for a tariff classification and the goods are subject to import licensing, this additional information should also be provided even if not specifically requested. Many customs administrations also make available details of legal precedents and court actions which may, for example, be useful to the interested person in connection with making an appeal to the Customs.

The related information which should be furnished is a matter of judgement for Customs. However, Customs can only be expected to provide “other pertinent information” within their knowledge and authority. The overriding consideration is to provide as much information as possible which would be of assistance to the person making the enquiry.

Internal departmental instructions and other information are available to Customs staff on a confidential basis. The provisions of this Chapter should not be interpreted as placing an obligation on Customs to divulge such confidential or restricted information. Neither is there any implication that Customs may be held legally responsible for failing to supply supplementary information which the interested party might consider necessary. However, the concept of open government, freedom of information and transparency should be the underlying principle for Customs when determining what appropriate information is to be provided.

3.3. Freedom of information

Most modern administrations have instituted legislation to promote what is generally referred to as freedom of information. In broad terms, such legislation is aimed at giving people the legal right to view information held by governments nationally, regionally and locally, thereby making governments more accountable to the public.

In practical terms, this may be translated into a Code of Practice applicable to all government departments, which typically would :

- set out the kind of information which should be published voluntarily;

- require ministries to furnish their administrative decisions; and

- require ministries to meet reasonable requests for unpublished factual information relating to their policies, actions and decisions.

For Customs, this means not only publishing general and basic types of information (see Quality of Information - Setting Standards), but also being flexible in making other information available, such as internal instructions. Customs should, but may not always be able to, provide all this information free of charge and in this case Standard 9.7 of the Chapter would apply.

There are, of course, limits to what can be provided and there will be exceptions where disclosure may not be in the public interest. In the Customs context, this could be when :

- it would harm the ability of the Government to manage the economy;

- it would prejudice the assessment or collection of tax or duties, or assist tax avoidance or evasion;

- it would be likely to prejudice the prevention, investigation or detection of crime or the apprehension or prosecution of offenders; or

- it would prejudice the legal proceedings of any tribunal, public inquiry or other formal investigation.

If a dispute arises over whether Customs should have provided certain requested information, an independent Commission or Adjudicator may be appointed to deal with disputed cases.

3.4. Confidentiality

Standard 9.6

Standard 9.6 addresses the confidentiality of information. When providing specific information, decisions or binding rulings, Customs should have systems in place to ensure that confidential or commercially sensitive information received from traders or information that may affect the Customs is not divulged to unauthorised persons. Provision may be made in national legislation for authorised disclosure in certain cases such as serious infraction or fraud.

3.5. Charging

Standard 9.7

When the Customs cannot supply information free of charge, any charge shall be limited to the approximate cost of the services rendered.

Customs normally supply specific information or decisions free of charge. However, as previously indicated, this is not always possible. Where costs are incurred in providing information such as an expert opinion or laboratory analysis, these types of costs may legitimately be charged to the applicant. Standard 9.7 requires Customs to limit the charges to the cost incurred for furnishing the information.

3.6. Appeals against decisions

Standard 9.8

National legislation must include deadlines for Customs to furnish decisions under normal circumstances. When a decision is requested, Standard 9.8 requires Customs to furnish it in writing and within the specified period. If decisions are adverse, the reasons for the decision and, where necessary, the legal basis must be included. Customs are also required to notify interested parties of their right of appeal. Full details of the appeals procedure are contained in Chapter 10 to the General Annex.

3.7. Binding rulings

Standard 9.9

The Customs shall issue binding rulings at the request of the interested person, provided that the Customs have all the information they deem necessary.

In an effort to provide advanced and predictable information to traders to facilitate their compliance with Customs requirements, many administrations have instituted a programme of binding rulings, as prescribed in Standard 9.9. These are rulings supplied on request and are based on information provided by the applicant. In some administrations they may be legally binding and provided for in national legislation, whereas in others there may simply be a commitment by the Customs to honour the ruling. For example where a binding tariff classification is issued, it will be binding on both parties for a number of years specified by Customs.

Where legal or administrative changes override the ruling, a period of grace might be given to the individual applicant before the ruling is withdrawn. If on the other hand the facts upon which the ruling was based were changed, the ruling would not be applicable.

National legislation or departmental instructions should lay down the procedures to apply for binding rulings and should include the particulars to be supplied. The application should be in writing and the following details should be required as a minimum :

- name and address of applicant;

- full details of the goods, such as commercial description, nature, composition, quality, price, origin, end‑use, packaging and, where applicable, manufacturing process;

- particulars of any previous importations by the applicant of goods of the same kind, together with the tariff heading applied;

- Customs office through which the goods are to be cleared.

Although tariff classification is the most common area for binding rulings, origin and valuation rulings are also common. The procedure is similar for all binding rulings.

3.8. Sampling of goods

Customs will usually ask for a sample of the goods if practicable. Otherwise photographs, plans, drawings or a complete and exact description may be called for.

3.9. Notification of binding rulings

The applicant must be notified of binding rulings in writing. For ease of recognition, a standard format may be considered useful. The ruling should include the exact description of the goods and, if appropriate, reference to the relevant samples, photographs, plans, drawings or detailed descriptions submitted with the application.

The ruling should be communicated to all Customs offices or at least to those at which the goods are to be declared. Distribution of the ruling through a computerised database will facilitate this and can make the information available to the public as well. Publication of binding rulings, however, does not place Customs under any obligation other than towards the person who obtained the ruling.

3.10. Time‑limits for validity of rulings

For practical reasons (changes in products, legislation, etc.) Customs administrations apply a minimum period of validity for the binding ruling. In practice this varies between one and five years.

3.11. Use of binding rulings

Importers and exporters can produce the ruling to minimize clearance formalities for their goods. In many circumstances Customs will accept the reference number in place of the full ruling. Customs officers can make risk‑based checks where necessary and will need to satisfy themselves that the goods in question are identical to those which are subject to the ruling, and that the ruling is still valid.

3.12. Annulment of binding ruling

The binding ruling may be annulled if it was given on the basis of incorrect or incomplete details provided by the applicant. The binding rulings cease to be valid under the following circumstances :

(i) when it becomes incompatible with new measures or judicial decisions taken by the national authority or by the Customs or Economic Union concerned, or

(ii) when the holder of the binding ruling is notified in writing of its withdrawal, revocation or amendment, for example because further details have been obtained which affect the ruling. The ruling would normally be withdrawn from the effective date of the new measures or judicial decision and would cease to be binding on Customs. However, where the withdrawal of the ruling is detrimental to the applicant, it might be possible to extend the ruling for a fixed period. This should be limited to instances where applicants can show that they have entered into irrevocable commitments on the basis of the original ruling.

Other problems can arise for the applicant, such as a change in tariff classification resulting in the goods becoming liable to import restrictions. Customs may choose to apply the greater facility clause in Article 2 of the Convention to avoid placing applicants at an unforeseen disadvantage in such circumstances when appropriate.

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Appendix I

TC2-38

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE USE OF WORLD WIDE WEB SITES BY CUSTOMS ADMINISTRATIONS

(26 June 1999)

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to facilitate the international movement of goods and people through Customs,

DESIRING to facilitate access to, and dissemination of, Customs regulatory information in the public domain, particularly for travellers and participants in international trade,

CONSIDERING the importance of making relevant regulatory information available to the public in a cost-effective and easily accessible manner,

HAVING REGARD to the widespread acceptance of the Internet and World Wide Web (WWW) as a means of communication and information dissemination,

HAVING REGARD to growing use of the Internet and WWW by Customs administrations,

TC2-3855

Annex to the Recommendation on Customs Web Sites

Basic information to be made available on Customs web sites

Information for travellers

General overview of Customs
Comprehensive details of duty-free allowances
Comprehensive details of prohibited goods for import and export
Information about Customs channels (dual-channel system)
Penalties for Customs offences
Contact information (including e-mail address) for further information
Links to other relevant sites, especially immigration and agriculture
Multiple language versions of the information.
Access to official publications

Comprehensive details of duty-free allowances

Comprehensive details of prohibited goods for import and export

Goods which are prohibited or restricted should be clearly identified, e.g. arms and ammunition, live animals, certain types of plants, ivory, currency, etc. Penalties for breaches of the legislation should also be highlighted.

Information about Customs channels (dual-channel system)

Information on how the dual channel system works and how passengers declare goods to Customs on arrival should be presented. This should include examples of Customs forms to be completed.

Penalties for Customs offences

A comprehensive set of information should be given indicating what penalties a traveller should expect to receive if caught deliberately breaking the law.

TC2-3855

Contact information (including e-mail address) for further information

Customs contact information for travellers, especially a public e-mail address, should be given to allow the public to make specific enquiries.

Links to other relevant sites, especially immigration and agriculture

Multiple language versions of the information

Access to official publications

Information for traders

General overview of Customs
Overview of Customs procedures and legislation
National legislation including Customs regulations on all the Customs procedures
Tariff and duty information
Currency rates of exchange
Details of prohibitions and restrictions
Details of how to complete a Customs declaration
Classification decisions
Penalties for Customs offences
Contact information (including e-mail addresses)
Links to other government agencies
Access to official publications

Overview of Customs procedures and legislation

TC2-3855

National legislation including Customs regulations on all the Customs procedures

Search engines should also be made available on the web site to allow users to conduct key word searches.

Tariff and duty information

Currency rates of exchange

A list of the official currency rates of exchange for Customs purposes should be a basic element included on the web site.

Details of prohibitions and restrictions

Details of how to complete a Customs declaration

Classification decisions

TC2-3855

Penalties for Customs offences

A comprehensive set of information should be given indicating what penalties a trader should expect to receive if caught deliberately breaking the law.

Contact information (including e-mail addresses)

As with the information for travellers, contact details (including e-mail addresses) for Customs officials dealing with specific issues should be given.

Links to other government agencies

Links to such other web sites as the Ministries of Trade and Finance and the national Chamber of Commerce should be included.

Access to official publications

Developing computer applications on the web

----------------------------

Appendix II

Methods of Application

1. EBTI System (European Union)

The European Binding Tariff Information (EBTI) Link in Brussels is a central database for the storage of all Binding Tariff Information (BTIs). The objectives of establishing such a link were to comply with Commission Regulations 1715/90 and 3969/90 by making provision for a rapid means of transmission of BTI to the Commission and Member States. Article 4.1 of Implementing Regulation 3796/90 requires that “Member States should transmit BTI data using electronic means”. The EBTI link became fully operational in the UK in September 1993.

Member States are not only able to transmit BTI data to the Brussels database, they also have the facility to interrogate the system by one of a number of search criteria or a combination. Interrogating the Brussels database ensures as far as possible that the Member States do not issue ‘divergent’ BTIs (ie contradicting classification decisions) . These would otherwise have to be resolved by lengthy bilateral discussions with other Member States concerned and, in many instances, ultimately discussed in committee, in Brussels. It also enables the European Commission to monitor the BTI decisions for all Member States and ensure that a uniform approach is adopted to classification and all BTI issues.

In the UK at present, access to this facility is limited to one terminal. However, the Commission produces CD ROMs of the downloaded data and accompanying images, thus allowing wider access to the information. Every member of staff in the Classification Group has access to the CD ROMs via their PC. The CD ROMs are also available to other UK Customs sites.

2. BERTI (United Kingdom)

The UK Binding Electronic Retrieval of Tariff Information (BERTI) system is a database which racks and manages all correspondence received in the classification group, including the on-line produce of the BTI.

It was designed to eliminate the keeping of manual records, to eradicate the non duplication of data, and to ensure a uniform and standard approach to classification. BERTI stores all the UK BTI decisions and Liability rulings (i.e. decisions made on behalf of the officer at the port of entry) and has an extensive interrogation and enquiry facility. The system provides comprehensive management information in line with the UKs departmental Charter Standards and local Management Plan targets.

BERTI is an ‘in-house’ system which went live in March 1997. It is accessed by all classification staff via their PC.

3. TAPIN (Australia)

The Tariff and Precedents Information Network (TAPIN) is an on-line mainframe computer based system. It is an electronic version of the publications used by Customs Officers, Customs Brokers and the general importing community, to ascertain the correct rate of Customs duty payable on imported goods.

TAPIN is an integral part of the Australian Customs Service (ACS) electronic initiatives scheme. It provides a means by which users across Australia can have fingertip electronic access to all the information they require to assess their Customs liabilities.

TAPIN is designed to:

- help users to have a uniform approach towards Tariff interpretation and classification of goods for duty and concessional purposes and towards valuation issues

- facilitate access to Dumping information.

TAPIN provides:

- the latest update of Tariff, Valuation and Dumping publications;

- a means of obtaining a unique number for each Tariff or Valuation Advice application, which may be quoted on import documents;

- access to Tariff and Valuation precedents;

- access to individual Tariff and Valuation Advice databases; and

- an index of goods that are subject to Dumping.

TAPIN comprises:

- the Act, the schedules and the supplementary provisions of the working Tariff;

- the Harmonised System Explanatory Notes;

- the Schedule of Concessional Instruments;

- the Australian Customs Tariff Guide;

- the European Customs Inventory of Chemicals;

- the Tariff Precedents, Valuation Precedents and Preference Precedents database;

- the Tariff Advice and Valuation Advice application systems;

- each individual Broker’s Tariff Advice and Valuation Advice database;

- the GATT Valuation Compendium;

- Volume No 8 of the ACS Manual; and

- the indices to both the Dumping Commodities Register and the Confidential Instructions.

Chapter 10 - Appeals in customs matters

CHAPTER 10

APPEALS IN CUSTOMS MATTERS

A

RIGHT OF APPEAL

10.1. Standard

National legislation shall provide for a right of appeal in Customs matters.

10.2. Standard

Any person who is directly affected by a decision or omission of the Customs shall have a right of appeal.

10.3. Standard

The person directly affected by a decision or omission of the Customs shall be given, after having made a request to the Customs, the reasons for such decision or omission within a period specified in national legislation. This may or may not result in an appeal.

10.4. Standard

National legislation shall provide for the right of an initial appeal to the Customs.

10.5. Standard

Where an appeal to the Customs is dismissed, the appellant shall have the right of a further appeal to an authority independent of the Customs administration.

10.6. Standard

In the final instance, the appellant shall have the right of appeal to a judicial authority.

B

FORM AND GROUNDS OF APPEAL

10.7. Standard

An appeal shall be lodged in writing and shall state the grounds on which it is being made.

10.8. Standard

A time limit shall be fixed for the lodgement of an appeal against a decision of the Customs and it shall be such as to allow the appellant sufficient time to study the contested decision and to prepare an appeal.

10.9. Standard

Where an appeal is to the Customs they shall not, as a matter of course, require that any supporting evidence be lodged together with the appeal but shall, in appropriate circumstances, allow a reasonable time for the lodgement of such evidence.

C

CONSIDERATION OF APPEAL

10.10. Standard

The Customs shall give its ruling upon an appeal and written notice thereof to the appellant as soon as possible.

10.11. Standard

Where an appeal to the Customs is dismissed, the Customs shall set out the reasons therefor in writing and shall advise the appellant of his right to lodge any further appeal with an administrative or independent authority and of any time limit for the lodgement of such appeal.

10.12. Standard

Where an appeal is allowed, the Customs shall put their decision or the ruling of the independent or judicial authority into effect as soon as possible, except in cases where the Customs appeal against the ruling.

Guidelines to Chapter 10

Guidelines to the legal text

Chapter 10

APPEALS IN CUSTOMS MATTERS

1. Introduction

It is a general principle of the Kyoto Convention that all Customs matters must be treated in a transparent and fair manner. As a consequence there is another general principle that all persons who deal with Customs must be afforded the opportunity to lodge an appeal on any matter. In everyday practice situations may arise in which a decision or omission of the Customs is not acceptable to the person directly affected by it. It is therefore important that provision be made for the person concerned to be given, upon request, an explanation of the reasons for the decision or omission and for the person to have a right of appeal to a competent authority. The competent authority may be the Customs themselves, another administrative authority, one or more arbitrators, a special tribunal and, in the final instance, a judicial authority.

This right of appeal ensures protection for the individual against decisions of Customs that may not be in compliance with the laws and regulations which they are responsible to administer and enforce. It also ensures protection against omissions by Customs in any matter. At the same time, the review of challenged decisions or omissions by a competent authority and the verdicts of these reviews can be a suitable means of ensuring uniform application of the laws and regulations. Depending upon the legal system of the country concerned, these verdicts may or may not constitute legal precedents or official interpretations that will relate to like or similar disputes to be settled in the future.

The provisions contained in this Chapter provide for a transparent and multi-stage appeal process. It is intended to prevent the perception of victimization by those affected by Customs decisions. Furthermore the availability of an independent judicial review as a final avenue of appeal should instill confidence by the public and the trade in the government institutions and in particular in the Customs administration. The principles contained in the provisions of this Chapter are also consistent with Article 11 of the WTO GATT Valuation agreement.

This Chapter covers appeals in all matters relating to the laws and regulations which the Customs are responsible for administering and enforcing such as in matters of tariff classification, origin and Customs valuation, as well as appeals against provisions of a general character. It does not, however, embrace appeals in penal matters or appeals against opinions expressed by Customs which are not binding in effect.

2. Right of appeal

Standard 10.1

National legislation shall provide for a right of appeal in Customs matters.

This Standard requires that the right of appeal on Customs matters be provided for in national legislation. This is important so that there is no uncertainty about the existence of such rights.

The appeal procedure must be clearly outlined in the legislation, and the legal requirements and procedures for filing an appeal must be made readily accessible to the trade community and the general public. The manner in which such requirements and procedures could be made available is detailed at length in the Guidelines to Chapter 9 on Information, decisions and rulings supplied by the Customs in the General Annex.

As stipulated in Article 2 of the Body of the Kyoto Convention, Customs may always grant facilities for appeals that are greater than those provided for in this Chapter.

Standard 10.2

Any person who is directly affected by a decision or omission of the Customs shall have a right of appeal.

This provision ensures the right of appeal to any person directly affected by a decision or omission of Customs. It is up to each individual Customs administration to define in its legislation what constitutes a “person who is directly affected” for purposes of appeal rights. Examples of such persons would include importers, exporters, Customs brokers or agents and travellers.

In order to avoid confusion over what types of decisions and omissions can be appealed, the national legislation must set forth the specific types of decisions and omissions that are subject to appeal. Usually this includes decisions on valuation and classification matters and rules of origin, as well as matters affecting travellers.

An omission, on the other hand, generally occurs when Customs fails to fulfill its obligations under national legislation or in its published client’s charter. As an example, a delay by Customs in processing a transaction within the established time may cause the importer to be liable to additional duties and taxes due to changes in exchange rates that vary from one period to another. The importer might also have to pay additional demurrage or other storage charges. Another example would be when Customs has not responded to or supplied a specific information requested by an importer within a reasonable or established period, and the delay results in the importer having to incur additional duties, taxes or other charges. Such failures on the part of Customs would constitute an omission, and the person concerned must be given the right to appeal against the omission.

Omissions can take various forms depending on the procedure or operation involved. Whether Customs has committed an omission will have to be evaluated in relation to its obligations under Customs law and the provisions of the General Annex of the Kyoto Convention.

This Standard is included with good administrative practice in mind and does not oblige or require the person concerned to ask for the reason for the decision or omission before lodging an appeal.

Standard 10.3

Upon request, those persons directly affected by a decision or omission should be provided with a full explanation and reasons for the decision or omission within a reasonable period specified in the national legislation. This provision is necessary so that the affected person is able to lodge a timely and effective appeal.

As noted for Standard 10.2 above, some decisions may not be subject to appeal, for example the hours of business at a particular port or office or the official rates of exchange. While there are not many instances which should not be subject to appeal in an open and transparent government, the administration, too, has a right not to be unduly burdened with requests not related to an appealable decision or omission. A Customs administration should only be required to provide explanations and reasons for those decisions or omissions that are subject to appeal as set forth in the national legislation.

Standard 10.4

National legislation shall provide for the right of an initial appeal to the Customs.

It is important that an affected person be provided with an opportunity to address a decision or omission initially within Customs at the administrative level without first having to resort to an independent judicial authority. This principle in Standard 10.4 for an initial appeal to Customs may result in a more expeditious resolution of the matter and at less cost and time to both the affected person and the Customs administration.

The appeal may be made to the Customs office responsible for the decision or omission or to a higher authority within the Customs administration.

In perhaps the most common situations an importer or a traveller is aggrieved by the decision of the frontline officer. The initial recourse should be to appeal to a supervisory officer, to the head of the local Customs office or to the Regional office. This avenue should be available before the issue is raised to the Customs Headquarters. Such appeal processes not only enable solutions to be found efficiently and quickly for the convenience of the importer or traveller, but also reduce the burden within Customs hierarchy in resolving appeals which may be minor or only local in nature. Information concerning this appeal process should be made available in public notices and in the Customs offices. See also the Guidelines to Chapter 9 of the General Annex.

In some countries the initial appeal may be made either to Customs or to an authority independent of the Customs administration at the option of the person concerned. The authority independent of the Customs may be an administrative tribunal, which although not strictly part of the judicial system, nevertheless has full powers to adjudicate such appeals.

Lodging an initial appeal with the Customs office responsible for the decision or omission can often provide the most expeditious and least costly method of remedying an erroneous decision or omission. This is particularly evident as this office may, after considering the appeal, modify its decision or in relation to an omission take a decision.

Standard 10.5

Where an appeal to the Customs is dismissed, the appellant shall have the right of a further appeal to an authority independent of the Customs administration.

In order that the process for a right of appeal provides an affected person with a fair and impartial review of his appeal, Standard 10.5 stipulates that there must exist a right to appeal to an authority independent of the Customs administration which initially examined the appeal.

The constitution and field of jurisdiction of such an independent authority may vary from one country to another. It may be, for example, a court of law or a special tribunal with power to settle Customs disputes, or it may be part of an established arbitration procedure.

Standard 10.6

In the final instance, the appellant shall have the right of appeal to a judicial authority.

Another important principle is specified in Standard 10.6 which requires that an appellant have the legal right to appeal ultimately to an independent judicial authority. National legislation in some countries sets out the judicial authority that is empowered to hear such appeals.

Many administrations allow this appeal at any stage in the overall process. For example, if a local Customs office renders a decision that the person decides to appeal against, the person should be allowed to appeal directly to an independent judicial authority without going through higher levels of the Customs administration. The costs involved in this course of action usually result in appellants following a stage-by-stage process. However in certain cases, such as with large multinational corporations, the appellant may opt to submit the matter to the highest authoritative body as early as possible. Some international traders may have a large volume of transactions or a high amount of investment and clients which would be affected by the outcome, and therefore decide to expedite the entire appeals process to obtain the earliest definitive ruling.

3. Form and grounds of appeal

Standard 10.7

An appeal shall be lodged in writing and shall state the grounds on which it is being made.

In order that the basis of an appeal is clear and specific, Standard 10.7 requires that appellants lodge appeals in writing and state with particularity the grounds on which the appeal is being made. This allows that the consideration of the matter will be based on clear facts and not submitted to subjective interpretations.

Customs administrations should review an appeal for its substance and content and not for its form. In other words, in keeping with the principle of the revised Kyoto Convention that Customs could accept information in a variety of formats, including especially electronically, Customs should refrain from creating any particular formats or forms for appeals. They should accept the information submitted based on its sufficiency for making a fair and full assessment. Therefore, legislation should not set unreasonable or unnecessary requirements for the form in which an appeal must be lodged.

A person lodging an appeal must have the right to withdraw the appeal if done so before the reviewing authority has rendered a decision on the appeal.

Standard 10.8

To ensure that any appeal rights may be fully exercised, Standard 10.8 requires that prescribed periods be set that provide an adequate and reasonable amount of time for the lodging of an appeal against a Customs decision. These periods must therefore not be too short. They will also have to take into account any statutes of limitation applicable to a case.

There will likely be different periods depending on the nature of the decision or omission. For example, tariff and valuation rulings may have a certain period and matters involving infractions or minor offences may have a different period. Some countries allow at least 90 days for an appeal to be submitted regarding any decision of Customs.

Many Customs administrations provide in their national legislation for extensions of time in which to lodge an appeal in exceptional cases.

Standard 10.9

In order to mount an effective appeal, the appellant must be provided with an adequate and reasonable amount of time in which to gather evidence in support of his appeal after it has been lodged. This may involve obtaining supporting documents or statements from a foreign shipper or client in order for the appellant to demonstrate the basis of his initial declaration or statements. It may also require the appellant to obtain a certificate or statement from a foreign government. Thus this period to gather evidence should allow for the practical considerations necessary to allow Customs to have all the facts at hand. On the other hand, Customs should not normally impose requirements for supporting evidence where it will not be necessary or relevant to the case.

In order to prevent any abuse or misuse of the appeals process, once the time for lodging an appeal against a decision by Customs has expired, no new claims or appeals should be allowed against that decision. The only additional evidence that should be allowed to be submitted would be evidence in support of the claims that were lodged timely against the decision.

4. Consideration of appeal

Standard 10.10

The Customs shall give its ruling upon an appeal and written notice thereof to the appellant as soon as possible.

In the interests of good management and fair and open government, Standard 10.10 requires that Customs render its decision on an appeal as soon as possible. It also requires that Customs notify the appellant in writing as soon as possible of the decision taken on the appeal. This not intended to place undue administrative burden on Customs, but to instill accountability in the appeals process and predictability for both appellants and Customs.

Standard 10.11

Further developing the need for fairness in administration, Standard 10.11 requires Customs to indicate in writing to an appellant the specific reasons for denying an appeal. Moreover, Customs must also advise the appellant in writing of his right to lodge any additional or further appeals against the decision with any other body and include the time limit for lodging such further appeals.

This is a necessary extension of Standard 10.5 which stipulates that the appellant shall have a right of further appeal to an authority independent of Customs. In some countries the appellant is advised on the avenues of further appeal in the decision denying the appeal, whereas in others this advice is given through pre-printed notices, brochures or pamphlets that provide information to the appellant on further avenues of appeal. Whatever written method is used, it must be clear to the appellant when there is a further avenue of appeal and how he can avail himself of this further appeal if he so chooses.

Standard 10.12

Standard 10.12 describes another important principle of good governance. When an appeal has been decided in favor of the appellant, the Customs administration must implement the decision as soon as possible. In other words, just because Customs may not like the final verdict in an appeals process, they cannot stall in implementing a decision which is not in their favor.

However when the Customs administration has lodged an appeal of its own against the decision resulting from the appeal, they normally will need not implement this decision until the Customs appeal has been decided by the reviewing authority.

As an example, if the decision on an appeal required Customs to refund duties and taxes by classifying a commodity in a different tariff heading with a lower rate, Customs would not have to furnish the refund until its own avenue of appeal has been completed. If, however, Customs decided not to seek a further appeal, it would have to adjust the classification and refund the amount in question without delay once the ruling had been given.

5. Conclusion

In summation, the right to appeal a Customs decision or omission is fundamental. The process for administering and deciding any appeal must be as simple, straightforward and timely as possible. All requirements on both the appellant and Customs must be clearly laid out in legislation and easily accessible to all parties. Customs must inform appellants in writing of decisions and must implement final decisions promptly.

Specific Annexes

Annex A - Arrival of goods in a Customs territory

Annex A

Arrival of goods in a Customs territory

1. Introduction

Goods may be introduced into a Customs territory by many different modes of transport. In order to safeguard the Revenue and ensure compliance with national legislation, the carrier bringing goods into a Customs territory must produce them and the means of transport carrying them to Customs as soon as possible. The controls necessary on goods arriving in the Customs territory depend, to a large extent, upon geography; air, land and maritime infrastructures; and volume and frequency of transport arrivals.

In many cases the Customs office where the goods are to be produced and the Goods declaration lodged is situated at the place where the goods arrive in the Customs territory. In other cases this Customs office is situated some distance from that place such as an inland airport, warehouse or train yard. It is essential that Customs be able to control the conveyance of the goods to the Customs office where they will be produced without causing unnecessary delays in normal transport flows. This can be accomplished by placing regulatory obligations on the carrier or by physical controls such as sealing the means of transport until arrival at the designated Customs office.

This Chapter covers the formalities that have to be completed by the carrier before the Goods declaration is lodged and the goods are placed under a relevant Customs procedure. These formalities are an important element of the overall Customs operation since they are the initial action necessary to identify goods entering the Customs territory and bring them under Customs control. They are also of particular importance in the simplification of Customs formalities and trade facilitation. The Customs requirements should cause minimum inconvenience to international trade by ensuring that the formalities to be accomplished by the carrier are as simple as possible. At the same time these formalities should cover Customs requirements under Customs law and any other regulations that Customs are responsible for enforcing.

One of the crucial factors in Customs control and trade facilitation is the flow of information between the carrier and Customs. The formalities described in this Chapter aim essentially at better management of information flows to help Customs to perform more efficiently.

Most Customs administrations permit the declarant to lodge a Goods declaration prior to the arrival of the goods in the Customs territory. This pre-arrival information enables Customs to implement their risk management techniques and to improve control targeting well in advance of the actual arrival of the goods and thus facilitate the release of goods. Many Customs administrations also allow similar pre-arrival information to be furnished by the carriers in order to facilitate international trade.

The formalities of this Chapter do not apply to goods on board vessels or aircraft crossing the territorial seas or airspace of a Contracting Party that are not destined for a port or airport situated in the territory of the Contracting Party. Similarly this Chapter does not cover goods which arrive under a Customs procedure, e.g. international Customs transit, goods carried by post, in travellers baggage or the temporary storage of goods, except for those provisions relating to the places where these goods may be introduced into the Customs territory. Nor does it cover certain other formalities which apply for particular modes of transport, e.g. presentation of a report of the arrival of a ship.

2. Purpose and scope of the procedure

The purpose of the formalities described in this Chapter is to enable Customs to control the entry of goods into their territory as well as to help the logistical requirements of trade, industry and transport for uninterrupted movement of goods.

3. Essential features of the procedure

3.1. Benefits

The advantages of including provisions of this Chapter in Customs legislation are :

that well-defined formalities will ensure the identification of goods entering the Customs territory and will enable Customs to control the goods effectively until they are placed under a Customs procedure; and
that all parties involved in bringing goods into the Customs territory will be required to provide Customs necessary information regarding the ultimate destination and use of the goods.

4. Definitions

E1/F1

“cargo declaration” means information submitted prior to or on arrival or departure of a means of transport for commercial use that provides the particulars required by the Customs relating to cargo brought to or removed from the Customs territory;

E2/F3

“carrier” means the person actually transporting goods or in charge of or responsible for the operation of the means of transport;

E3/F2

“Customs formalities prior to the lodgement of the Goods declaration” means all the operations to be carried out by the person concerned and by the Customs from the time goods are introduced into the Customs territory until goods are placed under a Customs procedure.

All the definitions of terms necessary for the interpretation of more than one Annex to the Convention are placed in the General Annex. The definitions of terms applicable to only a particular procedure or practice are contained in that Specific Annex or Chapter.

5. Application of the procedure

Standard 1

Customs formalities prior to the lodgement of the Goods declaration shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

The revised Kyoto Convention has a set of obligatory core provisions that are contained in the General Annex. The General Annex reflects the main principles considered necessary to harmonize and simplify all the relevant Customs procedures and practices which Customs apply in their daily activities.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for the formalities prior to the lodgement of the Goods declaration. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 6 on Customs control and Chapter 8 on Relationships with Third parties should be read in conjunction with this Chapter on Formalities prior to the lodgement of the goods declaration.

Contracting Parties should particularly note Standard 1.2 of the General Annex and ensure that their national legislation specifies the conditions to be fulfilled and the formalities to be accomplished prior to the lodgement of the Goods declaration.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Recommended Practice 2

Customs formalities prior to the lodgement of the Goods declaration should apply equally, without regard to the country of origin of the goods or the country from which they arrived.

Recommended Practice 2 is intended to prevent discrimination in the application of the Customs formalities upon arrival of goods. Customs administrations are encouraged not to impose more requirements for the goods simply because of where they originated. This does not, however, restrict Contracting Parties from varying the degree of controls exercised due to circumstances such as the possibility that goods being introduced from a certain country might be more likely to contain contraband. This Recommended Practice also does not preclude or discourage the granting of special facilitation measures, such as the reduction of Customs facilities, to countries with whom agreements have been made.

In cases where the United Nations has imposed sanctions against particular countries, these sanctions operate independently of the Kyoto Convention. Contracting Parties applying these sanctions would not be required to apply this Standard, as provided for in Article 3 of this Convention.

6. Entry of the goods under the procedure

Standard 3

National legislation shall specify the places at which goods may be introduced into the Customs territory. Only when they consider it necessary for control purposes shall the Customs specify the routes which must be used to convey the goods directly to a designated Customs office or other places specified by the Customs. In determining these places and routes the factors to be taken into account shall include the particular requirements of the trade.

This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory.

Standard 3 stipulates that goods may be introduced into a Customs territory only at designated places. The Standard further provides that Customs may specify routes that must be used to convey goods to a Customs office or other place they designate. However, routes to be taken by vessels, aircraft and rail are most commonly specified by international agreements and by national authorities responsible for such traffic. It is therefore important that Customs specify routes for these carriers only when it is essential for control purposes. Consequently, in practical terms, this Standard is most applicable for road transport. Any such routes specified by Customs would be between the place of arrival of the goods and the Customs office to which they are to be conveyed.

It is also equally important that in determining the places where goods must be introduced and the routes that should be used to convey the goods, Customs consider the particular requirements of the trade. This provision therefore should be considered in conjunction with Standard 3.1 of the General Annex that relates to designating Customs offices.

This Standard does not preclude any provisions in force concerning special procedures for tourist traffic, frontier traffic, postal traffic or traffic of negligible economic importance, on condition that Customs control possibilities are not thereby jeopardized.

Any person who assumes responsibility for the carriage of goods after they have been brought into the Customs territory, including as a result of transhipment, shall become responsible for compliance with the obligation mentioned above.

Standard 4

The carrier shall be held responsible to the Customs for ensuring that all goods are included in the cargo declaration or are brought to the attention of the Customs in another authorized manner.

Goods introduced into the Customs territory must be reported to Customs by the carrier. Standard 4 holds the carrier responsible for reporting all goods in a cargo declaration or in any other manner that is acceptable to Customs. Generally the reporting is done by a cargo declaration or by copies of bills of lading. While these are commonly submitted in paper form at the time of arrival, many administrations and carriers have developed electronic interfaces that allow Customs to receive the data automatically. This is an important facilitation measure that paves the way toward paperless international trading in the future.

Although the Standard requires all goods to be reported there are many varying practices. Some administrations only require the goods that are to be unloaded in their Customs territory to be reported, while others require all goods to be reported irrespective of whether they are unloaded or not. In some cases goods not meant to be unloaded or meant for destinations outside the Customs territory can be reported in a simplified manner.

Some modes of transport are also covered by other international conventions governing the data required for reporting for the goods at arrival. There are also international agreements covering goods that move under carnets, such as international transit and temporary admission, which can fulfil this reporting requirement. However, when such a method is used for reporting the goods, Customs may require additional documents or information for the purposes of Customs control and risk management techniques.

The information required at arrival is to report the goods and not necessarily the same information as required for risk assessment.

Standard 5

The fact of having introduced goods into the Customs territory shall entail the obligation for the carrier to convey them directly using designated routes, where required, and without delay to a designated Customs office or other place specified by the Customs. In doing so the nature of the goods or their packaging shall not be altered nor shall any seals be interfered with.

This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory.

The carrier is responsible for conveying the goods to the Customs office or other specified place without any delay. The Customs office would normally be the Customs office that is competent to process the goods concerned. However, as a facilitation measure, Customs could give approval for the goods to be conveyed to another Customs office in special circumstances such as extreme weather conditions or transport difficulties.

Customs could also give approval, in appropriate circumstances, for the goods to be conveyed directly to the importer’s premises if the importer so requested. This is an element as well of Transitional Standard 3.32 in the General Annex that provides special procedures for authorized traders.

Customs would not apply Standard 5 to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in the Customs territory. These goods pose no risk since they cannot be reasonably offloaded. To impose the requirements of this Standard would unnecessarily interfere with the international movements of these conveyances.

Goods which arrive at the Customs office or another place specified by Customs should be presented to Customs by the person who brought the goods into the Customs territory or, if appropriate, by the person who assumes responsibility for carriage of the goods following such entry. This does not preclude the implementation of special procedures relating to goods :

(a) carried by travellers; or

(b) placed under a Customs procedure but not presented to Customs.

Standard 6

Where the conveyance of the goods from the place of their introduction into the Customs territory to a designated Customs office or other specified place is interrupted by accident or force majeure, the carrier shall be required to take reasonable precautions to prevent the goods from entering into unauthorized circulation and to advise the Customs or other competent authorities of the nature of the accident or other circumstance which has interrupted the journey.

The conveyance of goods from the place of their arrival in the Customs territory to the designated Customs office can obviously be interrupted by accidents to the vehicle or involving other vehicles, or by any disruption of the transport routes, thus affecting the delivery of the goods to their destination. In the case of accidents where there is not a total destruction of the goods, the carrier should try to obtain a report of the incident from other authorities who may be present. This will assist the carrier in reporting the delay in conveying the goods to their destination. The carrier must also seek assistance in securing the goods so that they do not enter into unauthorised circulation. In all such cases the person bound by the obligation to Customs for the goods or any other person acting in his place must inform Customs of the situation without delay.

Recommended Practice 7

Where the Customs office at which the goods are to be produced is not located at the place where the goods are introduced into the Customs territory, a document should be required to be lodged with the Customs at that place only when the Customs consider it necessary for control purposes.

It is possible that goods may be introduced at a place where there is no Customs office. In this case, most administrations do not require the submission of a document at the place of introduction.

Likewise when there is a Customs office at the frontier, this Recommended Practice offers a facilitation by encouraging Customs to only require a document relating to the goods to be lodged at the frontier office if it is necessary for control purposes. When required Customs can still be facilitative to the trade by accepting a commercial, transport or other documents accompanying the goods.

7. Production of goods to the Customs

Standard 8

Where the Customs require documentation in respect of the production of the goods to the Customs, this shall not be required to contain more than the information necessary to identify the goods and the means of transport.

The principle in Standard 8 is to limit the information requirements to the minimum that will enable Customs to ensure compliance with Customs law. Customs should normally not require any more than a description of the goods and of the packages (marks and numbers, quantity and weight) and an identification of the means of transport.

Some administrations may require the lodgement of documentation once the goods have been presented to Customs. This documentation may have to follow a particular Customs model or format, but it is more facilitative to trade if Customs will accept any commercial or official document that contains the particulars necessary to identify the goods. This information can be normally obtained from commercial transport documents, the contents of which may vary from one mode of transport to another.

Recommended Practice 9

The Customs should limit their information requirements to that available in carriers’ normal documentation and should base their requirements on those set out in the relevant international transport agreements.

The principle in Recommended Practice 9 is to use the available information instead of requiring it to be duplicated in a different form for Customs purposes.

The documents required for the production of goods should contain no more than the following data :

Goods arriving by sea :

Place where the report is made;

Name of the means of transport;

Nationality of the means of transport;

Name of master;

Place of loading/place of discharge;

Marks and numbers of packages;

Number and kind of packages;

Description of goods;

Gross weight;

Measurement;

Numbers of the bills of lading.

Goods arriving by air :

The information indicated in the heading of the format of the cargo manifest;

The air waybill number;

The number of packages related to each air waybill number;

The nature of the goods;

A simple stores list.

Goods arriving by land :

Holder of the goods;

Country of departure;

Country of destination (if applicable);

Registration No(s). of road vehicle(s) (if applicable);

Identification No(s). of containers (if applicable);

Marks and numbers of packages;

Number and nature of the goods;

Gross weight;

Marks and number of seals (if applicable).

Normally the carriers are obliged to have available information regarding the cargo they are carrying. Some international agreements lay down the maximum information which may be required of the carrier, (e.g. the ICAO Convention, the IMO Convention). A country that is a Contracting Party to such international agreements would fulfil its obligation for the documentation within the terms of those Conventions. In international transit the documentation for goods which have moved under a transit procedure prior to being presented to Customs should be a copy of the transit document intended for the Customs office of destination.

As with the previous provisions of this Chapter, it is recommended that the Customs use the information already available to carry out their functions.

Recommended Practice 10

The Customs should normally accept the cargo declaration as the only required documentation for the production of the goods.

When Customs require documentation for the goods produced upon or after arrival, it should normally be limited to a cargo declaration, and no further documents should be required. In most administrations a cargo manifest is accepted in place of a Customs cargo declaration as it is a document commonly used by the carriers.

Recommended Practice 11

The Customs office responsible for the acceptance of the documentation required for the production of the goods should also be competent for acceptance of the Goods declaration.

It is also recommended, as a basic facilitation measure, that the Customs offices that are responsible for accepting the cargo declaration be competent to accept the Goods declaration. This will facilitate both Customs and the trade in that both the obligations can be accomplished in the same office and the goods cleared without any delay.

Recommended Practice 12

Where the documents produced to the Customs are made out in a language which is not specified for this purpose or in a language which is not a language of the country into which the goods are introduced, a translation of the particulars given in those documents should not be required as a matter of course.

The documents available to be produced to Customs may very often be in the language of the country from which the goods arrived, even if they conform to the layout prescribed in international agreements. Recommended Practice 12 requires Customs not to impose a translation requirement as a matter of course unless the information contained in the document is ambiguous or is required for control purposes, or it would facilitate the movement of the goods. Such a requirement should be waived wherever possible.

Standard 13

The Customs shall specify the precautions to be taken by the carrier to prevent the goods from entering into unauthorized circulation in the Customs territory when they arrive at a Customs office outside working hours.

In the international movement of goods, precise time of arrival, particularly in the sea mode, is difficult to ascertain. Therefore goods may arrive at a Customs office outside the working hours and it is important that precautions are taken to prevent the goods from entering into unauthorized circulation within the Customs territory. Standard 13 requires Customs to indicate the precautions that the carrier must take. Usually when the goods arrive outside the working hours the carrier is required to keep the goods at a specific place at or in the vicinity of this Customs office and that meets Customs security requirements.

Recommended Practice 14

At the request of the carrier, and for reasons deemed valid by the Customs, the latter should, insofar as possible, allow the Customs formalities prior to the lodgement of the Goods declaration to be accomplished outside the designated hours of business of the Customs.

The carrier will often want to accomplish the Customs formalities for goods which arrive outside the working hours as soon as possible in order to facilitate the quick turn around of the means of transport after unloading the goods. In such cases the carrier should request Customs to allow the accomplishment of these formalities outside the designated hours of business. Recommended Practice 14 requires Customs to allow this facility if there are available resources. In many administrations, this request has to be submitted during the normal business hours in order to allow Customs to schedule the available personnel or other resources.

In allowing this facility, Customs may charge the carrier any expense incurred subject to the approximate cost of the services rendered. (See also the Guidelines to Standard 3.2 of the General Annex.)

Standard 15

National legislation shall specify the places which are approved for unloading.

Normally goods entering the Customs territory can be unloaded only at places that are designated for this purpose. Standard 15 requires that such places be specified in national legislation. While designating places where goods may be unloaded, Customs should normally take into account the requirements of the trade as well as changing trade patterns.

In some instances Customs may only allow certain types of goods to be unloaded at some of the designated places. Such a restriction may be placed on goods like oil or bulk goods or hazardous goods which can only be unloaded at terminals or depots that are specially equipped for handling such specialized cargo.

Recommended Practice 16

At the request of the person concerned, and for reasons deemed valid by the Customs, the latter should allow goods to be unloaded at a place other than the one approved for unloading.

Normally goods can only be unloaded at places designated or approved by Customs. However, goods may be unloaded, according to the circumstances, at the premises of the person concerned, at premises with appropriate equipment or at any place within the Customs surveillance zone. These are special control zones extending on either side of the frontier and on certain sections of rail or road, where the Contracting Parties empower their Customs officers (and sometimes officers of the neighbouring Customs territory) to carry out Customs operations.

Once unloaded, goods usually must be stored in locked premises. However, bulky or heavy goods and low-duty goods that are little risk to the Revenue are frequently stored in un-enclosed spaces under Customs supervision.

Standard 17

The commencement of unloading shall be permitted as soon as possible after the arrival of the means of transport at the place of unloading.

Standard 17 requires Customs to permit unloading of the goods soon after the arrival of the means of transport. This is primarily based on economic factors since extended stay of a carrier will normally result in the payment of large sums as fees to port authorities as well as the loss of productivity since the carrier could be idle for prolonged periods of time. It is therefore important that there should not be any delay in permitting the unloading of goods. This principle will also prevent traffic congestion, particularly in the busy ports, and facilitate the arrival and departure of carriers without any delay.

However, such permission should not be required in the event of any imminent danger that would necessitate immediate unloading of all or part of the goods. In that case, the carrier must inform Customs accordingly as soon as possible after the event.

For the purpose of inspecting goods and the means of transport carrying them, Customs may at any time require goods to be unloaded and unpacked.

An important facilitation measure offered by many Customs administrations in this regard is prior to the arrival of the carrier to grant permission for immediate unloading upon arrival.

Recommended Practice 18

At the request of the person concerned and for reasons deemed valid by the Customs, the latter should, insofar as possible, allow unloading to proceed outside the designated hours of business of the Customs.

Means of transport often arrive after the Customs designated hours of business. Recommended Practice 18 requires Customs, when a request is made to unload the goods outside the designated hours, to permit the unloading to proceed if at all possible. This may depend on the availability of Customs resources to supervise any such unloading. However, many Customs today allow unloading after business hours without supervision. This is contingent upon the carrier and the operator at the place of intended unloading having good records of compliance with Customs requirements and that they can provide any security Customs may require.

As with the other provisions of this Chapter, Customs must work closely with other authorities responsible for the arrival and departure of the means of transport to organize and facilitate the adequate movements of carriers and the goods they carry within ports and commercial centres.

Standard 19

Any expenses chargeable by the Customs in connection with :

- accomplishment of Customs formalities prior to the lodgement of the Goods declaration outside the designated hours of business of the Customs;

- unloading goods at a place other than the one approved for unloading; or

- unloading goods outside the designated hours of business of the Customs,

shall be limited to the approximate cost of the services rendered.

In fulfilment of the requirements of this Chapter, Customs may incur expenses such as cost of unpacking, weighing, re-packing, overtime payments, travel expenses of officers, and any other operations related to goods. Such expenses are charged to the person concerned. Standard 19 requires the expenses charged to be limited to the approximate cost of the services rendered, which is the principle laid down in Standard 3.2 of the General Annex.

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CHAPTER 1

Formalities prior to the lodgement of the Goods declaration

Entered into force :

Definitions

For the purposes of this Chapter:

E1./ F1.

“cargo declaration ” means information submitted prior to or on arrival or departure of a means of transport for commercial use that provides the particulars required by the Customs relating to cargo brought to or removed from the Customs territory;

E2./ F3.

“carrier ” means the person actually transporting goods or in charge of or responsible for the operation of the means of transport;

E3./ F2.

“Customs formalities prior to the lodgement of the Goods declaration ” means all the operations to be carried out by the person concerned and by the Customs from the time goods are introduced into the Customs territory until goods are placed under a Customs procedure.

Principles

1. Standard

Customs formalities prior to the lodgement of the Goods declaration shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Recommended Practice

Customs formalities prior to the lodgement of the Goods declaration should apply equally, without regard to the country of origin of the goods or the country from which they arrived.

Introduction of goods into the Customs territory

(a) Places at which goods may be introduced into the Customs territory

3. Standard

This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory.

(b) Obligations of the carrier

4. Standard

The carrier shall be held responsible to the Customs for ensuring that all goods are included in the cargo declaration or are brought to the attention of the Customs in another authorized manner.

5. Standard

This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory.

6. Standard

Production of goods to the Customs

(a) Documentation

7. Recommended Practice

8. Standard

9. Recommended Practice

10. Recommended Practice

The Customs should normally accept the cargo declaration as the only required documentation for the production of the goods.

11. Recommended Practice

The Customs office responsible for the acceptance of the documentation required for the production of the goods should also be competent for acceptance of the Goods declaration.

12. Recommended Practice

(b) Arrival outside working hours

13. Standard

14. Recommended Practice

Unloading

(a) Places of unloading

15. Standard

National legislation shall specify the places which are approved for unloading.

16. Recommended Practice

At the request of the person concerned, and for reasons deemed valid by the Customs, the latter should allow goods to be unloaded at a place other than the one approved for unloading.

(b) Commencement of unloading

17. Standard

The commencement of unloading shall be permitted as soon as possible after the arrival of the means of transport at the place of unloading.

18. Recommended Practice

Charges

19. Standard

Any expenses chargeable by the Customs in connection with:

accomplishment of Customs formalities prior to the lodgement of the Goods declaration outside the designated hours of business of the Customs;
unloading goods at a place other than the one approved for unloading; or
unloading goods outside the designated hours of business of the Customs, shall be limited to the approximate cost of the services rendered.

CHAPTER 2

Temporary storage of goods

Definitions

For the purposes of this Chapter:

E1./ F1.

“cargo declaration” means information submitted prior to or on arrival or departure of a means of transport for commercial use providing the particulars required by the Customs relating to cargo brought to or removed from the Customs territory thereon;

E2./ F2.

“temporary storage of goods” means the storing of goods under Customs control in premises and enclosed or unenclosed spaces approved by the Customs (hereinafter called temporary stores) pending lodgement of the Goods declaration.

Principles

1. Standard

Temporary storage of goods shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

The Customs shall authorize the establishment of temporary stores whenever they deem it necessary to meet the requirements of the trade.

3. Recommended Practice

Temporary storage should be allowed for all goods irrespective of quantity, country of origin or country from which they arrived. However, goods which constitute a hazard, which are likely to affect other goods or which require special installations should be admitted only into temporary stores specially equipped and designated by the competent authorities to receive them.

Documentation

4. Standard

The only document to be required when goods are placed under temporary storage shall be that used to describe the goods when they are produced to the Customs.

5. Recommended Practice

The Customs should accept the cargo declaration or another commercial document as the only document to be required to place the goods under temporary storage, provided that all the goods mentioned in that cargo declaration or that other commercial document are placed in a temporary store.

Management of temporary stores

6. Standard

The Customs shall lay down the requirements as regards the construction, layout and management of temporary stores and the arrangements for the storage of goods, for stock-keeping and accounting and for Customs control.

Authorized operations

7. Standard

Goods under temporary storage shall be allowed, for reasons deemed valid by the Customs, to undergo normal operations necessary for their preservation in their unaltered state.

8. Recommended Practice

Goods under temporary storage should be allowed, for reasons deemed valid by the Customs, to undergo normal operations necessary to facilitate their removal from the temporary store and their further transport.

Duration of temporary storage

9. Standard

Where national legislation lays down a time limit for temporary storage, the time allowed shall be sufficient to enable the importer to complete the necessary formalities to place the goods under another Customs procedure.

10. Recommended Practice

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

Goods deteriorated or damaged

11. Recommended Practice

Goods deteriorated, spoiled or damaged by accident or force majeure before leaving the temporary store should be allowed to be cleared as if they had been imported in their deteriorated, spoiled or damaged state provided that such deterioration, spoilage or damage is duly established to the satisfaction of the Customs.

Removal from a temporary store

12. Standard

Any person having the right to dispose of the goods shall be entitled to remove them from a temporary store subject to compliance with the conditions and formalities in each case.

13. Standard

National legislation shall specify the procedure to be followed when goods are not removed from a temporary store within the period allowed.

Guidelines to Annex A

Guidelines to the legal text - Annex A

Chapter 1

FORMALITIES PRIOR TO THE LODGEMENT OF THE GOODS DECLARATION

1.Introduction

2. Purpose and scope of the procedure

3. Essential features of the procedure

3.1. Benefits

The advantages of including provisions of this Chapter in Customs legislation are :

that well-defined formalities will ensure the identification of goods entering the Customs territory and will enable Customs to control the goods effectively until they are placed under a Customs procedure; and
that all parties involved in bringing goods into the Customs territory will be required to provide Customs necessary information regarding the ultimate destination and use of the goods.

4. Definitions

*E1/F1*	*“cargo declaration”* means information submitted prior to or on arrival or departure of a means of transport for commercial use that provides the particulars required by the Customs relating to cargo brought to or removed from the Customs territory;
*E2/F3*	*“carrier”* means the person actually transporting goods or in charge of or responsible for the operation of the means of transport;
*E3/F2*	*“Customs formalities prior to the lodgement of the Goods declaration”* means all the operations to be carried out by the person concerned and by the Customs from the time goods are introduced into the Customs territory until goods are placed under a Customs procedure.

5. Application of the procedure

Standard 1

Customs formalities prior to the lodgement of the Goods declaration shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Recommended Practice 2

Customs formalities prior to the lodgement of the Goods declaration should apply equally, without regard to the country of origin of the goods or the country from which they arrived.

6. Entry of the goods under the procedure

Standard 3

This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory.

Standard 4

The carrier shall be held responsible to the Customs for ensuring that all goods are included in the cargo declaration or are brought to the attention of the Customs in another authorized manner.

The information required at arrival is to report the goods and not necessarily the same information as required for risk assessment.

Standard 5

This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory.

(a) carried by travellers; or

(b) placed under a Customs procedure but not presented to Customs.

Standard 6

Recommended Practice 7

It is possible that goods may be introduced at a place where there is no Customs office. In this case, most administrations do not require the submission of a document at the place of introduction.

7. Production of goods to the Customs

Standard 8

Recommended Practice 9

The principle in Recommended Practice 9 is to use the available information instead of requiring it to be duplicated in a different form for Customs purposes.

The documents required for the production of goods should contain no more than the following data :

Goods arriving by sea :

Place where the report is made;

Name of the means of transport;

Nationality of the means of transport;

Name of master;

Place of loading/place of discharge;

Marks and numbers of packages;

Number and kind of packages;

Description of goods;

Gross weight;

Measurement;

Numbers of the bills of lading.

Goods arriving by air :

The information indicated in the heading of the format of the cargo manifest;

The air waybill number;

The number of packages related to each air waybill number;

The nature of the goods;

A simple stores list.

Goods arriving by land :

Holder of the goods;

Country of departure;

Country of destination (if applicable);

Registration No(s). of road vehicle(s) (if applicable);

Identification No(s). of containers (if applicable);

Marks and numbers of packages;

Number and nature of the goods;

Gross weight;

Marks and number of seals (if applicable).

As with the previous provisions of this Chapter, it is recommended that the Customs use the information already available to carry out their functions.

Recommended Practice 10

The Customs should normally accept the cargo declaration as the only required documentation for the production of the goods.

Recommended Practice 11

The Customs office responsible for the acceptance of the documentation required for the production of the goods should also be competent for acceptance of the Goods declaration.

Recommended Practice 12

Standard 13

Recommended Practice 14

Standard 15

National legislation shall specify the places which are approved for unloading.

Recommended Practice 16

At the request of the person concerned, and for reasons deemed valid by the Customs, the latter should allow goods to be unloaded at a place other than the one approved for unloading.

Standard 17

The commencement of unloading shall be permitted as soon as possible after the arrival of the means of transport at the place of unloading.

For the purpose of inspecting goods and the means of transport carrying them, Customs may at any time require goods to be unloaded and unpacked.

An important facilitation measure offered by many Customs administrations in this regard is prior to the arrival of the carrier to grant permission for immediate unloading upon arrival.

Recommended Practice 18

Standard 19

Any expenses chargeable by the Customs in connection with :

- accomplishment of Customs formalities prior to the lodgement of the Goods declaration outside the designated hours of business of the Customs;

- unloading goods at a place other than the one approved for unloading; or

- unloading goods outside the designated hours of business of the Customs,

shall be limited to the approximate cost of the services rendered.

Chapter 2

TEMPORARY STORAGE OF GOODS

1. Introduction

It is important to trade and commerce that, on arrival, goods can be unloaded from the means of transport as soon as possible. In recognition of this, Customs administrations have introduced arrangements under which the discharge of cargo may begin as soon as possible after arrival with a minimum of formalities, subject to ensuring compliance with Customs law.

For a variety of reasons, some time may elapse between the arrival of the goods and the lodgement of the relevant Goods declaration. In these circumstances Customs require the goods to be kept under Customs control and they are usually placed in a specified area where they are stored pending lodgement of the Goods declaration. These areas are termed temporary stores and may consist of buildings or enclosed or un-enclosed spaces.

Nothing in the Chapter prevents goods imported into the Customs territory under Customs transit from being placed in a temporary store pending assignment to another Customs procedure.

The provisions of this Chapter do not apply to the storage of goods in Customs warehouses or in free zones.

Customs are free to enact rules on aspects of the temporary storage of goods not covered by specific provisions of this Chapter.

2. Essential features of the procedure

2.1. Benefits

In practical commercial experience, the final destination of many consignments is not known at the time of entering the Customs territory, or all the relevant information is not yet available. Customs therefore allows the storage of goods, for logistical reasons, in temporary storage. Temporary storage also permits commercial interests to check whether the goods concerned are in conformity with contract conditions. Because an increasing percentage of world trade is made up of intra-company movements or transactions between related firms and just in time delivery logistics that are managed by advanced automation and communication systems, the relative importance of temporary storage has decreased.

2.2. Requirements

The owner or manager of a temporary store will usually be required to provide a security to Customs. This security may sometimes be required from the person(s) who place the goods in the store. It is usually provided by depositing cash or negotiable securities or is given by an approved surety (natural or legal person, generally a bank or an insurance company). It may also take the form of a bond or (for example, where the temporary store is managed by an administrative authority) be given as a simple undertaking. Chapter 5 on Security in the General Annex and its Guidelines contain further details.

Standard 4.7 of the General Annex requires the national legislation to identify the persons who will be held responsible for the payment of duties and taxes on goods placed in temporary stores which are not accounted to the satisfaction of Customs. In some countries the person or persons held responsible for the payment of any import duties and taxes may be the person who places the goods in temporary storage; in other countries it may be the manager or owner of the temporary store, for example if the goods are lost through no fault of the importer or the person who placed the goods in the store.

3. Definitions

*E1/F1*	*“cargo declaration”* means information submitted prior to or on arrival or departure of a means of transport for commercial use providing the particulars required by the Customs relating to cargo brought to or removed from the Customs territory thereon.
*E2/F2*	*“temporary storage of goods”* means the storing of goods under Customs control in premises and enclosed or unenclosed spaces approved by the Customs (hereinafter called temporary stores) pending lodgement of the Goods declaration.

4. Application of the procedure

Standard

Temporary storage of goods shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for the temporary storage of goods. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 4 on Duties and taxes, Chapter 5 on Security and Chapter 6 on Customs control should be read in conjunction with this Chapter on Temporary storage of goods.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Standard 2

The Customs shall authorize the establishment of temporary stores whenever they deem it necessary to meet the requirements of the trade.

The establishment of temporary stores should be authorized whenever the necessity arises. This Standard requires Customs to consider the needs of the trade when authorizing the temporary storage of goods. Customs will normally stipulate conditions that will safeguard the Revenue interests. In accordance with the provisions of national legislation, temporary stores may be managed by Customs, other authorities or by natural or legal persons.

Temporary stores may be open to all importers and other persons entitled to dispose of goods being imported, or the use of them may be restricted to specified persons.

Recommended Practice 3

Recommended Practice 3 does not allow discrimination in respect of the quantity, country of origin or country from which the goods arrived. These factors should not be taken into account when allowing goods into temporary storage. However goods which constitute a hazard may be refused temporary storage where the facilities or location are not equipped or designed for such storage.

Standard 4

The only document to be required when goods are placed under temporary storage shall be that used to describe the goods when they are produced to the Customs.

The principle contained in Standard 4 is that Customs should not require a different type of documentation for goods that are placed in temporary storage than that which was required for producing the goods to Customs. Since temporary storage is a facility to allow goods to be unloaded from a means of transport on its arrival without delay, and precedes the lodgement of a Goods declaration in most cases, Customs should accept the documents that are used for producing the goods to Customs for the temporary storage as well.

However, where Customs require the lodging of a specific declaration made out on a form corresponding to the model they have determined, it should be ensured that the information requirements are limited only to the particulars deemed necessary to permit the temporary storage of the goods and to the extent possible are harmonized with the data requirements for a Goods declaration.

Recommended Practice 5

Recommended Practice 5 encourages Customs to accept the cargo declaration or another commercial document for placing the goods under temporary storage. This would simplify the documentary requirements for temporary storage since the basic description of the goods, i.e. marks and number, quantity, etc., would already be available on the cargo declaration or another commercial document such as an invoice. These documents normally form the basis of the Goods declaration that will be lodged for clearance of the goods and may at times accompany the Goods declaration as a supporting document. This Recommended Practice provides a significant facilitation and a practical measure since acceptance of these documents will eliminate the need to reproduce the details relating to the goods in another form.

This provision carries the stipulation that it apply only when all the goods specified in a cargo declaration are placed in temporary storage. However, administrations that accept the cargo declaration or a commercial document even when only part of the goods are placed in the temporary store would be granting a greater facility as encouraged under Article 2 of the Convention. Customs could implement this by marking the document to indicate which of the goods it applies to and, if necessary, the disposition of the other goods.

5. Management of temporary stores

Standard 6

As indicated above, temporary stores may be managed by Customs, by other authorities or by natural or legal persons. Other authorities can include port authorities, animal or veterinary authorities, harbor boards and similar bodies or agencies. These will vary in different countries.

Normally Customs is the authority to approve the location of temporary stores and will lay down the conditions necessary for Customs control to ensure compliance with Customs law.

Customs may require the person holding the goods to provide security with a view to ensuring payment of any import duties and taxes that might become chargeable if the goods are not properly accounted for. Chapter 5 of the General Annex and its Guidelines specify the details for the provision of this security.

Customs may, where they do not themselves manage the temporary storage facility, require the person operating the temporary store to maintain stock accounts that will enable the movements of goods to be tracked.

Temporary stores can be open to all importers and other persons entitled to dispose of goods being imported, or their use may be restricted to specified persons.

For the purposes of control Customs may, in particular:

- keep or require to be kept, accounts of goods placed in the temporary store (by using either special registers or the relevant documentation);

- keep the temporary store under permanent or intermittent supervision;

- require that the temporary store be double-locked (secured by the lock of the person concerned and by Customs lock); or

- take stock of the goods in the temporary store from time to time.

Goods are usually required to be stored in locked premises. However, bulky or heavy goods and low-duty goods that constitute little Revenue risk are frequently stored in un-enclosed spaces under Customs supervision.

6. Authorized operations

Standard 7

Goods under temporary storage shall be allowed, for reasons deemed valid by the Customs, to undergo normal operations necessary for their preservation in their unaltered state.

Goods kept in temporary storage may need to undergo certain normal operations necessary to preserve them before they are assigned another Customs procedure. It should be noted that these operations are meant only to preserve the goods and not to alter the state of the goods. Standard 7 requires Customs to allow these operations. In doing so Customs may impose conditions. Generally normal operations necessary for the preservation of the goods in their unaltered state include:

- cleaning,

- beating,

- removal of dust,

- sorting, or

- repair or change of faulty packings.

Recommended Practice 8

Certain goods, apart from their need to undergo operations to preserve them, might need some manipulation or other operation to facilitate their removal and further transport. This can include sorting, piling, weighing, marking, labelling and consolidation of different consignments intended for further transport under a single transport document and/or a single Customs document (groupage).

Recommended Practice 8 requires Customs to allow such operations if they deem the reasons for the request to be valid. However Customs may impose conditions to ensure that the facility granted will not be abused. An example of abuse would be the repackaging of the goods in a manner that may alter the essential character of the goods or conceal their origin. The conditions may be that, if necessary, the operations are subject to Customs supervision of the activity or specifying the procedures to be followed.

In order to prepare a Goods declaration, the declarant or importer may request to inspect, weigh, or take samples of the goods. Samples taken can be subject to payment of duties and taxes where appropriate. (See the Guidelines to Standards 3.9 and 3.10 of the General Annex.)

7. Completion of the procedure

Standard 9

Goods are normally placed in temporary storage prior to the completion of the documentation and other formalities relating to the lodgement of the Goods declaration that will place the goods under a Customs procedure. Standard 9 specifies that the length of time the goods can remain in temporary storage should be sufficient for these other formalities to be fulfilled. Usually the time limit will vary according to the mode of transport used, and the duration for goods imported by sea may be longer than for goods imported by air. Similarly Customs may limit the time for the temporary storage of certain types of goods.

The period of temporary storage allowed in many administrations is 15 days. A longer period, sometimes 45 days, is often allowed for goods arriving by sea.

Recommended Practice 10

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

There will be times when it is not be possible to fulfil the Customs obligations within the time limit prescribed in Standard 9. An example would be when certain documents are not available, such as licences or permits, without which the Goods declaration cannot be lodged. As a facilitation measure Customs should extend this time limit for temporary storage upon request if the reasons are valid.

Recommended Practice 11

For reasons of equity, goods deteriorated, spoiled or damaged by accident or force majeure should be cleared as if they had been imported in that deteriorated, spoiled or damaged state. However in some administrations this does not affect the requirements to be met for permits (e.g. import licences) before goods can be taken into home use.

Stolen goods are not considered to be destroyed or irrecoverably lost and are not, therefore, covered by this principle. Likewise goods irrecoverably lost by reason of their own nature are not covered.

The procedure may be completed by rendering the goods commercially valueless under Customs control. This means that the goods have been reduced to such a condition that their remnants not only have no value in the field of commerce for which the goods were originally intended, but also have no value in any other field of commerce, thereby ceasing to be of any interest to the Revenue.

Standard 3.44 of the General Annex and its Guidelines should also be consulted for the treatment of goods when they are abandoned or destroyed.

Standard 12

Any person having the right to dispose of the goods shall be entitled to remove them from a temporary store subject to compliance with the conditions and formalities in each case.

Standard 12 allows for any person who has the right to dispose of the goods to remove them from temporary storage. This is a facilitative measure which should be given a wide interpretation. It should not be taken as referring solely to the owner of the goods but also to the carrier, forwarding agent, Customs broker or any other person who can prove his right of disposal. In this respect Customs may require the person concerned to establish his right to dispose of the goods.

Information regarding the persons having the right to dispose of the goods is provided in greater detail in the Guidelines to Standard 3.7 of the General Annex.

Standard 13

National legislation shall specify the procedure to be followed when goods are not removed from a temporary store within the period allowed.

If the goods are not removed from the temporary store within the prescribed period, Customs might take various courses of action. Apart from granting an extension of time, as already provided for in Recommended Practice 10, they might arrange for the goods to be placed in a Customs warehouse, to be transferred to a free zone or to be re-exported. In certain circumstances the goods might in due course be deemed to have been abandoned to the Revenue, and might subsequently be sold or otherwise disposed of. (See the Guidelines to Standard 3.44 of the General Annex.)

The aim is to protect the interests of both the persons having goods in temporary store and the Customs who are responsible for ensuring collection of import duties and taxes.

Standard 13 does not apply to goods which are voluntarily abandoned, for which the person concerned would not be entitled to receive the appropriate proceeds of the sale.

8. Conclusion

It should be emphasized that temporary storage has characteristics which are fundamentally different from those of warehousing or free zones. Temporary storage is primarily intended to facilitate the logistical requirements in moving goods internationally, whereas warehousing and storage in a free zone have an important economic function independent of their transport.

Annex B - Importation

Annex B

Importation

CHAPTER 1

Clearance for home use

Definitions

For the purposes of this Chapter :

E1./ F2.

“clearance for home use ” means the Customs procedure which provides that imported goods enter into free circulation in the Customs territory upon the payment of any import duties and taxes chargeable and the accomplishment of all the necessary Customs formalities;

E2./ F1.

“goods in free circulation ” means goods which may be disposed of without Customs restriction.

Principle

1. Standard

Clearance for home use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Documentation

2. Recommended Practice

National legislation should provide that goods may be declared in an alternative manner to the standard Goods declaration on the condition that it provides the necessary particulars relating to the goods to be cleared for home use.

CHAPTER 2

Re-importation in the same state

Definitions

For the purposes of this Chapter :

E1./ F3.

E2./ F5.

“compensating products ” means the products resulting from the manufacturing, processing or repair of the goods for which the use of the inward processing procedure is authorized;

E3./ F2.

“goods exported with notification of intended return ” means goods specified by the declarant as intended for re-importation, in respect of which identification measures may be taken by the Customs to facilitate re-importation in the same state;

E4./ F1.

“goods in free circulation ” means goods which may be disposed of without Customs restriction;

E5./ F4.

“re-importation in the same state ” means the Customs procedure under which goods which were exported may be taken into home use free of import duties and taxes, provided they have not undergone any manufacturing, processing or repairs abroad and provided that any sums chargeable as a result of repayment or remission of or conditional relief from duties and taxes or of any subsidies or other amounts granted in connection with exportation must be paid. The goods that are eligible for re-importation in the same state can be goods that were in free circulation or were compensating products.

Principle

1. Standard

Re-importation in the same state shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

Re-importation in the same state shall be allowed even if o nly a part of the exported goods is re-imported.

3. Standard

When circumstances so justify, re-importation in the same state shall be allowed even if the goods are re-imported by a person other than the person who exported them.

4. Standard

Re-importation in the same state shall not be refused on the grounds that the goods have been used or damaged or have deteriorated during their stay abroad.

5. Standard

Re-importation in the same state shall not be refused on the grounds that, durin g their stay abroad, the goods have undergone operations necessary for their preservation or maintenance provided, however, that their value at the time of exportation has not been enhanced by such operations.

6. Standard

Re-importation in the same state shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure.

7. Standard

Re-importation in the same state shall not be refused on the grounds that the goods were exported without notification of intended return.

Time limit for re-importation in the same state

8. Standard

Where time limits are fixed beyond which re-importation in the same state will not be granted, such limits shall be of sufficient duration to take account of the differing circumstances pertaining to each type of case.

Competent Customs offices

9. Standard

The Customs shall only require that goods re-imported in the same st ate be declared at the Customs office through which they were exported where this will facilitate the re-importation procedure.

Goods declaration

10. Standard

No written Goods declaration shall be required for the re-importation in the same state of packings, containers, pallets and means of transport for commercial use which are in use for the international transport of goods, subject to the satisfaction of the Customs that the packings, containers, pallets and means of transport for commercial use were in free circulation at the time of exportation.

Goods exported with notification of intended return

11. Standard

The Customs shall, at the request of the declarant, allow goods to be exported with notification of intended return, and shall take any necessary steps to facilitate re-importation in the same state.

12. Standard

The Customs shall specify the requirements relating to the identification of goods exported with notification of intended return. In carrying this out, due account shall be taken of the nature of the goods and the importance of the interests involved.

13. Recommended Practice

Goods exported with notification of intended return should be granted conditional relief from any export duties and taxes applicable.

14. Standard

At the request of the person concerned, the Customs shall allow exportation with notification of intended return to be converted to outright exportation, subject to compliance with the relevant conditions and formalities.

15. Recommended Practice

Where the same goods are to be exported with notification of intended return and re-imported in the same state several times, the Customs should, at the request of the declarant, allow the declaration for exportation with notification of intended return that is lodged on the first exportation to cover the subsequent re-importations and exportations of the goods during a specified period.

CHAPTER 3

Relief from import duties and taxes

Definitions

For the purposes of this Chapter:

E1./ F2.

E2./ F1.

“relief from import duties and taxes ” means the clearance of goods for home use free of import duties and taxes, irrespective of their normal tariff classification or normal liability, provided that they are imported in specified circumstances and for specified purposes.

Principle

1. Standard

Relief from import duties and taxes in respect of goods declared for home use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

National legislation shall enumerate the cases in which relief from import duties and taxes is granted.

3. Standard

Relief from import duties and taxes shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure.

4. Recommended Practice

Relief from import duties and taxes should be granted without regard to the country of origin of the goods or the country from which they arrived, except where an international instrument provides for reciprocity.

5. Standard

National legislation sh all enumerate the cases in which prior authorization is required for relief from import duties and taxes and specify the authorities empowered to grant such authorization. Such cases shall be as few as possible.

6. Recommended Practice

Contracting Parties should consider granting relief from import duties and taxes for goods specified in international instruments under the conditions laid down therein, and also give careful consideration to the possibility of acceding to those international instruments.

7. Recommended Practice

Relief from import duties and taxes and from economic prohibitions and restrictions should be granted in respect of the following goods under the conditions specified, and provided that any other requirements set out in national legislation for such relief are complied with:

a. therapeutic substances of human origin, blood grouping and tissue typing reagents, where they are consigned to institutions or laboratories approved by the competent authorities;

b. samples of no commercial value which are regarded by the Customs to be of negligible value and which are to be used only for soliciting orders for goods of the kind they represent;

c. removable articles other than industrial, commercial or agricultural plant or equipment, intended for the personal and professional use of a person or members of his family which are brought into the country with that person or separately for the purpose of removal of his residence to the country;

d. effects inherited by a person who, at the time of the death of t he deceased, has his principal residence in the country of importation and provided that such personal effects were for the personal use of the deceased;

e. personal gifts, excluding alcohol, alcoholic beverages and tobacco goods, not exceeding a total value to be specified in national legislation on the basis of retail value;

f. goods such as foodstuffs, medicaments, clothing and blankets sent as gifts to an approved charitable or philanthropic organization for distribution free of charge to needy persons by the organization or under its control;

g. awards to persons resident in the country of importation subject to the production of any supporting documents required by the Customs;

h. materials for the construction, upkeep or ornamentation of m ilitary cemeteries; coffins, funerary urns and ornamental funerary articles imported by organizations approved by the competent authorities;

i. documents, forms, publications, reports and other articles of no commercial value specified in national legislation;

j. religious objects used for worship; and

k. products imported for testing, provided that the quantities imported do not exceed those strictly necessary for testing, and that the products are used up during testing or that remaining products are re-exported or rendered commercially valueless under Customs control.

Guidelines to Annex B

Guidelines to the Annex B

Chapter 1

CLEARANCE FOR HOME USE

1. Introduction

When goods are introduced into a Customs territory, a decision must be made as to their clearance in accordance with one of the Customs procedures laid down for that purpose. Goods may be declared for home use either directly upon importation or after another Customs procedure such as Customs warehousing, temporary storage, temporary admission, inward processing or Customs transit.

2. Purpose and scope

Chapter 1 of Specific Annex B on Importation establishes the minimum specific requirements for the clearance of goods for home use. Chapter 2 of the Specific Annex details the requirements for the clearance of goods for home use that were exported and are being re-imported in the same state. Chapter 3 outlines the circumstances and conditions in which relief from import duties and taxes may be granted for certain goods declared for home use.

It is necessary to point out that although the goods cleared under this procedure are allowed to remain permanently in the Customs territory, there is nothing to prevent their re-exportation, for example, with a view to obtaining drawback. Also, goods cleared for home use may still be subject to post-importation control by Customs, for example, to verify their end use.

The declarant must fulfil several main obligations to obtain clearance of the goods for home use. These usually are the lodgement of a Goods declaration and supporting documents (import licence, certificates of origin, etc.), either by electronic means or paper documents, and the payment of import duties and taxes applicable. Under certain conditions the payment of import duties and taxes may be deferred or even sometimes relieved entirely. The general provisions pertaining to the payment and deferment of duties and taxes are included in Chapter 4 of the General Annex and the related Guidelines. The circumstances or specified purposes wherein relief from import duties and taxes should be granted when clearing goods for home use are outlined in Chapter 3 of this Annex.

In general, the measures taken by Customs in connection with the clearance of the goods are : accepting and checking the Goods declaration and supporting documents, examining the goods, assessing and collecting import duties and taxes and releasing the goods. Customs may also be responsible for obtaining data required for trade statistics and for enforcing other statutory or regulatory provisions relating to the control of the imported goods. Chapter 6 of the General Annex outlines the requirements that Customs should establish pertaining to control of the goods. Customs usually maintains a co-operative agreement with other competent authorities for carrying out certain controls (veterinary, health, phytosanitary, etc.). These formalities are essential to ensure compliance with Customs law and other related legislation.

In the instances where the goods are being imported by travellers or via post, then the relative provisions are to be found in Specific Annex J, Special procedures, Chapters 1 and 2, respectively.

3. Essential features

3.1. Benefits

The documentation used for the clearance of goods for home use procedure is often regarded as the basic import declaration for other procedures. For example, It may be used as a model for the other declaration forms required at importation for placing goods under a Customs procedure other than home use, e.g., temporary admission, Customs warehousing, Customs transit, or it could be adapted according to EDI standards for use in the electronic environment. In the case of goods taken into home use after these procedures, provision may be made for the use of a simpler declaration, or for the waiving of a new declaration. A cost-effective, simplification and harmonization benefit can therefore be realized through the development and use of one prime import declaration document, or a variation of it. This document could contain separate fields, or in the manual processing environment additional parts, to accommodate the appropriate level of detail that is required for the procedure being applied.

An efficient and effective clearance for home use procedure is a vital feature in the smooth functioning of a country’s economy, particularly in a time of increased international trade volumes and the adoption by businesses of new inventory control methods, such as just-in-time delivery. The efficiency of the clearance for home use procedure and the ease with which goods can be cleared is often the barometer by which a commercial enterprise determines where it will do business. The introduction of appropriate facilitative and forward-looking measures by Customs which permit the speedy clearance of goods for home use, yet accommodate barriers to illicit goods and illegitimate trade, are necessary features of a modern and productive economy.

In this regard, facilitative and modern approaches such as :

standardization and simplification of documentation for the Goods declaration for the home use procedure;
establishing and using alternative formats for declaring goods for home use;
using information in the cargo declaration for a pre-arrival risk assessment of the goods; and,
in certain circumstances, the release of goods on the basis solely of the information contained in the cargo declaration (e.g. bill of lading, airway bill, etc.),

are examples which are proposed in Recommended Practice 2 of this Annex as “best practices” for consideration and adoption by Customs.

3.2. Definitions

E1/F2 “clearance for home use” means “the Customs procedure which provides that imported goods enter into free circulation in the Customs territory upon the payment of any import duties and taxes chargeable and the accomplishment of all the necessary Customs formalities”;

E2/F1 “goods in free circulation” means “goods which may be disposed of without Customs restriction”.

3.3. Requirements

3.3.1. Principle

Standard 1

Clearance for home use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Clearance for home use. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 5 on Security and Chapter 7 on Information technology should be read in conjunction with this Chapter on Clearance for home use.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

The provisions in Chapter 3 of the General Annex provide additional detail regarding the general requirements for the clearance of goods and other Customs formalities. They apply to the clearance of all goods, including those cleared for home use. Details of the provisions explicit to the clearance of goods for home use are found in this Annex.

4. Documentation

Recommended Practice 2

As an additional facilitation to trade many Customs administrations permit goods to be declared for home use in an alternative manner instead of using the official format of the Goods declaration, as long as all of the required information pertaining to the goods is included in the alternative document or format. This facilitative option would be applicable in both the manual and electronic environments and is available to all the declarants. The alternative format is accepted in lieu of the Goods declaration and would be the only declaration required for clearing the goods for home use. This procedure therefore differs from the provisions of Transitional Standard 3.32 of the General Annex which is available only to authorized traders.

Customs usually specifies the types of goods that can be declared in this manner and normally extends the facility for goods which are in large volumes and of low risk or are unconditionally free of duties and taxes. This may include for example, newspapers, journals and periodicals, certain bulk construction materials such as cement or sand, etc.

The alternative format to the standard Goods declaration could be a commercial document, for example, an invoice or a transport document, as long as the necessary particulars relating to the goods to be cleared for home use are contained in the commercial document.

Customs is usually satisfied with a commercial document where the goods to be cleared for home use are not liable to import duties and taxes and the Goods declaration is not used for the compilation of statistics.

A number of international efforts are underway to standardize commercial and transport documents (e.g. International Maritime Organization and International Civil Aviation Organization cargo declaration formats). The Economic Commission for Europe (UN/ECE) has adopted a Recommendation on an aligned invoice lay-out key for international trade which is an example of a standardized format for a commercial invoice. The use of any of these standardized formats in lieu of a Goods declaration could be considered by administrations implementing this Recommended Practice.

Another facilitative and forward-looking measure is one which enables Customs to use the information in the cargo declaration for purposes of risk assessment before the arrival of the goods.

Another is one in which the goods are permitted to be released solely on the basis of the information contained in the cargo declaration in order to further expedite the release of legitimate goods.

Such measures are consistent with Standard 3.41 of the General Annex which also states that security may be required to allow for the release of the goods under this type of circumstance. For additional information on the issue of security, reference should be made to Chapter 5 of the General Annex and the related Guidelines to that Chapter which cover the matter of security in more detail. This facilitative measure is also consistent with Recommended Practice 10 in Chapter 1 of Specific Annex A, Arrival of Goods in the Customs Territory. In the case where the use of a cargo declaration for the clearance of goods is permitted, further checking could be done, if necessary, through a system of post-audit review.

In situations where the goods are taken into home use after Customs warehousing, temporary admission, inward processing or Customs transit, provision may also be made for the use of a simpler declaration or for waiving the requirement of a new declaration.

------------------------------

Appendix I

METHODS OF APPLICATION

1. CANADA

A Facilitative Approach to the Declaration and

Clearance of Goods for Home Use and

Alternative Goods declaration formats

Examples of a facilitative approach to alternate Goods declaration formats and, consequently, to a stream-lined declaration and clearance of goods for home use process are to be found in several initiatives employed in Canada. Essentially, Canadian Customs has four goods declaration and release systems which feature alternate Goods declaration formats and expedited goods clearance and release processes. The above-mentioned systems, or processes, are known as:

Release on Minimum Documentation (RMD);
Frequent Importer Release System (FIRST);
Pre-Arrival Review System (PARS); and,
Courier Imports/Consist Sheet Reporting

It should be noted that these four systems also permit Canada to accommodate and implement the advanced level of service provisions outlined in the “Special procedures for authorized persons” set out in Transitional Standard 32 of Chapter 3 of the General Annex.

(1) Release on Minimum Documentation (RMD).

By using RMD and providing sufficient information to identify the goods at the time of release, an importer can fast-track their release by accounting for and paying for shipments after they are released by Customs.

As an alternate format for a Goods declaration, importers and brokers submitting RMD, present or transmit a cargo control document; a commercial invoice; and, all permits, licences, and certificates that may be required by other government departments. The commercial invoice may be a “Canada Customs Invoice” or other acceptable document, such as a bill of sale, that contains the following information:

1. Name (and business number) of the importer;

2. Name of the exporter;

3. Unit of measure and quantity of goods;

4. Value of the goods and currency of settlement;

5. Detailed description of the goods;

6. Country of origin of the goods;

7. Number of invoice pages; and

8. Transaction number in bar-coded format.

Each shipment is identified with a unique 14-digit transaction number. The transaction number is used to identify a shipment at various times throughout the Customs process. (Under the cash option, a transaction number is assigned to the documents in the “accounting package” which is presented to obtain release of the goods.)

In the case of RMD, the importer is assigned a unique five-digit account security number. This number will always appear as the first five digits of the transaction number. After the importer receives an account security number, the transaction number is affixed, in bar-coded format, to the release and accounting documents for all later shipments.

To take advantage of this privilege, an importer must post an approved amount of security with Customs. Security can be posted locally or nationally, depending on whether the importer needs shipments released at various Customs offices across the Customs territory. The importer’s security amount is based on an amount equal to the average monthly duties owed during the previous year, up to a maximum of Cdn$10 million.

The importer must present a final accounting package no later than five business days after the goods are released. To pay any duties due under RMD an importer can pay every month based on the monthly bill, or can make any number of interim payments based on the daily statements issued by Customs. The RMD system also incorporates a system of ”late-accounting’ penalties for non-compliance (late submission of documents).

The RMD program, in addition to providing for the use of a simplified, alternative Goods declaration format, speeds up clearance through Customs, by reducing the amount of information importers have to provide at the time of release.

(2) & (3) - Frequent Importer Release System (FIRST) and Pre-arrival Review System (PARS)

Canada Customs has developed two special release procedures that provide for speedy release of goods at the border and at inland Customs offices. These are known as FIRST and PARS.

Frequent Importer Release System (FIRST):

FIRST was designed for use by frequent importers who import repetitive low risk shipments (for example, bulk loads like sand or gravel, and single-commodity shipments) and permits the use of a simplified alternative Goods declaration format through the use of a FIRST lead sheet. FIRST also allows for an expedited release process upon arrival of the goods in Canada since importers and their commodities are pre-approved by Customs.

An importer with a high degree of voluntary compliance with Customs regulations can apply to Customs for authorization to use FIRST. The application must be accompanied by a FIRST lead sheet that the importer will use for all FIRST releases. The lead sheet identifies the unique information required by Canadian Customs, e.g., the “transaction number”, FIRST service option, the importer Business Number and the pattern number. Customs forwards the applications to use FIRST to the Canadian Food Inspection Agency (CFIA) for approval when commodities are controlled by that department. The CFIA and the importer or broker must reach an agreement concerning the handling of permits, certificates, or other documentation before applications are approved. Customs sends a letter to the importer or broker confirming that the application is approved and issues a FIRST pattern number that is used on the FIRST documents.

SAMPLE OF A FIRST LEAD SHEET

Company Logo

FIRST

F requent I mporter R elease S ystem Information Card

Pre-Arrival Review System (PARS):

The Pre-Arrival Review System (PARS) allows importers and brokers to submit release information to Canadian Customs for review and processing prior to the arrival of the goods in Canada. PARS is based on the presentation of a Release on Minimum Documentation (RMD) package to Customs by the importer or broker, for review and processing prior to the arrival of the goods in Canada. This speeds up the release or referral process when the carrier arrives in Canada with the goods.

The release information can either be submitted in paper format or electronically at least one hour before the goods arrive. A “release” or “refer” recommendation is entered into the Canada Customs automated “Customs Commercial System” (CCS) allowing the shipment, on its arrival, to be released directly from the primary inspection line, or through an expedited counter release process inside the Customs office.

PARS includes the processing of goods that require permits or certificates. An importer or broker who has ”release before payment account security privileges”; the “‘ability to receive invoice and manifest information”, and who provides this information to Customs before a shipment arrives, can use any of these pre-arrival review processes.

Importers and brokers can provide release information for pre-arrival processing for goods send by different modes of transport : goods arriving by highway and cleared at the border use PARS, goods arriving by rail use RAIL PARS, marine freight uses MARINE PARS, and air freight uses AIR PARS. Goods cleared at inland highway sufferance warehouses use IN PARS (Inland Pre-Arrival Review System).
In addition, Canadian Customs and the Canadian Food Inspection Agency have developed AGRI-PARS procedure for certain agricultural products regulated or controlled by that department.

The PARS release package consists of a lead sheet that provides the shipment’s estimated time and date of arrival, a copy of the invoice and the original copy of any required permits. This package can be submitted to Customs up to ten days before the goods arrive in Canada so that Customs can process the documentation and enter the cargo control number and either a “release recommendation” or a “refer for examination recommendation” into its computer system. When the shipment arrives, it will be released by Customs in minutes, unless an examination is required.

The importer/broker must present or transmit a final confirming accounting package within the time-limits established for the various PARS programs, usually within five business days of the release of the goods.

SAMPLE OF A PARS LEAD SHEET

Explanation of information fields of the PARS lead sheet:

PARS
(For Customs Use)
Transaction Number
Importer/Exporter Account Number or Business Number of Importer
Number of Invoice Pages
Importers Name
Customs Office
Cargo Number
Estimated Date of Arrival (Day/Month)

(4) Courier Low-Value Shipment (LVS) Program/Consist Sheet Reporting :

This program was designed to address the WCO “Guidelines on the clearance of express consignments”. It provides for streamlined documentation requirements, simplified release procedures and post clearance audit-based compliance verification.

Consist Sheet Reporting is a much simplified process whereby goods that are eligible for release as “Courier Imports” may be reported on a ‘consist sheet’.

Carriers wishing to use consist sheet reporting must submit a copy of the proposed consist sheet format to Customs for approval. Essentially, the consist sheet must be typed and contain certain information:

Carrier’s control number for the goods;
Exporter’s name;
Importer’s name and address;
Number of packages;
Description;
Weight;
Estimated value of the goods (in Canadian dollars);
the Customs office where the goods are destined;
Country of origin;
A blank field for Customs use; and
Total number of shipments

Prior to or upon arrival of the shipment, the carrier presents to Customs two copies of a consist sheet which lists all shipments, including a full plane-load, for which release is being requested. Customs reviews the list and highlights any shipments to be examined. Customs will examine these shipments and make a decision either to release the shipments or to have them removed from the consist sheet.

The courier must remove shipments that are not eligible for release on the consist sheet. Any shipments removed from the consist sheet are subject to the requirements for release under regular Customs processing. Once goods are released, the courier is responsible for providing all release information and supporting documentation for each shipment to the importer or Customs broker.

Example of a Consist Sheet

CONSIST SHEET CARRIER’S NAME

Chapter 2

RE-IMPORTATION IN THE SAME STATE

1. Introduction

Goods are often re-imported into the Customs territory from which they were exported without having undergone any manufacturing, processing or repairs while abroad. In many instances, re-importation is foreseeable at the time of exportation, in which case the goods may be exported with notification of intended return. Examples of situations involving goods re-imported in the same state following their exportation with notification of intended return would include:

Packings, containers, pallets, and commercial road vehicles which are in use for the international transport of goods.
Goods displayed abroad (and/or equipment for use in such a display) at exhibitions, fairs, meetings or similar events of a commercial, technical, religious, educational, scientific, cultural or charitable nature.
Professional equipment

However, in certain other cases, goods are re-imported as a result of circumstances which arise after they are exported. Examples are:

An exporter may encounter unforeseen or unforeseeable difficulties which may lead to the re-importation of goods which had been exported outright, e.g., where they have remained unsold, where the consignee refuses them as not conforming to contract, or where they have been damaged during transportation.
Goods may also be re-imported as a result of a new transaction providing for their return to the Customs territory from which they were exported, or because they were exported inadvertently.

Provisions and information regarding the re-importation of travellers’ personal effects and the re-importation of means of transport for private use can be found in Specific Annex J, Chapter 1 on Travellers and its Guidelines.

2. Purpose and scope

National legislation in most administrations usually includes provisions which enable re-imported goods to enter back into the Customs territory free of import duties and taxes and provides for the repayment of any export duties and taxes paid on exportation.

The Customs procedure which provides for such duty and tax-free importation and repayment is that of re-importation in the same state.

Some administrations may also provide a form of relief on re-importation through tariff preferences, granted unilaterally or under bilateral or multilateral agreements.

Goods re-imported in the same state may include goods which were in free circulation (i.e., may be disposed of without Customs restriction) prior to their exportation for intended return or which are “compensating products”. Compensating products are those resulting from the manufacturing, processing or repair of the goods for which the use of the inward processing procedure is authorized. However, compensating products need not be obtained solely from goods temporarily admitted for inward processing. It may be necessary to use goods of national origin or goods previously imported against payment of import duties and taxes.

The procedure of re-importation in the same state is granted subject to the condition that the identity of the re-imported goods can be established. For those goods exported with notification of intended return, identification measures can be taken at the time of exportation in order to facilitate their subsequent re-importation. Another condition is that any sums chargeable as a result of repayment or remission of or conditional relief from duties and taxes or of any subsidies or other amounts granted in connection with the original exportation, must be paid.

3. Essential features

3.1. Benefits

In order to ensure equitable treatment and to facilitate legitimate international trade, many Customs administrations do not require payment of import duties and taxes on re-imported goods which have been produced or manufactured in the Customs territory of re-importation or which have already been duty and tax-paid in that Customs territory. Equally, such goods are granted freedom from prohibitions and restrictions of an economic character at re-importation. These facilities are granted even if the goods have been cleared for home use in the foreign Customs territory.

This facilitative measure may be dependent upon proof that the goods were in free circulation in the Customs territory of re-importation before their exportation in order to qualify. It should also cover goods that were granted drawback when exported. Of course, any amounts refunded become chargeable.

On the other hand, goods which were previously imported and placed in a Customs warehouse or under the procedure of temporary admission with re-exportation in the same state are not covered. Also, this procedure would not apply to the re-importation of goods exported under the temporary exportation procedure.

3.2. Definitions

E1/F3 “clearance for home use ” means the Customs procedure which provides that imported goods enter into free circulation in the Customs territory upon the payment of any import duties and taxes chargeable and the accomplishment of all the necessary Customs formalities;

E2/F5 ”compensating products ” means the products resulting from the manufacturing, processing or repair of the goods for which the use of the inward processing procedure is authorized;

E3/F2 “goods exported with notification of intended return ” means goods specified by the declarant as intended for re-importation, in respect of which identification measures may be taken by the Customs to facilitate re-importation in the same state;

E4/F1 “goods in free circulation ” means goods which may be disposed of without Customs restriction;

E5/F4 “re-importation in the same state ” means the Customs procedure under which goods which were exported may be taken into home use free of import duties and taxes, provided they have not undergone any manufacturing, processing or repairs abroad and provided that any sums chargeable as a result of repayment or remission of or conditional relief from duties and taxes or of any subsidies or other amounts granted in connection with exportation must be paid. The goods that are eligible for re-importation in the same state can be goods that were in free circulation or were compensating products.

In definition E5/F4 the phrase “provided they have not undergone any manufacturing, processing or repairs abroad” should be taken to mean that their nature and form have not been changed.

4. Principle

Standard 1

Re-importation in the same state shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Re-importation in the same state. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 3 of the General Annex on Clearance and other Customs formalities, Chapter 5 on Security and Chapter 7 on Information technology should be read in conjunction with this Chapter on Re-importation in the same state.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

5. Field of Application

Standard 2

Re-importation in the same state shall be allowed even if only a part of the exported goods is re-imported.

The facilitative provisions of this procedure must apply even if only a part of the exported goods are re-imported. That is to say, the provisions apply to the re-importation of a certain percentage of the exported goods and of parts or components removed from the exported goods. The provisions also apply to exported goods that are re-imported in several consignments, as long as the importer can prove the goods contained in each consignment are those same goods originally exported.

In all these cases the importer must furnish evidence to the satisfaction of Customs, at each re-importation, of the identity of the re-imported goods. This evidence may be markings or serial numbers on the goods, parts or components; certifications of export; copies of import documents in the other Customs territory which clearly identify the goods; and similar documents clearly identifying the goods that were previously exported.

Standard 3

When circumstances so justify, re-importation in the same state shall be allowed even if the goods are re-imported by a person other than the person who exported them.

In certain circumstances, re-importation in the same state must be allowed even if the goods are re-imported by a person other than the person who exported them. This is subject to the condition that the person concerned is duly authorized to do so and can furnish the necessary evidence to enable the identification of the goods. The second person must be able to prove to Customs the amount of any refund, remission, conditional relief or subsidies granted at exportation in order for Customs to be able to determine whether any duties and taxes are payable on re-importation.

Standard 4

Re-importation in the same state shall not be refused on the grounds that the goods have been used or damaged or have deteriorated during their stay abroad.

Usually this re-importation procedure is subject to the condition that the goods produced at re-importation must be in the same state as they were at exportation. This condition may be regarded as fulfilled even if, during their stay abroad, the goods have been used or damaged or have deteriorated during their stay abroad. For example, the goods may have been used in a display abroad and as a result, any protective coverings may have been removed or the paint might have suffered some deterioration from exposure to sunlight, etc., or during the display or exhibition someone may have inadvertently caused some minor damage. Standard 4 indicates that re-importation in the same state must not be refused under these or similar circumstances.

It is important to note that, in its application, this Standard does not limit the extent of usage of goods. For example, a digger may be temporarily exported to carry out a building project. This machine would clearly have been used to its full capacity while abroad and would still qualify for relief upon re-importation.

Standard 5

Re-importation in the same state shall not be refused on the grounds that, during their stay abroad, the goods have undergone operations necessary for their preservation or maintenance provided, however, that their value at the time of exportation has not been enhanced by such operations.

If the goods have undergone manufacture or processing or any other deliberate operation entailing a change of their state, usually the re-importation in the same state procedure would not apply. However, if the operations were necessary for the preservation or maintenance of the goods and the value of the goods have not been enhanced by such operations, then the re-importation procedure must not be refused by Customs.

The preservation and maintenance operations envisaged in this provision cover solely those necessary to preserve or maintain the goods in good condition or working order during their stay or use abroad. For example, a scientific instrument may need some recalibration, or a motor may need to have the oil changed as a result of its operation during the display or exhibition.

The operations dealt with in Chapter 2 of Specific Annex F, regarding temporary exportation for Outward Processing, are not regarded as covered by this provision.

Standard 6

Re-importation in the same state shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure.

Even if the goods are already placed under another Customs procedure and are not imported directly from abroad, this procedure must be allowed. Goods may qualify for re-importation in the same state from whichever Customs procedure they were under immediately prior to the application for the re-importation facility, such as Customs warehousing. For example, re-imported goods or compensating products may be placed in a Customs warehouse pending reception of the necessary evidence to prove that they qualify for the re-importation in the same state procedure.

Standard 7

Re-importation in the same state shall not be refused on the grounds that the goods were exported without notification of intended return.

Standard 7 mandates that Customs must not refuse the application of the re-importation in the same state procedure for goods that were exported without notification of intended return. As stated earlier, unforeseen circumstances may require the re-importation of the goods, such as in the situation when goods are left unsold, goods were refused by the consignee as not conforming to contract or goods have been damaged during transportation.

6. Time limit for re-importation in the same state

Standard 8

Standard 8 of this Chapter mandates that Customs administrations ensure that any time limits imposed by Customs, beyond which re-importation in the same state will not be granted, be of sufficient duration for each type of case. Although a minimum time limit is not prescribed in this Standard, a one to three year time limit is often established by Customs administrations. This period can also be extended by Customs under certain circumstances.

This Standard represents a facilitation measure which provides both Customs and the importing community greater certainty in planning their respective operations. As a consequence, Customs will not be required to establish onerous monitoring systems and the importer/exporter can better plan their business affairs to ensure appropriate time frames are established.

7. Competent Customs offices

Standard 9

The Customs shall only require that goods re-imported in the same state be declared at the Customs office through which they were exported where this will facilitate the re-importation procedure.

Standard 9 limits the requirement by Customs that the re-imported goods be declared at the same Customs office through which they were exported. The Standard indicates that Customs can only make this a requirement if this will facilitate the re-importation procedure. In fact, in most circumstances Customs should allow the goods to be declared at a different Customs office from where they were exported.

8. Goods declaration

Standard 10

Standard 10 stipulates that Customs must not require a Goods declaration for the re-importation in the same state of packings, containers, pallets and means of transport for commercial use which are in use for the international transport of goods. This is subject to the satisfaction of Customs that the packings, containers, pallets and means of transport for commercial use were in free circulation at the time of exportation, and Customs may use commercial documents to identify these goods.

As a rule, production of a written declaration in respect of packings, containers, pallets and means of transport for commercial use is also waived in connection with exportation with notification of intended return.

The international conventions applicable to packings, containers, pallets and commercial road vehicles are concerned principally, if not exclusively, with the temporary admission and re-exportation of these articles. These conventions are mentioned in Specific Annex G, Chapter 1 on Temporary Admission.

9. Goods exported with notification of intended return

Standard 11

The Customs shall, at the request of the declarant, allow goods to be exported with notification of intended return, and shall take any necessary steps to facilitate re-importation in the same state.

The steps Customs may take to facilitate re-importation in the same state may include the certification, upon export of the goods, of an appropriate Customs approved form listing the goods, their particulars and any special identifying marks and serial numbers. It is for the declarant to decide whether the goods should be exported with notification of intended return.

In some cases, exportation with notification of intended return may be authorized under cover of an ATA carnet in lieu of a national Customs document.

Customs may use a Goods declaration for exportation with notification of intended return as the Goods declaration for re-importation in the same state.

Standard 12

Customs must determine what identification measures should be taken for goods exported with notification of intended return. In doing so, Customs must take into account the nature of the goods and the importance of the interests involved. This Standard should be interpreted as implying that the requirements for the identification of goods must be such as to allow their total identification. The obligation upon Customs to take due account of the nature of the goods in laying down their identification requirements implies that care must be taken to choose methods of identification which do not damage the goods. Also, the measures required must be clearly communicated to the declarant.

For the identification of goods to be exported with notification of intended return, Customs may affix Customs marks (seals, stamps, perforations), may rely on marks, numbers or other indications permanently affixed to the goods or on the description of the goods, scale plans or photographs, or may take samples

Recommended Practice 13

Goods exported with notification of intended return should be granted conditional relief from any export duties and taxes applicable.

When goods are being exported with notification of intended return, it is highly recommended that Customs grant conditional relief from any export duties and taxes that would normally be applicable. However, some administrations may require that the declarant provide security for recovery of the sums that would be chargeable if the goods were not re-imported within any time limit specified.

Standard 14

In order to be as facilitative as possible, Customs must allow, at the request of the person concerned, exportation with notification of intended return to be converted to outright exportation. This is subject to compliance with the relevant conditions and formalities. One such condition is that any export duties and taxes not paid would now become chargeable. On the other hand, if the goods were definitively exported they would qualify for any repayment of or exemption from duties and taxes.

Recommended Practice 15

It is recommended that, in the case where the same goods are to be exported with notification of intended return and re-imported in the same state several times, the Customs should, at the request of the declarant, allow the declaration for exportation with notification of intended return that is lodged on the first exportation to cover the subsequent re-importations and exportations of the goods during a specified period.

Such a facilitative measure may be dependent upon Customs being satisfied that the client concerned has a strong record of compliance. The emphasis on such a condition would appear to be an important control feature of the proposed facilitation measure and mirrors the General Annex provisions for approved consignees/consignors.

The subsequent re-importations and exportations may be recorded by Customs on the Goods declaration, by stamping or by appropriate endorsement.

Chapter 3

RELIEF FROM IMPORT DUTIES AND TAXES

1. Introduction

Most administrations provide relief from import duties and taxes on certain goods cleared for home use, irrespective of their normal tariff classification and normal liability, provided that they are imported in specified circumstances and for specified purposes. This relief may be provided for in the Customs tariff or may be set out in separate legislation or regulations.

Relief may be granted on philanthropic or humanitarian grounds, or may be based on consideration of equity. It may be intended to encourage the development of education, science and culture, or to foster harmonious international relations, or be introduced simply for administrative convenience to avoid expenditure that would be out of proportion to the amounts collected. Economic considerations also have to be taken into account when granting relief.

2. Purpose and scope

The relief referred to in this Chapter is outright inasmuch as the goods are taken into home use and are not placed under a Customs procedure affording only conditional relief from import duties and taxes.

Although the relief is outright, there are usually certain conditions to be met and the facility may, for a time at least, be subject to constraints; that is, use for approved purposes, prohibition on sale, etc.

The relief may apply to both import duties and import taxes or, in certain cases, to Customs duties only.

As an example of relief from Customs duties only, in 1966, the WCO Council recommended a number of measures to facilitate the application of the 1950 UNESCO Agreement. In particular, it was recommended that a measure of relief from Customs duties only could be applied to spare parts and accessories in the case of goods referred to in the Annexes to the UNESCO Agreement on the Importation of educational, scientific and cultural materials (New York, 22 November 1950) and to the Protocol thereto (Nairobi, 26 November 1976) as well in the UNESCO Agreement for Facilitating the international circulation of visual and auditory materials of an educational, scientific and cultural character (Beirut, 1948).

This measure recommended that relief from Customs duties should be granted in respect of spare parts and accessories (including tools specially made for maintenance, checking, gauging or repair) for instruments and apparatus granted relief, provided that they are imported at the same time as the instruments or apparatus or, if imported subsequently, are identifiable as being intended for instruments or apparatus that have been, or could be, granted relief.

In some administrations, relief from Customs duties is only granted in respect of industrial, commercial or agricultural plant or equipment imported by natural persons in connection with the transfer of their undertaking to the Customs territory of importation. Relief may also be granted, in some administrations, in respect of equipment imported by legal persons.

This Annex does not contain an exhaustive list of the various reliefs granted by all administrations. Nor does it cover tariff preferences, whether granted unilaterally or under bilateral or multilateral arrangements. However, some additional information on the various forms of relief granted on goods consumed on board ships, aircraft and international trains can be found in the Guidelines in Specific Annex J, Chapter 4, Stores. The subject of relief from duties and taxes for private means of transport and on goods contained in travellers’ baggage is covered in Specific Annex J, Chapter 1, Travellers, while relief from duties and taxes relating to the traditional temporary admission procedures is dealt with in Specific Annex G, Chapter 1, Temporary Admission.

3. Essential features

3.1. Benefits

As noted in the introduction, relief from duties and taxes may be on philanthropic or humanitarian grounds or for purposes of equity. Such relief may be useful in encouraging the development of education, science and culture or in fostering harmonious international relations. It may be introduced for administrative convenience to avoid expenditure that would be out of proportion to the amounts collected or to relieve economic considerations.

This Chapter mentions a number of forms of relief normally granted in most administrations. It describes a broad variety of relief provisions referred to in other international instruments; for example, human therapeutic substances and blood-grouping and tissue-typing reagents; removable articles imported on transfer of residence; effects acquired by inheritance; personal gifts; goods sent to charitable or philanthropic organizations; awards, materials for the construction, upkeep or ornamentation of military cemeteries; coffins, funerary urns and ornamental funerary articles; documents and miscellaneous articles of no commercial value; religious objects; and products imported for testing.

This Chapter not only lists examples of relief; in addition, to encourage Customs administrations to advance along the path of harmonization, it also formulates a number of conditions to which the granting of the relief facility may be subject.

3.2. Definitions

*E1/F2*	*“clearance for home use”* means the Customs procedure which provides that imported goods enter into free circulation in the Customs territory upon the payment of any import duties and taxes chargeable and the accomplishment of all the necessary Customs formalities;
*E2/F1*	*“relief from import duties and taxes”* means the clearance of goods for home use free of import duties and taxes, irrespective of their normal tariff classification or normal liability, provided that they are imported in specified circumstances and for specified purposes.

4. Principle

Standard 1

Relief from import duties and taxes in respect of goods declared for home use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Relief from import duties and taxes. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 9 on Information, decisions and rulings supplied by the Customs should be read in conjunction with this Chapter on Relief from import duties and taxes.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

5. Field of Application

Standard 2

National legislation shall enumerate the cases in which relief from import duties and taxes is granted.

Worldwide there is a proliferation of a broad range of relief procedures which are granted subject to differing conditions in different administrations. As the procedures and the conditions for granting them vary so broadly from Customs territory to Customs territory, for efficiency reasons the national legislation of each Customs territory granting such facilities must set out the appropriate provisions. In this way, the information can be made accessible and readily available to interested parties.

Standard 3

Relief from import duties and taxes shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure.

Goods may qualify for relief irrespective of the Customs procedure they were under immediately prior to the application for relief. As an example, provided that the conditions for relief are met, goods being removed from the Customs warehousing procedure may be granted relief from duties and taxes.

Recommended Practice 4

Certain international instruments provide for relief on a reciprocal basis. As one example, there are a number of reciprocity clauses covering certain materials and equipment contained in the International Convention on International Civil Aviation (Chicago Convention). The reciprocity provisions based on these clauses are normally established in the respective bilateral air agreements between contracting states. Such reciprocity clauses are further explained in the International Civil Aviation Organization (ICAO) Facilitation Manual and the conditions established by them are contained in national legislation. More specifically, administrations may agree to provide for mutual relief from duties and taxes on ground equipment such as aircraft servicing equipment, security equipment, instructional material and training aids imported into the territory of a Contracting State to the Chicago Convention, by or on behalf of an operator of another Contracting State for its own use within the limits of an international airport.

Standard 5

National legislation shall enumerate the cases in which prior authorization is required for relief from import duties and taxes and specify the authorities empowered to grant such authorization. Such cases shall be as few as possible.

An obligation to obtain prior authority for all clearance procedures is restrictive and can be an obstacle to the speedy completion of clearance formalities. In order to avoid the disadvantages of such formalities, the relevant authorities should ensure that the cases in which prior authority is required are as few as possible. However, prior authorization, used as a measure of facilitation, provides a commercial operator with a degree of certainty that the goods may be accorded relief before financial commitments are made.

The specification in national legislation of authorities that are empowered to grant such authorization is also an important facilitation measure in that it advises the commercial operator/importer of the authorities to whom such requests should be directed. Additionally, the publication of this information is useful as an aid to assist Customs officials in providing a service to their clientele.

In some Customs territories, for instance in Canada, the authority permitting relief from duties and taxes and which stipulates the cases in which prior authority is either required, or recommended, is contained in regulations issued under the Customs Tariff. The information is published in official Customs directives. Such directives, regularly used by Customs officials as guidelines in the carrying out of their duties, are also readily available to the public.

Recommended Practice 6

Recommended Practice 6 addresses the matter of relief from duties and taxes on a broad category of goods that are covered in a number of international agreements. The goods are subject to conditions specified in these instruments in order to be eligible for relief.

Although a number of Customs territories are parties to these international instruments, there is presently no real consistency in the harmonization of the conditions for granting relief from duties and taxes among the contracting parties to these instruments.

In the period of time since the earlier instruments were put into effect, other international instruments covering relief from duties and taxes have been established. These new instruments are intended to eventually supercede and modernize the earlier agreements.

Recommended Practice 6 is intended to encourage Contracting Parties to accede to these instruments and to adopt appropriate facilitative measures in order to move along the path to harmonizing the conditions for granting relief from duties and taxes.

Relevant international instruments referred to above include:

(a) Goods referred to in the Annexes to the UNESCO Agreement on the Importation of educational, scientific and cultural materials (New York, 22 November 1950) and to the Protocol thereto (Nairobi, 26 November 1976) as well as in the UNESCO Agreement for facilitating the international circulation of visual and auditory materials of an educational and cultural character (Beirut, 1948). Annex B.5 of the Istanbul Convention concerning goods imported for educational, scientific or cultural purposes also relates.

(b) Equipment or material referred to in Recommended Practices 4.39 and 4.41 of Annex 9 (7^th Edition) to the Convention on International Civil Aviation (Chicago Convention, Chicago, 7 December 1944).

(c) Tourist publicity documents and material referred to in the Additional Protocol to the Convention concerning Customs facilities for touring, relating to the importation of tourist publicity documents and material (New York, 4 June 1954). Annex B.7 of the Istanbul Convention, concerning tourist publicity material, is intended to update, modernize and eventually replace the above-noted Additional Protocol.

(d) Products referred to in Articles 6 and 7 of the Customs Convention concerning Facilities for the importation of goods for display or use at exhibitions, fairs, meetings or similar events (Brussels, 8 June 1961).

(e) Goods imported under diplomatic or consular privileges as referred to in the Vienna Conventions on Diplomatic Relations (18 April 1961) and Consular Relations (24 April 1963).

Additional information on the above can be found in Appendix 1 to these Guidelines.

Recommended Practice 7

(a) Therapeutic substances of human origin, blood grouping and tissue typing reagents, where they are consigned to institutions or laboratories approved by the competent authorities;

(b) Samples of no commercial value which are regarded by the Customs to be of negligible value and which are to be used only for soliciting orders for goods of the kind they represent;

(c) Removable articles other than industrial, commercial or agricultural plant or equipment, intended for the personal and professional use of a person or members of his family which are brought into the country with that person or separately for the purpose of removal of his residence to the country;

(d) Effects inherited by a person who, at the time of the death of the deceased, has his principal residence in the country of importation and provided that such personal effects were for the personal use of the deceased;

(e) Personal gifts, excluding alcohol, alcoholic beverages and tobacco goods, not exceeding a total value to be specified in national legislation on the basis of retail value;

(f) Goods such as foodstuffs, medicaments, clothing and blankets sent as gifts to an approved charitable or philanthropic organization for distribution free of charge to needy persons by the organization or under its control;

(g) Awards to persons resident in the country of importation subject to the production of any supporting documents required by the Customs;

(h) Materials for the construction, upkeep or ornamentation of military cemeteries; coffins, funerary urns and ornamental funerary articles imported by organizations approved by the competent authorities;

(ij) Documents, forms, publications, reports and other articles of no commercial value specified in national legislation;

(k) Religious objects used for worship; and

(l) Products imported for testing, provided that the quantities imported do not exceed those strictly necessary for testing, and that the products are used up during testing or that remaining products are re-exported or rendered commercially valueless under Customs control.

Recommended Practice 7 includes goods, normally exempt from duties and taxes under certain conditions, for example, goods brought by returning residents on transfer of residence, gifts to charitable institutions, and similar circumstances.

For these categories of goods there is presently no standard set of conditions among WCO Members for granting relief. There should be a harmonization of the conditions for granting relief from duties and taxes among Contracting Parties. However, to achieve such harmonization would require an in depth study of the procedures and conditions for relief applied in Member countries, and it would not be practical at this point to harmonize such large categories of goods and circumstances.

This Recommended Practice has been made as comprehensive as possible and contains an indicative list of items for which relief is recommended, with such relief subject to conditions in national legislation. The conditions for granting relief for these goods would be one of the areas for further harmonization. It is important to note that, under this Recommended Practice, in view of the goods and the circumstances involved, serious consideration should be given to also providing relief where possible from economic prohibitions and restrictions, i.e., quotas or import licences.

Additional information on the relief provisions recommended above can be found in Appendix II to these Guidelines.

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Appendix I

Additional Information on International Instruments which provide for

Relief from Duties and Taxes on goods

UNESCO Agreement on the Importation of educational, scientific and cultural materials (New York, 22 November 1950 and to the Protocol thereto (Nairobi, 26 November 1976)
UNESCO Agreement for Facilitating the international circulation of visual and auditory materials of an educational and cultural character (Beirut, 1948)

It should be recalled that the purpose of the UNESCO Agreement is to further the aims of a free exchange of ideas and knowledge and, in general, the widest possible dissemination of the diverse forms of self-expression used by civilizations for intellectual progress and international understanding for the maintenance of world peace through the free flow of books, publications and educational, scientific and cultural materials.

In 1966, the Council recommended a number of provisions which facilitate the application of the 1950 UNESCO Agreement. These provisions include:

a) Spare parts and accessories

Relief from Customs duties should be granted in respect of spare parts and accessories (including tools specially made for maintenance, checking, gauging or repair) for instruments and apparatus that have themselves been granted relief, provided that they are imported at the same time as the instruments or apparatus or, if imported subsequently, are identifiable as being intended for instruments or apparatus that have been or could be granted relief.

b) Provisional clearance

While making release subject to the production of any import licences or exchange control permits required under national legislation, Customs should authorize provisional clearance if requested on his responsibility, by the Director of the institution concerned, where it cannot be established prior to importation, without delaying clearance, that the material is of a kind covered by the terms of the UNESCO Agreement and that national equipment of equivalent scientific value is not available in the importing Customs territory.

c) Approval of scientific or educational institutions

While retaining the power to withdraw such approval for valid reasons, Customs should grant approval of scientific or educational institutions mentioned in Annex D to the UNESCO Agreement on a permanent basis or for a given period open to extension.

d) Undertaking to be given by the Directors of approved institutions

Customs should not require the Directors of approved institutions, referred to in Annex D to the UNESCO Agreement, to give a general undertaking to comply with the conditions governing approval nor to provide security in this respect. An undertaking in respect of each importation should be regarded as sufficient.

e) Importations by third parties on behalf of approved institutions

The facilities should not be restricted to equipment which is consigned, at the time of importation, to an approved institution, but should extend to importations by third parties on behalf of such institutions, subject to the production of the undertaking by the Director referred to in paragraph (b) above.

f) Importations by institutions which have not yet obtained approval

Where scientific equipment is to be imported by an institution which has not been granted approval but could qualify for approval, provisional clearance with exemption from Customs duties should be authorized pending the granting of approval. Wherever possible, the Director should not be required, for the purposes of this provisional clearance, to furnish security for payment of the Customs duties which would be chargeable if approval were refused.

Convention on International Civil Aviation Annex 9 (Facilitation) (Chicago Convention, Chicago, 7 December 1944)

The 10^th Edition of Annex 9 of the Chicago Convention incorporates, in Parts E and G of Chapter 4, a number of provisions which relate principally to relief from duties and taxes in connection with aircraft and related containers, pallets (and their loads), aircraft equipment, stores and parts.

Additionally these provisions grant relief from duties and taxes on ground equipment such as aircraft servicing equipment, security equipment, and on instructional material and training aids imported into the territory of a Contracting State, by or on behalf of an operator of another Contracting State for its own use within the limits of an international airport, providing that the other party to the agreement provides reciprocal relief provisions.

Additional Protocol to the Convention concerning Customs facilities for touring, relating to the importation of tourist publicity documents and material (New York, 4 June 1954)
International Convention on Temporary Admission, (Istanbul Convention, Istanbul, 26 June 1990), Annex B.7 concerning tourist publicity material, Article 5

The Additional Protocol to the New York Convention and Annex B.7. of the Istanbul Convention are intended to contribute to the promotion of international tourism by facilitating the circulation of tourist publicity documents and other material aimed at encouraging the public to visit a foreign Customs territory, in particular to attend cultural, religious, touristic, sporting or professional meetings or demonstrations/exhibitions held there.

Article 5 of Annex B.7 to the Istanbul Convention deals with relief from duties and taxes on tourist publicity material which will not be re-exported, either because it is for free distribution, or because to require its re-exportation would serve no useful purpose (This is an example of administrative convenience to avoid expenditure that would be out of proportion to the amounts collected).

Customs Convention concerning Facilities for the importation of goods for display or use at exhibitions, fairs, meetings or similar events (Brussels Convention, Brussels, 8 June 1961)
International Convention on Temporary Admission, (Istanbul Convention, Istanbul, 26 June 1990) Annex B.1 concerning goods for display or use at exhibitions, fairs meetings or similar events, Article 5

Annex B.1 of the Istanbul Convention concerning goods for display or use at exhibitions, fairs, meetings or similar events, is intended to update, modernize and eventually replace the above-noted 1961 Convention.

In comparison with Annex B.1 of the Istanbul Convention, the provisions of Articles 6 and 7 of the 1961 Brussels Convention are somewhat limited in nature. Article 5 of Annex B.1 provides for relief from duties and taxes on :

- small samples which are representative of foreign goods displayed at an event;

- goods imported solely for demonstration or for the purpose of demonstrating the operation of a foreign machine or apparatus displayed at an event and which are consumed or destroyed in the course of such demonstration;

- products of low value used up in constructing, furnishing or decorating temporary stands of foreign exhibitors; and

- printed matter, catalogues, trade notices, price lists, advertising posters, calendars, unframed photographs and files, records, forms and other documents for use at international meetings, conferences or congresses.

Relief from duties and taxes on such goods affords considerable advantages to trade and industry and promotes the international exchange of ideas and knowledge.

Vienna Convention on Diplomatic Relations (Vienna, 18 April 1961)
Vienna Convention on Consular Relations (Vienna, 24 April 1963)

Relief from Customs duties and taxes and other related charges on the goods referred to in the above instruments includes articles for the official use of the mission or of the consular post and articles for the personal use of a diplomatic agent or of a consular officer or members of their families forming part of their households. In the case of a consular officer, the Vienna Convention on Consular Relations notes that articles intended for consumption shall not exceed the quantities necessary for direct utilization by the persons concerned.

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Appendix II

List of Possible Provisions for Additional Relief

Recommended Practice 7

(a) Therapeutic substances of human origin, blood grouping and tissue typing reagents, where consigned to institutions or laboratories approved by the competent authorities

- Therapeutic substances of human origin includes human blood and its derivatives (whole blood, dried plasma, albumin, gamma-globulin, fibrinogen) and bodily organs.

- Blood grouping and tissue typing reagents may be of human, plant or other origin.

It is for the competent authorities to establish the conditions under which institutions or laboratories may be authorized to receive therapeutic substances of human origin and reagents with relief from import duties and taxes.

Special packaging used for the transport of such substances should qualify for relief under the same provisions as the substances themselves.

b) Samples of no commercial value which are regarded by the Customs to be of negligible value and which are to be used only for soliciting orders for goods of the kind they represent

The following should generally be regarded as samples of no commercial value:

raw materials and products of such dimensions that they are useless except for purposes of demonstration;
articles of non-precious materials affixed to cards or put up as samples in the manner usual in the trade, provided that there is not more than one of each size or kind;
raw materials and products, and articles of such materials or products, rendered useless, except for purposes of demonstration, by slashing, perforation, indelible marking or by any other effective method;
products which cannot be put up as samples of no commercial value in accordance with paragraphs (1) to (3) above and which consist of:

(i) non-consumable goods of an individual value not exceeding US$5, and provided there is not more than one sample of each kind or quality;

(ii) consumable goods of an individual value not exceeding US$5, even if they consist wholly or partly of samples of the same kind or quality, provided the quantity and the manner in which they are put up preclude their being used otherwise than as samples.

The above provisions are based on the Customs Co-operation Council Recommendation of 30 November 1956 concerning samples to be regarded as being of negligible value within the meaning of the international Convention to facilitate the importation of commercial samples and advertising material. The provisions are however open to all Customs territories for acceptance regardless of whether they are party to the above-mentioned Convention.

c) Removable articles other than industrial, commercial or agricultural plant or equipment, intended for the personal and professional use of a person or members of his family which are brought into the Customs territory with that person or separately for the purpose of removal of his residence to the Customs territory.

In order to facilitate the transfer of residence by persons from one Customs territory to another, it is desirable to harmonize and simplify the Customs regulations and formalities governing the free admission of removable articles used by a person in one Customs territory and intended for continued personal or professional use in the Customs territory of importation.

The adoption of liberal provisions applicable to these importations should not present to Customs any real risk of serious abuse having regard to the circumstances normally resulting in transfers of residence and the nature of the articles concerned.

These provisions relate solely to the admission of removable articles free of import duties and taxes and free of economic prohibitions and restrictions. They do not affect any other requirements (for example, immigration, policy or health regulations) of the Customs territory of importation.

Special conditions may however be imposed in respect of articles liable to large amounts of import duties and taxes. An example would be in the case of a yacht being imported by a returning resident and which is valued over a threshold amount specified in national legislation for full relief from duties and taxes.

The expression “removable articles” normally comprises the furniture, furnishings and other movable belongings of a person and of members of his household. These would include household appliances (washing machines, refrigerators, vacuum cleaners, floor polishers, etc.) and audio-visual equipment, personal effects, means of transport for private use, household provisions, collector’s pieces, household pets and saddle horses.

While the exemption in respect of household provisions is restricted to quantities normally kept in stock, Customs may also set maximum quantities in respect of alcoholic beverages and tobacco goods.

The expression “removable articles” also covers equipment necessary for the exercise of the calling, trade or profession of the above-mentioned persons, other than industrial, commercial or agricultural plant.

In some Customs territories, relief from Customs duties and from economic prohibitions or restrictions is granted in respect of industrial, commercial or agricultural plant or equipment imported by natural persons in connection with the transfer of their undertaking to the Customs territory of importation. Some Customs administrations also grant relief in respect of plant or equipment imported by legal persons on the relocation of that entity.

d) Effects inherited by a person who, at the time of the death of the deceased, has his principal residence in the country of importation and provided that such personal effects were for the use of the deceased

The relief provided for in the case of inherited effects should not normally be made subject to conditions more restrictive than the following:

i) that the deceased was resident abroad at the time of death;

ii) that the effects be imported within one year of the date on which the person concerned became entitled to dispose of them;

iii) that, except in the case of household provisions, the person granted relief retain ownership or possession of the goods inherited for a reasonable period after importation. As a rule, this period should not be fixed at more than one year;

iv) that any alcoholic beverages and tobacco goods do not exceed the quantities laid down in national legislation;

v) that a list (inventory) of the goods to be imported be submitted, together with any supporting documentary proof required by Customs.

e) Personal gifts, excluding alcohol, alcoholic beverages and tobacco goods, not exceeding a total value to be specified in national legislation on the basis of retail value

The harmonization and relaxation of the Customs provisions concerning the importation of gifts and the expedited clearance of such consignments is in the interests of Customs territories desiring to strengthen understanding and friendship between peoples through the continuing expansion of international tourism, of international cultural exchanges, and of international movements of workers and to reflect close personal and family ties with family members in other Customs territories.

Free admission of gifts may be made subject to the condition that at importation it is established to the satisfaction of Customs that the consignment:

i) is sent to a private person by or on behalf of another private person resident abroad;

ii) is occasional; and

iii) consists only of goods for personal use by the addressee or his family, and that the nature and quantity of the goods imported are such that the consignment is not of a commercial nature.

The formalities for obtaining free admission should be as simple as possible and should be available irrespective of the means of transport used to bring the consignment to the Customs territory of importation. To facilitate the speedy clearance of gift consignments at importation, the sender should indicate on the package that the consignment is a gift, and state its value and its contents.

The relief does not preclude the application of prohibitions or restrictions imposed under national laws and regulations on grounds of public morality or order, public security, public hygiene or health or based on veterinary or phytopathological considerations.

Such relief facilities would not relate to gifts carried in travellers’ baggage and would not prevent the application of greater facilities which some Customs administrations grant or may grant in future by unilateral provisions or by virtue of bilateral or multilateral agreements.

f) Goods such as foodstuffs, medicaments, clothing and blankets sent as gifts to an approved charitable or philanthropic organization for distribution free of charge to needy persons by the organization or under its control

This provision is intended as a contribution to the efforts made in the interest of humanity by granting relief from payment of duties and taxes and from prohibitions and restrictions to facilitate the importation of goods such as foodstuffs, medicaments, clothing and blankets sent as gifts to an approved charitable or philanthropic organization.

This provision also relates to the humanitarian objectives connected with relief consignments as set out in Specific Annex J, Chapter 5, in that it also covers foodstuffs, medicaments, clothing and blankets sent as aid. The main difference lies in the fact that this separate provision is directed to ongoing specific or chronic situations which fall outside the terms of emergencies and disasters.

g) Awards to persons resident in the country of importation subject to the production of any supporting documents required by the Customs

In the interests of furthering international cooperation, peace and understanding and achieving educational, scientific and cultural aims, many Customs territories establish award programs. In recognition of the need to present the relevant awards to the selected candidates, who may live outside the Customs territory that is responsible for the award, it is desirable to ensure that such international recognition does not place the recipient at an economic disadvantage through providing relief from duties and taxes and economic prohibitions and restrictions.

The relief may extend to decorations presented by foreign governments to persons resident in the country of importation. It may also extend to objets d’art, trophies, medals and similar articles presented abroad either as prizes in a competition or as a reward for acts of courage or self-sacrifice, to persons resident in the country of importation, or such articles donated by authorities or non-profit making organizations abroad with a view to presentation for the same purposes in the country of importation to persons resident in that country, subject to the production of any supporting documents required by Customs.

h) Materials for the construction, upkeep or ornamentation of military cemeteries; coffins, funerary urns and ornamental funerary articles imported by organizations approved by the competent authorities.

Most Customs territories include provisions in their national legislation for the purposes of granting relief from import duties and taxes and from economic prohibitions or restrictions for goods for the construction, upkeep or ornamentation of military cemeteries. In most cases, there is a requirement that such goods be imported by the competent authorities of the country of importation. The goods must also be appropriate to these purposes.

Relief from import duties and taxes should also be granted for coffins containing the bodies of deceased persons as well as for urns containing the ashes of deceased persons. Normally, flowers, wreaths and other ornamental funerary objects accompanying the coffins or urns would be granted relief from duties and taxes.

Most Customs administrations also grant relief from duties and taxes on flowers, wreaths and other ornamental objects brought by persons attending a funeral or mourners coming to decorate the graves in the country of importation.

Although many Customs administrations may grant relief from economic prohibitions and restrictions, such relief should not be construed as affecting any requirements, for example, agriculture or health regulations or prohibited goods regulations, of the country of importation.

ij) Documents, forms, publications, reports and other articles of no commercial value specified in national legislation

National legislation of a Customs territory may specify that relief from import duties and taxes and from economic prohibitions or restrictions will be granted for consignments containing the following items provided that these are clearly by their quantity or nature, of no commercial value:

a) publications of foreign governments and publications of official international organizations;

b) printed forms issued by foreign governments;

c) voting papers for foreign nationals;

d) documents sent free of charge to the public services of the country of importation;

e) objects to be submitted as evidence or for similar purposes to the courts or other official agencies of the country of importation;

f) printed circulars concerning signatures addressed to public services or banks in the country of importation;

g) securities in foreign currencies, cheque books and travellers’ cheques of banks established abroad;

h) reports, statements and notes drawn up by companies established abroad;

ij) recorded media such as punched cards, sound recordings, magnetic tapes, microfiches, microfilms and magnetic discs, for the international exchange of information;

k) publications of chambers of commerce of the country of importation abroad;

l) plans, technical drawings, traced designs, specifications and other documents imported solely with a view to placing orders abroad or to participating in competitions or calls for tenders in the country of importation;

m) documents relating to trade marks, patterns or designs and patent applications submitted to the agencies in the country of importation which deal with the protection of copyrights or the protection of industrial or commercial property;

n) printed forms and tickets sent by transport and travel undertakings located abroad to their offices and agencies in the country of importation;

o) printed forms and tickets, bills of lading, waybills and other commercial documents which have been processed;

p) press photographs and stereotype mats for press photographs sent to press agencies or to publishers of newspapers or periodicals.

k) Religious objects used for worship

Many Customs territories have specific provisions in place in national legislation to address relief from duties and taxes and from economic prohibitions and restrictions for religious objects used for worship. However, such relief may be restricted to religious objects used by internationally recognized religious institutions. The relief granted does not preclude the application of prohibitions or restrictions imposed under national laws and regulations on grounds of public morality or order, public security, public hygiene or health or based on veterinary or phytopathological considerations.

l) Products imported for testing, provided that the quantities imported do not exceed those strictly necessary for testing, and that the products are used up during testing or that remaining products are re-exported or rendered commercially valueless under Customs control.

Relief from duties and taxes on products imported for testing is an important consideration enabling national or recognized consumer protection organizations to send samples of consumer products to laboratories in other Customs territories for comparative testing. Such relief supports the work of organizations both public and private in contributing to the improvement of the quality of goods and of the information available to consumers.

Some Customs administrations may restrict such importations to their bureau of standards or other similar body and may also require such imports to be processed under the temporary admission procedure with a time-limit for re-exportation unless the products are of negligible value or used up completely during the testing. In the latter case, some Customs administrations may require a “destruction certificate”.

Annex C - Exportation

Annex C

Exportation

CHAPTER 1 Outright exportation

Definition

For the purposes of this Chapter:

E1./ F1.

“outright exportation ” means the Customs procedure applicable to goods which, being in free circulation, leave the Customs territory and are intended to remain permanently outside it.

Principle

1. Standard

Outright exportation shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Documentation

2. Recommended Practice

Evidence of arrival at destination

3. Standard

The Customs shall not require evidence of the arrival of the goods abroad as a matter of course.

Guidelines to Annex C

Guidelines to the Annex C

Chapter 1

OUTRIGHT EXPORTATION

1. Introduction

These Guidelines are aimed at developing general principles governing the outright exportation procedure, the export formalities to be completed under the normal procedure and ways of simplifying the formalities and the procedures.

In accordance with the definition of “outright exportation”, this Chapter only applies to goods in free circulation that are intended to be permanently exported. Temporary exportations are dealt with under other Chapters of this Convention.

2. General principles

To place goods under the outright exportation procedure the declarant must make an export declaration. The export declaration is both an instrument by which the declarant states that he wants the goods placed under the outright exportation procedure and a formality enabling Customs to carry out the necessary controls and to collect any duties and taxes payable at exportation.

It should be noted that the exporter is the person on whose behalf the export declaration is made out and who may, in this capacity, enjoy relief from internal taxes and who must pay any export duties and taxes due. In some countries the competent Customs office for lodgement of the export declaration and presentation of the goods is normally the office closest or most accessible to the exporter's premises. Where applicable, the Customs office may be assigned a geographical area, and the exporters based in this area can be covered by that office. In addition, offices further from the exporter's premises but located on a major trade route (port, airport, railway station, frontier post) selected by the exporter for the transport of the goods, could also be competent to accept the export declaration. In other countries, the office of exit is the only office where the goods are presented and the declaration is lodged for outright exportation. For further details on competent Customs offices, please see the Guidelines to Standard 3.1 of the General Annex.

Standards 3.6 and 3.7 of the General Annex and their Guidelines contain information regarding the declarant. Likewise the General Annex Guidelines for Standards 3.11 and 3.12 give details pertaining to the contents, format and data requirements of a Goods declaration.

It should be noted that Chapter 3 of the General Annex also covers, in particular, facilities for a provisional or incomplete declaration, the lodgement and registration of the Goods declaration, examination and release of the goods. These procedures are especially applicable to this Chapter on outright exportation.

Chapter 6 of the General Annex on Customs control provides that Customs control must be limited to that necessary to ensure compliance with Customs law and that Customs shall use risk management in the application of Customs control. The degree of control with regard to goods to be exported, including means of transport, will depend upon the risk involved and the manner in which the outright exportation is carried out. In some Customs territories the goods and the Goods declaration for export are presented directly to the office of exit. In others the goods and the declaration are presented at an inland Customs office before being moved to the office of exit. Many Customs administrations offer special simplified procedures for outright exportation, for example allowing the export declaration to be lodged at the declarant’s premises before the goods are moved to the office of exit. (See Guidelines to Transitional Standard 32 and Standard 3.41 of the General Annex).

A few countries have also entered into bilateral agreements under which they are developing the possibility to use the information submitted on the export Goods declaration as the information for the import Goods declaration. This is commonly referred to as an integrated transaction, and it is particularly pertinent for use by multinational companies in their intra-company international transfers of goods. This is intended to improve both facilitation and compliance by using a single set of the data regarding the goods.

The physical exit of the goods from the Customs territory can be certified by specific reference on the export declaration, either when the goods actually leave the territory or when the goods declared for export are placed under a Customs transit procedure within the Customs territory enroute to the place of exit from that territory.

Goods exported outright are not expected to return to the country of exportation. However, for various reasons the goods, in practice, may be returned and in this case they would normally be treated under the procedure for re-importation in the same state if they meet all the relevant conditions. This procedure is covered in Specific Annex B, Chapter 2. If the conditions for re-importation in the same state are not met, the goods would be treated as foreign goods.

3. Definition

E1/F1

“outright exportation” means the Customs procedure applicable to goods which, being in free circulation, leave the Customs territory and are intended to remain permanently outside it.

4. Formalities to be completed under the normal procedure

Standard 1

Outright exportation shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Outright exportation. Where a specific applicability is not relevant, the greater facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 7 on Information technology should be read in conjunction with this Chapter on Outright exportation.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Recommended Practice 2

As an additional facilitation to trade many Customs administrations permit goods for outright exportation to be declared in an alternative manner instead of using the official format of the Goods declaration as long as all of the required information pertaining to the goods is included in the alternative document or format. This is a facilitative approach to the acceptance of documentation that would be applicable in both the manual and electronic environments. This alternative format is in lieu of the Goods declaration and is considered to be the only declaration required for the purpose of outright exportation. It is a facility made available to all the declarants, and this procedure therefore differs from the provisions of Transitional Standard 3.32 of the General Annex which are available only to authorized traders.

Customs usually specifies the types of goods that can be declared in this manner and normally extends the facility for goods which are in large volumes and of low risk or are unconditionally free of duties and taxes. This may include, for example, newspapers, journals and periodicals, and certain bulk construction materials such as cement or sand, etc.

The alternative format to the standard Goods declaration could be a commercial document, for example an invoice or a transport document, as long as the necessary particulars relating to the goods to be exported are contained in the commercial document.

Customs is usually satisfied with a commercial document where the goods to be exported are not liable to export duties and taxes and do not give rise to repayment of or exemption from internal duties and taxes, and where the Goods declaration is not used for the compilation of statistics.

A number of international efforts are underway to standardize commercial and transport documents (e.g. International Maritime Organization and International Civil Aviation Organization cargo declaration formats). The United Nations Economic Commission for Europe (UN/ECE) has adopted a Recommendation on an aligned invoice lay-out key for international trade which is an example of a standardized format for a commercial invoice. The use of any of these standardized formats for declaring goods for export in specified cases in lieu of a Goods declaration could be considered by administrations implementing this Recommended Practice.

Standard 3

The Customs shall not require evidence of the arrival of the goods abroad as a matter of course.

Normally the Customs office of export does not require evidence of the arrival of goods abroad when clearance has been given to goods for outright exportation. In general, the only cases when such evidence would be required are when the goods :

- are subject to special controls,

- require such a notification under certain types of regulations or

- qualify for repayment of or exemption from internal duties and taxes and evidence of exportation is not otherwise available, and there is a reason to fear abuse.

Examples of goods under special export controls or regulations could be arms and ammunition, narcotics exported for the production of medicines and hazardous or precursor chemicals.

When evidence not otherwise available must be furnished, Customs in the country of export would normally accept a statement supplied by the consignee who received the goods and certified by Customs in the country of destination.

Annex D - Customs warehouses and free zones

Annex D

Customs warehouses and free zones

CHAPTER 1

Customs warehouses

Definition

For the purpose of this Chapter:

E1./ F1.

“Customs warehousing procedure ” means the Customs procedure under which imported goods are stored under Customs control in a designated place (a Customs warehouse) without payment of import duties and taxes.

Principle

1. Standard

The Customs warehousing procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Classes of Customs warehouses

2. Standard

National legislation shall provide for Customs warehouses open to any person having the right to dispose of the goods (public Customs warehouses).

3. Standard

National legislation shall provide for Customs warehouses to be used solely by specified persons (private Customs warehouses) when this is necessary to meet the special requirements of the trade.

Establishment, management and control

4. Standard

The Customs shall lay down the requirements for the establishment, suitability and management of the Customs warehouses and the arrangements for Customs control. The arrangements for storage of goods in Customs warehouses and for stock-keeping and accounting shall be subject to the approval of the Customs.

Admission of goods

5. Recommended Practice

Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to prohibitions or restrictions other than those imposed on grounds of:

public morality or order, public security, public hygiene or health, or for veterinary or phytosanitary considerations; or
the protection of patents, trade marks and copyrights,

irrespective of quantity, country of origin, country from which arrived or country of destination.

Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be accepted only by Customs warehouses specially designed to receive them.

The Customs shall specify the kinds of goods which may be admitted to private Customs warehouses.

7. Recommended Practice

Admission to Customs warehouses should be allowed for goods which ar e entitled to repayment of import duties and taxes when exported, so that they may qualify for such repayment immediately, on condition that they are to be subsequently exported.

8. Recommended Practice

Admission to Customs warehouses, with a view t o subsequent exportation or other authorized disposal, should be allowed for goods under the temporary admission procedure, the obligations under that procedure thereby being suspended or discharged.

9. Recommended Practice

Admission to Customs warehouses should be allowed for goods intended for exportation that are liable to or have borne internal duties or taxes, in order that they may qualify for exemption from or repayment of such internal duties and taxes, on condition that they are to be subsequently exported.

Authorized operations

10. Standard

Any person entitled to dispose of the warehoused goods shall be allowed, for reasons deemed valid by the Customs:

a. to inspect them;

b. to take samples, against payment of import duties and taxes wherever applicable;

c. to carry out operations necessary for their preservation; and

d. to carry out such other normal handling operations as are necessary to improve their packaging or marketable quality or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking.

Duration of stay

11. Standard

The Customs shall fix the authorized maximum duration of storage in a Customs warehouse with due regard to the needs of the trade, and in the case of non-perishable goods it shall be not less than one year.

Transfer of ownership

12. Standard

The transfer of ownership of warehoused goods shall be allowed.

Deterioration of goods

13. Standard

Goods deteriorated or spoiled by accident or force majeure while under the Customs warehouse procedure shall be allowed to be declared for home use as if they had been imported in their deteriorated or spoiled state, provided that such deterioration or spoilage is duly established to the satisfaction of the Customs.

Removal of goods

14. Standard

Any person entitled to dispose of the goods shall be authorized to remove all or part of them from one Customs warehouse to another or to place them under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

15. Standard

National legislation shall specify the procedure to be followed where goods are not removed from the Customs warehouse within the period laid down.

Closure of a Customs warehouse

16. Standard

In the event of the closure of a Customs warehouse, the persons concerned shall be given sufficient time to remove their goods to another Customs warehouse or to place them under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

CHAPTER 2

Free zones

Definition

For the purpose of this Chapter:

E1./ F1.

“free zone ” means a part of the territory of a Contracting Party where any goods introduced are generally regarded, insofar as import duties and taxes are concerned, as being outside the Customs territory.

Principle

1. Standard

The Customs regulations appli cable to free zones shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Establishment and control

2. Standard

National legisl ation shall specify the requirements relating to the establishment of free zones, the kinds of goods admissible to such zones and the nature of the operations to which goods may be subjected in them.

3. Standard

The Customs shall lay down the arra ngements for Customs control including appropriate requirements as regards the suitability, construction and layout of free zones.

4. Standard

The Customs shall have the right to carry out checks at any time on the goods stored in a free zone.

Admission of goods

5. Standard

Admission to a free zone shall be authorized not only for goods imported directly from abroad but also for goods brought from the Customs territory of the Contracting Party concerned.

6. Recommended Practice

Admission to a free zone of goods brought from abroad should not be refused solely on the grounds that the goods are liable to prohibitions or restrictions other than those imposed on grounds of:

public morality or order, public security, public hygie ne or health, or for veterinary or phytosanitary considerations; or
the protection of patents, trade marks and copyrights,

irrespective of country of origin, country from which arrived or country of destination.

Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be admitted only to free zones specially designed to receive them.

7. Standard

Goods admissible to a free zone which are entitled to exemption from or repayment of import duties and taxes when exported shall qualify for such exemption or repayment immediately after they have been introduced into the free zone.

8. Standard

Goods admissible to a free zone which are entitled to exemption from or repayment of internal duties and taxes when exported shall qualify for such exemption or repayment after they have been introduced into the free zone.

9. Recommended Practice

No Goods declaration should be required by the Customs in respect of goods introduced into a free zone directly from abroad if the information is already available on the documents accompanying the goods.

Security

10. Recommended Practice

The Customs should not require security for the admission of goods to a free zone.

Authorized operations

11. Standard

Goods admitted to a free zone shall be allowed to undergo operations necessary for their preservation and usual forms of handling to improve their packaging or marketable quality or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking.

12. Standard

Where the competent authorities allow processing or manufacturing operations in a free zone, they shall specify the processing or manufacturing operations to which goods may be subjected in general terms and/or in detail in a regulation applicable throughout the free zone or in the authority granted to the enterprise carrying out these operations.

Goods consumed within the free zone

13. Standard

National legislation shall enumerate the cases in which goods to be consumed inside the free zone may be admitted free of duties and taxes and shall lay down the requirements which must be met.

Duration of stay

14. Standard

Only in exceptional circumstances shall a time limit be imposed on the duration of the stay of goods in a free zone.

Transfer of ownership

15. Standard

The transfer of ownership of goods admitted to a free zone shall be allowed.

Removal of goods

16. Standard

Goods admitted to or produced in a free zone shall be permitted to be removed in part or in full to another free zone or placed under a Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

17. Standard

The only declaration required for goods on removal from a free zone shall be the Goods declaration normally required for the Customs procedure to which those goods are assigned.

18. Recommended Practice

Where a document must be produced to the Custo ms in respect of goods which on removal from a free zone are sent directly abroad, the Customs should not require more information than already available on the documents accompanying the goods.

Assessment of duties and taxes

19. Standard

Nation al legislation shall specify the point in time to be taken into consideration for the purpose of determining the value and quantity of goods which may be taken into home use on removal from a free zone and the rates of the import duties and taxes or internal duties and taxes, as the case may be, applicable to them.

20. Standard

National legislation shall specify the rules applicable for determining the amount of the import duties and taxes or internal duties and taxes, as the case may be, chargeable on goods taken into home use after processing or manufacturing in a free zone.

Closure of a free zone

21. Standard

In the event of the closure of a free zone, the persons concerned shall be given sufficient time to remove their goods to another free zone or to place them under a Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

Guidelines to Annex D

Guidelines to the Annex D

Chapter 1

CUSTOMS WAREHOUSES

1. Introduction

In international trade it is sometimes not known at the time of importation how the imported goods will finally be disposed of. This means that the importers are obliged, or may choose, to store the imported goods for some time before they are finally disposed of. When the goods are intended for clearance for home use, the Customs warehouse procedure enables the importer to delay the payment of the import duties and taxes until the goods are actually taken into home use. The importer may also choose to place the goods in a warehouse until they can meet the conditions relating to restrictions or prohibitions.

Where it is intended to re-export the goods, it is also in the importer’s interest to place them under a Customs procedure which obviates the need to pay the import duties and taxes.

In order to make these facilities available to importers, the national legislation of most administrations provides for the Customs warehousing procedure that allows for the storage of goods without the payment of import duties and taxes while the goods remain in the warehouse.

2. Purpose and Scope

The main purpose of the Customs warehousing procedure is to facilitate the trade to a great extent. Goods deposited in a Customs warehouse do not become liable to the payment of import duties and taxes until the goods are cleared for home use from the warehouse. If the goods are re-exported, then there is a waiver of import duties and taxes. It also affords the person warehousing the goods sufficient time to negotiate their sale, either on the home market or abroad, or to arrange for the goods to be processed or manufactured, transferred to another Customs procedure or otherwise disposed of in an authorized manner.

The scope of this procedure may not cover only imported goods. For example, some administrations allow goods that are liable to, or have borne, internal duties and taxes (whether of national origin or previously imported against payment of import duties and taxes) to be stored in a Customs warehouse in order that they may qualify for exemption from or repayment of such internal duties and taxes. Thus the definition of the term "Customs warehousing procedure" covers the warehousing of imported goods since this is the use generally authorized, but the storage of goods of national origin is recommended as an additional case of the use of Customs warehouses. (See also Recommended Practice 9.)

Similarly, the deposit in a Customs warehouse of goods that have previously been dealt with under another Customs procedure, such as temporary admission, with a view to subsequent exportation or other authorized disposal is also possible.

The provisions of this Chapter do not apply to :

- goods in temporary storage (See Specific Annex A, Chapter 2),

- goods in free zones (See Specific Annex D, Chapter 2)

- the processing or manufacturing of goods conditionally relieved from import duties and taxes (inward processing), even if such processing takes place in premises approved by Customs (See Specific Annex F, Chapter1).

It should be noted, however, that administrations which do allow processing or manufacturing to take place in Customs warehouses are considered to be granting a greater facility to traders as provided for in Article 2 of the Convention.

3. Definition

E1/F1

4. Essential Features of the Customs warehousing procedure

4.1. Principle

Standard 1

The Customs warehousing procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Customs warehouses. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 4 on Duties and taxes, Chapter 5 on Security and Chapter 6 on Customs control should be read in conjunction with this Chapter on Customs warehouses.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

4.2. Types of Customs warehouses

Standard 2

National legislation shall provide for Customs warehouses open to any person having the right to dispose of the goods (public Customs warehouses).

Standard 3

National legislation shall provide for Customs warehouses to be used solely by specified persons (private Customs warehouses) when this is necessary to meet the special requirements of the trade.

There are two types of Customs warehouses, namely public and private Customs warehouses.

Standard 2 provides that public Customs warehouses are open to any person who has the right to dispose of the goods stored or to be stored in such warehouses. The person can be the importer, any other person to whom the goods have been sold while in the warehouse, or other persons (natural or legal) having title to the goods or the legal right to dispose of them.

In accordance with national legislation, public Customs warehouses may be managed either by Customs or by other authorities or by natural or legal persons. Standard 3 further requires national legislation to provide for the establishment of private Customs warehouses. These will meet the special requirements of trade or industry and allow specified persons to store goods in these warehouses for their own specific uses. Generally, private Customs warehouses are located within or near the premises of the manufacturing units.

The categories of goods that may be stored in private Customs warehouses is usually not restricted. However, Standard 6 also states that Customs shall specify the categories of goods that may be admitted to these warehouses.

Some administrations provide additional facilitation to the trade through a simplified warehousing procedure for special categories of goods, e.g. aircraft spare parts where a classification of the parts under the Harmonized System is not required. An example of this simplified procedure is in Appendix 1.

4.3. Establishment, Management and Control

Standard 4

The Customs shall lay down the requirements for the establishment, suitability and management of the Customs warehouses and the arrangements for Customs control.

The arrangements for storage of goods in Customs warehouses and for stock-keeping and accounting shall be subject to the approval of the Customs.

Although the establishment of Customs warehouses is normally subject to the approval of Customs, it is not practicable to enumerate all the requirements concerning the management of Customs warehouses. The requirements may vary according to whether the warehouses are managed by Customs, by another authority or by private persons, as well as whether the warehouses are public or private. Therefore the requirements may differ according to the circumstances. They will also depend on the risk for Customs of fraudulent removal or substitution of goods and on the amount of the import duties and taxes chargeable on the goods allowed to be stored. In certain circumstances, enclosed sites may also be used for the storage of goods under the Customs warehousing procedure. However, for Customs and the public alike it would be superfluous and detrimental to smooth operations to impose requirements or measures of no practical value or not commensurate with the actual risks involved. In general, Customs should consider the following requirements with a view to ensuring Customs control :

- require that Customs warehouses be double-locked (secured by the lock of the person concerned and by the Customs lock)

- keep the premises under permanent or intermittent supervision,

- keep, or require to be kept, accounts of goods warehoused (by using either special registers or the relevant declarations), and

- take stock of the goods in the warehouse from time to time.

The Customs supervision and control may be exercised by physical presence, unannounced spot checks and periodic audits. The arrangement for storage of goods and for stock keeping and accounting is subject to the approval of Customs. The requirements indicated above are not exhaustive and are illustrative to indicate some of the major requirements. (See also the Guidelines to Chapter 6 of the General Annex on Customs control and risk management.)

Many administrations waive the requirement for security where the physical characteristics of the warehouse or the Customs control measures applied make it practically impossible to remove or substitute goods without the authorization of Customs. (See also the Guidelines to Standard 5.4 of the General Annex.)

4.4. Admission of Goods and duration of stay

Recommended Practice 5

Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to prohibitions or restrictions other than those imposed on grounds of:

- public morality or order, public security, public hygiene or health, or for veterinary or phytosanitary considerations; or

- the protection of patents, trade marks and copyrights,

irrespective of quantity, country or origin, country from which arrived or country of destination.

Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be accepted only by Customs warehouses specially designed to receive them.

It should be noted that the prohibitions and restrictions mentioned in the two indents of Recommended Practice 5 are applied when the goods enter the Customs territory and therefore prevent goods liable to these prohibitions and restrictions from being stored in a Customs warehouse.

There are certain other prohibitions and restrictions, however, usually based on economic reasons, which are only applied when goods are cleared for home use. Goods to which such prohibitions and restrictions apply should be allowed to be stored in Customs warehouses. By applying this provision, these goods could be warehoused for the period of time that is required for arrangements to be made to re-export them. In the case of restricted goods, warehousing provides sufficient time for the importer to arrange for licences or permits and documents that may be required for clearance of the goods.

Standard 6

The Customs shall specify the kinds of goods which may be admitted to private Customs warehouses.

Standard 11

This set of provisions relates to the types of goods that may be stored in a Customs warehouse and the duration of their stay.

It should be noted that certain prohibitions and restrictions, other than the exceptions listed in Recommended Practice 5, which may be applicable to goods cleared for home use should not apply to the storage of goods in public Customs warehouses. Goods that are prohibited could be warehoused for the period of time that is required for arrangements to be made to re-export them. In the case of restricted items, warehousing the goods provides sufficient time for the importer to arrange for licences or other permits and documents that may be required for the goods to be cleared.

Private Customs warehouses are in a different category, as indicated in Standard 3 of this Chapter, and only those goods for which specific approval has been given can be stored in them. Thus Customs are free to specify the classes of goods that can be stored in private warehouses. Customs permit the storage of goods taking into account the special requirements of the trade and therefore do not normally impose restrictions on these goods. Since the private warehouse is a facility granted for the explicit needs of the trade, any restrictions regarding the goods would relate to the area of activities of the warehouse operator. Thus a person manufacturing electronic products or components would be allowed to store only goods associated with this area of activity.

As in Recommended Practice 5 for public warehouses, goods which constitute a hazard, which are likely to affect other goods or which require special installations should be permitted for storage in private Customs warehouses only if these warehouses are specially designed to receive them.

While fixing the maximum duration of storage in a Customs warehouse as required in Standard 11, Customs should take into account issues such as the nature of the substances to be stored, perishable goods, shelf life and other similar factors.

Recommended Practice 7

Admission to Customs warehouses should be allowed for goods which are entitled to repayment of import duties and taxes when exported, so that they may qualify for such repayment immediately, on condition that they are to be subsequently exported.

Recommended Practice 7 provides for a situation whereby the Customs warehousing procedure, in certain instances, can offer the same advantages as the outright exportation of goods. Usually any repayment of duties and taxes at exportation are available only when the goods are actually exported. However, this Recommended Practice provides that goods meant for export could be warehoused prior to the actual export and become immediately eligible for repayment of import duties and taxes when they are admitted into the warehouse. For example this practice could be applied to goods on which drawback is claimed, which are re-exported as not in accordance with contract, or for any other reason recognized under national legislation.

The condition that the goods be subsequently exported is important in the application of this Recommended Practice. Customs may, in some instances, require a security to be furnished to ensure that the obligation to export is fulfilled. This could occur for goods to be placed in a private warehouse before export or for certain sensitive commodities where Customs consider that additional control measures are required.

Recommended Practice 8

Admission to Customs warehouses, with a view to subsequent exportation or other authorized disposal, should be allowed for goods under the temporary admission procedure, the obligations under that procedure thereby being suspended or discharged.

Normally for goods admitted under temporary admission subject to re-exportation in the same state or goods temporarily admitted under duty suspension procedures such as the inward processing procedure, the procedure is terminated when the goods or the compensating products are physically exported. However the relevant Chapters in this Convention that deal with these procedures also allow termination when the goods are placed under another Customs procedure. Recommended Practice 8 is a corollary to those other provisions and recommends a situation more facilitative than that provided for in the definition of the Customs warehousing procedure, which only allows for goods to be placed in such warehouses without payment of import duties and taxes. As specified in this Recommended Practice, goods under temporary admission that are placed in a Customs warehouse may subsequently on removal be placed under another Customs procedure, for example, Customs transit or clearance for home use.

Recommended Practice 9

In normal circumstances the Customs warehousing procedure is intended for the storage of goods under Customs control without payment of import duties and taxes. Recommended Practice 9 provides a greater facility to the trade in two ways. First, it provides for warehousing of goods intended for export that have borne internal duties and taxes, which is greater in scope than the definition of this procedure. In addition, the trader is eligible to obtain a refund of the internal duties and taxes at the point in time when the goods are placed in the warehouse and prior to the actual exportation.

4.5. Authorized Operations

Standard 10

Any person entitled to dispose of the warehoused goods shall be allowed, for reasons deemed valid by the Customs:

(a) to inspect them;

(b) to take samples, against payment of import duties and taxes wherever applicable;

(c) to carry out operations necessary for their preservation; and

(d) to carry out such other normal handling operations as are necessary to improve their packaging or marketable quality or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking.

The practice of allowing handling and other operations in Customs warehouses is a useful facilitation to traders and owners of the goods. In general the operations that are authorized by Customs are those which do not affect the essential character of the goods. This can include operations necessary for preservation such as fumigating, drying and ventilating. These operations can also include retail packing from bulk, sorting, grading and repacking to make the goods presentable or marketable. The main purpose of allowing these operations is to preserve the goods while in storage so that they can be finally disposed of. Since the operations are not intended to change the essential character, this provision does not cover blending, processing or manufacture. The Guidelines to Standard 3.9 of the General Annex should also be consulted.

4.6. Transfer of Ownership

Standard 12

The transfer of ownership of warehoused goods shall be allowed.

For commercial reasons, goods may change hands while they are in warehouse. There is no reason for Customs to object to this. However the general conditions of warehousing must be complied with after any transfer of ownership of the warehoused goods, and where the transfer is permitted it should be effected in accordance with national legislation. (See also the Guidelines to Chapter 4 of the General Annex.)

4.7. Deterioration of Goods

Standard 13

This provision is parallel to Standard 3.44 in the General Annex and its Guidelines that cover goods deteriorated or spoiled by accident or force majeure. Standard 13 does not, however, relieve the importer from any requirements to be met, such as obtaining import licence or permits before the goods can be taken into home use.

4.8. Removal of Goods

Standard 14

In some administrations the transfer from one Customs warehouse to another is dealt with under a simplified procedure, such as using the accounting from one warehouse to another, without the need for separate Goods declarations. The facility of removing goods piecemeal to be placed under another Customs procedure is also allowed. This enables the person concerned to remove only the quantity of goods that are required for his immediate use.

This provision is not to be interpreted as conferring an absolute right on the person concerned to remove the goods from one Customs warehouse to any other warehouse of his choice, and Customs remain free to lay down the conditions governing such removals.

4.9. Goods not removed from a warehouse

Standard 15

National legislation shall specify the procedure to be followed where goods are not removed from the Customs warehouse within the period laid down.

When the person concerned does not remove goods from a Customs warehouse within the storage period allowed, Customs must take action to ensure such removal. For example Customs might collect the duties and taxes due from the security rather than taking physical custody of the goods. Customs may also sell the goods and hand over the proceeds of sale, after deduction of import duties and taxes and other charges to the person entitled to receive them. (See also Transitional Standard 3.45 of the General Annex.)

The object of this Standard is to protect the interests of both the persons having warehoused goods and Customs who are responsible for ensuring collection of import duties and taxes.

4.10. Closure of a Customs warehouse

Standard 16

In the event of the closure of Customs warehouse, the persons concerned shall be given sufficient time to remove their goods to another Customs warehouse or to place them under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

Allowing sufficient time to remove goods from a Customs warehouse that is to be closed is important, so that the person concerned can arrange for transport, to obtain any necessary permits or licenses for a subsequent procedure or to pay the duties and taxes.

-----------------------------

Appendix 1

METHODS OF APPLICATION

1. UNITED KINGDOM

AIRCRAFT SPARE PARTS DEPOTS (ASPDs)

The ASPD procedure was introduced to fulfil the UK’s obligations for aircraft spare parts under the Convention on International Civil Aviation (Chicago Convention) in particular Recommendation 4.51 of Annex 9. This states :

“Contracting States shall establish procedures for airlines and/or operators of other Contracting States allowing the prompt entry into or departure from their territories of aircraft equipment, spare parts, ground, training and security equipment, whether or not they are free of Customs duties and other taxes and charges, under the provisions of this Annex or any other arrangements. Contracting States shall grant prompt clearance for the importation and exportation of such goods upon the completion of simplified documentary procedures by the airlines or operators concerned. These arrangements shall not extend to goods intended for general sale, food, beverages and tobacco.”

Due to weight restrictions aeroplanes are unable to carry spares on board, a situation quite different, for example, from ships which are able to carry many minor spares.

In order therefore to overcome these difficulties, the ASPD arrangements allow non-UK airlines and UK operators of aircraft repair and maintenance organisations to establish a store free of duty and tax of aircraft parts in the UK on a contingency basis; the items are used only if and when the corresponding part on an aircraft needs to be replaced and there is no time limit on how long parts may remain in an ASPD.

The essence of these depots is simplicity. Applications for ASPD status may be considered for

non-UK airlines for maintenance of their own aircraftBritish and other EC airlines for maintenance of aircraft owned or operated by other non-UK airlines , for which they act as agents or
Aviation engineering and maintenance companies for repairs and maintenance of non - EC aircraft.

If approved the operator in question is assigned a unique authorisation number for control purposes and the location in question is designated as an ASPD.

When spare parts are introduced into the UK a simplified declaration is required quoting the authorisation number and a list of the spare parts and their values. No classification under the Harmonised System is required; a fact which is of considerable importance in reducing operators’ costs. Parts may also be transferred simply between depots or sent for repair, accompanied by commercial documentation. The operator is required to maintain clear records of movements in and out of the ASPD at all times.

Control of the ASPDs by the Customs is on a risk assessment basis consisting of targeted control visits by the officer responsible for the ASPD in question.

ASPDs have been operating successfully in the UK for some time and put into practice two key Kyoto principles; simplified procedures and minimum, targeted Customs control. Whilst there is currently no specific EC legislation covering ASPDs, the Commission is looking globally at the question of Customs treatment of aircraft spares and legislation may be introduced at a future date. For the UK we would expect this legislation to offer the same simplicity that we believe is currently afforded by our scheme.

Chapter 2

FREE ZONES

1. Introduction

In order to encourage the development of external trade and of international commerce in general, certain Customs administrations grant relief from import duties and taxes for goods introduced into locations where they are generally regarded, insofar as import duties and taxes are concerned, as being outside the Customs territory. These locations are referred to as “free zones” in Chapter 2. Some administrations use various other names such as “free port”, “free warehouse” or “foreign trade zone”. Goods introduced in a free zone are generally not subject to the usual Customs control.

Goods that enter a free zone from the Customs territory normally qualify for the exemption from or repayment of import duties and taxes or internal duties and taxes which are granted at exportation.

Imported goods that enter the Customs territory for home use from a free zone and which have not been processed there are liable to import duties and taxes as if they had been imported directly from abroad. Special assessment rules, laid down in national legislation, are applicable to the imported goods which have been processed in the free zone. They also apply when the goods utilized are of national origin or had been imported against payment of import duties and taxes and granted exemption from or repayment of duties and taxes when they were introduced into the free zone.

In some territories Customs facilities comparable to those features of free zones are granted throughout the territory in the context of other Customs procedures such as Customs warehousing, drawback, inward processing or Customs transit. As an example, in some administrations there are no free zones, but the benefits of the free zone scheme are made available through alternative programs.

2. Purpose and Scope

The establishment of free zones is part of an economic policy that encourages the flow of investment into a Customs territory for manufacturing and other commercial activities. The main purpose of free zones is to promote external trade and international commerce by granting relief from duties and taxes on goods imported to the territory. Additional benefits are the creation of employment in the free zones and the development of associated trade activities.

Goods manufactured in a free zone are often exported. Since exports are generally exempt from duties and taxes, this facilitates and encourages the development of external trade. Domestic goods meant for export can also be admitted to free zones and become entitled to exemption from or repayment of internal duties and taxes. In some administrations when processed goods are removed from free zones for home use, they may sometimes benefit from lower rates of import duties and taxes.

Customs control exercised over goods placed in free zones is more flexible than that applicable to goods stored, for example, in Customs warehouses or admitted under the inward processing procedure. In free zones, Customs normally apply general surveillance measures only. (See the Guidelines to Standard 4.)

It should be noted that in the definition of “free zone” the word “generally” may not be applicable to some goods such as machinery remaining permanently in the free zone.

In many Customs territories, a distinction is made between “commercial” and “industrial” free zones. In commercial free zones, no processing or manufacturing operations of the goods are allowed. The operations that are allowed are restricted to only those required to preserve the goods or to improve their packaging/marketable quality and which do not change the character of the goods. In industrial free zones, processing or manufacturing operations are allowed. These aspects are covered in the Guidelines to Standards 11 and 12.

3. Definition

E1/F1

4. Essential features of the Free Zone Procedure

4.1. Principle

Standard 1

The Customs regulations applicable to free zones shall be governed by the provisions of this chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for the Free zones. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 4 on Duties and taxes and Chapter 6 on Customs control should be read in conjunction with this Chapter on Free zones.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

4.2. Establishment and Control

Standard 2

National legislation shall specify the requirements relating to the establishment of free zones, the kinds of goods admissible to such zones and the nature of the operations to which goods may be subjected in them.

The establishment of a free zone depends upon the inclusion of a formal provision in national legislation. Hence it is not sufficient that part of the national territory be located outside the Customs territory for it to be automatically regarded as forming a free zone.

Free zones are established on seaports, riverports, airports and places with similar geographic and economic advantages. Free zones may be quite extensive (for example, all or part of a port) or relatively small (a simple site adjacent to an airport).

Free zones may be regulated by Customs, by other authorities or by both. The day-to-day management of the free zone may be done by an authority itself or by a private entity as specified in the relevant regulation.

Inasmuch as national legislation specifies the kinds of the goods admissible and the nature of operations authorized, Customs should be in a position to issue general authorizations rather than apply a system of prior authorization for each consignment of goods introduced into the free zone. Independently of the conditions which may be laid down by Customs to permit control of the goods held in a free zone, the authority in charge of free zones may impose special conditions as regards, in particular, safety and security measures to be observed in connection with the storage of goods, fees payable for the use of the installations, rental charges for the premises, and the approval and control of the vehicles and personnel allowed access to the free zone.

In specifying the kinds of goods admissible into a free zone, restriction should not be imposed on the quantities that could be brought in, as this would be a hindrance to international trade.

Standard 3

The Customs shall lay down the arrangements for Customs control including appropriate requirements as regards the suitability, construction and layout of free zones.

Requirements as regards the suitability, construction and layout of free zones are laid down by Customs with a view to ensuring adequate Customs control. For this purpose Customs may, in particular:

- require that the premises used for free zones be enclosed and constructed in a manner that ensures proper safety and accounting of goods;

- impose restrictions on means of access and establish hours of business;

- keep the premises and means of access to the free zone under permanent or intermittent supervision; and

- require persons introducing goods into free zones to keep proper accounts of the goods (by using either special registers or the relevant declarations or by use of computers) so that the circulation of the goods can be controlled.

In some administrations Customs share some of these responsibilities with other government agencies.

Standard 4

The Customs shall have the right to carry out checks at any time of the goods stored in a free zone.

Customs control in a free zone is more flexible than that exercised under the Customs warehousing procedure and is principally concerned with the relevant documentation. Nevertheless Customs have the right to carry out spot checks of the goods at any time to ensure that the goods are being accounted for satisfactorily, are being subjected to only authorized operations and that no unauthorized goods have been introduced or removed.

The extent of these checks should be based on a risk management system as provided for in Chapter 6 of the General Annex and its Guidelines.

4.3. Admission of Goods

Standard 5

Admission to a free zone shall be authorized not only for goods imported directly from abroad but also for goods brought from the Customs territory of the Contracting Party concerned.

Goods brought from the Customs territory of the Contracting Party concerned may be goods in free circulation or goods placed under a procedure affording conditional relief from import duties and taxes or a processing procedure.

In order to prevent free zones from becoming congested with goods placed there principally for the purpose of qualifying for exemption from or repayment of internal duties and taxes, Customs may make such exemption or repayment subject to the exportation of the goods from the national territory. In this connection please refer to the Guidelines for Standard 8.

Recommended Practice 6

Admission to a free zone of goods brought from abroad should not be refused solely on the grounds that the goods are liable to prohibitions or restrictions other than those imposed on grounds of :

- public morality or order, public security, public hygiene or health, or for veterinary or phytosanitary considerations;

- or the protection of patents, trade marks and copyrights, irrespective of country of origin, country from which arrived or country of destination.

Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be admitted only to free zones specially designed to receive them.

It should be noted that the prohibitions and restrictions mentioned in the two indents of Recommended Practice 6 are applied when the goods enter the Customs territory and therefore prevent goods liable to these prohibitions and restrictions from being admitted to a free zone.

There are certain other prohibitions and restrictions, however, usually based on economic reasons which are only applied when goods are cleared for home use. Goods to which such prohibitions and restrictions apply should be admitted to a free zone.

Export restrictions and prohibitions may be fully applicable to goods brought from the Customs territory.

Standard 7

In Standard 7 goods admitted to a free zone which are exempted from or eligible for repayment of import duties and taxes when exported will qualify for this exemption or repayment as soon as they are introduced into the free zone. This facility is for reasons of equity recognized by national legislation, as goods meant for export are generally zero-rated. The re-introduction of these goods into the Customs territory entails payment of the appropriate import duties and taxes.

These are generally goods on which drawback is claimed, goods under the inward processing procedure and goods re-exported as not in accordance with contract.

Standard 8

This provision is a parallel to Standard 7 and covers goods in free circulation, whether imported or domestic. This Standard does no more than establish the time at which entitlement to exemption from or repayment of internal duties and taxes becomes effective. It does not lay down the procedures for granting such exemption or repayment, as these are left to the discretion of the Contracting Parties. In special cases, exemption or repayment may be made subject to the exportation of the goods from the national territory. This condition may be made to prevent the free zones from becoming congested with goods, principally for the purpose of qualifying for exemption from or repayment of internal duties and taxes. Exceptionally, evidence of arrival of the goods in the country of destination may also be required. The reintroduction of these goods into the Customs territory entails payment of the appropriate internal duties or taxes.

Recommended Practice 9

There should be no requirement for a Goods declaration for goods introduced into a free zone directly from abroad if the necessary information is already available in the documents accompanying the goods. The document may be commercial invoice, waybill, bill of lading, despatch note or a simplified document on a special form identifying the goods entered into the free zone.

4.4. Security

Recommended Practice 10

The Customs should not require security for the admission of goods to a free zone.

See the Guidelines to Standard 5.4 in the General Annex regarding the waiver of security. In some cases, where an individual operator’s premise is designated as a free zone, the requirement of security may in fact offer greater facilitation by allowing physical controls to be waived.

Security that might be required on goods in transit to a free zone is not covered by this provision.

4.5. Authorized Operations

Standard 11

Standard 12

Standard 11 enumerates those operations which do not affect the character of the goods. Thus these can be taken to apply to any type of a free zone, whether commercial or industrial. (See also the Guidelines to Standard 10 of Chapter 1 on Customs warehouses.)

Standard 12 deals with those free zones (known as “industrial” free zones in many Customs territories) where processing or manufacturing operations of the goods are also allowed.

The right to carry out processing or manufacturing operations may be made subject to the condition that the proposed operations are regarded by the competent authorities as advantageous to the national economy.

Activities connected with the shipbuilding are generally authorized in industrial free zones established in seaports.

4.6. Goods consumed within the free zone

Standard 13

National legislation shall enumerate the cases in which goods to be consumed inside the free zone may be admitted free of duties and taxes and shall lay down the requirements which must be met.

Admission of goods to the free zone may be allowed not only free from import duties and taxes but also from internal duties and taxes. Equipment to be used solely inside the free zone for transport, storage and processing of goods may also be admitted free. Standard 13 covers not only goods such as catalysts and accelerators or retarders of chemical reactions which are used in the industrial processing, but also goods consumed by people working inside the free zones (office stores, fuel, food and beverages). Different rules for free admission can be established in national legislation depending upon the type of use to which the goods are put. The possibility of granting free admission to material necessary for the construction of buildings or plants in free zones is left to the discretion of the Contracting Parties.

4.7. Duration of stay

Standard 14

Only in exceptional circumstances shall a time limit be imposed on the duration of the stay of goods in a free zone.

“Exceptional circumstances” may relate to time limits specified in the authorization granted for the processing or manufacturing operations, taking into account the nature of the goods, their anticipated shelf life or health and safety considerations.

4.8. Transfer of Ownership

Standard 15

The transfer of ownership of goods admitted to a free zone shall be allowed.

As in the Chapter 1 on Customs warehouses, no restriction has been placed on the transfer of ownership of goods in a free zone. (See Standard 12 of Specific Annex D, Chapter 1 and its Guidelines.)

For commercial reasons, goods may change hands while they are in a free zone. There is no reason for Customs to object to this and the Standard provides for it to be allowed. However the general conditions must be complied with after any transfer of ownership of goods admitted to a free zone and where transfer is permitted it should be effected in accordance with national legislation. (See also the Guidelines to Chapter 4 of the General Annex.)

Retail sales within free zones may be prohibited as such sales can be treated as a clearance for home use.

Goods admitted to free zones may be transferred for provisioning ships and aircraft.

4.9. Removal of Goods

Standard 16

In some administrations the transfer of goods from one free zone to another is dealt with under a simplified procedure, with accounting from one free zone to another, without the need for separate Goods declarations. The facility of removing goods piecemeal for other Customs procedures is also allowed. This enables the person concerned to remove only the quantity of goods that are required for his immediate use.

Standard 17

The only declaration required for goods on removal from a free zone shall be the Goods declaration normally required for the Customs procedure to which those goods are assigned.

Documents which national legislation requires to be produced in support of the Goods declaration are also covered by the term “Goods declaration”. (See also the Guidelines to Chapter 3 of the General Annex.)

Recommended Practice 18

Where a document must be produced to the Customs in respect of goodswhich on removal from a free zone are sent directly abroad, the Customs should not require more information than already available on the documents accompanying the goods.

A simplified document on a special form identifying the goods that were introduced into the free zone may suffice.

4.10. Assessment of Goods

Standard 19

National legislation shall specify the point in time to be taken into consideration for the purpose of determining the value and quantity of goods which may be taken into home use on removal from a free zone and the rates of the import duties and taxes or internal duties and taxes, as the case may be, applicable to them.

Between the time when the goods entered the free zone and the time when they are taken into home use changes may occur in the Customs tariff or in the value of the goods, or their quantity may decrease through evaporation or other losses. It is therefore necessary to specify the point in time to be taken into consideration for the purpose of determining the value and quantity of the goods, and the rates of the import duties and taxes applicable to them, on their removal from the free zone.

There are two main points in time to be taken into consideration, the time of entry into the free zone and the time of delivery from the free zone. However, there are a number of factors that should be taken into account in making the choice such as the equity to traders, revenue considerations and the effect of changes while in the free zone.

As a greater facility some administrations may offer the possibility that, where there have been changes in the rates since the goods entered the free zone, the person concerned may choose the rate applicable.

As regards the various alternatives for determining the point in time to be taken into consideration for the purpose of determining the rate applicable, reference should be made to the Guidelines to Standard 4.5 of the General Annex on Duties and taxes and its Guidelines.

Standard 20

It should be noted that if products produced in a free zone were subject to import duties and taxes under the same rules as apply to goods imported directly from abroad, the benefits that international trade would get from free zones would be substantially reduced.

There can be several possible methods of determining the amount of import duties and taxes chargeable. The amount of the import duties and taxes chargeable on goods taken into home use after processing in a free zone may be limited to the amount of the import duties and taxes which are applicable to the imported goods used (in the state in which they were originally introduced into the free zone). Where goods of national origin or goods imported against payment of import duties and taxes were used, it may be limited to the amount of any exemption from or repayment of internal duties and taxes or import duties and taxes granted when those goods were introduced into the free zone.

As an example, if the goods produced in a free zone are cleared for home use, then the internal duty applicable for clearance may be limited to only 50% of the import duty on such goods as if they are imported.

A special assessment procedure may be laid down where equipment that has been used to process goods in a free zone was admitted free of import duties and taxes.

4.11. Closure of a Free Zone

Standard 21

Allowing sufficient time to remove goods from a free zone in these circumstances is important so that the person concerned can arrange for transport, for any necessary permits or licenses for a subsequent procedure, or can pay the duties and taxes. This is similar to Standard 16 in Chapter 1 of this Specific Annex concerning Customs warehouses.

Annex E - Transit

Annex E

Transit

CHAPTER 1

Customs transit

Definitions

For the purposes of this Chapter:

E1./ F4.

“authorized consignee ” means a person empowered by the Customs to receive goods directly at his premises without having to present them at the office of destination;

E2./ F5.

“authorized consignor ” means a person empowered by the Customs to send goods directly from his premises without having to present them at the office of departure;

E3./ F1.

“control office ” means the Customs office responsible for one or more “authorized consignors” or “authorized consignees” and, in this respect, performing a special control function for all Customs transit operations;

E4./ F7.

“Customs transit ” means the Customs procedure under which goods are transported under Customs control from one Customs office to another;

E5./ F6.

“Customs transit operation ” means the transport of goods from an office of departure to an office of destination under Customs transit;

E6./ F2.

office of departure ” means any Customs office at which a Customs transit operation commences;

E7./ F3.

office of destination ” means any Customs office at which a Customs transit operation is terminated;

E8./ F8.

transport-unit ” means :

containers having an internal volume of one-cubic metre or more, including demountable bodies; road vehicles, including trailers and semi-trailers;
railway coaches or wagons;
lighters, barges and other vessels; and
aircraft.

Principle

1. Standard

Customs transit shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

The Customs shall allow goods to be transported under Customs transit in their territory :

from an office of entry to an office of exit;
from an office of entry to an inland Customs office;
from an inland Customs office to an office of exit; and
from one inland Customs office to another inland Customs office.

3. Standard

Goods being carried under Customs transit shall not be subject to the payment of duties and taxes, provided the conditions laid down by the Customs are complied with and that any security required has been furnished.

4. Standard

National legislation shall specify the persons who shall be responsible to the Customs for compliance with the obligations incurred under Customs transit, in particular for ensuring that the goods are produced intact at the office of destination in accordance with the conditions imposed by the Customs.

5. Recommended Practice

The Customs should approve persons as au thorized consignors and authorized consignees when they are satisfied that the prescribed conditions laid down by the Customs are met.

Formalities at the office of departure

(a) Goods declaration for Customs transit

6. Standard

Any commercial or transport document setting out clearly the necessary particulars shall be accepted as the descriptive part of the Goods declaration for Customs transit and this acceptance shall be noted on the document.

7. Recommended Practice

The Customs should accept as the Goods declaration for Customs transit any commercial or transport document for the consignment concerned which meets all the Customs requirements. This acceptance should be noted on the document.

(b) Sealing and identification of consignments

8. Standard

The Customs at the office of departure shall take all necessary action to enable the office of destination to identify the consignment and to detect any unauthorized interference.

9. Recommended Practice

Subject to the provisions of other international conventions, the Customs should not generally require that transport -units be approved in advance for the transport of goods under Customs seal.

10. Standard

When a consignment is conveyed in a transport-unit and Customs sealing is required, the Customs seals shall be affixed to the transport-unit itself provided that the transport-unit is so constructed and equipped that :

Customs seals can be simply and effectively affixed to it;
no goods can be removed from or introduced into the sealed part of the transport-unit without leaving visible traces of tampering or without breaking the Customs seal;
it contains no concealed spaces where goods may be hidden; and
all spaces capable of holding goods are readily accessible for Customs inspection.

The Customs shall decide whether transport-units are secure for the purposes of Customs transit.

11. Recommended Practice

Where the accompanying documents make it possible unequivocally to identify the goods, the latter should generally be transported without a Customs seal or fastening. However, a Customs seal or fastening may be required :

where the Customs office of departure considers it necessary in the light of risk management;
where the Customs transit operation will be facilitated as a whole; or
where an international agreement so provides.

12. Standard

If a consignment is, in principle, to be conveyed under Customs seal and the transport-unit cannot be effectively sealed, identification shall be assured and unauthorized interference rendered readily detectable by :

full examination of the goods and recording the res ults thereof on the transit document;
affixing Customs seals or fastenings to individual packages;
a precise description of the goods by reference to samples, plans, sketches, photographs, or similar means, to be attached to the transit document;
stipulation of a strict routing and strict time limits; or
Customs escort.

The decision to waive sealing of the transport-unit shall, however, be the prerogative of the Customs alone.

13. Standard

When the Customs fix a time limit for Custom s transit, it shall be sufficient for the purposes of the transit operation.

14. Recommended Practice

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

15. Standard

Only when they consider such a measure to be indispensable shall the Customs :
(a) require goods to follow a prescribed itinerary; or
(b) require goods to be transported under Customs escort.

Customs seals

16. Standard

Customs sea ls and fastenings used in the application of Customs transit shall fulfil the minimum requirements laid down in the Appendix to this Chapter.

17. Recommended Practice

Customs seals and identification marks affixed by foreign Customs should be accepted for the purposes of the Customs transit operation unless :

they are considered not to be sufficient;
they are not secure; or
the Customs proceed to an examination of the goods.

When foreign Customs seals and fastenings have been accepted in a Customs territory, they should be afforded the same legal protection in that territory as national seals and fastenings.

18. Recommended Practice

Where the Customs offices concerned check the Customs seals and fastenings or examine the goods, they should record the results on the transit document.

Formalities en route

19. Standard

A change in the office of destination shall be accepted without prior notification except where the Customs have specified that prior approval is necessary.

20. Standard

Transfer of the goods from one means of transport to another shall be allowed wi thout Customs authorization, provided that any Customs seals or fastenings are not broken or interfered with.

21. Recommended Practice

The Customs should allow goods to be transported under Customs transit in a transport-unit carrying other goods at the same time, provided that they are satisfied that the goods under Customs transit can be identified and the other Customs requirements will be met.

22. Recommended Practice

The Customs should require the person concerned to report accidents or other unforeseen events directly affecting the Customs transit operation promptly to the nearest Customs office or other competent authorities.

Termination of Customs transit

23. Standard

National legislation shall not, in respect of the termination of a Customs transit operation, require more than that the goods and the relevant Goods declaration be presented at the office of destination within any time limit fixed, without the goods having undergone any change and without having been used, and with Customs seals, fastenings or identification marks intact.

24. Standard

As soon as the goods are under its control, the office of destination shall arrange without delay for the termination of the Customs transit operation after having satisfied itself that all conditions have been met.

25. Recommended Practice

Failure to follow a prescribed itinerary or to comply with a prescribed time limit should not entail the collection of any duties and taxes potentially chargeable, provided the Customs are satisfied that all other requirements have been met.

International agreements relating to Customs transit

26. Recommended Practice

Contracting Parties should give car eful consideration to the possibility of acceding to international instruments relating to Customs transit. When they are not in a position to accede to such international instruments they should, when drawing up bilateral or multilateral agreements with a view to setting up an international Customs transit procedure, take account therein of Standards and Recommended Practices in the present Chapter.

APPENDIX

Minimum requirements to be met by Customs seals and fastenings

A. Customs seals and fastenings shall meet the following minimum requirements :

1. General requirements in respect of seals and fastenings :

The seals and fastenings shall :

be strong and durable;
be capable of being affixed easily and quickly;
be capable of being readily checked and identified;
not permit removal or undoing without breaking or tampering without leaving traces;
not permit use more than once, except seals intended for multiple use (e.g. electronic seals);
be made as difficult as possible to copy or counterfeit.

2. Physical specification of seals :

the shape and size of the seal shall be such that any identifying marks are readily distinguishable;
each eyelet in a seal shall be of a size corresponding to that of the fastening used, and shall be positioned so that the fastening will be held firmly in place when the seal is closed;
the material used shall be sufficiently strong to prevent accide ntal breakage, early deterioration (due to weather conditions, chemical action, etc.) or undetectable tampering;
the material used shall be selected by reference to the sealing system used.

3. Physical specification of fastenings :

the fastening shall be strong and durable and resistant to weather and corrosion;
the length of the fastening used shall not enable a sealed aperture to be opened or partly opened without the seal or fastening being broken or otherwise showing obvious damage;
the material used shall be selected by reference to the sealing system used.

4. Identification marks :

The seal or fastening shall be marked :

to show that it is a Customs seal, by application of the word "Customs" preferably in one of the official languages of the Council (English or French);
to show the country which affixed the seal, preferably by means of the sign used to indicate the country of registration of motor vehicles in international traffic;
to enable the Customs office which affixed the seal, or under whose authority the seal was affixed, to be identified, for example, by means of code letters or numbers.

B. Seals or fastenings affixed by authorized consignors and other authorized persons for Customs transit purposes to ensure security for Customs purposes shall offer physical security comparable to that of seals affixed by the Customs and shall make it possible to identify the person who affixed those seals, by means of numbers to be entered on the transit document.

CHAPTER 2

Transhipment

Definition

For the purposes of this Chapter :

E1./ F1.

“transhipment ” means the Customs procedure under which goods are transferred under Customs control from the importing means of transport to the exporting means of transport within the area of one Customs office which is the office of both importation and exportation.

Principles

1. Standard

Transhipment shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

Goods admitted to transhipment shall not be subject to the payment of duties and taxes, provided the conditions laid down by the Customs are complied with.

3. Recommended Practice

Transhipment should not be refused solely on the grounds of the country of origin of the goods, the country from which they arrived or their country of destination.

Admission to transhipment

(a) Declaration

4. Standard

Only one Goods declaration shall be required for the purposes of transhipment.

5. Standard

Any commercial or transport document setting out clearly the necessary particulars shall be accepted as the descriptive part of the Goods declaration for transhipment and this acceptance shall be noted on the document.

6. Recommended Practice

The Customs should accept as the Goods declaration for transhipment any commercial or transport document for the consignment concerned which meets all the Customs requirements. This acceptance should be noted on the document.

(b) Examination and identification of goods

7. Standard

When the Customs consider it necessary, they shall take action at importation to ensure that the goods to be transhipped will be identifiable at exportation and that unauthorized interference will be readily detectable.

(c) Additional control measures

8. Standard

When the Customs fix a time limit for the exportation of goods declared for transhipment, it shall be sufficient for the purposes of transhipment.

9. Recommended Practice

At the request of the person co ncerned, and for reasons deemed valid by the Customs, the latter should extend any period initially fixed.

10. Recommended Practice

Failure to comply with a prescribed time limit should not entail the collection of any duties and taxes potentially chargeable, provided the Customs is satisfied that all other requirements have been met.

(d) Authorized operations

11. Recommended Practice

At the request of the person concerned, and subject to such conditions as the Customs may specify, the Customs should as far as possible allow goods in transhipment to undergo operations likely to facilitate their exportation.

CHAPTER 3

Carriage of goods coastwise

Definition

For the purpose of this Chapter :

E1./ F1.

“the carriage of goods coastwise procedure ” means the Customs procedure under which :

a. goods in free circulation, and

b. imported goods that have not been declared under the condition that they must be transported in a vessel other than the importing vessel in which they arrived in the Customs territory are loaded on board a vessel at a place in the Customs territory and are transported to another place in the same Customs territory where they are then unloaded.

Principle

1. Standard

The carriage of goods coastwise procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

The Customs shall allow goods to be transported under the carriage of goods coastwise procedure on board a vessel carrying other goods at the same time, provided that they are satisfied that the goods can be identified and other requirements will be met.

3. Recommended Practice

The Customs should require goods in free circulation being transported under the carriage of goods coastwise procedure to be segregated from other goods carried on board the vessel only when they consider it to be necessary for control purposes.

4. Recommended Practice

At the request of the person concerned, and subject to such conditions as the Customs deem necessary, the latter should allow goods to be transported under the carriage of goods coastwise procedure on board a vessel which is to call at a foreign port during its voyage coastwise.

5. Recommended Practice

When a vessel which is to call at a place or places outside the Customs territory has been authorized to convey goods under the carriage of goods coastwise procedure, those goods should be sealed only at the request of the person concerned or when the Customs consider sealing to be necessary to ensure that goods cannot be removed therefrom or other goods added thereto without this being readily apparent.

6. Recommended Practice

When a vessel transporting goods under the carriage of goods coastwise procedure is forced to deviate from its intended route and to call at a place outside the Customs territory, the Customs should regard those goods as remaining under the carriage of goods coastwise procedure provided they are satisfied that the goods are those which were originally placed under the procedure.

Loading and unloading

7. Standard

National legislation shall specify the places which are approved for the loading and unloading of goods under the carriage of goods coastwise procedure and the times during which loading and unloading may be carried out.

8. Recommended Practice

At the request of the person concerned, the Customs should, in the case of a vessel carrying only goods in free circulation under the carriage of goods coastwise procedure, allow such goods to be loaded or unloaded at any place and at any time.

9. Recommended Practice

At the request of the person concerned, the Customs should allow goods under the carriage of goods coastwise procedure to be loaded or unloaded at a place other than that normally approved for that purpose even if the vessel is also carrying imported goods that have not been declared or goods placed under any other Customs procedure. Any expenses chargeable shall be limited to the approximate cost of the services rendered.

10. Recommended Practice

When a vessel transporting goods under the carriage of goods coastwise procedure is diverted during the voyage, the Customs should, at the request of the person concerned, allow such goods to be unloaded under the procedure at a place other than that originally intended. Any expenses chargeable shall be limited to the approximate cost of the services rendered.

11. Standard

When the transport of goods under the carriage of go ods coastwise procedure is interrupted by accident or force majeure, the Customs shall require the master or other person concerned to take reasonable precautions to prevent the goods from entering into unauthorized circulation and to advise the Customs or other competent authorities of the nature of the accident or other circumstance which has interrupted the journey.

12. Standard

When a vessel transporting goods under the carriage of goods coastwise procedure is conveying imported goods that have not been declared or goods placed under any other Customs procedure, the Customs shall allow goods under the carriage of goods coastwise procedure to be loaded or unloaded as soon as possible after the arrival of the vessel at the place of loading or unloading.

Documentation

13. Standard

The Customs shall require the master or other person concerned to present only a single document giving details of the vessel, listing the goods to be carried under the carriage of goods coastwise procedure and stating the port or ports in the Customs territory at which they are to be unloaded. This document, once endorsed by the Customs, shall constitute the authorization for the conveyance of the goods under the carriage of goods coastwise procedure.

14. Recommended Practice

The Customs should grant a general authorization to convey goods under the carriage of goods coastwise procedure for vessels which trade regularly between specified ports.

15. Recommended Practice

When a general authorization has been granted for a vessel, the Customs should require only a list of the goods to be conveyed under the carriage of goods coastwise procedure before the goods are loaded.

16. Recommended Practice

In relation to goods unloaded from a vessel cover ed by a specific authorization, the Customs should require the master or other person concerned to present only a copy of the authorization listing the goods to be unloaded at that port. In the case of a vessel granted a general authorization, only a list of the goods unloaded should be required.

Security

17. Standard

Only when the Customs consider it indispensable shall security be required in respect of goods in free circulation being transported under the carriage of goods coastwise procedure which would be liable to export duties and taxes if exported or which are subject to export prohibitions or restrictions.

Guidelines to Annex E

Guidelines to the legal text

Chapter 1

CUSTOMS TRANSIT

1. Introduction

Moving goods from one point to another is the basis of most commercial activities. When entering a Customs territory, goods are normally liable to import duties and taxes, and subsequent re-exportation does not necessarily give entitlement to a repayment. For this reason the legislation of most administrations contains provisions under which such movements may take place without payment of the import or export duties and taxes, the goods being transported under Customs control to ensure compliance with the requirements laid down. The procedure under which such movements are made is termed Customs transit.

To facilitate the international transport of goods which have to pass through a number of Customs territories, arrangements have been made under international agreements for the States concerned to apply standard procedures for the treatment of goods carried in Customs transit through their territories.

In order for any goods to move under a transit procedure, a request must be made for Customs clearance in transit, subject to the conditions set by the various provisions. The Goods declaration to be used depends on the type of transit planned and the Convention at issue.

When the goods are required to move from one Customs office to another for control purposes within one Customs territory, this is referred to as national transit. When the Customs offices are in more than one Customs territory, this is international transit. The Chapter on Customs transit relates to both national and international Customs transit.

This Chapter, however, does not apply to goods carried by post or in travellers’ baggage. Nor does the Chapter apply to goods which are transferred under Customs control from the importing means of transport to the exporting means of transport within the area of one Customs office. Such a transfer is dealt with by the Chapter 2 on Transhipment of the Specific Annex E.

In the present Guidelines the Goods declaration refers not only to a "paper" document. In accordance with the provisions of the General Annex, Customs administrations should allow the information contained in the Goods declaration and supporting documents to be submitted by electronic data transmission. As all development of electronic transmission in Customs should be promoted, this includes the data necessary for the Customs transit procedure. An explanation on the New Computerized Transit System (NCTS) of the European Communities is attached as Appendix II to this Guideline for reference purpose.

2. Definitions

*E1./F4.*	*"authorized consignee"* means a person empowered by the Customs to receive goods directly at his premises without having to present them at the office of destination;
*E2./F5.*	*"authorized consignor"* means a person empowered by the Customs to send goods directly from his premises without having to present them at the office of departure;
*E3./F1.*	*"control office"* means the Customs office responsible for one or more "authorized consignors" or "authorized consignees" and, in this respect, performing a special control function for all Customs transit operations;
*E4./F7.*	*"Customs transit"* means the Customs procedure under which goods are transported under Customs control from one Customs office to another;
*E5./F6.*	*"Customs transit operation"* means the transport of goods from an office of departure to an office of destination under Customs transit;
*E6./F2* .	*"office of departure"* means any Customs office at which a Customs transit operation commences;
*E7./F3.*	*"office of destination"* means any Customs office at which a Customs transit operation is terminated;
*E8./F8.*	*"transport-unit"* means : (a) containers having an internal volume of one-cubic metre or more, including demountable bodies; (b) road vehicles, including trailers and semi-trailers; (c) railway coaches or wagons; (d) lighters, barges and other vessels; and (e) aircraft.

3. Principle

The basic principle of Customs transit is to permit goods to move from one Customs office to another in the same Customs territory or another Customs territory, without collecting the duties and taxes that may be applicable to imported or exported goods and without applying economic prohibitions or restrictions, and under the condition that all the requirements concerning Customs seals, time limits or security etc. are met.

Customs transit through the Customs territory may be authorized for goods which, under national legislation, are subject to prohibitions or restrictions at importation. In such cases, Customs may impose particular requirements, such as the issue of a license and the production of evidence of arrival of the goods in the Customs territory of destination, and may impose strict controls, such as requiring the goods be transported under Customs escort.

Goods under Customs transit may not be used in the territory being transited. If the goods are brought into use, a further Customs procedure is first necessary. In fact, transit is always followed by another Customs procedure, such as clearance for home use, warehousing, temporary admission or a new transit procedure.

Standard 1

Customs transit shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Customs transit. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 5 on Security, Chapter 6 on Customs control and Chapter 7 on Information technology should be read in conjunction with this Chapter on Transit.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

4. Scope

Standard 2

The Customs shall allow goods to be transported under Customs transit in their territory :

(a) from an office of entry to an office of exit;

(b) from an office of entry to an inland Customs office;

(c) from an inland Customs office to an office of exit; and

(d) from one inland Customs office to another inland Customs office.

4.1. National and international Customs transit

Transit movements referred to in Standard 2 are :

- “National Customs transit” : when the transit procedure applies to one country or Customs territory only and the office of departure and the office of destination are in the same territory. Any security required relates only to the transit movements in the Customs territory concerned.

- “International Customs transit” : when the transit movements are part of a single Customs transit operation during which one or more frontiers are crossed in accordance with a bilateral or multilateral agreement. This agreement generally sets out the form of the Goods declaration for Customs transit and, if required, a security acceptable in each of the administrations which are parties to this agreement.

The following notions and comments are intended to facilitate the application of these Guidelines:

Goods declaration : The document defined as the “Goods declaration” in the General Annex. This is the Customs document required for transit.

Customs office : The term “Customs office” is not strictly limited to the premises and site of a Customs office. For example, when transit begins at the “Customs office”, this can mean the domicile of an authorized consignor.

Domicile : The rooms, halls, piers and similar places at the premises of an authorized consignor or consignee, recognized by Customs as a zone where Customs operations can be carried out.

Office of entry : Customs office at or near the frontier through which the goods under the transit procedure enter the Customs territory.

Office of exit : Customs office at or near the frontier through which the goods under the transit procedure leave the Customs territory.

4.2. Customs transit movements

The following expressions may be used to describe the Customs transit movements referred to above :

(a) through transit (office of entry to office of exit);

(b) transit at importation (office of entry to inland Customs office);

(d) internal transit (one inland Customs office to another).

These expressions are used here purely to facilitate the description of the various possible types of Customs transit movement. They do not form part of internationally accepted Customs terminology.

The term “inland Customs office” is not used in this context in any geographical sense. An inland Customs office may be situated anywhere in the Customs territory concerned (it might be on the coast for example). The term as used in this Standard denotes an office of destination situated after the office of entry in the Customs territory concerned, or an office of departure situated before the office of exit of the Customs territory concerned. In a transit operation, the goods do not physically enter the territory through the inland office, located away from the frontier, but through the office of entry. Likewise, they do not leave the territory through the inland office, located away from the frontier, but through the office of exit. However, the inland Customs office is generally an office of destination (case (b)) or of departure (case (c)). It should be noted that in some cases, the inland Customs office takes on specific tasks without being either an office of destination or an office of departure. This is the case if, during transit, goods under Customs seal are transferred under Customs control to another transport-unit (e.g. following an incident such as a defective container or damaged vehicle – provided that the vehicle can be driven to the Customs office).

4.3. Duties and taxes

Standard 3

The basic principle of Customs transit is relief from import and export duties and taxes for goods in Customs transit passing through a Customs territory.

However, this provision does not prevent :

- The collection of export duties and taxes in the country of exportation when such duties and taxes remain due whether the goods are exported under Customs transit or under a national exportation procedure.

- The collection of import duties and taxes in the country of destination when the Customs transit operation is terminated and, for example, the goods are cleared for home use.

4.4. Responsibility of persons

Standard 4

According to the General Annex, the declarant is liable to Customs for the accuracy of the information in the Goods declaration. However, this provision does not exempt third parties from liability. If during Customs transit certain conditions imposed by Customs are not respected through no fault of the declarant (e.g. the driver deviates from an itinerary prescribed by Customs or does not observe a time limit for presentation to a Customs office), the person directly concerned may have to take responsibility.

In cases of irregularity, and especially fraud, it is generally a case of determining the responsibilities of the persons involved (declarant, commercial operator, driver, carrier, consignor, consignee or other), so as to fully clarify the matter.

Given that the definition of persons responsible may vary from Customs territory to Customs territory, national legislation should define persons responsible to Customs for compliance with the obligations incurred under Customs transit.

4.5. Schedule and place of Customs clearance

Standards 3.2 and 3.22 of the General Annex state that the Goods declaration must be presented during the hours designated by Customs and that Customs should allow, at the declarant’s request, the Goods declaration to be lodged outside the opening days and hours of the designated Customs office.

In view of measures aimed at facilitating traffic flow, Customs must forecast extended hours of business for these transit operations. This facility does not prejudice the right of Customs to use controls adjusted to the risks (risk management).

5. Authorized consignors and authorized consignees

Recommended Practice 5

The Customs should approve persons as authorized consignors and authorized consignees when they are satisfied that the prescribed conditions laid down by the Customs are met.

The level of traffic flows, the ever shorter transport times and the electronic transmission of data have encouraged many administrations to seek solutions requiring the operator’s co-operation without compromising compliance with Customs law. Many administrations have decided that traders who demonstrate a record of good compliance with Customs requirements can be allowed to accomplish the Customs formalities with little physical intervention by Customs on a regular basis.

As an authorized consignor or authorized consignee, the person concerned is permitted to carry out specified Customs operations on his premises. This status is based on an authorization that Customs grants to the person concerned (forwarder, importer, exporter, etc.) after having approved the premises of the authorized consignor or consignee and setting forth an agreement between Customs and the person concerned specifying the latter’s rights and obligations.

Each authorized consignor or consignee is responsible to a Customs office known as the “control office” which monitors the activity of the authorized consignor or consignee and also acts as office of departure or destination, as the case may be, on the understanding that the goods are not physically presented at this office. The authorized consignor or consignee procedure is advantageous to both Customs and the person concerned. What is more, Customs loses none of its control powers.

As Customs transit has to be preceded or followed by another Customs procedure (e.g. exportation followed by transit at exportation; transit at importation followed by clearance for home use; transit from importation followed by warehousing ), the authorization granted by Customs conferring the status of authorized consignor should normally cover both export and transit. The Customs administrations grant that the status of authorized consignee will control transit and home use (or even other procedures). If necessary, national legislation and Customs determine the procedures concerned.

The implementation procedures are set out in the “Methods of Application” Appendix I to these Guidelines. They are for information purposes only for administrations wishing to initiate an authorized consignor or authorized consignee procedure. Such administrations can use them as a basis and adapt them to local conditions.

5.1. Benefits of the status of authorized consignor and authorized consignee

5.1.1. For the operator :

- Less waiting time at the frontier

- More flexible (24 hours a day) Customs notification, computerization

- Trader’s agent not required at the frontier

- Immediate release of the goods in the country of destination if Customs waives controls; faster delivery to the customer

- Customs clearance (termination of transit)/export (opening of transit) at the operator’s domicile

- Controls at the operator's domicile facilitated by the infrastructure available

- More rapid release of the means of transport

- Less risk of damage to the goods

5.1.2. For the Customs :

- Better use of Customs resources and facilities

- Data provided by electronic data transmission can be managed more easily

- No loss of or restriction on the right to conduct controls

- No infrastructure (piers, halls, etc.) to be made available to the operator.

6. Formalities at the office of departure

(a) Goods declaration for Customs transit :

6.1. Goods declaration and descriptive documents

Standard 6

The Goods declaration should make it possible to identify goods to be placed under the transit procedure. The document defined as the “Goods declaration” in the General Annex is the Customs document required for transit. However, the data required is often already in the operator’s computer system, in commercial documents or in transport documents (such as the packing list). These documents can therefore be accepted as the descriptive part of the Goods declaration and the declaration itself shall contain only the very minimum data required to identify

the goods, such as the total number of packages, the total weight and the reference “according to the attached lists” or similar language.

The Customs office of destination and, where applicable, the other Customs offices concerned, such as the offices of exit and entry, should be able to ensure that the commercial document or the accompanying transport document making up the descriptive part of the Goods declaration is the actual document accepted by the Customs office of departure. That is why this document shall be marked by Customs. A sensible solution would be to stamp the document with both the number of the Goods declaration (identification) and the official seal (authentication).

A computerized system would successfully replace the paper Goods declaration and prevent the occurrences of no more lost documents and forgeries. Some administrations are already developing or implementing such systems for transit (European Community, TIR).

6.2. Transport and commercial documents

Recommended Practice 7

Given the legal nature of a transport contract (e.g. rail or road waybill) or a commercial document (invoice), Recommended Practice 7 sets out the reliable legal framework authorizing the use of these documents as a transit declaration. This simplified method is already used in certain administrations for national transit and applies to rail traffic, road traffic, river traffic, air traffic or carriage of goods coastwise. This procedure can also be applied to international rail or road transport using an international transit document recognized by virtue of an international Convention. In some cases, the transport or commercial documents must contain certain information required by Customs to identify the goods, in particular for security purposes, and to fix the liability for any duties and taxes that might become chargeable. If such a document is accepted as the transit document, the Customs office of departure must mark it by applying a stamp containing the elements generally used by Customs to identify and authenticate a transit declaration, such as the transit declaration number, the office of departure and the office of destination, the number of any seals applied and the official stamp.

In various administrations simplified procedures exist under which certain Customs formalities, including the presentation of a Goods declaration, are waived. These procedures are applicable, for example, to goods carried by rail under cover of an international consignment note, and to goods moving only in the frontier zone.

Examples :

Customs may dispense with the need for a specific Customs document for goods carried by rail when the railway authorities operate an accounting control system under Customs supervision enabling Customs to control proper completion of international Customs transit operations and to check that the goods arrive at their destination. The details of these arrangements are laid down by mutual agreement between Customs and railway authorities.

Customs may dispense with the requirement of a Goods declaration for Customs transit for goods moving only in the frontier zone when they are familiar with the circumstances of the operation, the persons concerned are financially sound, and compliant with Customs laws,

and Customs are satisfied that the goods will be properly presented at the office of destination.

(b) Sealing and identification of consignments :

6.3. Integrity of the consignment

Standard 8

The Customs at the office of departure shall take all necessary action to enable the office of destination to identify the consignment and to detect any unauthorized interference.

The aim of any transit operation is to move goods from one point to another and to ensure that the consignment reaching the destination is the same consignment that was under Customs control at the start of the transit procedure. The measures taken by Customs must therefore ensure identification of the consignment and ascertain whether, en route, any goods have been removed, exchanged or have undergone any unauthorized interference.

In the procedure set out for the authorized consignor or consignee, it is the person obtaining this particular status who assumes this responsibility. Any measures taken at the office of departure when beginning the transit procedure should be recognized as sufficient by the Customs of the other administrations at issue, unless the conditions are different (e.g. different risk profile).

6.4. Fitting out and approval of the transport-unit

Recommended Practice 9

Subject to the provisions of other international conventions, the Customs should not generally require that transport-units be approved in advance for the transport of goods under Customs seal.

If transit is carried out under Customs seal, the transport-unit must meet certain construction and fitting conditions so that the affixing of the seal does not provide merely illusory security. The reason for which the transport-unit was sealed is not a decisive factor.

Approval of a transport-unit consists of examining whether it meets the Customs security requirements and of preparing a certificate, generally valid for a limited period, certifying that it is considered suitable for transport under Customs seal. It is up to Customs to examine the transport-unit and to draw up the approval. This is done at the request of the person concerned.

Unless expressly required by other international agreements, approval of the transport-unit is not mandatory for transport under Customs seal. Customs shall decide whether the transport-unit is sufficiently secure for Customs transit purposes. However, for transports regularly carried out under Customs seal, approval should facilitate Customs sealing.

When approval of transport-units for goods placed under Customs seal is required, the conditions of this approval are governed by national legislation and various international agreements, such as the Customs Convention on Containers of 2 December 1972 and the Customs Convention on the international transport of goods under cover of TIR carnets of 14 November 1975. Countries may make additional arrangements for approval through bilateral or multilateral agreements, where the transport-units are to be used for Customs transit solely in their territories.

Even if approval of transport-units is envisaged for transports where it is not mandatory, the provisions contained in the above-mentioned international agreements could be helpful for administrations wishing to set up an approval procedure.

The construction of some transport-units, such as motorized road vehicles, railway wagons or containers, must meet certain technical conditions in order to be approved by Customs for the transport of goods under Customs seal under the transit procedure. These conditions include that the transport-unit be :

- specially designed to facilitate the transport of goods by one or more means of transport,

- permanent and sufficiently durable to allow repeated use, and

- provided for in Standard 10 of this Chapter.

Standard 10

(a) Customs seals can be simply and effectively affixed to it;

(b) no goods can be removed from or introduced into the sealed part of the transport-unit without leaving visible traces of tampering or without breaking the Customs seal;

(c) it contains no concealed spaces where goods may be hidden; and

(d) all spaces capable of holding goods are readily accessible for Customs inspection.

The Customs shall decide whether transport-units are secure for the purposes of Customs transit.

When the transport-unit meets the conditions set out in this Standard, the Customs seals must be affixed to the transport-unit itself. However in certain circumstances Customs may decide to seal transport-units which have not been approved for the transport of goods when they are satisfied that the units, when sealed, are sufficiently secure.

In addition, there are several international agreements that contain details of transport-units approved for the transport of goods under Customs seal. Some of these international agreements are the Customs Convention on Containers, done at Geneva on 18 May 1956, the Customs Convention on the international transport of goods under cover of TIR carnets, done at Geneva on 15 January 1959, the Unité technique des chemins de fer, concluded at Berne in May 1886 (1960 edition), and the Regulations of the Central Rhine Commission concerning the sealing of Rhine navigation vessels (21 November 1963 version).

Transport-units may also be approved in the future pursuant to new agreements that could supersede those listed above. Furthermore, additional arrangements for approval can be made by administrations through bilateral or multilateral agreement for transport-units to be used for Customs transit solely within their territories, such as containers having an internal volume of less than one-cubic metre but which in all other respects qualify for Customs treatment as containers.

In all such cases where a Customs territory is a Contracting Party to an international agreement or has entered into a bilateral or multilateral agreement, Customs normally accept transport-units under these agreements and affix a seal on the unit itself.

In addition to the standard practice of Customs themselves affixing Customs seals, there are two alternative methods of sealing used in some administrations which may be regarded as offering greater facilities. These are:

(a) Customs seals are issued to approved persons who themselves affix the seals;

(b) the acceptance by Customs of private seals affixed by the person concerned.

6.5. Open transit

Recommended Practice 11

- where the Customs office of departure considers it necessary in the light of risk management;

- where the Customs transit operation will be facilitated as a whole; or

- where an international agreement so provides.

The vast majority of transit operations present no particular risk to compliance with Customs law. That is why the generalized affixing of a Customs seal to safeguard the identity of the goods may be a disproportionate measure, especially when the same results can be obtained using other identification methods. In transit operations, suitable documents are generally available to satisfy Customs identification criteria. Thus, Customs feels that these documents allow proper identification of goods, transport should take place without Customs seal, i.e. open transport should be the rule and affixing a seal the exception.

The following information in the accompanying documents generally permits proper identification :

- Packaging (marks, serial numbers, type and number)

- Trade description of the goods

- Gross mass (gross weight)

The fact of not requiring a Customs seal as a matter of course, but rather as an exception, does not limit Customs’ right to require a seal when deemed useful or prudent. Customs can therefore require seals not only for high-risk goods or to facilitate the Customs transit operation in general, but also for any other reason. A Customs administration is therefore not limited in its right to affix a seal.

High-risk goods are goods subject to a high tax or subject to special control measures for which Customs feels that there is a higher likelihood of non-compliance with Customs laws. The issue of risks is covered in Chapter 6 of the General Annex on Customs control and should be consulted for all aspects of risk management.

Goods subject to very high duties (cigarettes, alcohol, etc.) are the highest risk in terms of transit. In fact, if diverted during a transit procedure and brought onto the market without being cleared for home use they can be extremely profitable, and this is their attraction. Apart from duty levels, high-risk goods also include goods subject to prohibitions or restrictions involving licences or permits. In several administrations this is the case for agricultural produce or other sensitive products. It should be noted that a risk for some administrations is not necessarily a risk for others.

Some international agreements, such as the TIR Convention, expressly prescribe Customs seals for transit. For transport under cover of these agreements, the provisions of the agreements at issue are decisive.

The declarant cannot request Customs seals be affixed simply for convenience, for example because he does not have a list permitting proper identification of the goods in the transport-unit. However, given the liability of the declarant and possibly other persons during a transit operation, if the person concerned feels that the Customs seal reduces the risks they take, Customs should be flexible if asked to seal a consignment.

In national transit, the practice is sometimes to prepare a Goods declaration with the minimum of data adequate for proper identification. In such cases, it would run counter to the aim of the Recommended Practice to require the declarant to go to great efforts to obtain the necessary data if the Customs seal can settle the question of identification.

If a transit operation can take place without a Customs seal, there should be no objection to transfer of the goods from one means of transport to another. This facility is mentioned under “En route formalities”.

6.6. Solutions other than seals

Standard 12

- full examination of the goods and recording the results thereof on the transit document;

- affixing Customs seals or fastenings to individual packages;

- a precise description of the goods by reference to samples, plans, sketches, photographs, or similar means, to be attached to the transit document;

- stipulation of a strict routing and strict time limits; or

- Customs escort.

The decision to waive sealing of the transport-unit shall, however, be the prerogative of the Customs alone.

In some cases the transit should be under Customs seal, but the transport-unit may not be suitable for this and hence cannot be properly sealed. In such cases, the measures mentioned in Standard 12 are alternative solutions to ensure Customs security (in principle non-cumulative).

Among the solutions proposed, imposing a fixed routing and a strict time limit considerably reduces room for manoeuvre by the transporter and enables Customs to conduct more effective controls.

Customs may prescribe an escort if the risks to compliance with Customs law so require, however it should be noted that Standard 15 requires that an escort be used only when indispensable. Customs may also provide an escort on request as a special service if it has sufficient resources available and provided it considers the reasons for the request valid. The Customs escort is intended solely to ensure the identity of the goods and cannot take on police tasks (such as protecting against theft).

The exact measures that Customs may have to take when goods are transported in a non-sealable transport-unit will depend on the specific circumstances of each case, taking account of various elements such as the nature of the goods and the packaging, the duties and taxes that may be payable at importation or at exportation and the previous history of the person concerned.

As specified in Standard 12, Customs decides whether or not to waive the seal. Thus the decision as to whether the transit can be carried out using a non-sealable transport-unit lies with Customs alone. The declarant cannot therefore use this Standard to make frequent or regular transits for which a seal would normally be required, for the simple reason that his transport-unit cannot be sealed effectively.

6.7. Time limit for transit

Standard 13

When the Customs fix a time limit for Customs transit, it shall be sufficient for the purposes of the transit operation.

In principle many administrations set quite generous standard time limits so that the transit operation can take place under good conditions. Such general time limits are easy to apply and permit a certain degree of harmonization. The primary objective of a time limit is to permit termination of transit in a reasonable time and, if necessary, to initiate an investigation to ensure compliance with the Revenue and without causing unnecessary delay which would only complicate the next part of the operations. General time limits are mainly for goods presenting no particular risks. A more specific time limit could be used if Customs felt the risks were higher, for example as described in Standard 12.

In some groups of administrations where there is a transit agreement, when the office of departure has found it necessary to specify a time limit, the other administrations in the agreement should accept that time limit and not require another one.

When Customs fix a time limit for Customs transit, it should take into account any special regulations to which carriers are subject, particularly regulations concerning working hours and mandatory rest periods for drivers of road vehicles.

Standard 14

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

Under normal circumstances the initial time fixed for the completion of the transit operation would be sufficient for the completion of the operation. However, there may be instances when this time limit cannot be complied with by the operator. This could be caused by unforeseen events such as a breakdown to the transport-unit or an accident. Although such events are required to be reported to the nearest Customs office or other competent authorities as stipulated under Recommended Practice 22, it would nevertheless result in the transit operation not being completed within the initial time limit fixed. Standard 14 requires Customs to extend the period initially fixed in such circumstances if a request is made and they deem the reasons to be valid.

6.8. Special measures

Standard 15

Only when they consider such a measure to be indispensable shall the Customs :

(a) require goods to follow a prescribed itinerary; or

(b) require goods to be transported under Customs escort.

Provided that identification of the consignment and the detection of any unauthorized interference can be assured by the ordinary measures set out in Recommended Practice 11, by using Customs seals, or by applying the stricter measures described in the first part of Standard 12 (full examination of the goods and recording the results on the Goods declaration, sealing of each package and precise description supplemented with samples, etc.), there should be no obligation to follow a prescribed itinerary or to have the goods transported under Customs escort, unless Customs exceptionally judges these special measures vital, for example because of a high risk. However, it should be recalled that Customs and, by extension, the Customs escort, is not responsible for guaranteeing the physical safety of goods, but rather for ensuring that they are presented at the Customs office of destination. That is why, when it comes to judging whether or not an escort is necessary, no account should be taken of the concept of protecting the goods against theft or highway robbery, for example.

7. Customs seals

Standard 16

Customs seals and fastenings used in the application of Customs transit shall fulfil the minimum requirements laid down in the Appendix to this Chapter.

To ensure the security of the goods in transit operations, Customs themselves usually affix Customs seals and fastenings on the goods and/or the transport-unit.

Customs seals must conform to certain minimum requirements. The office of destination must also be able to identify the office that affixed the Customs seals and fastenings and to ensure that goods in transit have not been tampered with. The details of the minimum requirements of such Customs seals and fastenings are set out in the Appendix to this Chapter and are included in these Guidelines. The particulars of the Customs seals used should be identified in the Goods declaration or the transport document.

As a facilitative measure Customs also allow authorized consignors to fix seals themselves. (See Guidelines to Standard 10 of this Chapter.) This enables the sealing to take place at the place of loading or stuffing of the goods.

Authorized consignors and other persons authorized for Customs transit are required to use seals bearing a specific identification (name of Customs territory, serial numbering and possibly other distinctive signs such as code letters or numbers). These seals make it possible to identify the Customs territory where the seals were applied, the person who affixed them and the consignment. As in the case of Customs seals affixed by Customs themselves, the details of the seals affixed by authorized consignors or other authorized persons will have to be recorded on the Goods declaration and transport document to ensure that they are not replaced en route.

Customs will usually require the authorized persons to take precautionary measures such as requiring that adequate records of the use of the approved seals are maintained; that the seals are kept in a place of safety and access to the approved seals is restricted to specially authorized personnel; and that these seals are affixed by an authorized person within their organization.

The seals must be Customs-approved, and Customs should keep a check on the seals in the possession of the authorized person by requiring that he periodically notify them of the seals used.

The manufacturer or supplier of the seals must also be Customs-approved, and Customs can require these manufacturers or suppliers to give an understanding not to supply seals without Customs approval.

Some administrations encourage the use of high security seals at the point of stuffing of a container as part of seal integrity programs. Further explanation of the use of seals in such integrity programs may be found in the Guideline to Chapter 6 of the General Annex.

Minimum requirements to be met by Customs seals and fastenings

A. Customs seals and fastenings shall meet the following minimum requirements :
1. General requirements in respect of seals and fastenings :

The seals and fastenings shall :

(a) be strong and durable;

(b) be capable of being affixed easily and quickly;

(c) be capable of being readily checked and identified;

(d) not permit removal or undoing without breaking or tampering without leaving traces;

(e) not permit use more than once, except seals intended for multiple use (e.g. electronic seals);

(f) be made as difficult as possible to copy or counterfeit.

2. Physical specification of seals :

(a) the shape and size of the seal shall be such that any identifying marks are readily distinguishable;

(b) each eyelet in a seal shall be of a size corresponding to that of the fastening used, and shall be positioned so that the fastening will be held firmly in place when the seal is closed;

(c) the material used shall be sufficiently strong to prevent accidental breakage, early deterioration (due to weather conditions, chemical action, etc.) or undetectable tampering;

(d) the material used shall be selected by reference to the sealing system used.

3. Physical specification of fastenings :

(a) the fastening shall be strong and durable and resistant to weather and corrosion;

(b) the length of the fastening used shall not enable a sealed aperture to be opened or partly opened without the seal or fastening being broken or otherwise showing obvious damage;

(c) the material used shall be selected by reference to the sealing system used.

4. Identification marks :

The seal or fastening shall be marked :

(a) to show that it is a Customs seal, by application of the word "Customs" preferably in one of the official languages of the Council (English or French);

(b) to show the country which affixed the seal, preferably by means of the sign used to indicate the country of registration of motor vehicles in international traffic;

(c) to enable the Customs office which affixed the seal, or under whose authority the seal was affixed, to be identified, for example, by means of code letters or numbers.

B. Seals or fastenings affixed by authorized consignors and other authorized persons for Customs transit purposes to ensure security for Customs purposes shall offer physical security comparable to that of seals affixed by the Customs and shall make it possible to identify the person who affixed those seals, by means of numbers to be entered on the transit document.

Recommended Practice 17

Customs seals and identification marks affixed by foreign Customs should be accepted for the purposes of the Customs transit operation unless :

- they are considered not to be sufficient;

- they are not secure; or

- the Customs proceed to an examination of the goods.

When foreign Customs seals and fastenings have been accepted in a Customs territory, they should be afforded the same legal protection in that territory as national seals and fastenings.

This provision recommends that Customs facilitate transit operations by accepting Customs seals and identification marks affixed by foreign Customs. This avoids the need for re-sealing of the goods or the transport-unit at each frontier office, thereby reducing any delays that could arise from Customs intervention. Such facilitation is normally accorded on the basis of bilateral or multilateral agreements. Under these agreements, similar facilitation should also be accorded to Customs-approved seals used by authorized consignors and other authorized persons. The acceptance of foreign Customs seals requires Customs to afford the same legal protection in their territory as given to national Customs seals and fastenings. As a greater facility, Customs could also accept foreign Customs seals even when there are no agreements to that effect.

The acceptance of foreign Customs seals does not restrict Customs from affixing their own Customs seal if the foreign seals and identification marks are found to be insufficient, not secure or when the goods need to be examined.

Recommended Practice 18

Where the Customs offices concerned check the Customs seals and fastenings or examine the goods, they should record the results on the transit document.

In transit operations, Customs would normally check to ensure that the Customs seals and fastenings are intact and that the transport-unit is secure. The goods are generally not examined, except in rare circumstances when there is evidence of tampering with the seals or fastenings. Examination should also be avoided when the goods are to be imported into a Customs territory since, if an examination is required, it will take place when the goods are placed under another procedure such as clearance for home use.

In international transit the goods should not be examined while moving en route if at all possible. However there may be exceptional circumstances that would warrant Customs to examine the goods. In doing so the seals and fastenings would have to be broken and upon the completion of the examination new seals would have to be affixed.

When Customs performs any of these functions (checks the seals and fastenings, examines the goods and re-seals the transport-unit) they should record the details of the examination and the seals or identification marks of the new seals on the document that accompanies the goods. This is to ensure that continued transit operation is not hindered and no complication arises when the transit document is finally presented to the office of departure.

8. Formalities en route

8.1. Change in the office of destination

Standard 19

A change in the office of destination shall be accepted without prior notification except where the Customs have specified that prior approval is necessary.

The Goods declaration must indicate an office of destination where the Customs transit will be terminated.

Indicating the office of destination is useful, especially for directing investigations if the Goods declaration is not presented properly or if this office has specific competencies (e.g. Customs offices within the premises of an exhibition). However, Standard 19 allows the office of destination to be changed without notifying Customs, except where Customs have specified that prior approval is necessary. In fact, for reasons beyond the carrier’s control, such as a congested or blocked road or rail link, a closed airport, an inaccessible port, etc., or for transport or logistical requirements that the operator need not justify, or simply because the intended office of destination is overloaded, the Goods declaration can be presented at an office of destination other than that indicated in the Goods declaration. Customs could also allow the goods to be entered another Customs procedure. The new office of destination should inform the office of departure of the change in destination. When they consider it useful, Customs should specify on the Goods declaration that its prior approval is required for changing the office of destination. This could be the case for high-risk goods or goods subject to specific controls under Standard 12.

The indication of an office of destination does not necessarily involve the actual presentation of the transport-unit or the goods in the premises of that office, if an agreement with Customs sets out another procedure (e.g. authorized consignee).

8.2. Transfer from one transport-unit to another en route

Standard 20

Transfer of the goods from one means of transport to another shall be allowed without Customs authorization, provided that any Customs seals or fastenings are not broken or interfered with.

The essential point in this Standard is that Customs seals and fastenings must not be broken or interfered with. Thus there is no problem with transferring goods from one means of transport to another if the transport-unit itself has not been sealed. Even if the transport-unit itself has been sealed, transfer en route without Customs authorization is possible if, for example, a sealed container is transferred intact from one means of transport to another.

8.3. Mixed transport

Recommended Practice

To get best use of the loading surface of the transport-unit, transporters may request that other goods be transported together with the consignment in transit. These will usually be goods in free circulation being transported from one point to another in the same Customs territory, which may be the country of departure, the country of destination or a Customs territory being crossed. They may also be goods that will be declared for exportation later at a Customs office in the Customs territory where the transport-unit was loaded.

If the transport-unit is not sealed, loading and unloading of the goods in free circulation can take place at any time and any place without having to notify Customs. These operations can even result in a change of routing, provided that the route is not expressly prescribed by Customs and that the time limit is sufficient. The transporter should be able to account for the presence of these goods using commercial transport documents, such as the delivery note or invoice. It should also be easy to distinguish the consignment of goods under Customs transit from the goods in free circulation.

If the transport-unit is placed under seal, loading and unloading of goods not covered by transit can only be carried out under Customs control. For goods which Customs believe pose a high risk of fraud, the Customs office can refuse the mixed transport or make it subject to special conditions. Normally the goods in free circulation accompanying goods in transit will be going to the same destination. Should the goods in free circulation be unloaded en route, this operation can take place at a Customs office not involved in the transit. This Customs office should remove the seal, and then reseal the transport-unit after checking the unloaded goods, randomly and according to the risks. The change of seal will be indicated on the Goods declaration.

8.4. Accidents or other unforeseen events

Recommended Practice 22

Accidents or other unforeseen events can have repercussions on transit. They can result in accidental breaking of the seal, loss or destruction of the goods or the urgent transfer of the goods to another transport-unit necessitating removal of the seal (e.g. if a refrigerated lorry breaks down).

The accident in question need not necessarily involve the vehicle carrying the goods under Customs transit. It may involve other vehicles, resulting in the road being blocked or traffic diverted, making it impossible for the carrier to respect a strict time limit or a prescribed itinerary.

Seals ought normally to be removed or replaced by Customs, but unforeseen events do not always enable this principle to be observed. For example, if a vehicle breaks down and there is no Customs office within a reasonable distance, the person concerned should call another authority (e.g. police, town hall) so that it can vouch that the seal was intact before the goods were transferred to another transport-unit. Ideally that authority would reseal the transport-unit after supervising the transfer, and note this on the transit document.

During such incidents, it would be useful if the interested party could subsequently provide proof of the event in question by means of a report or certificate from the authority justifying why the transit-related conditions were not respected. This certificate could describe the nature of the incident and the consequences on the goods concerned and most competent local authorities are actually prepared to provide the assistance when requested.

Only incidents which directly affect the running of the transit operation require specific measures in the above sense. Thus, for example, if the transport-unit is not sealed, Standard 20 already generally allows goods to be transferred from one transit-unit to another. In some cases, the incident would not therefore have to be recorded. The same applies if, despite serious difficulties en route, the consignment reaches the office of destination later than expected, but nevertheless within the generally prescribed time limit.

Destruction and abandonment of goods are governed by Chapter 3 of the General Annex.

9. Termination of Customs transit

9.1. End of Customs transit

Standard 23

Transit is deemed terminated when the goods are placed under the control of the Customs office of destination or, where applicable, the domicile of an authorized consignee, and the Goods declaration is endorsed. Other formalities generally follow, such as sending notification of termination to the Customs office of departure, and releasing or refunding the security for the transit operation.

The controls carried out by the office of destination at the end of Customs transit will depend on the specific circumstances of each transit operation. If seals or identification marks have been affixed, Customs generally ensures that they are intact. Customs may also verify that the transport-unit is otherwise secure and may carry out either a summary or detailed examination of the goods themselves so as to place them under another Customs procedure. If there is an authorized consignee, he is responsible for most of these tasks (see Appendix I on Methods of Application).

9.2. Notification of termination

Standard 24

Whereas the office of destination ends the transit operation and certifies this on the Goods declaration, there are several possible termination methods, depending on whether the transit is national or international, the type of security and the manner in which the liability for duties and taxes is discharged. If the transit is international the system of international guarantees will come into operation. The different types of security are described in the Guidelines to Chapter 5 on the "Security" of the General Annex.

Standard 24 states that as soon as the goods are under its control, the office of destination shall arrange without delay for the termination of the Customs transit operation. Thus, the Customs office of destination should not wait until the goods are under a new Customs procedure (e.g. clearance for home use, temporary admission, new transit procedure) before proceeding with the termination. To avoid unnecessary investigations and to enable any security to be released to the entitled person, care must be taken to ensure that the notification of termination should be sent to the person concerned as soon as possible. This may involve returning the document to the operator for the attention of the guaranteeing association or it may involve returning a copy of the Goods declaration duly endorsed to the Customs office of departure, possibly to the office of entry of the Customs territory concerned. In the latter case Customs could consider providing the operator with a copy in order to avoid difficulties if the original goes astray. This can be done via any medium, and electronic systems offer considerable advantages for this (instant transmission of the notification of termination, release of the security, no need for subsequent investigations, an end to false documents, false Customs seals or lost documents).

If the goods are not exported promptly upon arrival at the office of destination, they should be placed under Customs control as soon as possible. Once the goods are under Customs control or placed under another Customs procedure, the office of destination should ensure that the transit declaration does not remain open (e.g. during warehousing prior to loading onto a vessel or in a zone outside Customs premises) so that the liability of the transporter who has delivered the goods intact at the office of destination can be discharged.

When the goods arriving in a Customs territory are to be placed under Customs transit to travel to the intended office of exportation, some administrations, as a facility to trade, combine the Customs transit and exportation procedures into a single arrangement. In such cases the Customs transit operation cannot be terminated until exportation has taken place. Some administrations also provide a similar arrangement for goods leaving an inland office for subsequent exportation by combining the Customs transit and exportation procedures as a facilitation measure.

9.3. Monitoring the termination

When setting up a transit system, provisions should always be made for a Customs office to ensure that the duly endorsed Goods declaration is returned as explained in the previous paragraph. Many administrations assign this task to the Customs office of departure for both national and international transit.

If a termination notice is not returned to the office of departure in national transit, some administrations do not initiate a search procedure and use the security for payment of the duties and taxes, considering that the person responsible has not fulfilled the obligation of presenting the goods to the Customs office of destination within a set time limit. In an international transit operation covered by a general security or at least a security valid for the whole transit operation, the Customs territory in which the goods left Customs control should be determined in every case so that the duties and taxes can be claimed by the Customs territory concerned, if necessary by using the security covering the transit operation.

In international transit involving the crossing of several Customs territories, the office of departure could be entrusted with monitoring the smooth running of the whole transit procedure. If the transit operated smoothly, the Customs territories crossed would not have to carry out any special surveillance measures; they would merely be required to record the entry and exit of the transport-unit in a very simplified manner.

If the endorsed Goods declaration is not returned within a reasonable time limit, the office of departure should initiate an investigation. If this gives no results, the first Customs territory where the offence could have been committed would be required to recover the duties. Lodgement of a simple transit advice note identifying the transport-unit and the Goods declaration or declarations would make it possible to determine the last territory in which the transport-unit was seen. At juxtaposed national control Customs offices, a single transit advice note for two bordering Customs territories should suffice. The transit advice note could also be advantageously replaced by a computerized procedure (e.g. electronically recording transit). This international transit system makes more sense if combined with a security valid for the whole Customs transit operation.

This system is represented in the following example.

Other options

- The administrative management of the Goods declarations can be entrusted to a "central" Customs office. This office ensures that the Goods declarations issued by the offices of a whole Customs territory or region are completed and the security is discharged. If necessary, this office also conducts investigations on behalf of the office of departure. This “centralizing” enables the work to be done more efficiently, and preferably by computer.

- Each Customs administration monitors the entry and exit from its territory using import and export vouchers on the Goods declaration; thus overall monitoring is not carried out by the Customs office of departure. This system also has advantages, but only if the security is valid from start to finish of the transit operation (e.g. chain of guaranteeing associations). If not, to require a security in each administration would considerably limit the attraction of an international transit procedure.

9.4. Failure to follow a prescribed itinerary or to comply with a prescribed time limit

Recommended Practice 25

In accordance with Standard 15, Customs prescribe the itinerary only when this is considered absolutely necessary. Any prescribed itinerary must therefore be followed. However, when the goods are presented at the Customs office of destination without the prescribed itinerary being followed and the failure to comply with this order is due to circumstances explained to the satisfaction of the office of destination, Customs may consider that the conditions prescribed have been observed. The same should apply if the time limit prescribed by the office of departure or that of the office en route has not been complied with for similar reasons.

In case of failure to follow a prescribed itinerary or to comply with a prescribed time limit, Recommended Practice 25 recommends not collecting the duties and taxes potentially chargeable, provided that Customs are satisfied that all other requirements have been met. However, this provision does not prevent Customs from imposing a fine if the prescribed conditions regarding the route or the time limit have not been respected.

10. International agreements relating to Customs transit

Recommended Practice 26

Contracting Parties should give careful consideration to the possibility of acceding to international instruments relating to Customs transit. When they are not in a position to accede to such international instruments they should, when drawing up bilateral or multilateral agreements with a view to setting up an international Customs transit procedure, take account therein of Standards and Recommended Practices in the present Chapter.

There are several international instruments containing provisions relating to Customs transit. The most well known are :

- The Customs Convention on the International Transport of Goods under cover of TIR carnets (TIR Convention), Geneva, 14 November 1975.

- The Convention on Temporary Admission (done at Istanbul, 26 June 1990).

The Istanbul Convention groups various facilities for the temporary admission of goods into a single instrument. Consequently it does not deal with matters of Customs transit. Nevertheless it is mentioned here since Annex A relates, in particular, to ATA carnets, which also comprise an international transit system.

- The Customs Convention on the ATA carnet for the Temporary Admission of Goods (ATA Convention), Brussels, 6 December 1961.

ATA carnets can be accepted for the transit of goods under temporary admission which have to be conveyed to or from their destination under Customs control, either in the Customs territory of temporary admission or through a Customs territory or countries between those of exportation and importation.

The Contracting Parties to the Kyoto Convention which accept Specific Annex E on Transit should give careful consideration to the possibility of acceding to the above international agreements or to the instruments that will have replaced them. Those not in a position to accede to them should, when drawing up bilateral or multilateral agreements with a view to setting up an international Customs transit procedure, take account of the Standards and the Recommended Practices of the General Annex (especially the Chapter 5 on Security) and this Chapter on Customs transit, and also include in these agreements the provisions listed below.

When transit vehicles cross the frontier, Customs should, as a rule, limit the extent of the formalities to be carried out at the office of exit (which may be not the Customs office of departure) or the office of entry (which may not be the office of destination).

- Customs should check that there is a transit document and then endorse it, if an agreement between the Contracting Parties so provides. If that is not the case, Customs should issue a transit advice note and carry out random checks on whether the measures ensuring the integrity of the goods are complied with. Customs examination of the load or of the goods should be exceptional.

- When a Customs office of exit or entry removes a Customs seal or identification mark, for example in order to examine the goods, it should record details of the new Customs seals or identification marks on the Goods declaration accompanying the goods.

- Formalities at the Customs offices of exit or entry should be further reduced, or completely abolished, since the discharge of the obligations incurred under Customs transit is given by the competent authorities for the entire Customs transit operation.

- Arrangements should be made for mutual assistance measures between the Customs administrations of the Customs territories concerned with regard to the verification of documents describing goods transported under Customs transit and of the authenticity of Customs seals.

As far as possible, controls should be carried out only in the offices of departure and destination. At the Customs offices of entry and exit, controls could in principle be limited to giving notification that the transport-unit passed through by submitting a brief form to facilitate investigations in case of irregularities. For juxtaposed control offices, the Contracting Parties concerned could agree that the form be submitted at the office en route at entry. If need be, the office en route at exit could therefore obtain the desired information from the neighbouring Customs office en route at entry.

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Appendix I

Methods of Application

1. SWITZERLAND

Authorized consignor and authorized consignee

This Appendix does not describe the procedure preceding or following Customs transit. However, where additional information may prove useful for the application of transit, the necessary information is given. The procedures described herein are for information purposes only for Customs administrations wishing to set up an authorized consignor or consignee procedure. They can base themselves on the special procedures for authorized parties in Chapter 3 of the General Annex as well as this Appendix, and adapt them to local conditions.

General conditions for granting authorized consignor or authorized consignee status

Customs could accept as authorized consignor or consignee any person subject to Customs obligations, provided that :

- they have an appropriate record;

- they regularly send or receive goods;

- their domicile is sufficiently close to the competent Customs office to enable controls to be carried out without generating excessive administrative work;

- they designate premises and/or a room for placing under Customs control the goods for consignment or receipt (the tasks of placing goods under Customs control is assigned to the authorized consignor or authorized consignee);

- their administrative management and user system are organized in such a way that the arrival of a consignment can be checked at any time without fail, from arrival up until removal; by transmitting data the authorized consignor or consignee takes on an obligation to Customs;

- they provide Customs with the necessary infrastructure (writing desk, possibly telephone),

- they furnish a security to guarantee payment of duties and taxes in case of irregularity.

The security is a surety valid until withdrawal of the status and subject to changes according to developments (solvency of the security, major growth of the authorized consignor or consignee requiring a greater degree of cover, for example). This security is separate from the one which, where applicable, is required for the transit procedure. Whereas the latter only covers the transit operation, the general security by the authorized consignor serves as a security for other operations (e.g. disappearance of goods from the authorized consignee’s premises after termination of Customs transit, but before clearance for home use).

The authorization issued by Customs lists the conditions for using the procedure. The authorization holder is required to notify Customs of any change in the conditions forming the basis of the authorization.

Customs may refuse authorization if the person does not guarantee that the procedure will take place in accordance with the rules or if the person has committed serious or repeated infringements against Customs or tax rules.

Authorization

If the person requiring authorized consignor or authorized consignee status appears to meet the general conditions, Customs shall carry out a more detailed inspection at the person's premises. On that occasion, the general conditions mentioned above and the methods for implementing the Customs procedure or procedures at issue will be determined. In this case, Customs also plays an advisory role in developing a system which is beneficial to both parties. In addition to the basic conditions mentioned above, the following points could be defined :

- The Customs control office which will be the person’s contact office for all Customs matters

- Scope of the status of authorized consignor or consignee

- Type of traffic (export and transit; transit and clearance for home use, transit and temporary admission, etc., road traffic, rail traffic; air traffic; water traffic, etc.), possible exclusion of certain goods or laying down special obligations

- Procedure for giving notification of the consignment.

This means notifying Customs of the arrival of the consignment by electronic data transmission with all the information required. For the transit procedure, such notification comprises a minimum of data, but must permit identification of the transport-unit and the type and quantity of the goods at issue. Customs may add other conditions to this notification (e.g. information on the requirement for and presence of a licence).

- Time limit for intervention by Customs

This time period, to be set individually, depends on local conditions and the transmission method. It could be of the order of 30 minutes, but some Customs offices accept shorter times. A reasonable balance has to be struck between a sufficient time for Customs to assess the situation and make a decision on the one hand, and not to make operators wait unnecessarily on the other. When Customs are notified of the consignment, the latter has the specified intervention time to notify the person if Customs intends to carry out the control. If Customs gives no indication during the intervention period, the consignment is deemed released for the rest of the procedure (authorized consignor : consignment placed under the transit regime may be moved; authorized consignee : unloading of the transport-unit may commence, subject to the application procedures for the procedure following transit). If Customs states its intention to conduct a control, this will be carried out within a reasonable time limit, regardless of the time limit for intervention). The intervention time limit shall not prejudice Customs’ right to carry out impromptu controls.

- Information in the Goods declaration

- Methods of identification of goods

In the Customs transit procedure, the status of authorized consignor or consignee requires certain additional information when drawing up or discharging the Goods declaration.

- Responsibility

The persons responsible as well as their responsibilities shall be defined. Authorized consignors/consignees will ensure that their staff is familiar with Customs requirements.

- Customs controls

In addition to the controls notified during the intervention period and impromptu controls, the person will authorize Customs to examine the data management and commercial documents where required to ensure that the procedures laid down are being observed.

- Time limit for retaining supporting documents.

Authorized consignor

General

The authorized consignor procedure applies to goods in free circulation for which the authorized consignor is deemed subject to Customs requirements and also applies to goods under Customs control.

This may relate to all transit procedures (national transit; international transit).

The authorized consignor carries out certain tasks at the office of departure, which may vary according to the transit procedure (e.g. opening the Goods declaration) and, if necessary, is authorized to seal the transport-unit, unless the procedure at issue states otherwise (e.g. TIR carnet).

In principle, the duties in question are generally guaranteed for all the transit operations, unless stated otherwise in the procedure at issue (TIR carnet, goods requiring a separate security for each transit operation).

With regard to the seal affixed by the authorized consignor, the Appendix to the Chapter on Customs transit is the final authority.

Example of how the procedure could take place

In this example, the procedure applicable to the authorized consignor covers the export procedure (or other procedures where applicable) and the transit procedure at departure.

1. Partners

Authorized consignor :

Authorized consignor indicated in the authorization.

Customs office :

The Customs control office named in the authorization to ensure that the procedure takes place at the authorized consignor's premises.

Office of exit :

The Customs office situated at the frontier of the country of departure.

2. Moved

The goods coming from free circulation are moved to the authorized consignor for Customs processing. Should Customs carry out a control, the authorized consignor must be able to justify where they came from.

3. Loading

Loading in the transport-unit can already begin before the loading list is sent (4) or not until after the time limit for intervention has elapsed or after Customs controls (5).

The goods can also be left in the means of transport of arrival or be transhipped to another means of transport.

Goods from the authorized consignor can also consist of additional goods already in the means of transport (e.g. goods already placed under a Customs procedure by another authorized consignor).

4. Loading list (first phase declaration and notification)

The loading list has two functions :

(a) It is the binding simplified export declaration in the first phase of the declaration procedure and

(b) It is also a notice of departure and will also contain the transport data.

The loading list is generally sent to the control office by electronic data transmission.

Contents of the loading list :

(a) for general transport (vehicle, container, etc.)

- Consignor's name (authorized consignor)

- Date and time of departure

- Registration number of the vehicle or container

- Gross weight of the whole consignment (load weight)

- Number and type of Goods declarations for the transit

- Where applicable, number and type of Customs seals

- Customs office via which the goods are to leave the Customs territory

(b) for each consignment (batches in the loading list)

- Identification (e.g. reference number + serial number)

- Packaging (marks, serial numbers, type and number)

- Exporter (name, place)

- Trade description of the goods

- Gross mass (gross weight)

- Indication of whether the goods are subject to an export licence

- Country of destination

- Type of Customs clearance (e.g. exportation, end of a temporary admission procedure).

Information on each consignment can be contained in the information on the general transport if it is valid for the whole transport.

A Goods declaration can be used instead of the loading list if it contains the information required (e.g. unitary goods).

Goods requiring an export licence can be accepted, provided that the licence is available in this phase.

5. Intervention and inspection

The loading list is a binding Goods declaration (e.g. outright exportation procedure). Upon its receipt, the control office decides whether or not to carry out an inspection. If so, it must inform the authorized consignor of its intentions within the specified intervention period, otherwise the transport or loading can take place.

The intervention period is only valid during the Customs office opening hours. Shorter intervention times may be agreed where local conditions so permit. The time of the electronic data transmission to the control office is decisive. The time limit tacitly expires at the end of the intervention period, which may be shortened by rapid release from the Customs office.

In principle, inspections are only carried out during the opening hours of the control office, using the loading list as a basis. Customs may request additional documents (e.g. transport order, invoices, etc.).

6. Transit

The Goods declaration (transit) is drawn up on the basis of the loading list, which is often only a duly completed copy of the Goods declaration. In principle, all types of Customs clearance in transit for all types of traffic are possible (see below).

The authorized consignor is required to notify the Customs office without delay when errors in the loading or other irregularities are noted after the goods have been shipped.

7. Loading control

The Customs control office can also conduct loading controls through the Customs office of exit of the Customs territory concerned. Customs may also ensure that the load has not been changed since notification to the Customs control office. Customs should allow extended opening hours (e.g. from 5 a.m. to 10 p.m.) for these controls in exceptional circumstances.

8. Declaration (2nd phase)

The consignments numbered on the loading list should generally be declared the working day following notification of departure. The phase 2 declaration is also binding.

Declarations should refer to the batches on the loading list (by mentioning the identification numbers). The second phase declaration can also be combined with phase 1.

9. Assessment

The authorization will set the time limit for returning a copy of the Goods declaration (transit) to the control office.

National and international transit

Customs clearance in national transit

A very simple system may be used for clearance in national transit of goods in internal free circulation and cleared at export. In the following model, the exporter would enjoy a simplified exportation procedure enabling him to state periodically (e.g. in the form of a monthly summary), by computerized procedure, all the data required by Customs. However, to permit processing of the goods at the time of actual exportation, the exporter sends notification by means of an existing document, such as the delivery sheet, containing at least the following information :

- Consignment identification number;

- Packaging (marks, serial numbers, type and number)

- Trade description

- Gross weight of the whole consignment

- A stamp of a varying dimensions containing a minimum of data.

This stamp mark (an adhesive stamp, computer-generated stamp, etc.) made by the authorized consignor, gives the commercial document the status of an export document. If an ad hoc heading is added, it becomes a transit document. The stamp could be based on the following model, but may be amended according to the specific needs of the Contracting Party.

The original of the transit document is sent with the consignment and, once signed by the office of destination, is returned to the office of issue. This simplified transit document is valid only for clearance in national transit.

Customs clearance in international transit procedures

Basic procedure

The goods to be placed under the transit procedure are not presented at the Customs office and the formalities take place on the premises of the authorized consignor. As the authorized consignor carries out certain functions delegated by the office of departure (his control office), in addition to the data normally required he shall complete the Goods declaration (e.g. using an adhesive stamp or computer-generated stamp) with the following references :

- identification of the Customs territory, Customs office, transit document number, title, date, authorized consignor and authorization;

- "simplified procedure", any Customs seals and the time limit for transit.

The authorized consignor is not required to sign computer-generated Goods declarations. In the space for the signature he writes "signature waived". A copy of the Goods declaration is returned to the control office within the time limit set by the agreement (e.g. the following working day).

TIR carnets and ATA carnets

TIR carnets must be presented at the Customs office so that the sheet and voucher can be processed and checked. Transport of goods under TIR carnet is subject to general provisions and must be made under Customs seal. ATA carnets (transit counterfoils) are processed in a similar way.

Transit in rail traffic

If the railways are under State control, they have a control function insomuch as the consignment will be forwarded in accordance with the transport order (consignment note) to an office of destination. The place of loading or preparation for consignment will be decided upon between the authorized consignor and the Customs control office, on a case-by-case basis and depending on the type of rail transport (authorized consignor with rail links, free loading at the station of dispatch, etc.).

Customs does not require the Goods declaration to be presented. Instead it is replaced by an international consignment note or a transfer note for a container, containing the necessary information (“Customs” pictogram label, stamp which may contain the Customs territory crest, Customs office, loading number, date, approved consignor and authorization number).

The Customs office will ensure that the authorized consignor has submitted to the railways the unchanged Goods declarations and consignments.

Transit in air and water traffic

A procedure based on rail traffic can be applied to air and water traffic, subject to local conditions.

Authorized consignee

The procedure applicable to the authorized consignee extends to goods transported to the consignee's premises under a transit procedure.

This may cover all the transit procedures (national transit; international transit).

The authorized consignee carries out some of the office of destination’s tasks which may vary according to the transit procedure and, where applicable, removes the Customs seal, unless Customs states otherwise.

The goods are moved to the consignee’s premises under the transit procedure with Customs declaration. The authorized consignee takes into charge the Goods declaration and removes any seals, unless the transit procedure or Customs states otherwise.

The notification by the authorized consignee to the Customs office must cover the whole load of the vehicle. The consignee shall send Customs, by electronic data transmission, the business name, date and time of arrival, number of the goods list (summary list of all the goods contained on the Goods transit declaration or declarations : this goods list will be an important document for the subsequent clearance for home use procedure), file number, identification of the transport-unit, number of packages, gross weight, number, type and serial numbers of goods transit declarations, and, where applicable, the number and type of Customs seals.

The Customs office has an agreed time limit for stating whether it intends to check the load or carry out a physical inspection of the goods. At the end of this time limit, in the absence of notification from the Customs office, release is deemed to be granted. The consignee may then remove any Customs seals and use the goods, subject to the conditions applicable to the procedure following Customs transit (e.g. clearance for home use). An inventory must be made of all the goods to permit the application of the procedure following transit. Depending on the transit procedure applied, discharge of the Goods declaration can be either fully or partially entrusted to the authorized consignor (e.g. stating the date of arrival and the result of the goods examination, and, where applicable, seals), unless the transit procedure (e.g. TIR carnets) or Customs otherwise requires.

After subsequent presentation of the Goods declaration at the Customs control office, the latter will authenticate the discharge statements (unless the discharge procedure is solely under Customs competence, e.g. as for TIR carnets). This authentication does not mean that Customs has checked the data, but rather that it has accepted it. If the discharged Goods declaration has to be returned to a Customs office in another Customs territory (e.g. because the Customs office manages the security), this authentication is required as the office of departure does not generally control authorized consignees resident in another Customs territory.

The Customs office is solely responsible for releasing the Customs transit security, unless the transit procedure (e.g. TIR carnet) otherwise requires.

Goods intended for another transit procedure

Goods intended for subsequent transit must be named as such in the inventory list. They may not be interfered with in any way. Goods stored at the premises of the authorized consignee are considered to be under Customs control. Re-consignment to another inland Customs office is carried out using a national transit document if the arrival of Goods declaration is no longer valid.

Example of how the process may take place

In this example, the procedure applicable to the authorized consignee covers the transit procedure at arrival and the clearance for home use procedure (and other procedures where applicable).

1. Partners

Customs office of entry :

Any competent Customs office situated at the border or inland.

Authorized consignee :

Authorized consignee indicated in the authorization.

Control office :

Customs office named in the authorization supervising the procedure at the authorized consignee.

2.Transit

All types of Customs clearance in transit for all types of traffic are possible.

Customs determines the types of traffic for which the Goods declaration can be waived (e.g. when the international rail consignment note, the air waybill or the manifest serves as a Goods declaration).

3. Notification

The authorized consignee informs the Customs office of the goods’ arrival. This notification, by electronic data transmission, shall contain the following data :

- Consignee (authorized consignee)

- Date and time of arrival

- Number of the goods list

- File number

- Identification of the vehicle or container

- Number of packages

- Weight of the load (gross weight)

- Number and type of Goods declarations

- Where applicable, the number and type of Customs seals

The procedure is settled with each authorized consignee subject to local conditions.

Advance notice, i.e. notice before the arrival of the goods at the authorized consignee, is acceptable. For frequent consignments this may take the form of a general notification. The Customs office must be informed immediately when the goods actually arrive; if circumstances so permit (frequent transports – practically according to a timetable – of specified goods), the authorized consignee merely has to give notification that a consignment has been cancelled or delayed in good time.

4/5. Loading control

If the control office plans to check the consignment at the authorized consignee's premises, it so notifies the consignee during the intervention period agreed, otherwise the authorized consignee is permitted to remove any Customs seals and unload the goods. The intervention period is generally half an hour and is only applicable during the Customs office opening hours. The time at which the data is electronically transmitted to the Customs office is decisive. When local conditions so permit, shorter intervention periods can be agreed. Customs must decide whether or not to check the load during the intervention period. However, the check can be carried out later, but still within a reasonable time period. The time period set does not adversely affect the Customs right to carry out impromptu checks.

6. Unloading

At the end of the intervention period or on completion of the loading control by the Customs office, the authorized consignee can unload the goods and place them in the premises named in the authorization. He can, however, also leave the goods on the means of transport of arrival or tranship them.

All the goods, including those which remain on the means of transport of arrival or are transhipped, must be listed. The form of inventory is set out in agreement with the authorized consignee.

The authorized consignee is required to notify the Customs office immediately of any missing or surplus goods, switched goods or other irregularities.

Special conditions are laid down for certain goods, such as those subject to controls outside Customs’ competence (veterinary inspection for animals, control of plants, etc.) to take account of local conditions (separate warehousing, transit at the destination of the competent Customs office, for example).

7-10. Customs clearance, inspection and release

These operations in principle belong to the procedure following transit.

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Appendix II

METHODS OF APPLICATION

2. European Comminity

The New Computerised

Transit System (NCTS)

Introduction

In this chapter we first describe the advantages of the NCTS and the obligations for both trader and customs. We then outline how the system works.

What are the advantages of the NCTS for trade?

The system offers traders many advantages, including:

Improved quality of service:

• Less time spent waiting at customs, because the declaration will have been sent electronically beforehand;

• Greater flexibility in presenting declarations.

Earlier discharge of the transit procedure because an electronic message is used instead of the return of the paper copy No 5 by mail, leading to a faster release of the guarantee.
The high costs, incurred in relation with the paper-based system of declaring goods (lengthy procedures involving much time and effort), are reduced.
A greater clarity of the transit operation, for the benefit of trade.
Because customs will have decided well in advance of the arrival of the goods at the office of destination whether or not they want to check the consignment, the trader will not lose valuable time at the office of destination waiting for a decision.

Apart from these general advantages for trade, there is an additional advantage for authorised consignors linked to the NCTS system. They no longer have to carry out the

cumbersome formalities that are necessary in a paper-based environment, because all the movements will be directly managed by the system.

What are the advantages of the NCTS for customs?

The communication and coordination between the customs administrations involved will improve.
Repetitive activities will only have to be performed once; this saves time and eliminates the risks involved in the duplication of information.
Creation of a more coherent system, which will speed up the processing of data and at the same time making the system more flexible.
Harmonisation of operating criteria, which will do away with the plethora of subprocedures and divergent interpretations of how the rules have to be implemented.
Availability of a system run directly by customs, which offers greater security and a higher tempo in managing transit, provides more reliable data and better monitoring of movements.

It is clear that the trader indirectly benefits from the advantages of the NCTS for customs, and vice versa.

Which traders can use the NCTS?

In principle all traders can use the NCTS. It is only necessary to use the electronic data interchange (EDI) procedures which have been established for the communication with customs in order to be connected to the NCTS.

What are the customs’ obligations?

Customs will have to:

install computer infrastructure, or adjust their existing facilities, to meet the specific needs of the NCTS, including compatibility with the Common Communication Network (CCN/CSI);
set up an organisation to keep the computer applications running (Helpdesk);
formulate and develop measures to ensure that the NCTS is integrated into the existing procedural and organisational set-up;
devise and introduce suitable training for customs staff and traders.

Operation

Main items or messages used in a NCTS operation

Before going into the details it is useful to mention the main items and messages in a NCTS operation.

The transit declaration, which is presented in a paper or electronic form.
The movement reference number (MRN), which is a unique registration number, given by the system to the declaration to identify the movement.
The transit accompanying document, which accompanies the goodsfrom departure to destination.
The ‘anticipated arrival record’ message, which is sent by the office of departure to the declared office of destination mentioned in the declaration.
The ‘anticipated transit record’ message, which is sent by the office of departure to the declared office(s) of transit[1] to notify the anticipated border passage of a consignment.
The ‘notification of crossing frontier’ message, which is sent by the actual office of transit used after having checked the consignment.
The ‘arrival advice’ message, which is sent by the actual office of destination to the office of departure when the goods arrive.
The ‘control results’ message, which is sent by the actual office of destination to the office of departure after the goods have been checked.

Furthermore it is important to understand that the system covers all the possible combinations of normal and simplified procedures, at departure as well as at destination.

Office of departure

The transit declaration is presented at the office of departure, either in paper form (in which case the data is introduced in the system by the customs office) or in a computerised form. Electronic declarations can be made from terminals made available to traders at the customs office of departure or from a trader’s own premises.

Whatever the form of the presentation, the declaration must contain all the data required and comply with the system specifications, since the system codifies and validates the data automatically. If there is an inconsistency in the data the system will indicate this. The trader will be informed, so that he can make the necessary corrections before the declaration is finally accepted.

Once the corrections have been entered and the declaration is accepted, the system will provide the declaration with a unique registration number, the movement reference number.

Then, once any inspections have been carried out, either at the office of departure itself or at the authorised consignor’s premises, and the guarantees are accepted, the goods will be released for transit. The system will print the transit accompanying document and, where appropriate, the list of items, either at the office of departure or at the authorised consignor’s premises. The accompanying document and the list of items must travel with the goods and be presented at any office of transit and at the office of destination.

When printing the transit accompanying document and the list of items, the office of departure will simultaneously send an anticipated arrival record to the declared office of destination. This message will mainly contain the information taken from the declaration, enabling the office of destination to control the consignment when it arrives. The office of destination needs to have access to the best possible information about the transit operation to take a correct and reliable decision about what actions to take when the goods arrive.

Should the movement have to pass an office of transit, the office of departure will also send an anticipated transit record, so that any office of transit has prior notification of the consignment concerned and can check the passage of the movement.

Office of destination

Upon arrival, the goods must be presented at the office of destination (either indirectly via the authorised consignee or directly) together with the transit accompanying document and the list of items, if appropriate. Customs, having already received the anticipated arrival record will have full details about the operation and therefore will have had the possibility to decide beforehand what controls are necessary. When they enter the movement reference number into the system, it will automatically locate the corresponding anticipated arrival record, which will be used as a basis for any action or control, and send an arrival advice message to the office of departure.

After the relevant controls have been carried out, the office of destination will notify the office of departure of the control results by using a control results message, stating which, if any, irregularities have been detected.

The control results message is necessary to discharge the transit operation and free the guarantees that were used for it.

Office of transit

When the goods pass by an office of transit, the goods, the transit accompanying document and, where appropriate, the list of items have to be presented to customs. The anticipated transit record, already available in the system, will automatically be located when the movement reference number is entered and subsequently the movement may be approved for passage. A notification of crossing the frontier is sent to the office of departure.

Change of office of transit or destination

If the goods go via an office of transit other than the declared one, the message that had initially been sent to the declared office of transit is of no use. In this case the actual office of transit will send a message to the office of departure, requesting the anticipated transit record, so that it can access the relevant information. Having checked the movement it will send the notification of crossing the frontier to the office of departure.

Likewise, the goods can be presented at an office of destination, other than the declared one. The actual office of destination will request the office of departure to send the anticipated arrival record so that the new office of destination may obtain the necessary information on the consignment.

If there is a change in office of transit or destination, the messages which have been sent to the declared offices are of no use and will remain open. To this end, the system will automatically send a message to the declared offices, notifying them where and when the goods have been presented, so that they can close the messages.

Simplified procedures: authorised consignor and authorised consignee

The use of both simplified procedures represents the optimal use of resources within the framework of the NCTS. The possibility of carrying out all the procedures at one’s own premises and exchanging information with customs electronically is clearly the most rapid, comfortable, secure and economic way of doing business.

Obviously in addition to satisfying the normal criteria to become an authorised consignor or authorised consignee, they will have to possess an adequate electronic data processing system for information interchange with their relevant customs offices. Of course this canonly work if these offices are connected to the NCTS.

Once these criteria have been fulfilled the NCTS allows authorised consignors to :

create the transit declaration in their own computer system;
send the corresponding declaration message electronically to the office of departure without the goods having to be physically presented there;
send and receive by electronic means subsequent messages, including requests for correction of the declaration, notification of its acceptance and notification of the release of the goods.

As far as authorised consignees are concerned the NCTS allows them to:

receive the goods and the accompanying document directly at their own premises;
send the arrival notification message to the relevant office of destination electronically;
receive and send subsequent messages concerning permission to unload goods and the notification of the results of the unloading to customs electronically.

These advantages really make the NCTS the transit system of the future.

Chapter 2

TRANSHIPMENT

1. Introduction

It often occurs, for reasons of trade or transport, that goods arrive in a Customs territory in order to be transferred from the importing means of transport to another means of transport in which they then leave that territory for their destination.

Frequently the arrival, the transfer of goods from one means of transport to another and the exportation of the goods all take place within the area of a single Customs office. To facilitate this operation the legislation of some administrations contains a procedure that enables the goods to transfer from one conveyance to another under Customs control and without payment of import or export duties and taxes. This procedure, for which a simplified control system is generally used, is called "transhipment" and is the subject of this Chapter 2 of the Specific Annex E. For container traffic, the term "transhipment" is sometimes known as "relay" or “immediate exportation”.

Transhipment can be regarded as a simplified application of the transit system. However, as certain administrations do not have the transhipment procedure and others have no knowledge of transit, they would not have been able to accept all the relevant provisions of a single Chapter covering all these aspects, particularly since the Standards of the Chapter must be implemented without reservations. Thus Specific Annex E of the revised Convention contains 2 separate Chapters, one on Customs transit and another on transhipment. Contracting Parties can then accept either the first or the second Chapter, or both.

While Customs transit necessarily involves at least two Customs offices, the transhipment procedure only involves one. However it is possible, for example, that two Customs offices in one Customs or harbour area are both affected by a transhipment operation.

The transhipment procedure is probably best suited to the simplest Goods declaration and usually one in an electronic format.

This Chapter on transhipment does not apply to goods which, on arrival in the Customs territory, are already under a Customs procedure (such as Customs transit) and are transferred from one means of transport to another during the course of that procedure. Such a transfer is dealt with by Customs under the procedure already in operation. Nor does the Chapter apply to goods carried by post or in travellers' baggage.

2. Definition

E1/F1

“transhipment” means the Customs procedure under which goods are transferred under Customs control from the importing means of transport to the exporting means of transport within the area of one Customs office which is the office of both importation and exportation.

3. Principles of a Customs transhipment procedure

The purpose of a Customs transhipment procedure is simply to ensure that goods which arrive in the area of a Customs office for transhipment are subsequently duly removed from it for onward transport to their final destination. (See the Guidelines to Standard 3.1 of the General Annex for an explanation of the use of the term “Customs office”.)

It is important to recognize that transhipment operations will generally be carried out by the carrier or warehouse operator who will not have access to the same amount of information about the goods (e.g., their value or tariff classification) as would the importer or exporter.

Transhipment can be authorized for goods which, in accordance with the national legislation, are subject to import or export restrictions. In this case, Customs may lay down particular conditions or strict controls.

Transhipment does not allow for use of the goods. If a product is intended for use it must be placed under a different Customs procedure (home use, for example). However some operations that are likely to facilitate the exportation of goods are authorized (See Recommended Practice 9 and the respective Guidelines).

When designing a transhipment procedure, Customs administrations should recognize the following essential features of transhipment operations :

- the goods concerned arrive in the Customs territory only for the purpose of being transferred to another means of transport for removal from the territory;

- the transfer and removal usually takes place within a very short timeframe; and

- throughout their stay in the Customs territory, the goods are at all times under Customs control by virtue of remaining within the area of the Customs office.

In essence despite their arrival in the area of the Customs office, the goods are not "entering" the country in any real sense. The control procedures which would be applied, for example, to goods arriving for importation or processing consequently do not apply. Equally, on the goods' departure, the normal control procedures for exports do not apply.

Standard 1

Transhipment shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex .

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for transhipment. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 7 on Information technology should be read in conjunction with this Chapter on Transhipment.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Standard

Goods admitted to transhipment shall not be subject to the payment of duties and taxes, provided the conditions laid down by the Customs are complied with.

Recommended Practice 3

Transhipment should not be refused solely on the grounds of the country of origin of the goods, the country from which they arrived or their country of destination.

Some of the normal elements of Customs procedures for goods arriving in or leaving a country do not apply for goods involved in transhipment operations. In particular :

- duties and taxes are not normally to be levied on the goods (Standard 2); and

- consideration of the goods' origin, the country from which they arrived for transhipment, or to which they are destined after transhipment shall not alone lead Customs to refuse the transhipment operation (Recommended Practice 3).

4. Elements of a Customs transhipment procedure

The objective of ensuring that goods which arrive in a Customs office for transhipment are subsequently removed from it for onward transport to their final destination can be accomplished by a procedure based on documentary controls, supplemented in limited cases by physical controls as necessary.

4.1. Documentary controls

Standard 4

Only one Goods declaration shall be required for the purposes of transhipment.

Standard 5

The process of controlling transhipment operations through documentation essentially involves recording the goods which arrive for transhipment, keeping a list of goods in transhipment, and then subsequently removing goods from the list when they leave for their onward journey.

A single Goods declaration should suffice to cover both the arrival and removal of goods in a transhipment operation (Standard 4). It is not necessary to demand one declaration when the goods arrive and another declaration when they are removed.

The most basic method of documenting transhipment for control purposes under Standard 4 is to use an official form in two copies made of two pages or in detachable parts. The data content need only be minimal to :

- declare that the goods are being transhipped;

- identify the party responsible for the transhipment operation;

- indicate the means of transport for arrival and the means of transport for removal;

- identify the marks and numbers of the goods or the containers in which the goods are being transported; and

- describe (briefly) the goods.

The last item (brief description of goods) can be provided by attaching a copy of the transport document (air waybill, sea waybill, bill of lading, etc), container packing/loading list, or the relevant extract of the carrier’s manifest or of the cargo declaration (Standard 5).

On arrival of the goods, the completed form is presented to Customs for the purposes of entering the goods into the transhipment procedure. Customs retain a copy or a part of the form and return the other to the operator who is performing the transhipment. When the transhipment operation has been completed and the goods have been removed, the operator returns this part of the form to Customs. Customs match it up with the other copy or part, mark it to identify the procedure as having been discharged, and then file it. As with all documentation, Chapter 7 of the General Annex encourages Customs to implement and accept the information required for any procedure electronically.

4.2. Simplifications

Recommended Practice 6

Recommended Practice 6 sets out the framework for authorizing the use of commercial or transport documents as a Goods declaration for transhipment. This simplified method applies to all types of traffic, i.e. by rail, road, river, maritime or air. When the document is accepted as the Goods declaration for transhipment, the Customs office must authenticate that document as the Goods declaration for that transhipment.

Where a large number of transhipment operations are carried out in the same area of a Customs office, it is necessary to simplify the above process in order to ensure that excessive paperwork does not impede smooth and swift operations.

For high-volume transhipment operators, Customs could accept aggregated lists of consignments arriving for transhipment and subsequently being exported in place of individual declarations. The function of the documents remains the same : to record the arrival of the goods and later to record their export. These two lists may take the form of the inward and outward cargo declarations of the means of transport. The Customs process of reconciling the two lists to verify completion of the transhipment remains the same.

4.3. Supplementary physical controls

Standard 7

Customs may sometimes consider that the risk relating to a particular consignment arriving for transhipment is such that the documentary control processes need to be supplemented by physical controls. These could include sealing the goods container on arrival to provide an assurance (by examining the seal on departure) that the same goods were being removed as had arrived.

4.4. Examination and identification of the goods

The aim of an examination of goods under transhipment would primarily be to allow goods to be identified at the re-export stage and to detect unauthorized interference. Its objective is therefore different to that of examination of goods for home use, for instance, where the verification that the goods match their description can have an effect on the duties and taxes payable. Under a transhipment procedure, examination must therefore be as simple as possible. It should be done only as a means of identification when there is no other means available, for example if the usual trade documents cannot be presented. Customs' right to inspect goods nonetheless remains guaranteed in all cases.

4.5. Additional control measures

Standard 8

When the Customs fix a time limit for the exportation of goods declared for transhipment, it shall be sufficient for the purposes of transhipment.

Recommended Practice 9

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

Recommended Practice 10

When a time limit is prescribed for the transhipment operation to ensure that the consignments are removed within a reasonable time it must be sufficient to allow the intended transhipment operation to take place (Standard 8), for example, by taking account of the sailing/flight schedules of the carriers involved. Customs should also be prepared to apply time limits flexibly where it appears appropriate, for example where schedules change or where the intended means of transport for removal is full (Recommended Practice 9). Similarly, failure to observe a time limit should not, by itself, lead to Customs collecting duties and taxes if they can determine that the goods were eventually exported and otherwise in compliance with all other requirements. (Recommended Practice 10).

Some countries do not set a time limit for the exportation of goods declared for transhipment as they consider that the person concerned will be careful not to allow his goods to devalue, and that Customs security is not compromised as long as the goods are in an area reserved for transhipment.

Other countries do set a general time limit or, more rarely, a specific time limit, depending on the transhipment of the goods concerned and in order to prevent transhipment from becoming a warehousing procedure. Where a time limit exists, it must be sufficient and reasonable to allow the transhipment without placing undue constraints on the person concerned. As a rule, many countries set general time limits that are very generously calculated so that transhipment can take place under good conditions. The general time limit is easy to apply and allows for some degree of harmonization. This type of time limit is especially relevant for goods that present no particular risk. A more specific time limit would be applicable where Customs consider there is an increased risk or because of the route taken.

A transhipment operation is completed when the goods in question are removed from the Customs office for onward transport to their final destination. The documentary control process described in the final paragraph of section 4.1 above provides Customs with proof that a transhipment operation has been completed correctly in this way.

4.6. Authorized operations

Recommended Practice 11

The process of transhipment is essentially that of transferring goods from one means of transport to another and it is generally understood that the goods should be in the same condition after the transfer as before. Use of the goods is not allowed. However in some countries, certain operations intended to facilitate exportation are expressly authorized. These can be of different types such as grouping, change of packing, marking, sorting, and repair or replacement of damaged packing. On request, Customs should allow such operations when it seems reasonable.

For example, the goods container may become damaged and need either to be repaired or replaced. Logistical efficiency considerations might indicate that goods for transhipment should be consolidated for onward carriage to a single country of destination or that packaged goods should be re-packed into larger packages or divided into smaller packages. In all such operations, the condition of the goods themselves will be unaltered - only their outer packaging or containers will change.

The Contracting Parties to the Kyoto Convention which accept Specific Annex E, Chapter 2 on transhipment but which do not authorize any operations on goods in transhipment must enter a reservation to Recommended Practice11. However, those Parties which authorize some operations under Recommended Practice 11 are not obliged to enter a reservation to the other operations.

5. Extension of the procedure

It is a defining feature of a Customs transhipment procedure that goods must be transferred from one means of transport to another within the area of a single Customs office. However, there may be occasions when the goods arrive at very large ports or airports, for example, where it may be necessary for goods to pass out of the gates, travel briefly on public roads, and then re-enter the port or airport through another set of gates in order to travel from one berth or cargo shed to another. As a greater facility, Customs should allow such movements to fall within their transhipment procedure.

It is also the case that some administrations, in offering greater facilitation, allow an extension of the transhipment procedure to provide for the transfer to a means of transport at another Customs office instead of using the Customs transit procedure.

Chapter 3

CARRIAGE OF GOODS COASTWISE

1. Introduction

It is frequently desirable for trade or transport reasons to carry goods by vessel from one place to another in a Customs territory. In some circumstances, taking account of the geographical situation or the nature of the goods involved, transport by vessel in practice is the only viable method of carrying the goods to their destination. In addition, in some locations this coastwise transport may require the vessel to leave their territorial waters and enter international waters.

For a variety of reasons it is necessary for Customs to maintain control over the carriage of goods coastwise and that remains true even if the cargo consists entirely of goods in free circulation, although in practice in such circumstances control is normally very light. For example, Customs will need to be satisfied that unauthorised goods are not taken on board illegally during the voyage and subsequently unloaded in the Customs territory without the proper formalities being accomplished. Equally it is necessary to ensure that goods in free circulation are not offloaded for export or landed abroad during the coastwise voyage since such goods may be liable to export duties and taxes if exported or may be subject to export prohibitions or restrictions.

The Customs documentary and control requirements for the carriage coastwise of cargo which consists entirely of goods in free circulation are usually simple and straightforward, but additional or tighter control may be necessary if imported goods that have not been declared are being carried coastwise or if the vessel is transporting goods other than coastwise cargo.

2. Scope

Chapter 3 of Specific Annex E deals with the carriage coastwise of goods in free circulation, and of imported goods that have not been declared and which are transported in a vessel other than the importing vessel in which they arrived in the Customs territory.

It does not apply to the transport of imported goods that have not been declared and which are still on board the vessel in which they arrived in the Customs territory (such goods are dealt with under Specific Annex A, Chapter 1) nor does it apply to goods which have already been placed under a Customs procedure such as Customs transit or Transhipment (Specific Annex E, Chapters 1 and 2) or Outright exportation (Specific Annex C, Chapter 1).

3. Essential features

3.1 Benefits

The maritime trade and the carriage of goods coastwise are of considerable importance to many administrations, and the provision of a relatively simple and straightforward Customs procedure for the movement of the two specific categories of cargo covered by this Chapter constitutes a useful facility for trade and transport operators.

Large numbers of vessels are engaged only in coastal trade, often plying between regular ports of call, and a considerable degree of facilitation and simplification can usually be made available to those with a sound performance record - the Chapter recommends additional measures of facilitation for such regular users of the procedure.

In principle the element of potential risk in controlling coastwise traffic is greater in those Customs territories which are geographically close to their neighbours making it possible for vessels to call at foreign ports without any appreciable delay in their sailing time. In practice, however, controls on shipping by maritime authorities, the coastguard etc, can provide some assurance for Customs in this context.

Reference should be made to Chapter 6 of the General Annex concerning Customs control and the use of risk assessment in determining the degree of control necessary.

3.2 Definition

E1/F1

“the carriage of goods coastwise procedure” means the Customs procedure under which :

(a) goods in free circulation, and

(b) imported goods that have not been declared under the condition that they must be transported in a vessel other than the importing vessel in which they arrived in the Customs territory

are loaded on board a vessel at a place in the Customs territory and are transported to another place in the same Customs territory where they are then unloaded.

4. Field of application

Standard 1

The carriage of goods coastwise procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Carriage of goods coastwise. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 6 on Customs control should be read in conjunction with this Chapter on Carriage of goods coastwise.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter. They may therefore simplify requirements even further in certain circumstances or may decide to waive the use of the procedure in the case of goods being transported on some inland waterways.

Standard 2

Recommended Practice 3

Standard 2 is an important principle enabling vessels to use their capacity for transporting goods without what might be regarded as a bureaucratic restriction by Customs. For example, vessels may pick up coastwise goods while proceeding to the port where imported goods on board are to be declared or may carry goods coastwise to the port at which goods will be placed under the outright exportation procedure. Not to allow a mix of cargo would prevent operators from making the most efficient use of their vessels and approval must be given unless, for one reason or another, Customs cannot be satisfied that their requirements will be met.

The basic consideration for Customs is that they are in a position to know which goods are being transported under which procedure or arrangement, and that they will be able to identify them when necessary and be satisfied that their requirements for each category of goods are met.

Identification will normally be possible from the available documents, i.e. the manifest, the Goods declarations for goods already under another Customs procedure and the goods list required for goods under the carriage of goods coastwise procedure (see Standard 13 and Recommended Practice 15). The following information should permit satisfactory identification:

– packaging (marks, serial numbers, type and number)

– trade description of the goods

– gross mass (gross weight).

Other options are open to Customs if the documentation alone does not suffice. They can obtain a more precise description by reference to samples, plan, sketches, photographs, etc. or they can affix Customs seals or identification marks. For detailed information on Customs seals and fastenings and identification marks see the Appendix to Chapter 1 (Customs Transit) of this Specific Annex.

Following on from the above considerations, Recommended Practice 3 provides that Customs should require goods in free circulation to be segregated from other goods on a vessel only where they consider this to be necessary for control purposes. Since vessels often have a number of holds, there may be a tendency to require physical segregation when it really serves no useful control function.

Operators (as well as Customs) have a direct interest in being able to identify goods correctly and easily and will normally divide cargo as necessary between holds, by partitioning, crating, pallets, etc. There may be cases, for example if bulk goods are involved, when segregation is a necessity, but Customs should be in a position to rely on the arrangements made by the operator or master whose storage plans are determined by considerations of safety, stability and efficient subsequent unloading of the vessel.

Recommended Practice 4

Recommended Practice 5

When a vessel which is to call at a place or places outside the Customs territory has been authorised to convey goods under the carriage of goods coastwise procedure, those goods should be sealed only at the request of the person concerned or when the Customs consider sealing to be necessary to ensure that goods cannot be removed therefrom or other goods added thereto without this being readily apparent.

Recommended Practice 5 is applicable only if the provisions of Recommended Practice 4 are accepted. It is most likely that Recommended Practice 4 is of interest to coastwise traffic operators in Customs territories which are physically close to other Customs territories. The geographical situation and small distances involved might then make it commercially attractive and practical to call at a port outside the Customs territory in the course of a coastwise voyage. It is likely that large distances and considerable sailing time to other Customs territories would generally mitigate against coastwise vessels calling at distant foreign ports during a coastal voyage.

Some Customs administrations may take the view that voyages which involve a call at a foreign port cannot be regarded as falling under the carriage of goods coastwise procedure, either as a matter of principle or for purely practical reasons. For example, there could be an additional risk if goods in free circulation but subject to export duties and taxes or export prohibitions or restrictions were involved. However, goods in free circulation on board a coasting vessel which calls at a foreign port would normally still be regarded as in free circulation on return but might be subject to greater control than would otherwise be the case.

If Customs authorize a vessel transporting goods under the carriage of goods coastwise procedure to call at a foreign port or ports during the voyage, Customs will need to be satisfied that their control is satisfactory and that they will be able to establish whether or not goods have been improperly removed, added or cannot be accounted for. Potentially there is a greater risk. Customs will have to assess that risk as in other cases taking account of factors such as the revenue record of the operator/master, whether or not the voyage is a regular ‘run’, the nature of the goods, the foreign Customs territory to be visited, etc. As in the “standard” coastal voyage, identification of the goods should normally be possible from the documentation; or identification marks can be affixed where necessary by the operator. Customs are recommended to seal the goods only when they feel that this is the only way of satisfactorily controlling the operation (short of refusing to authorize the voyage under the carriage of goods coastwise procedure) or when the operator or master requests sealing as a facilitation measure to assist identification of the goods on their return from the foreign leg of the voyage.

Recommended Practice 6

The essential difference between this provision and Recommended Practices 4 and 5 is that of the intention of the master or operator. Again, however, this provision is most likely to apply in Customs territories which are geographically close to their neighbours.

There are various reasons why a vessel engaged in the coastal trade may be forced to divert to a port in a nearby neighbouring Customs territory. They include bad weather, accident or damage to the vessel or equipment, injury or illness among the crew requiring urgent treatment, and the closure (e.g. by strike action) of landing facilities in the Customs territory of the coasting vessel concerned.

This provision recommends that, on the vessel’s return, the goods should be regarded, and consequently treated, as remaining under the carriage of goods coastwise procedure provided that Customs are satisfied that they are indeed the goods originally placed under the procedure.

Customs would normally need to be satisfied as to the circumstances under which the vessel diverted to a place outside the Customs territory and might need to carry out additional checks to satisfy themselves that all is in order. They might decide, for example, to require that unloading of the cargo should not proceed until Customs are present and would pay particular attention if the reason for the vessel’s diversion seemed unconvincing or a similar diversion had been made previously.

5. Loading and unloading

Standard 7

Recommended Practice 8

See Chapter 3 of the General Annex (Clearance and other Customs formalities) and in particular the Guidelines to Standards 3.1 and 3.2 concerning Customs offices and hours of business.

In implementing Standard 7 it is not necessary that all places approved for the loading and unloading of goods under the carriage of goods coastwise procedure should be designated as Customs offices. Vessels carrying goods coastwise may range from large ships usually engaged in international maritime traffic to small craft operating only local services. Larger ports will normally be designated as Customs offices and approved for the purposes of coastwise traffic, but there will also be a requirement for smaller places (minor ports, harbours, docks, wharves), some public and others private, to be approved to meet the needs of trade and transport. This should be done in consultation with the trade and the list of approved places will need to be updated from time to time to take account of changes in trade and transport operations.

At all approved places there will need to be the appropriate equipment and storage facilities for handling the goods. In some instances, for example small docks and private wharves, transport may be limited to bulk goods (timber, fuel, construction materials, etc.) and may be carried out by only a few companies or even a single operator. These should pose no problem to Customs for goods in free circulation carried coastwise, but if undeclared imported goods are to be unloaded, Customs will need to be satisfied that adequate facilities and arrangements are in place. Some Customs administrations may find it necessary to approve some of the smaller places only for the handling of goods in free circulation.

The hours during which loading and unloading may be carried out will also need to be agreed taking account of the needs of trade and transport. At designated Customs offices the hours of working will be established in accordance with Standard 3.1 of the General Annex. At smaller places approved only for the purposes of this Chapter, Customs and the trade should consult and agree working hours taking account of the needs of both parties to ensure efficient organisation and administration.

Recommended Practice 8 provides for greater facilitation for vessels carrying only goods in free circulation and recommends that Customs allow such vessels to load or unload goods at any place or at any time. In implementing such free movement Customs will need to be satisfied that there is no revenue risk. However, there may be many occasions when there are no grounds for Customs intervention in local traffic of a straightforward nature.

Recommended Practice 9

At the request of the person concerned, the Customs should allow goods under the carriage of goods coastwise procedure to be loaded or unloaded at a place other than that normally approved for that purpose even if the vessel is also carrying imported goods that have not been declared or goods placed under another Customs procedure. Any expenses chargeable shall be limited to the approximate cost of the services rendered.

There may be occasions when, for trade or transport reasons, a coasting vessel’s operator may wish to unload or load goods under the carriage of goods coastwise procedure at a place other than that normally approved for the purpose. The goods to be loaded or unloaded may be goods in free circulation or undeclared imported goods. Additionally the vessel may be carrying goods which are under another Customs procedure, although the Recommended Practice does not provide for these latter goods to be loaded or unloaded.

In this situation, unlike that covered by the preceding Recommended Practice, Customs may decide that the request can be granted but that a Customs presence is necessary to ensure that their requirements are met as regards goods under the procedure and that, where appropriate, goods under another Customs procedure remain on board. If they do so decide, the expenses they can charge for attendance are limited to the approximate cost of the service rendered as in the General Annex Chapter 3. The reference to charging for attendance recognizes the fact that Customs may need to attend but does not recommend that they should do so. That decision will depend upon the circumstances of the case and whether or not Customs feel that there is a risk.

Recommended Practice 10

There is a range of possible reasons for a vessel to unload at a place other than that originally intended. It may be due to force majeure (see the comments relating to Recommended Practice 6) such as bad weather, accident or damage, injury to the crew, or it may in this instance be due to a change of instructions for commercial or transport reasons. The place to which the vessel is to be diverted may be a place already approved for the purposes of the carriage of goods coastwise procedure or it may be an unapproved place (see the comments to the previous Recommended Practice).

In the former case the vessel can be dealt with under the standing arrangements on the approved place although the vessel operator may wish to unload outside the agreed hours. In the latter case Customs will normally expect a reasonable explanation for the request and, where appropriate, to be satisfied that any undeclared imported goods can be dealt with properly. Depending upon the perceived risk, they may decide that Customs attendance is necessary.

In either circumstance, if Customs do attend, the expenses chargeable must be limited to the approximate cost of the services rendered.

Standard 11

When the transport of goods under the carriage of goods coastwise procedure is interrupted by accident or force majeure, the Customs shall require the master or other person concerned to take reasonable precautions to prevent the goods from entering into unauthorised circulation and to advise the Customs or other competent authorities of the nature of the accident or other circumstances which has interrupted the journey.

As seen in Recommended Practices 6 and 10 there are various situations which may result in a coastwise voyage not proceeding as planned. When such an unforeseen event occurs, it is the responsibility, usually of the master, to take all reasonable steps to safeguard the cargo and to prevent, in particular, goods not in free circulation from entering into unauthorized circulation. He is also required to notify Customs or other competent authorities, such as the police, coastguard or harbour authorities, of what has happened. Exactly what the master can do to safeguard the goods obviously depends on the actual circumstances and the problems he faces but, except in situations where lives or the vessel itself are in danger, it would be reasonable to expect the master to keep goods on board or to arrange for them to be unloaded and kept as secure as circumstances permit. He should also be expected to notify Customs or other competent authorities at the first reasonable opportunity.

6. Documentation

Standard 12

This Standard lays down the basic principle that goods which have not been declared or goods in free circulation which are under the carriage of goods coastwise procedure can be loaded or unloaded as soon as possible when the vessel arrives, notwithstanding the fact that goods under other Customs procedures may also be on board.

At places which are designated as Customs offices, loading and unloading will normally proceed under the standing arrangements at that office. At other approved places Customs will need to decide whether or not they wish to carry out a control or be present during loading or unloading. If they do not, the work should be allowed to proceed without delay. If they do, Customs should ensure that their requirements do not cause unnecessary delay. That decision will of course be taken in accordance with Customs perception of the risk taking account of factors such as the goods involved, the revenue record of the persons concerned, the storage arrangements at the approved place, etc.

See also Recommended Practice 8 providing for a greater facility when the vessel is carrying only goods in free circulation.

Standard 13

The Customs shall require the master or other person concerned to present only a single document giving details of the vessel, listing the goods to be carried under the carriage of goods coastwise procedure and stating the port or ports in the Customs territory at which they are to be unloaded. This document, once endorsed by the Customs, shall constitute the authorisation for the conveyance of the goods under the carriage of goods coastwise procedure.

See the comments relating to Standard 2, in particular as regards Customs’ need to be able to identify goods transported under the carriage of goods coastwise procedure and the means of satisfying themselves in that respect.

Under this Standard Customs require only a single document for control purposes. This must give details of the vessel and of the goods being carried under the coastwise procedure and must state the port or ports where the goods are to be unloaded. In some instances, particularly where goods are to be unloaded at more than one place, it may be useful to set out different categories of goods or to enumerate goods for unloading at different places in separate sections or on separate pages of the document (or list of goods - see Recommended Practices 15 and 16). Once satisfied, Customs should endorse the document which then constitutes the authorization for the transport of the goods on that vessel.

This document will enable Customs at the port or ports called at during the voyage to see what is being carried and what is to be unloaded at each place. Customs may require copies of the document if there are a number of places at which goods are to be unloaded (see Recommended Practice 16).

Goods already under another Customs procedure and goods still on board the vessel in which they arrived in the Customs territory will be covered separately by the appropriate documentation and are not included in the document relating to goods under the procedure covered by this Chapter. Customs may collect additional documents which are required by other competent authorities.

Recommended Practice 14

The Customs should grant a general authorisation to convey goods under the carriage of goods coastwise procedure for vessels which trade regularly between specified ports.

Recommended Practice 15

When a general authorisation has been granted for a vessel, the Customs should require only a list of the goods to be conveyed under the carriage of goods coastwise procedure before the goods are loaded.

These two Recommended Practices apply to vessels which regularly convey goods under the carriage of goods coastwise procedure between specified ports. Standing arrangements are often made between Customs and the persons who regularly use a Customs procedure, and Recommended Practice 14 follows that concept by providing that such vessels should be granted a general authorization to use the procedure instead of the master or operator having to make a separate application for each voyage.

Customs would need to be satisfied concerning the revenue record and sound performance of the company and the persons concerned when granting a general authorization, and might need to revert to specific authorizations if the master or operator has failed to comply with Customs requirements. Recommended Practice 15 consequently then provides that Customs should require only a list of the goods to be carried under the coastwise procedure when a vessel is operating under a general authorization.

In some administrations other competent authorities issue these authorizations for coastwise trade.

Recommended Practice 16

In relation to goods unloaded from a vessel covered by a specific authorisation, the Customs should require the master or other person concerned to present only a copy of the authorisation listing the goods to be unloaded at that port. In the case of a vessel granted a general authorisation, only a list of the goods to be unloaded should be required.

In those administrations which accept Recommended Practices 14 and 15 there will often be two categories of coasting vessel, those operating under a general authorization and those covered by a specific authorization. Recommended Practice 16, dealing with the final stage of the movement, the unloading of the goods, sets out what documentation Customs should require in the two different cases. Where the vessel is under a general authorization Customs should require only a list of the goods to be unloaded at that place. On the other hand, where the vessel is operating with a specific authorization Customs should require only a copy of that authorization which will list the goods to be unloaded.

Customs may decide to check that any general authorization is still valid. If Customs are present at the vessel before the unloading of the goods, they will expect to receive the authorization prior to the unloading. If Customs decide not to attend or to arrive later, they should permit the unloading to begin as soon as possible after the vessel’s arrival.

7. Security

Standard 17

The provisions on Security in Chapter 5 of the General Annex apply to the carriage of goods coastwise procedure. In particular Standard 5.4 specifies that, where national legislation provides, Customs shall not require security when they are satisfied that an obligation to them will be fulfilled.

Customs would not normally require a security for goods in free circulation being carried coastwise, but in some instances the goods might be liable to export duties and taxes if exported or might be subject to export prohibitions or restrictions.

Standard 17 emphasizes the point that, even in such cases, Customs should only require security if they believe, taking account of all relevant factors, that there is a risk that the goods being carried coastwise might be improperly diverted abroad.

In principle the risk might be considered greater in those Customs territories which are geographically close to their neighbours, so that it would not be too difficult for the coasting vessel to make an unauthorized diversion to a foreign port, but there is also the possibility of unauthorized transfer to another vessel sailing for a foreign port. These factors would need to be taken into account together with the revenue record of the master and operator, nature of the goods, stated destination and consignee, etc.

___________________

[1] ) An office of transit is a customs office situated at one of the external land borders of the EU or oneof the other participating countries of the Common Transit Convention.

Annex F - Processing

Annex F

Processing

CHAPTER 1

Inward processing

Definitions

For the purposes of this Chapter:

E1./ F3.

“compensating products ” means the products resulting from the manufacturing, processing or repair of goods for which the use of the inward processing procedure is authorized;

E2./ F1.

“equivalent goods ” means domestic or imported goods identical in description, quality and technical characteristics to those imported for inward processing which they replace;

E3./ F2.

“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, on the basis that such goods are intended for manufacturing, processing or repair and subsequent exportation.

Principle

1. Standard

Inward processing shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

Goods admitted for inward processing shall be afforded total conditional relief from import duties and taxes. However, import duties and taxes may be collected on any products, including waste, deriving from the processing or manufacturing of goods admitted for inward processing that are not exported or treated in such a way as to render them commercially valueless.

3. Standard

Inward processing shall not be limited to goods imported directly from abroad, but shall also be granted for goods already placed under another Customs procedure.

4. Recommended Practice

Inward processing should not be refused solely on the grounds of the country of origin of the goods, the country from which arrived or the country of destination.

5. Standard

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

6. Recommended Practice

When, in the execution of a contract entered into with a person established abroad, the goods to be used are supplied by that person, inward processing should not be refused on the grounds that goods identical in description, quality and technical characteristics are available in the Customs territory of importation.

7. Recommended Practice

The possibility of determining the presence of the imported goods in the compensating products should not be imposed as a necessary condition of inward processing when:

(a) the identity of the goods can be established :

by submitting the details o f the inputs and the process of manufacture of the compensating products; or
during the processing operations by Customs control;

(b) the procedure is terminated by the exportation of products obtained from the treatment of goods identical in description, quality and technical characteristics to those admitted for inward processing.

Placing goods under inward processing

(a) Authorization for inward processing

8. Standard

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

9. Standard

The inward processing authorization shall specify the manner in which operations permitted under inward processing shall be carried out.

10. Recommended Practice

When an application for inward processing is made after the importation of the goods and meets the criteria for authorization, the authorization should be granted retrospectively.

11. Recommended Practice

Persons who carry out regular inward processing operations should, on request, be granted a general authorization covering such operations.

12. Standard

Where goods admitted for inward processing are to undergo manufacturing or processing, the competent authorities shall fix or agree to 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 or agreeing to that rate.

13. Recommended Practice

Where the inward processing operations:

relate to goods who se 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.

(b) Identification measures

14. Standard

The requirements relating to the identification of goods for inward processing shall be laid down by the Customs. In carrying this out, due account shall be taken of the nature of the goods, of the operation to be carried out and of the importance of the interests involved.

Stay of the goods in the Customs territory

15. Standard

The Customs shall fix the time limit for inward processing in each case.

16. Recommended Practice

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

17. Recommended Practice

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

18. Recommended Practice

The competent authorities should permit processing operations to be carried out by a person other than the person accorded the facilities for inward processing. Transfer of ownership of the goods admitted for inward processing should not be necessary, provided that the person accorded the inward processing facilities remains responsible to the Customs for compliance with the conditions set out in the authorization for the entire duration of the operations.

19. Standard

Provision shall be made to perm it compensating products to be exported through a Customs office other than that through which the goods placed under inward processing were imported.

Termination of inward processing

(a) Exportation

20. Standard

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

21. Standard

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 inward processing.

(b) Other methods of disposal

22. Recommended Practice

Provision should be made for suspending or teminating inward processing by placing the imported goods or the compensating products under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

23. Recommended Practice

National legislation should provide that the amount o f 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 imported goods admitted for inward processing.

24. Standard

Provision shall be made for terminating inward processing in respect of goods lost as a consequence of the nature of the goods, insofar as the compensating products are exported, provided that such loss is duly established to the satisfaction of the Customs.

25. Recommended Practice

The products obtained from the treatment of equivalent goods should be deemed to be compensating products for the purposes of this Chapter (setting-off with equivalent goods).

26. Recommended Practice

When setting-off with equivalent goods is allowed, the Customs should permit the exportation of compensating products prior to the importation of goods for inward processing.

CHAPTER 2

Outward processing

Definitions

For the purposes of this Chapter:

E1./ F2.

“compensating products ” means the products obtained abroad and resulting from the manufacturing, processing or repair of goods for which the use of the outward processing procedure is authorized;

E2./ F1.

“outward processing ” means the Customs procedure under which goods which are in free circulation in a Customs territory may be temporarily exported for manufacturing, processing or repair abroad and then re-imported with total or partial exemption from import duties and taxes.

Principle

1. Standard

Outward processing shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Recommended Practice

Outward processing should not be refused solely on the grounds that the goods are to be manufactured, processed or repaired in a given country.

3. Standard

Temporary exportation of goods for outward processing shall not be restricted to the owner of the goods.

Placing goods under outward processing

(a) Formalities prior to temporary exportation of the goods

4. Standard

National legislation shall enu merate the cases in which prior authorization is required for outward processing and specify the authorities empowered to grant such authorization.

Such cases shall be as few as possible.

5. Recommended Practice

Persons who carry out regular outward processing operations should, on request, be granted a general authorization covering such operations.

6. Recommended Practice

The competent authorities should fix a rate of yield for an outward processing operation when they deem it necessary or when it will facilitate the operation. The description, quality and quantity of the various compensating products shall be specified upon fixing that rate.

(b) Identification measures

7. Standard

The requiremen ts relating to the identification of goods for outward processing shall be laid down by the Customs. In carrying this out, due account shall be taken of the nature of the goods, of the operation to be carried out and of the importance of the interests involved.

Stay of the goods outside the Customs territory

8. Standard

The Customs shall fix the time limit for outward processing in each case.

9. Recommended Practice

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

Importation of compensating products

10. Standard

Provision shall be made to permit compensating products t o be imported through a Customs office other than that through which the goods were temporarily exported for outward processing.

11. Standard

Provision shall be made to permit compensating products to be imported in one or more consignments.

12. Standard

Upon request by the person concerned, the competent authorities shall allow goods temporarily exported for outward processing to be re-imported with exemption from import duties and taxes if they are returned in the same state.

This exemption shall not apply to import duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing.

13. Standard

Unless national legislation requires the re-importation of goo ds temporarily exported for outward processing, provision shall be made for terminating the outward processing by declaring the goods for outright exportation subject to compliance with the conditions and formalities applicable in such case.

Duties and taxes applicable to compensating products

14. Standard

National legislation shall specify the extent of the exemption from import duties and taxes granted when compensating products are taken into home use, and the methods of calculation of that exemption.

15. Standard

The exemption from import duties and taxes provided for in respect of compensating products shall not apply to duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing.

16. Recommended Practice

Where goods temporarily exported for outward processing have been repaired abroad free of charge, provision should be made for them to be re-imported with total exemption from import duties and taxes under the conditions laid down in national legislation.

17. Recommended Practice

The exemption from import duties and taxes should be granted if the compensating products were placed under another Customs procedure prior to being declared for home use.

18. Recommended Practice

The exemption from import duties and taxes should be granted if the ownership of the compensating products is transferred before they are taken into home use.

CHAPTER 3

Drawback

Definitions

For the purposes of this Chapter:

E1./ F1.

“drawback ” means the amount of import duties and taxes repaid under the drawback procedure;

E2./ F3.

“drawback procedure ” means the Customs procedure which, when goods are exported, provides for a repayment (total or partial) to be made in respect of the import duties and taxes charged on the goods, or on materials contained in them or consumed in their production;

E3./ F1.

“equivalent goods ” means domestic or imported goods identical in description, quality and technical characteristics to those under the drawback procedure which they replace.

Principle

1. Standard

The drawback procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

National legislation shall enumerate the cases in which drawback may be claimed.

3. Recommended Practice

National legislation should include provision for the application of the drawback procedure in cases where the goods which have borne import duties and taxes have been replaced by equivalent goods used in the production of exported goods.

Conditions to be fulfilled

4. Standard

The Customs shall not withhold payment of drawback solely because, at the time of importation of the goods for home use, the importer did not state his intention of claiming drawback at exportation. Similarly, exportation shall not be mandatory when such a statement has been made at importation.

Duration of stay of the goods in the Customs territory

5. Recommended Practice

Where a time limit for the exportation of the goods is fixed beyond which they no longer qualify for drawback, this should, upon request, be extended if the reasons are deemed valid by the Customs.

6. Recommended Practice

Where a time limit is fixed beyond which claims for drawback will not be accepted, provision should be made for its extension for commercial or other reasons deemed valid by the Customs.

Payment of drawback

7. Standard

Drawback shall be paid as soo n as possible after the claim has been verified.

8. Recommended Practice

National legislation should provide for the use of electronic funds transfer for the payment of drawback.

9. Recommended Practice

Drawback should also be paid on deposit of the goods in a Customs warehouse or introduction of the goods into a free zone, on condition that they are subsequently to be exported.

10. Recommended Practice

The Customs should, if so requested, pay drawb ack periodically on goods exported during a specified period.

CHAPTER 4

Processing of goods for home use

Definition

For the purposes of this Chapter:

E1./ F1.

“processing of goods for home use ” means the Customs procedure under which imported goods may be manufactured, processed or worked, before clearance for home use and under Customs control, to such an extent that the amount of the import duties and taxes applicable to the products thus obtained is lower than that which would be applicable to the imported goods.

Principles

1. Standard

Processing of goods for home use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

The granting of the procedure of processing of goods for home use shall be subject to the conditions that:

the Customs are able to satisfy themselves that the products resulting from the processing of goods for home use have been obtained from the imported goods; and
the original state of the goods cannot be economically recovered after the manufacturing, processing or working.

Field of application

3. Standard

National legislation shall specify the categories of goods and operations allowed for processing of goods for home use.

4. Standard

Processing of goods for home use shall not be limited to goods imported directly from abroad, but shall also be granted for goods already placed under another Customs procedure.

5. Standard

The right to process goods for home use shall not be limited to the owner of the imported goods.

6. Recommended Practice

Persons who carry out regular processing of goods for home use should, on request, be granted a general authorization covering such operations.

Termination of processing of goods for home use

7. Standard

Processing of goods for home use shall be terminated when the products resulting from the processing are cleared for home use.

8. Standard

Where justified by the circumstances and at the request of the person concerned, the Customs shall approve termination of the procedure when the products obtained from the manufacturing, processing or working are placed under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

9. Standard

Any waste or scrap resulting from the processing of goods for home use shall be liable, if cleared for home use, to the import duties and taxes that would be applicable to such waste or scrap imported in that state.

Guidelines to Annex F

Guidelines to the legal text

Chapter 1

INWARD PROCESSING

1. Introduction

National legislation often provides for conditional relief from import duties and taxes for goods that are to be exported after having undergone specified manufacturing, processing or repair. This is the Customs procedure of inward processing.

Inward processing is not the only Customs procedure or practice to grant tax concessions on imported goods which are to be processed before re-exportation. The use of the drawback procedure or free zones is also applicable in this context.

2. Purpose and scope

The main purpose of the inward processing procedure is to make it possible for national enterprises to offer their products or services on foreign markets at competitive prices, thereby promoting economic growth and helping to provide more employment opportunities for national labour.

As a general rule, inward processing allows total conditional relief from import duties and taxes (including internal taxes such as Value Added Tax (VAT) or Goods and Services Tax (GST) levied on the importation of goods). However, import duties and taxes may be charged on waste deriving from the processing or manufacturing of the goods. The imported goods must be intended for re-exportation within a specific period after having undergone manufacturing, processing or repair. The products obtained as a result of the manufacturing, processing or repair are called "compensating products". These compensating products need not be obtained solely from goods admitted for inward processing. It may be necessary to use goods of national origin or those previously imported with payment of import duties and taxes.

Goods may be directly placed under the inward processing procedure after they are brought into the Customs territory. Goods under temporary admission, including goods under Customs transit, moving from a Customs warehouse or from a free zone, should also be eligible for inward processing. Proper discharge of the Customs procedure under which the goods were originally imported may be made a prerequisite for the granting of the inward processing procedure.

3. Essential features

3.1. Benefits

The benefits of this Customs procedure are several. The main benefit for trade is the possibility to produce or process goods without the burden of paying Customs duty and taxes on imported goods that will be processed or used in production. The main benefit for the administration is the extra boost to the domestic economy afforded by this processing or producing of goods, thereby strengthening the competitiveness of its industry.

Inward processing covers not only general trade processing but also contract or "job" processing in which the foreign customer remains the owner of the imported goods.

It also does not imply that the processing must involve any major change increasing the value of the goods. Goods that are to undergo minor operations, such as packaging, packing or re-packing of goods, may also be covered by this procedure.

3.2. Definitions

E1/F3	“compensating products ” means the products resulting from the manufacturing, processing or repair of goods for which the use of the inward processing procedure is authorized;
E2/F1	“equivalent goods ” means domestic or imported goods identical in description, quality and technical characteristics to those imported for inward processing which they replace;
E3/F2	“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, on the basis that such goods are intended for manufacturing, processing or repair and subsequent exportation.

3.3. Principle

Standard 1

Inward processing shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Inward processing. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 5 on Security should be read in conjunction with this Chapter on Inward processing.

In accordance with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

3.4. Field of application

Standard 2

National legislation may provide that waste having a commercial value is liable to import duties and taxes. This would be calculated either on the basis of its own tariff description or on the basis of the tariff description of the goods from which the waste was derived. In the latter case Customs may consider it unnecessary to inspect the waste.

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

Standard 3

Inward processing shall not be limited to goods imported directly from abroad, but shall also be granted for goods already placed under another Customs procedure.

Goods may qualify for Inward processing irrespective of the Customs procedure they were under immediately prior to the application for inward processing. This would apply, for example, to goods being removed from a Customs warehouse or a free zone, or for goods under transit or under temporary admission, provided that the conditions for inward processing are met and that the previous Customs procedure is properly discharged.

Recommended Practice 4

Inward processing should not be refused solely on the grounds of the country of origin of the goods, the country from which arrived or the country of destination.

The objective of this Recommended Practice is to exclude any discrimination in applying the Customs formalities for the inward processing procedure because of the country of origin, departure or destination of the goods.

Contracting Parties are authorized by Article 3 of the Convention to apply all prohibitions and restrictions deriving from their national legislation. However, in the particular case of goods that are to be re-exported, thereby staying only temporarily in the Customs territory, Contracting Parties are encouraged not to apply those prohibitions and restrictions which are based on the country of origin of the goods, the country from which they arrived or their country of destination.

This does not prevent Customs administrations from varying the degree of Customs control due to particular circumstances. For example, more strict control measures may be exercised for goods on which prohibitions or restrictions apply when they are declared for home use. However in exercising this control function, Customs administrations should use risk management techniques as described in Chapter 6 of the General Annex and its Guidelines.

Standard 5

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

Inward processing covers not only general trade processing where the importer is the owner of the goods, but also contract or "job" processing in which the foreign customer remains the owner of the imported goods and the actual importer only processes the goods under contract with the (foreign) owner.

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

In regard to any need to obtain an authorization, see Standard 8 and its Guidelines.

Recommended Practice 6

When, in the execution of a contract entered into with a person established abroad, the goods to be used are supplied by that person, inward processing should not be refused on the grounds that goods identical in description, quality and technical characteristics are available in the Customs territory of importation.

In some cases the competent authorities may decide that inward processing be subject to the condition that the proposed operations are beneficial to the national economy and do not conflict with the interests of national producers of goods that are identical or similar to those for which admission is requested. The right to import goods temporarily for inward processing may thus be made subject to the condition that the competent authorities approve the processing operations as beneficial to the national economy. Recommended Practice 6, however, encourages administrations to apply the procedure broadly for imported goods and not to restrict it to certain categories of goods based on their domestic availability.

Recommended Practice 7

The possibility of determining the presence of the imported goods in the compensating products should not be imposed as a necessary condition of inward processing when :

(a) the identity of the goods can be established :

- by submitting the details of the inputs and the process of manufacture of the compensating products; or

- during the processing operations by Customs control; or

Recommended Practice 7 encourages Customs to accept several methods for identifying the quantities of imported goods in the compensating products and to allow the exportation of identical goods in lieu of the imported goods. This allows a more facilitative application of the procedure to stimulate international trade.

4. Placing goods under inward processing

4.1. Authorization for inward processing

Standard 8

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

In many administrations an authorization for the inward processing procedure must be obtained from a competent authority. This competent authority may be Customs or another governmental agency empowered to approve such authorizations based on economic policy (e.g. the government department responsible for economic affairs or external trade). However, Customs will ensure that all the conditions required for the procedure are fulfilled and issue the authorization.

4.2. Application for an authorization

The authorization is issued by Customs at the request of the person who carries out the processing operations or who arranges for them to be carried out. A request for the authorization can be made :

- by a standard request or

- by a simplified request.

Recommended Practice 10 of this Chapter allows the possibility for traders to receive a retrospective authorization.

4.2.1. Standard request

For a standard request the authorization is obtained in advance, before the goods can be placed under the inward processing procedure. A standard request is generally applicable for persons who have the intention of carrying on large-scale or continuous inward processing operations.

The following may be required in the application form and be approved of in the authorization itself :

Name or business name and address

- of the applicant.

- of the processor (if the applicant and the operator are not the same person).

Information on the goods to be processed :

- The trade and/or technical description. The description should be sufficiently clear and detailed to enable a decision to be taken on the application. Where the equivalent compensation system is to be used, whether or not with prior exportation, the commercial quality and technical characteristics must be indicated as well. The description should entail enough particulars to enable Customs to check on the use of the authorization, with particular reference to the expected rates of yield.

- Indication of the tariff classification.

- Estimated quantity stated by reference to imports over a given period.

- Estimated Customs value stated by reference to imports over a given period.

- Indication of the country of origin envisaged.

information on the compensating products and planned export operations :

- The trade and/or technical description. The description for each compensating product obtained should be sufficiently clear and detailed to enable a decision to be taken on the application. Where the equivalent compensation system is to be used, whether or not with prior exportation, the commercial quality and technical characteristics must be indicated as well. The description should entail enough particulars to enable Customs to check on the use of the authorization, with particular reference to the expected rates of yield.

- Indication of the tariff classification (for each compensating product obtained);

- The main compensating products;

- The planned export operations.

- Whether or not a special mode is applied for:

Equivalent compensation;
Prior exportation.

- Expected rate of yield or method of how such rate should be established by Customs.

- Description of the nature of processing operations to be carried out on the imported goods in order to produce the compensating products.

- Address of the place where the processing operations is to be carried out.

- Estimation of time needed :

Indication of the average time needed to carry out the processing operations for a given batch of the goods (expressed by unit or quantity, for example);

Indication of the time likely to elapse between completion of the processing operations and re-export of the compensating products (period of re-exportation);

if the special mode "prior exportation" is to be used, an indication of the time required for the procurement of the import goods and their transport to the Customs territory.

- Indication of the most suitable method(s) of identifying the imported goods incorporated in the compensating products.

- Suggested Customs office which would be suitable as the :

Customs office responsible for the supervision of the procedure;

Customs office where the Goods declaration for inward processing can be accepted;

Customs office of discharge where the Goods declaration for the appropriate Customs procedure can be accepted.

- Indication of the period which is planned to import goods temporarily for inward processing (intended duration of the authorization).

If the special mode "equivalent compensation" is to be used, the tariff classification, the commercial quality and technical characteristics of the equivalent goods. This is necessary to enable Customs to make the necessary comparison between the imported goods and equivalent goods.

4.2.2. Simplified request

A simplified request for the authorization is made by lodging the Goods declaration for inward processing. This is normally applied in situations where the importer intends to carry out a single and unique inward processing and where controlling the processing operations can be done quite easily.

A simplified request may also be limited to situations in which the inward processing has little economic impact, e.g. operations carried out under a job-processing contract, operations involving goods of a non-commercial nature, repairs or when the operations do not exceed a certain amount per applicant per calendar year.

Where a simplified request for the inward processing procedure is permitted, Customs should accept the lodging of the Goods declaration for the inward processing procedure as an application for authorization. In this case, Customs’ registering of the Goods declaration constitutes the authorization and subjects the goods to the conditions governing the authorization.

Where the information in the Goods declaration does not contain all the information necessary to grant the authorization for inward processing, Customs may require that the declarant submit a separate document containing the following information :

- the name or business name and address of the applicant where the person applying to use the procedure is not the same as the declarant;

- the name or business name and address of the operator where the operator is not the same as the applicant or declarant;

- the nature of the processing operation;

- the trade and/or technical description of the compensating products;

- the estimated rate of yield or, where appropriate, the method by which that rate is to be determined;

- the estimated period for exportation; and

- the place where it is intended to carry out the processing operation.

In many countries where the simplified request procedure is used, the full information will normally have to be provided on the Goods declaration. This is because Customs rely on the information in the Goods declaration as the basis for the authorization.

4.3. Administrative and financial responsibility

To ensure correct application of the provisions governing the inward processing procedure and to facilitate controls, Customs generally requires the person authorized to keep or ensure the keeping of stock records ("inward processing records"). The records should indicate the quantities of goods entered for the procedure and of compensating products obtained, all the particulars needed to monitor the operation, and the correct calculation of any import duties and taxes which may be payable. The term "records" should be interpreted as covering all books of account of the person concerned, including stock accounts.

The "inward processing records" must be made available to the supervising Customs office to enable it to carry out the checks necessary for the proper implementation of the procedure. Where the processing operations are being carried out in two or more establishments, the stock records should contain the information pertaining to the implementation of the procedure in each establishment.

Where the normal commercial records kept by the person concerned will allow supervision of the procedure, Customs can accept these as the valid "inward processing records".

4.4. Control and audit

Control and audit are described in Chapter 6 of the General Annex and its Guidelines. Operations allowed under the inward processing procedure may be carried out at premises authorized by Customs such as the premises of the firm, Customs warehouses and free zones. These establishments usually have to be located in a specified region or place and be approved by Customs. Customs may check that the establishment possesses the necessary equipment for the proposed processing operations. As a facility, users of the system may declare a specified percentage of compensating products for home use and may have Customs examinations carried out at their premises.

Inward processing premises are not necessarily subject to special Customs surveillance. The main characteristics of control arrangements can be that :

- the competent authorities specify the requirements as to the location and lay-out of the premises for inward processing; and

- examination of the goods to be used and of the compensating products to be removed from the premises will generally be carried out at the premises.

When authorizing goods to be placed under inward processing, it may be useful to establish a list of qualifying operations for the procedure. The circumstances in which inward processing is allowed mainly concern the possibility of determining the presence of the imported goods in the compensating products, the time limits for inward processing and the obligations of persons who import goods under this procedure.

4.5. Examination of the goods

The examination of goods is dealt with in Chapter 3 of the General Annex and its Guidelines. Examination of the goods generally takes place at the Customs office where the Goods declaration for the inward processing procedure is lodged.

Examination of the goods for inward processing at the premises of the person concerned should be allowed, for example, when it would facilitate the examination or when the nature of the goods is such that examination at the Customs office would be inconvenient. Obviously Customs will be able to allow inspection on private premises only to the extent that examining officers can be made available for the work.

Customs may require that goods for examination at the premises of the person concerned be transported under Customs seal or some other form of control from the office of importation to the place of destination.

Standard 9

The inward processing authorization shall specify the manner in which operations permitted under inward processing shall be carried out.

The imported goods can undergo manufacturing, processing or repair during the time placed under the procedure. As indicated above, it may be useful to establish a list of qualifying operations for inward processing. Examples of manufacturing, processing or repair could include :

- the working of goods, including erecting or assembling them or fitting them to other goods;

- the processing of goods;

- the repair of goods, including restoring them and putting them in order;

- packaging goods, packing or re-packing; and

- the use of certain goods which are not to be found in the compensating products, but which allow or facilitate the production of those products, even if they are entirely or partially consumed in the process. (Contracting Parties may make up a list of these goods or a list of goods that are excluded.)

4.6. Aids to manufacturing

Within the context of inward processing, exemption from import duties and taxes may be granted for goods consumed during the production of exported goods without actually being contained in them. This can include goods such as catalysts and accelerators or retarders of chemical reactions which, on being used to obtain compensating products, disappear entirely or partially without actually being contained in those products. The exemption may be granted only insofar as the compensating products obtained are exported. However, it does not normally extend to mere aids to manufacture, such as lubricants.

This exemption, which is provided for in the national legislation of many countries, is based on the fact that the economic value of the imported goods may be regarded as having been incorporated into the compensating products.

Lubricants are cited as an example of what is meant by "mere aids to manufacture". Other examples are power sources, tools and machines used in the manufacture of the compensating products. By contrast, catalysts and accelerators or retarders of chemical reactions are essential inputs in the process of manufacture and hence may qualify for exemption from import duties and taxes.

Recommended Practice 10

When an application for inward processing is made after the importation of the goods and meets the criteria for authorization, the authorization should be granted retrospectively.

The principle contained in this Recommended Practice is an extension of the facility provided in Standard 3 of this Chapter. Recommended Practice 10 offers traders the opportunity to be granted a retrospective authorization for inward processing for goods that have already been cleared for home use. The main advantages are that it offers a greater facility to traders by enabling duties and taxes to be repaid more quickly than would be possible under the drawback procedure (where it is applied), and in some instances enables them to obtain a refund of duties and taxes which might not be available under other procedures.

In granting this retrospective authorization Customs should assure themselves the reasons for the request are valid and that the traders' records provide accurate information for audit and verification. National legislation will determine the time limit for which retrospective authorizations can be granted.

In addition, Customs should take into consideration any time limits applicable to the refund of duties and taxes. (See Chapter 4 of the General Annex and its Guidelines.)

Recommended Practice 11

Persons who carry out regular inward processing operations should, on request, be granted a general authorization covering such operations.

Granting of a general authorization for traders who perform continuous inward processing operations is a measure of facilitation to both the trader and Customs. Such traders will normally have established good records of compliance with Customs law and therefore can be eligible for less Customs intervention for each individual transaction. For Customs this reduces the manpower and paperwork requirements for reviewing and granting multiple individual authorizations. The general authorization may be made subject to the condition that the goods held under inward processing should not exceed a certain quantity and that the processing operations should be completed within a prescribed time limit.

Standard 12

The rate of yield indicates the quantity of goods under inward processing that is considered to have been used to obtain the compensating products. In fixing this rate, account may be taken of losses resulting from the nature of the goods used, such as evaporation or drying out of the goods.

The rate of yield or the method of determining the rate should be set on the basis of production data and be identifiable in the operator's records. The rate or method of determining the rate is also subject to retrospective verification by Customs.

It should be noted that Customs may not be the only authorities concerned in fixing the rate of yield.

Recommended Practice 13

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.

Fixing standard rates of yield can simplify matters both for Customs and for persons granted inward processing. These standard rates may apply to processing operations carried out by the same person; they may also be fixed in relation to a specific industrial sector. Standard rates are normally used where circumstances so warrant and, in particular, for processing operations that are usually carried out under clearly defined technical conditions involving goods of substantially uniform characteristics and resulting in the production of compensating products of uniform quality. The standard rates of yield may be set on the basis of actual data previously ascertained.

4.7. Identification measures

Standard 14

For the identification of goods admitted for inward processing, Customs will normally rely on foreign seals affixed to the goods, on marks, numbers or other indications permanently affixed to them, on the description of the goods or scale plans or photographs. Customs may also take samples or affix Customs marks (seals, stamps, perforations, etc.) in order to identify the goods. Where national legislation or the authorization provides Customs may also have access to the importers' records.

Customs should take due account of the nature of the goods when laying down their requirements for identification, as well as of the interests involved in the goods themselves, such as value or national economic importance. Care must be taken to choose methods of identification which do not damage the goods. Where the interests involved are small (for example, goods of low value or not marketable in the country of importation), the identification requirements can be reduced.

Stay of the goods in the Customs territory

Standard 15

The Customs shall fix the time limit for inward processing in each case.

Customs must specify the period within which the compensating products must be exported. This period should take account of the time required to carry out the processing operations and to dispose of the compensating products, as well as the economic conditions in the Customs territory and the specific needs of the applicant. The period normally will begin on the date of registry of the declaration that enters the imported goods for the Inward processing procedure.

It may not be necessary for the maximum time limit fixed in each case to be automatically granted at importation. For example, if national legislation lays down a time limit of one year for the inward processing of goods intended for repair, it may not always be appropriate to grant this maximum time limit, particularly in cases where the proposed repairs are only minor.

For reasons of simplification, a period that commences in the course of a calendar month or quarter could be ended on the last day of a subsequent calendar month or quarter.

If a general time limit for inward processing is fixed instead of an individual time limit for each particular case, this may be regarded as granting a greater facility.

Recommended Practice 16

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

Whenever a duly substantiated request by the holder of the authorization to extend the time limit is submitted, Customs should grant the extension. Where the circumstances so warrant, Customs is also encouraged to extend the time limit even when the time limit originally set has expired.

Recommended Practice 17

As long as the obligations to Customs are clearly transferred with a transfer of ownership of the imported goods under the inward processing procedure, Customs should allow this transfer of ownership to take place. When the imported goods or the compensating products are transferred to a third person, the transferor should first be discharged from his obligations under the inward processing for the quantities transferred, and these quantities should then be placed under the same procedure for the account of the new owner.

Recommended Practice 18

In order to allow as much facilitation and operational flexibility to the persons authorized for the inward processing procedure, yet without compromising revenue controls, Customs should allow the person concerned to submit an oral application for permission to sub-contract the processing operations. As a rule it is unnecessary to lodge a new Goods declaration for inward processing in the name of the person entrusted with carrying out part of the processing operations provided for.

This covers not only general trade processing but also contract or "job" processing in which the foreign customer remains the owner of the imported goods.

Standard 19

Provision shall be made to permit compensating products to be exported through a Customs office other than that through which the goods placed under inward processing were imported.

Imported goods or compensating products under the inward processing procedure are normally presented to the Customs office assigned for supervising the discharge of the procedure. However, as a measure to facilitate operators’ logistics, Customs may allow the goods to be presented for export at another Customs office. Customs may require the declarant to indicate the suitable Customs office of discharge in the application for the authorization, or they may allow the declarant to produce the compensating products at any competent Customs office of his choice.

Where the declarant regularly exports compensating products through different Customs offices, Customs may centralize his accounts in a specific Customs office.

6. Termination of inward processing

6.1. Exportation

Standard 20

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

The subsequent exportation of the compensating products is a key element of the inward processing procedure. The obligation to export the compensating products has been provided for in order to avoid disturbing the balance of equal competition between processors who use goods under the inward processing procedure and those who make direct declaration for home use of the goods they import.

Upon expiry of the maximum time limit for inward processing, the goods must be disposed of in one of the ways provided for by national legislation or by the authorization. Exportation of the compensating products is the normal method of terminating inward processing. It is not always possible or necessary to export all the compensating products or the imported goods in an unaltered state in one consignment. Therefore Customs must allow exportation to take place in partial consignments.

A separate Goods declaration must be made for each partial consignment of compensating products. This is to allow the discharge of the inward processing procedure to take place in stages as the goods are placed under an assigned Customs procedure (exportation or another approved Customs procedure), and to allow the controls necessary to ensure final disposition of all the goods to be applied.

The declaration discharging the inward processing procedure should contain a reference to the authorization granting the inward processing in order to facilitate the control measures to be carried out by Customs. This Goods declaration should also contain a description of the compensating products or imported goods in the unaltered state that corresponds to the specifications in the authorization, as well as the particulars needed to permit discharge of the inward processing declaration for the goods that have been utilised.

In some countries to ensure that the goods leave the Customs territory, the compensating products will be placed under the Customs transit procedure before exportation when, for example, the exportation formalities are accomplished at an inland Customs office.

As soon as Customs have satisfied themselves that all the conditions in relation to the inward processing procedure have been complied with and total discharge has been granted, the importer should be released from all his obligations to Customs for those goods.

Standard 21

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 inward processing.

Generally, the person accorded the inward processing facility may terminate the procedure at any time by the re-exportation of the goods in the same state as imported.

6.2. Other methods of disposal

Recommended Practice 22

Provision should be made for suspending or terminating inward processing by placing the imported goods or the compensating products under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

Although the subsequent exportation of the compensating products is a key element of the inward processing procedure Customs may, however, allow the compensating products to be declared for another Customs procedure such as home use, Customs transit or Customs warehousing.

Home use may only be allowed up to a prescribed percentage. When home use is an approved Customs procedure to terminate inward processing, compensatory interest may be levied in order to avoid trade distortion.

The inward processing procedure is discharged for the imported goods when the compensating products or goods in the unaltered state have been declared for another Customs procedure and all other conditions for use of the procedure have been complied with. Customs may require to declarant to produce not only the Goods declaration needed to terminate the inward processing, but also a Goods declaration appropriate to the new Customs procedure under which the imported goods or the compensating products are to be placed.

Discharge of the inward processing procedure will be granted for the quantities of either imported goods corresponding to the compensating products or the imported goods in the unaltered state that are assigned to another Customs procedure.

The Goods declaration to assign the imported goods or the compensating products to another Customs procedure must contain all the particulars necessary for that procedure.

Where prohibitions or restrictions have been held in abeyance by declaring the goods for the inward processing procedure, these prohibitions and restrictions come into force again when the imported goods or the compensating products are declared for home use.

Recommended Practice 23

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 imported goods admitted for inward processing.

As a principle, there should be no difference in the amount of duties and taxes on goods because of the manner in which they were imported for home use, i. e. whether imported directly or declared for home use after being placed under another Customs procedure, such as inward processing.

Where Customs duties and taxes are due, the proportion of imported goods incorporated in the compensating products must be calculated in order to determine the amounts to be charged. The calculations can be based either on the quantities of the imported goods and the compensating products or on the values of these goods and products.

National legislation will prescribe 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 the rates of the import duties and taxes applicable. (See Standards 4.1 and 4.5 of the General Annex.) This might be when the goods are placed under the inward processing procedure or it might be when the Goods declaration for home use is lodged. The point in time to be taken into consideration in fixing of the quantity of the goods is a matter that arises more particularly for goods subject to specific duties and liable to inadvertent loss because of evaporation, spillage, etc.

In the event of a Goods declaration for home use for compensating products that have been sent abroad for supplementary processing, account may be taken in calculating the import duties and taxes, besides those applicable to the goods initially used, of the difference between :

(a) the amount of the import duties and taxes that would be chargeable on the products re-imported after supplementary processing, and

(b) the amount of the import duties and taxes that would be chargeable on the products temporarily exported for supplementary processing if they were imported directly from the country in which such processing had taken place.

Standard 24

Provision shall be made for terminating inward processing for goods lost as a consequence of the nature of the goods, insofar as the compensating products are exported, provided that such loss is duly established to the satisfaction of the Customs.

The obligation to export the compensating products has been provided for in order to avoid disturbing the balance of equal competition between processors who use goods under the inward processing procedure and those who make direct declaration for home use of the goods they import.

When the nature or technical characteristics of the imported goods are altered as a result of unforeseeable circumstances or force majeure, so that it becomes impossible to obtain the compensating products for which an inward processing authorization has been issued, the person concerned should inform the supervising Customs office of what has happened. For the discharge calculation the altered goods may be considered as goods that are totally destroyed.

In the event of the total destruction or irretrievable loss of goods in the unaltered state or of compensating products, Customs should ask the person concerned to produce evidence of the actual quantity of imported goods destroyed or lost. If not this is not possible, the proportion of imported goods destroyed or lost should be calculated by reference to the proportion of imported goods in stocks of goods of the same kind held by the holder of the authorization at the time when the destruction or loss occurred. Losses may, for example, be caused by evaporation or drying out of the goods.

National legislation may lay down standard loss percentages for specified categories of goods admitted for inward processing. This may be taken into account in fixing the rate of yield of the processing operation under the terms of Standard 12.

Recommended Practice 25

The products obtained from the treatment of equivalent goods should be deemed to be compensating products for the purposes of this Chapter (setting-off with equivalent goods).

National legislation usually requires that the products exported have been obtained from the goods imported. In some cases, however, authorization may be given for the use of goods equivalent to those admitted for inward processing for the production of the actual compensating products.

When this authorization is granted, the equivalent goods must normally be of the same commercial quality and have the same technical characteristics as the imported goods. However, in specific cases, the equivalent goods may be allowed to be at a more advanced stage of manufacture than the imported goods.

The particulars of the equivalent goods in the Goods declaration should be sufficiently detailed to make it possible to identify the particulars referred to in the authorization (e.g. tariff classification, commercial quality and technical characteristics).

Recommended Practice 26

When setting-off with equivalent goods is allowed, the Customs should permit the exportation of compensating products prior to the importation of goods for inward processing.

As a further facilitation to persons granted the inward processing procedure, authorization could be given for the compensating products obtained from equivalent goods to be exported from the Customs territory before the arrival of the imported goods (prior exportation).

Where prior exportation is granted, Customs must specify the period within which the imported goods are to be declared for the procedure. That period will normally run from the date of registry of the export declaration for the compensating products obtained from the corresponding equivalent goods, taking account of the time required for the procurement and transport to the Customs territory of the goods imported. Customs may grant an extension of this period on submission of a duly substantiated request by the person granted the authorization.

Where prior exportation is granted, the procedure will be discharged when Customs have registered the Goods declaration for the imported goods.

Chapter 2

OUTWARD PROCESSING

1. Introduction

National legislation often provides for total or partial exemption from import duties and taxes on goods declared for home use which are obtained by manufacturing, processing or repair of temporarily exported goods in free circulation. The Customs procedure which provides for this exemption is outward processing.

2. Purpose and scope

The main purpose of the outward processing procedure is to make it possible for national enterprises to reduce their production costs thereby making products available at more competitive prices. The term “processing” in this context may include packaging, packing or repacking of goods, in addition to the manufacturing and processing operations included in the definition of outward processing. The latter would also cover goods that undergo minor operations.

The application of this procedure may be made subject to the condition that the processing operations envisaged are not detrimental to national interests. The exemption granted on goods that are imported after processing abroad is usually partial. However it may be total, particularly where repairs have been carried out abroad free of charge. Duties and taxes in this context also include internal taxes levied on the importation of goods, such as Value Added Tax or Goods (VAT) and Services Tax (GST).

3. Essential Features

The outward processing procedure makes it possible to temporarily remove goods from the Customs territory which are there in free circulation. Compensating products resulting from the outward processing operations abroad can then be imported with total or partial exemption from import duties and taxes.

Thus, unlike goods under the outright exportation procedure, goods in free circulation in the Customs territory which are temporarily exported are, on their return to the Customs territory (after having been repaired, manufactured or incorporated into other goods), continue to be regarded as goods in free circulation to which import duties do not apply (totally or partially).

For that reason, goods exported temporarily must be subject to suitable identification measures making it possible to establish that the compensating products were obtained totally or partially from the temporarily exported goods.

At exportation it is essential that the goods be declared for the outward processing procedure. The export declaration is both an instrument by which the exporter states that he wants the goods to be placed under the outward processing procedure and a formality enabling Customs to carry out any necessary controls.

In some administrations this procedure is also applied to goods that were in the Customs territory under the inward processing procedure. In these administrations the

exported goods or compensating products on subsequent re-importation can be placed again under the inward processing procedure.

These Guidelines are aimed at developing general principles governing the outward processing procedure, the formalities to be completed under the normal procedure, and ways of simplifying the formalities and/or procedures. Some countries provide for the use of a “replacement system” when the processing operation consists of repairing the goods. (See Appendix I.)

These Guidelines do not cover the provisions governing outright exportation.

4. Definitions

E1/F2 "compensating products” means the products obtained abroad and resulting from the manufacturing, processing or repair of goods for which the use of the outward processing procedure is authorized;

E2/F1 "outward processing" means the Customs procedure under which goods which are in free circulation in a Customs territory may be temporarily exported for manufacturing, processing or repair abroad and then re-imported with total or partial exemption from import duties and taxes.

5. Principle

Standard 1

Outward processing shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Outward processing. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on general principles and Chapter 4 on duties and taxes should be read in conjunction with this Chapter on Outward processing.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Recommended Practice 2

Outward processing should not be refused solely on the grounds that the goods are to be manufactured, processed or repaired in a given country.

This Recommended Practice is intended to prevent any discrimination in applying the Customs formalities for outward processing because of the country where the outward processing is to be done.

Contracting Parties are authorized by Article 3 of the Convention to apply all prohibitions and restrictions deriving from their national legislation. However, in the particular case of goods that are in free circulation and are exported for outward processing, Contracting Parties are encouraged not to apply prohibitions and restrictions because of the country to which the goods are being sent for the outward processing.

This does not prevent Customs administrations from varying the degree of Customs control upon the return of the goods for home use. However in exercising this control function, Customs administrations should use risk management techniques as described in Chapter 6 of the General Annex and the related Guidelines.

6. Formalities to be completed under the normal procedure

6.1. Field of application

Standard 3

Temporary exportation of goods for outward processing shall not be restricted to the owner of the goods.

In general, use of the outward processing procedure is granted to the person carrying out the outward processing operations, who need not necessarily be the owner of the goods.

In practice, the procedure is used essentially by contractors. The authorization holder is the “contractor” who organizes the processing operations and, after the goods have been exported and processed abroad, declares the imported compensating products for home use.

7. Placing goods under outward processing

7.1. Authorization

Standard 4

National legislation shall enumerate the cases in which prior authorization is required for outward processing and specify the authorities empowered to grant such authorization. Such cases shall be as few as possible.

In many administrations an authorization for the outward processing procedure must be obtained from a competent authority. This competent authority may be Customs or another governmental agency empowered to approve such authorizations based on economic policy (e.g. the government department responsible for economic affairs or external trade). However, Customs will ensure that all the conditions required for the procedure are fulfilled and will issue the authorization.

Conditions for granting authorization

The following conditions usually must be met in order to be granted an authorization :

The persons carrying out the processing operations must generally be established in the Customs territory;
It must be possible to establish that the compensating products will result from processing of the temporarily exported goods; and
The “economic conditions” below must be met.

Customs must ensure that all the conditions required for granting an authorization are fulfilled.

(a) The economic conditions

Authorization for the outward processing procedure is not granted when the planned operations are likely to seriously damage the vital interests of national processors or producers.

In the case of outward processing, a country’s economic interests are difficult to establish, because although this procedure generally favours employment abroad it also reduces the production costs of national manufacturers.

A balance must therefore be found in this respect between a maximum reduction in the total production costs of national operators through sub-contracting abroad as opposed to keeping the processing operations for other national operators at the risk of reducing the national industry’s competitiveness.

As total exemption from import duties and taxes applies only in the case of certain repairs free of charge, the economic conditions are essentially examined in all the other cases where the application of partial taxation already provides some protection.

(b)Issuing the authorization

The authorization is issued by Customs at the request of the person who carries out the processing operations or who arranges for them to be carried out. A request for the authorization can be made :

- by a standard request or

- by a simplified request.

Standard request

For a standard request the authorization is obtained in advance, before the goods can be placed under the outward processing procedure. A standard request is generally applicable for persons who have the intention of carrying on large-scale or continuous outward processing operations.

The following may be required in the application form and be approved of in the authorization itself :

Name or business name and address of the applicant.
Information on the goods to be processed :

- The trade and/or technical description. The description should be sufficiently clear and detailed to enable a decision to be taken on the application. The description should entail enough particulars to enable Customs to check on the use of the authorization, with particular reference to the expected rates of yield.

- Indication of the tariff classification.

- Estimated quantity stated by reference to exports over a given period.

- Estimated Customs value stated by reference to exports over a given period.

information on the compensating products and planned import operations :

- The trade and/or technical description. The description for each compensating product obtained should be sufficiently clear and detailed to enable a decision to be taken on the application. The description should entail enough particulars to enable Customs to check on the use of the authorization, with particular reference to the expected rates of yield.

- Indication of the tariff classification (for each compensating product to be obtained);

- The main compensating products;

- The planned import operations.

- Expected rate of yield or method of how such rate should be established by Customs.

- Description of the nature of processing operations to be carried out on the exported goods in order to produce the compensating products.

- Estimation of time needed :

Indication of the average time needed to carry out the processing operations for a given batch of the goods (expressed by unit or quantity, for example);
Indication of the time likely to elapse between completion of the processing operations and import of the compensating products (period of re-importation);

- Indication of the most suitable method(s) of identifying the foreign goods in the compensating products.

- Suggested Customs office which would be suitable as the :

Customs office responsible for the supervision of the procedure;
Customs office where the Goods declaration for outward processing can be accepted;
Customs office of discharge where the Goods declaration for the appropriate Customs procedure can be accepted.

Indication of the period which is planned to export goods temporarily for outward processing (intended duration of the authorization).

Simplified request

A simplified request for the authorization is made by lodging the Goods declaration for outward processing. This is normally applied in situations where the importer intends to carry out a single and unique outward processing and where controlling the processing operations can be done quite easily.

A simplified request may also be limited to situations in which the outward processing has little economic impact, e.g. operations involving goods of a non-commercial nature or for repair.

Where a simplified request for the outward processing procedure is permitted, Customs should accept the lodging of the Goods declaration for the outward processing procedure as an application for authorization. In this case, Customs’ registering of the Goods declaration constitutes the authorization and subjects the goods to the conditions governing the authorization.

Where the information in the Goods declaration does not contain all the information necessary to grant the authorization for outward processing, Customs may require that the declarant submit a separate document containing the following information :

- the name or business name and address of the applicant where the person applying to use the procedure is not the same as the declarant;

- the nature of the processing operation;

- the trade and/or technical description of the compensating products;

- the estimated rate of yield or, where appropriate, the method by which that rate is to be determined;

- the estimated period for importation; and

the country where it is intended to carry out the processing operation.

In the case of Customs or Economic Unions, when goods are to be exported from several countries belonging to the same Customs territory, a single authorization may be issued by Customs of one of those countries and it is valid for the other countries from which the goods will be temporarily exported.

In principle, authorizations take effect on the date of issue.

The duration of an authorization’s validity is generally set by Customs according to the economic conditions and taking account of the specific needs of the applicant. These conditions may be re-examined periodically at intervals specified in the authorization.

Control and audit

Control and audit are described in Chapter 6 of the General Annex and its Guidelines. The circumstances in which outward processing is allowed mainly concern the possibility of determining the presence of foreign goods in the compensating products, the time limits for outward processing and the obligations of persons who export goods under this procedure.

Examination of the goods

Examination of the goods at the premises of the person concerned should be allowed, for example, when it would facilitate the examination or when the nature of the goods is such that examination at the Customs office would be inconvenient. Obviously Customs will be able to allow inspection on private premises only to the extent that examining officers can be made available for the work.

Recommended Practice 5

Persons who carry out regular outward processing operations should, on request, be granted a general authorization covering such operations.

Granting of a general authorization for traders who perform continuous outward processing operations is a measure of facilitation to both the trader and Customs. Such traders will normally have established good records of compliance with Customs law and therefore can be eligible for less Customs intervention for each individual transaction. For Customs this reduces the manpower and paperwork requirements for reviewing and granting multiple individual authorizations. The general authorization may be made subject to the condition that the goods held under outward processing should not exceed a certain quantity and that the processing operations should be completed within a prescribed time limit.

7.2. The rate of yield

Recommended Practice 6

The rate of yield indicates the quantity of compensating products normally obtainable from the goods temporarily exported. In fixing this rate, account may be taken of losses resulting from the nature of the goods used.

When a rate of yield is fixed, the exporter knows what quantities can be re-imported under the procedure, or are required to be so re-imported. The latter case may arise if the temporary exportation is conditional upon re-importation of all the compensating products obtained.

The rate of yield is fixed by Customs taking account of the technical data for the processing operations abroad or, where applicable, data available within the country regarding similar operations.

In some administrations, standard rates of yield may be fixed where the outward 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.

Generally, the rate of yield is fixed at the time of placing the goods under the procedure. However, when circumstances so justify, it can be fixed at the latest, at the date of registering the declaration for home use for the compensating products.

7.3. Identification measures

Standard 7

The requirements relating to the identification of goods for outward processing shall be laid down by the Customs. In carrying this out, due account shall be taken of the nature of the goods, of the operation to be carried out and the importance of the interests involved.

Customs must ensure that it is possible to establish that the compensating products were manufactured using the temporarily exported goods, especially by making use of, as applicable :

the reference to or description of the specific manufacturing marks or numbers;
seals, stamps or other individual marks;
samples, illustrations or technical descriptions;
analyses;
documentary evidence concerning the operations envisaged (such as contracts, correspondence, invoices) clearly showing that the compensating goods are to be manufactured from temporarily exported goods.

8. Stay of the goods outside the Customs territory

Standard 8

The Customs shall fix the time limit for outward processing in each case.

Customs must specify the period within which the compensating products must be imported. This period should take account of the time required to carry out the processing operations, as well as the economic conditions in the Customs territory and the specific needs of the applicant. The period normally will begin on the date of registration of the export declaration for the outward processing procedure.

It may not be necessary for the maximum time limit fixed in each case to be automatically granted at exportation. For example, if national legislation lays down a time limit of one year for the outward processing of goods intended for repair, it may not always be appropriate to grant this maximum time limit, particularly in cases where the proposed repairs are only minor.

For reasons of simplification, a period that commences in the course of a calendar month or quarter could be ended on the last day of a subsequent calendar month or quarter.

If a general time limit for outward processing is fixed instead of an individual time limit for each particular case, this may be regarded as granting a greater facility.

Recommended Practice 9

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

9. Importation of compensating products

Standard 10

Provision shall be made to permit compensating products to be imported through a Customs office other than that through which the goods were temporarily exported for outward processing.

The basic features of the procedure whereby compensating products are cleared for home use are the same as those laid down for any other home use operations. In addition Customs will have to satisfy themselves as to the identity of the compensating products.

Generally speaking, the declaration for home use is lodged with one of the offices specified in the authorization. However, the competent authorities may allow the declaration to be presented at another Customs office.

When a Customs territory is made up of several countries (for example, a Customs or Economic Union), triangular traffic should be authorized. Triangular traffic is the method by which the compensating products under the outward processing procedure are cleared for home use in a country other than that where the goods were temporarily exported.

This system is subject to compliance with certain rules for procedures permitting information exchange between the Customs of the countries concerned.

Standard 11

Provision shall be made to permit compensating products to be imported in one or more consignments.

For logistical and other commercial reasons, persons who have sent goods for outward processing may need to import the compensating products in more than one consignment, and Standard 11 requires Customs to permit such importation. Customs may take the necessary measures to ensure that the conditions and formalities pertaining to the outward processing procedure are complied with for each individual consignment. Such measures would include identification of the goods, reconciliation of records of imports and other verification measures.

Standard 12

This exemption shall not apply to import duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing.

For various commercial reasons goods which are temporarily exported for outward processing may return in the same state to the Customs territory of exportation. Such goods are covered under the scope of Standard 12 even if they are not processed. This exemption is conditional upon a request being made to Customs and that the goods are returned in the same state. However, the exemption will not apply if the import duties and taxes have been repaid or remitted at the time of exportation.

Standard 13

Unless national legislation requires the re-importation of goods temporarily exported for outward processing, provision shall be made for terminating the outward processing by declaring the goods for outright exportation subject to compliance with the conditions and formalities applicable in such case.

Generally the outward processing procedure will be terminated when the compensating products are imported for home use. However, there can be instances where the person concerned, for a variety of reasons, may decide not to import the compensating products. Standard 13 provides this economic and commercial flexibility and allows the outward processing to be terminated by declaring the goods for outright exportation, as long as there is no specific requirement in national legislation for the compensating products to be imported. In granting the outright exportation to terminate the outward processing, Customs should ensure that any related conditions and formalities, such as payment of export duties and taxes, are complied with.

Some administrations do not require the submission of an additional declaration for outright exportation and permit the request to be made on the outward processing documents. This can be regarded as granting a greater facility in accordance with Article 2 of the Convention.

10. Duties and taxes

Standard 14

Recommended Practice 16

The outward processing procedure allows total or partial exemption from import duties at re-importation of the compensating products.

Total exemption generally applies when outward processing consists of free repair due to a contractual or legal guarantee obligation or the existence of a manufacturing fault, or else when it is so laid down by specific provisions in the framework of particular trade arrangements.

National legislation will provide for calculating the total or partial exemption using one of the following methods.

10.1. Differential taxation method

The rate of yield is a fundamental element in the authorization of outward processing, as it is necessary in order to calculate the amount of duties to be collected by application of the differential taxation method. It must ensure equal treatment between operators.

Differential taxation is the result of a difference in import duties and taxes and it is in the operator’s interest to ensure that the amount to be deducted is as high as possible so that the amount to be paid is as low as possible. The operator could therefore export a quantity of goods in excess of that actually required for obtaining compensating products, so as to be able to deduct more duty when re-importing these products. That is why the rate of yield is necessary. This rate makes it possible to determine the quantity of temporarily exported goods actually required to obtain the compensating goods.

The differential taxation method is closely linked to the “further worked” principle inherent in the tariff, according to which, in many cases, the Customs duties increase proportionately with the degree to which the product is worked. In this case, the exported goods are, in principle, subject to a lower Customs rate than that applicable to the further worked compensating product.

By virtue of this method, exemption from import duties and taxes consists of deducting from the amount of import duties and taxes on compensating products cleared for home use, the amount of import duties and taxes that would apply on the same date to the temporarily exported goods used to obtain the compensating products, if they were imported into the Customs territory from the country where they were processed or underwent the last processing operation.

With differential taxation, the value of exported goods are included in the value of the compensating product; when re-imported, the exported goods are subject to higher duties in comparison to the Customs duties to be deducted. This represents an “over-taxation” of the national components and hence provides adequate protection of national interests, insofar as a high differential duty corresponds to a high need for protection of national industry, and vice versa. Thus, for example, no exemption is granted if there is a zero rate of Customs duties on the exported goods.

However, this protection mechanism does not always function in cases of tariff anomalies. Indeed, the use of the differential method could have the opposite effect if the exported goods are liable to a higher rate of duty than that applied to the compensating products.

10.2. Taxation method based on added value

The calculation method based on added value should make it possible to calculate the exemption of duties under outward processing by deducting the value of the temporarily exported goods from the Customs value of the compensating products. With this method, the increase in value obtained by the processing operations carried out abroad is taxed, and there is no need to know the rate of duty applicable to the exported goods.

The added value calculation method has some obvious advantages. The amount of the exemption for outward processing is easier to calculate than with the differential taxation method, and the trader can clearly determine the profitability of using outward processing.

The disadvantage of this method is that it can only be applied to goods liable to ad valorem duty, and this rules out its use for products taxed on the basis of a specific rate or a combination of both ad valorem and specific rates.

Standard 15

The principle enumerated in Standard 12 also applies to this provision in that if import duties and taxes have been repaid or remitted on goods exported for outward processing, exemption from import duties and taxes will not apply to the compensating products upon importation. However some countries do not allow goods on which import duties and taxes have been repaid or remitted on export to be placed under the outward processing procedure.

Recommended Practice 17

The exemption from import duties and taxes should be granted if the compensating products were placed under another Customs procedure prior to being declared for home use.

Recommended Practice 18

The exemption from import duties and taxes should be granted if the ownership of the compensating products is transferred before they are taken into home use.

Normally when compensating products are imported, they are cleared for home use on payment of any duties and taxes that may be applicable. However, in many instances it is possible that the compensating products are placed under another Customs procedure before they are cleared for home use. Examples of such procedures are placing the goods in a Customs warehouse or free zone or under temporary admission.

Recommended Practice 17 requires that the exemption from import duties and taxes provided for in Standard 14 will also apply when the compensating products have been placed under another Customs procedure before terminating the outward processing procedure. However, if a time limit was fixed for importation of the compensating products, Customs may require that this time limit be respected even if the goods are placed under a Customs procedure other than home use.

Likewise, Customs should grant the exemption from duties and taxes for the compensating products regardless of whether the ownership of these goods has been transferred while they were under the outward processing procedure. For example, in normal commercial practice goods may be sold to another person during the outward processing procedure. The exemption, however, is on the goods themselves regardless of the person taking them into home use. This exemption from duties and taxes does not include any internal taxes that may become chargeable because of the transfer of ownership of the goods.

Customs would normally require that the goods be declared for home use in the name or for the account of the person who placed the goods under the outward processing procedure as a matter of control.

11. Simplified procedures

11.1. Simplified procedures relating to the declaration for placing the goods under the procedure.

Simplified procedures such as those developed in the Guidelines to Specific Annex C, Chapter 1 on outright exportation are applicable under the same conditions as the formalities to be completed for exporting goods under the outward processing procedure. The Guidelines on outright exportation should therefore be consulted in this regard.

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Appendix 1

Method of application

The European Community

Outward processing using the replacement system

In the European Community the competent authorities permit use of the "replacement system" when the processing operation consists of repairing the goods.

This system consists of substituting an imported good for a compensating product. It therefore makes it possible to import, instead of the compensating product, another product known as the "replacement product", while retaining the benefits of outward processing.

The replacement product must normally fall in the same subheading of the Customs tariff (in the European Community this is referred to as the Combined Nomenclature), be of the same commercial grade or quality and have the same technical characteristics as the temporarily exported goods if the latter had undergone a specified repair (conditions of equivalence ).

If the temporarily exported goods were used prior to exportation, the replacement products must also have been used and cannot be new products. Derogations from this rule may be granted if the replacement product was delivered free of charge, either due to a contractual or legal guarantee obligation, or as a result of a manufacturing defect.

The competent authorities also permit, under conditions set by them, replacement products to be imported prior to exportation of the temporarily exported goods (prior importation ).

Prior importation of a replacement product may require provision of security for the amount of the import duties.

The replacement system cannot be used to improve the technical performance of the goods.

Use of the replacement system is accepted when it is possible to check compliance with the conditions of equivalence between the replacement products and the compensating products which should have been imported.

Under the replacement system without prior importation, the time limit is determined taking account of the time required to substitute the temporarily exported goods and to transport the temporarily exported goods and the replacement products.

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Chapter 3

DRAWBACK

1. Introduction

Most administrations have in place procedures which help promote export trade and are in the interest of the national economy. Drawback is one such procedure. This procedure grants repayment of import duties and taxes paid on :

- Goods used in the processing or manufacture of exported products,

- Materials contained in the goods or consumed in the manufacture of the exported products, or

- Imported goods re-exported in the same state.

The repayment may be partial or total.

Drawback is one of the several procedures which provides relief from duties and taxes for the manufacture of exported goods and is extensively used. Some administrations may allow it in combination with other procedures like inward processing, temporary admission or Customs warehouses.

2. Purpose and scope of drawback procedure

The imported goods are used to process or manufacture goods for export by the domestic industries. The use of domestic labour and processing or manufacturing of goods add value to the finished goods for export. The repayment of duties and taxes paid on the imported goods enables domestic industries to offer the goods at competitive prices on international markets.

Some administrations restrict the categories of goods qualifying for drawback. This is usually an economic consideration and is designed to encourage the use of equivalents of imported goods which are produced within the country by domestic industry.

Where it may be difficult to identify certain exported goods as being those that were originally imported or those resulting from the processing of imported goods, administrations should allow the exportation of equivalent goods (e.g. compensating goods equivalent in all respects to the goods which should normally have been re-exported) and apply the drawback procedure to repay import duties and taxes where goods or materials are replaced by equivalent goods or materials. This is a practice which is recommended in this Chapter.

Countries wishing to encourage trade through free zones in their territory may also apply the drawback procedure to goods that are re-exported into these zones.

Usually goods imported with the intention to re-export them, other than those used for processing or manufacture, are not permitted to be used during their stay in the Customs territory. If such use is allowed, administrations usually have provisions under which the amount of drawback granted is reduced according to the extent of the resulting depreciation.

Some administrations use the term drawback for refund of taxes on imported goods that are not according to specification and are returned to the seller, or goods used in manufacture for home consumption, or imported goods that are obsolete, etc. The procedure covered by this Chapter does not relate to such goods. This issue is covered in Standard 4.19 of the General Annex.

The drawback procedure will not apply to repayment of or relief from other taxes (e.g. sales tax, value added tax) or to items which may be aids to the manufacturing process that are granted relief or repayment under other provisions.

3. Essential features of the drawback procedure

The basis for assessment of the amounts payable as drawback is usually specified in the national legislation. Where drawback is applied to duties and taxes levied at importation for goods permitted to be used and then re-exported, the national legislation generally grants a reduction of the full amount of these duties and taxes. This is usually expressed as a percentage (e.g. 80 % of the import duty to be paid as drawback if the goods are used for X period of time).

Where rates of drawback are fixed for categories of goods or for individual manufacturers, national legislation usually provides for changes in these rates when there is a change in the rates of related imported duties and taxes. These new rates of drawback may either be fixed at the same time as the new rate of import duties and taxes or later when the goods which have effectively borne these new taxes are exported. For administrative convenience, national administrations will usually change the rates of drawback only if the changes in import duties and taxes are significant enough to justify the task of revision.

3.1. Benefits of the drawback procedure

The drawback procedure offers distinct benefits to national administrations and interested persons in that it :

- Generates domestic economic activities,

- Provides for revenue protection on imported goods released into the Customs territory, and

- Offers options to interested persons when other procedures such as temporary admission cannot be applied to the goods.

When Customs administers the drawback procedure by implementing modern control techniques of selective verifications, risk assessment of users, post-audits of users records and electronic data exchange and transfer of payments, drawback can be well managed and offers the full array of economic incentives to national economies. (See Chapter 6 of the General Annex and its Guidelines.)

Interested persons have import options regarding whether to make the financial commitment to pay the duties and taxes and wait for repayment to be completed under drawback after the goods are exported, and whether this affects the competitive pricing of exported goods.

4. Definitions

E1/F1	“drawback” means the amount of import duties and taxes repaid under the drawback procedure;
E2/F3	“drawback procedure” means the Customs procedure which, when goods are exported, provides for a repayment (total or partial) to be made in respect of the import duties and taxes charged on the goods, or on materials contained in them or consumed in their production;
E3/F1	“equivalent goods” means domestic or imported goods identical in description, quality and technical characteristics to those under the drawback procedure which they replace.

5. Principle

Standard 1

The drawback procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Drawback. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 4 on Duties and taxes, Chapter 6 on Customs control, Chapter 7 on Information technology and Chapter 9 on Information, decisions and rulings supplied by the Customs should be read in conjunction with this Chapter on Drawback.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

6. Field of Application

Standard 2

National legislation shall enumerate the cases in which drawback may be claimed.

The cases where drawback may be claimed may be specified by reference to certain goods or classes of goods or to certain uses of goods. This could be achieved, for example, by reference in national legislation to certain tariff headings or to specific descriptions of goods or classes of goods as being eligible for the payment of drawback. Some countries restrict the categories of imported goods qualifying for drawback based on economic considerations where equivalents of the goods to be imported are produced by domestic industries.

Drawback may also be restricted to certain categories of import duties and taxes or to cases where the goods have undergone processing, manufacture or repair or other authorized uses. In this respect some administrations exclude internal taxes which are applicable on import, such as value added tax or sales tax, from the scope of the drawback procedure. Some administrations exclude goods which are re-exported in the same state from eligibility for drawback.

Drawback on goods consumed in the production of exported goods does not normally extend to mere aids to manufacture, such as lubricants. However, it may apply to goods such as catalysts and accelerators or retarders of chemical reactions that are consumed during a manufacturing process and are essential to it. In most cases drawback also applies to waste or loss resulting from a manufacturing operation.

Countries which have free zone regimes or Customs warehouses also allow drawback on goods moved to these places on condition that they are subsequently exported. (See also the explanations to Recommended Practice 9).

In addition to indicating the cases in which drawback may be claimed, Customs administrations also specify in their regulations the extent of the payment of drawback. It may be partial or total. Some administrations allow the total amount of import duties and taxes paid upon the exportation of the goods to be eligible for drawback, whereas depending on the economic policy others only allow a part of the import duties and taxes paid. The drawback may be a percentage of the duties and taxes paid, or may be a fixed rate per unit of quantity or may be related to the value of re-exported goods. In fixing the amount of drawback to be paid, most administrations take into consideration the part of the imported goods which is lost in the manufacturing process, i.e. wastage. The percentage of such wastage that is allowed for drawback may be fixed for each product, for an individual manufacturer or for a certain process.

Repayment of drawback is not granted in cases where import duties and taxes have been, or will be, repaid under other provisions.

There are various possibilities by which drawback may be claimed and Standard 2 requires that such possibilities and the conditions attached are enumerated in the respective national legislation. The following key aspects should be specified in the national legislation :

- On which goods drawback can be claimed and/or which goods are not eligible for drawback;

- When drawback can be claimed : whether at the time of import, during the period when the manufacturing or processing activity is taking place, or at the time of export;

- The time limits for the export of goods eligible for drawback and for the submission of claims;

- The time limits within which drawback should be claimed;

- The amounts below which drawback cannot be claimed;

- Persons entitled to claim drawback : the exporter, the manufacturer, or any other persons;

- How drawback is to be claimed, including the information/documents necessary to be produced or maintained for claiming drawback;

- If a prescribed application form is to be completed for claiming drawback : If so, information regarding the specified form and where available. Where such forms are specified, clear instructions regarding them should be completed;

- Where drawback is eligible on imported goods processed or manufactured for export, including a clear definition of what activities will be considered as processing or manufacturing;

- The method used by the national administration for assessing or applying the drawback rate whether drawback is based on a schedule giving fixed rates, or based on individual applications; and

A clear notice to the users of this procedure whether the national legislation requires a declaration to be made at the time of import that the goods would be used under the drawback procedure.

This will benefit and facilitate exporters or entitled persons to claim drawback. It will also enable the national administration to develop and prescribe procedures which are simple and unambiguous.

Recommended Practice 3

In principle imported goods which have borne import duties and taxes must be exported in order to qualify for drawback. However, as a facility to traders, where such goods are replaced by equivalent goods in the production of exported goods, this provision recommends that the drawback procedure should also be applied.

This provision should apply whether or not it is possible to distinguish the imported goods from the equivalent goods, for example, where they have not been segregated for storage. The question of equivalence is related to the quantity of the goods rather than to the identification of precisely which goods had borne the import duties and taxes. From an economic point of view, allowing equivalent goods which are of domestic origin as replacements helps to generate domestic economic activities.

7. Conditions to be fulfilled

Standard 4

Customs may require the importer, at the time of importation of the goods for home use, to state his intention of claiming drawback. This may be required to establish a reference file and segregate the goods from other goods, or to enable the processing or manufacturing of the compensating products under Customs supervision. Such a statement would also facilitate the drawback process at the time of exportation and payment.

There are many practical situations, however, where the importer did not have the intention to re-export the goods, but circumstances changed after importation. Standard 4 therefore extends the facility of drawback to those importers who did not know at the time of importation that they would export the imported goods or their equivalent. Nevertheless the responsibility to establish the entitlement to drawback remains with the claimant and it is in his interest to ensure that all Customs requirements in relation to drawback are met.

Similarly, Customs should not require the importer to export the goods solely because a statement of intention to claim drawback was made at the time of import, as the Revenue interests were protected when the import duties and taxes on the goods were paid.

8. Duration of stay of the goods in the Customs territory

Recommended Practice 5

Where a time-limit for the exportation of the goods is fixed beyond which they no longer qualify for drawback, this should, upon request, be extended if the reasons are deemed valid by the Customs.

Recommended Practice 6

Where a time-limit is fixed beyond which claims for drawback will not be accepted, provision should be made for its extension for commercial or other reasons deemed valid by the Customs.

Recommended Practice 5 does not suggest that Customs should fix a time limit for the exportation of the goods beyond which they no longer qualify for drawback. If Customs does set a time limit, however, whether in general, for certain categories of goods or type of manufacture or process, or in relation to the period for which they normally retain records, they should allow reasonable requests to extend the time limit. This is generally done on a case-by-case basis.

It must be noted that there is a distinction between Recommended Practice 5, which is concerned with a possible time limit for the exportation of goods under the drawback procedure and Recommended Practice 6 which relates to a possible time limit for the lodgment of a claim for drawback.

As in Recommended Practice 5, Recommended Practice 6 does not suggest that a time limit for lodging a claim for drawback must be fixed. In practice, however, many administrations do fix a time limit beyond which claims for drawback will not be accepted. This is normally for administrative reasons such as the length of time that they retain records. In such cases it is recommended that Customs should take into consideration commercial reasons where it may not be possible to lodge the claim within the time limit specified, and determine if an extension should be allowed. Such reasons could be, for example, the manufacturing process involved or orders for the export of certain types of specialized goods.

Generally the time limit for filing a claim for drawback is calculated from the date of exportation or when the goods are deposited in a free zone or a Customs warehouse.

9. Payment of drawback

Standard 7

Drawback shall be paid as soon as possible after the claim has been verified.

Claims for drawback must provide all the facts necessary to determine the amount of drawback and provide proof, as required, to show that the conditions necessary for drawback have been fulfilled.

As a facilitation measure the drawback claim may be made on the same form as the declaration of exportation or on a separate form. If it is made out on a separate form, it may be lodged at the time of exportation or within the time limit stipulated by Customs.

Standard 7 requiring that drawback be paid without any delay should also be read in conjunction with Standard 4.24 of the General Annex. That Standard allows administrations to fix a minimum amount below which repayments need not be paid in order to avoid unnecessary paperwork in processing such claims. The administration should also apply this principle to the drawback procedure.

It is not normally considered necessary to make the payment of drawback subject to the production of evidence that the goods have arrived in the country of destination. However, this may be necessary where the claim for drawback is not made at the time of the exportation of the goods, so that the necessary checks can be made.

Some administrations pay the drawback claim immediately upon a cursory examination of the relevant documents and conduct a later post-audit of the claimant’s accounts to verify the claims in detail. This may be considered as granting a greater facility in accordance with Article 2 of the Convention.

In dealing with claims for drawback, as a good administrative practice, Customs should set themselves time limits for the verification of documents and the payment of drawback. (See the Guidelines to Standard 4.21 of the General Annex).

Verification should not be required as a matter of course where a general rate of drawback has been fixed for categories of goods based on trade data. In these cases calculation and payment of drawback can be made without verification, immediately on the completion of export, based on the declaration made by the exporter/claimant.

Some administrations fix rates of drawback for individual exporters when accurate general rates cannot be fixed because of the specialized nature of the goods or because there are few manufacturers of such goods. In such cases the exporter may be required to make a separate application requesting the special rate of drawback, complete with the details of imports, duties and taxes paid and the drawback due on the exported goods.

To fix individual rates of drawback for exporters, administrations could expedite the application process for exporters with good track records by allowing approved chartered accountants and/or chartered engineers to certify the correctness of the details of the application, drawback rate expected and, where necessary, the process of manufacture. Verification of every claim for drawback in these cases should be waived. Controls should be exercised through periodic and/or selective audits checks. Appendix I provides an example of the use of control and audit and the application of information technology in applying the drawback procedure.

Recommended Practice 8

National legislation should provide for the use of electronic funds transfer for the payment of drawback.

Electronic funds transfer is a modern practice which is highly recommended. Chapter 4 of the General Annex advocates the establishment of an electronic funds transfer system for a quick and efficient payment of duties and taxes. Likewise payment of drawback should be made with such a system for the benefit of both Customs and the trade. Electronic funds transfer allows swifter payments, immediate and accurate accounting, and security of the transfer of funds.

Recommended Practice 9

Drawback should also be paid on deposit of the goods in a Customs warehouse or introduction of the goods into a free zone, on condition that they are subsequently to be exported.

This Recommended Practice is a useful facility for traders in that it expedites the payment of drawback when the goods are placed under certain procedures. Very often goods meant for export are deposited in a Customs warehouse pending the clearance formalities and the arrival of the vessel. In addition there could be situations such as delay in the export of the goods due to the non-arrival or non-availability of vessels or due to force majeure. In such instances the application of this Recommended Practice enables the exporter to obtain the drawback instead of waiting for the actual shipment of the goods. It should be noted that in applying this provision Customs would be permitting the entry into a Customs warehouse of goods having previously borne import duties and taxes, a departure from the definition of the term “Customs warehouses”.

Free zones are considered to be areas outside the Customs territory insofar as the duties and taxes on goods are concerned. Thus if certain goods are eligible for payment of drawback when exported, they would automatically qualify for such payment once they are introduced into a free zone.

Recommended Practice 10

The Customs should, if so requested, pay drawback periodically on goods exported during a specified period.

This Recommended Practice provides an arrangement which would be facilitative to Customs and the trade. Usually where a trader has a large number of drawback claims and exports on a regular basis, it would be beneficial to allow the payment of the drawback amounts periodically for goods exported during a specified period if a request to this effect is made to Customs. Thus periodic payments simplify the work of both Customs and the claimant, and minimize the necessity for individual claims by the exporter and individual verification and payments by Customs. It should be noted that even where the claimant does not request periodic payment of drawback, Customs must nonetheless, by virtue of Standard 7, pay the drawback as soon as the claim has been verified.

10. References

Comparative studies of Customs procedures – study No. 9 – Customs Cooperation Council

International Customs Norms of the Customs Cooperation Council

Export Manual – Customs procedures

APEC Customs Guide

CCC Recommendation on Standard Codes*

CCC Recommendation on the use of UN/EDIFACT*

CCC Recommendation on the acceptability of electronically transmitted documents*

UN Model Data Interchange Agreement*

CCC Recommendation on the use of the Data Mapping Guide for UN/EDIFACT Messages*

* These references are applicable to all procedures where automation is applied.

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Appendix 1

Method of application

Customs Control and Information Technology for Drawback

CONTROL AND AUDIT

1. Introduction

Providing facilitative measures for the application of the drawback procedure, especially because it involves repayment of taxes collected by a national administration, involves certain risks.

As described in the "Guidelines on Customs Control” most administrations apply risk analysis techniques to identify these risks and develop control measures to be applied. This enables administrations to effectively direct their resources towards high-risk categories and to provide facilitative procedures for low-risk ones by minimizing controls.

In applying risk management to the drawback procedure, Customs would have to identify claimants of drawback and, through pre-audit of their records and manufacturing and processing systems, establish criteria for the types of controls to be exercised.

2. Establish exporter/claimant profiles

Customs should use historical records of drawback claims and establish a profile of exporters or claimants. The following criteria should be included and evaluated in an analysis of each exporter or claimant :

1. Record of compliance,

2. Whether there is systematically maintained accounting system for goods,

3. Standard manufacturing or processing systems, and

4. Whether these systems have been approved by Customs through pre-audit and physical verification.

Once exporters and claimants are evaluated against these criteria, the following three-level risk analysis can be applied.

3. Risk levels

A. Low risk :

Those exporters and claimants with positive evaluations in all or most of these criteria can be considered low risk and facilitated by :

- Approval to maintain records of imports, exports, duties and taxes paid and to lodge declarations and supporting documents certified by chartered accountants and/or engineers or other competent officials or agencies approved by Customs;

- Waiver of verification for fixing drawback rates;

- Waiver of routine examination of goods at the time of export;

- Provisional payment of a percentage of drawback claimed when the drawback rates are not fixed or available at the time of export and without requiring any security;

- Payment of drawback on placing the export goods in a Customs warehouse with the intent to export them;

- Payment of drawback on the basis of exporters' declarations without verification of records.

In all cases where such facilitation is extended, Customs will reserve the right to revoke the facility in the event of any misuse, and to check or verify records, manufacturing processes and export shipments at any time. This would include periodic verifications or audits.

B. Medium risk

Where national administrations specify certain categories of goods that require control due to national policy or licensing controls, or in cases where the exporter is not yet well established :

- Customs may combine various measures suggested for low and high risk and exercise an intermediate form of control under the drawback procedure.

C. High risk

Exporters or claimants with a record of misdeclarations, incorrect claims of drawback, smuggling or any other revenue fraud and those with insufficient accounting/record systems would be considered high risk. In all such cases the exporters would be subject to:

- Lodging individual declarations for each export under claim for drawback;

- Customs verification of the claim before payment of drawback; and

- Examination by Customs of import and export goods.

USE OF INFORMATION TECHNOLOGY/SIMPLIFIED PROCEDURES

1. Introduction

The use of information technology is common to most Customs procedures and is covered in the Guidelines to Chapter 7 of the General Annex on Application of information technology. These use systems like trader registration database, electronic submission system, central transaction database, risk management, electronic payment and funds transfer system, security features, etc. Only those aspects which are specific to the drawback procedure are described in the following paragraphs.

Drawback procedures can be greatly facilitated through the effective application of information technology. The submission of claims for drawback to Customs, the processing of such claims by Customs and the payment of the drawback to the exporter can all be greatly simplified and expedited. If the export declaration contains the data necessary to claim drawback, a separate claim will not be necessary and drawback processing may form an integrated part of an automated Customs export system.

2. Specific features

Whenever possible it is recommended to design the drawback system as part of an integrated Customs system covering import and export declarations. But it can also be designed as a stand-alone system. (See flow chart.) In addition to the common aspects explained in the Guidelines on Information technology and the data requirements for drawback, an automated drawback system should cover the following specific features :

Electronic matching of import payments with drawback claims;
Electronic matching of export references quoted on the drawback claim; and
Calculation of drawback.

3. Verification of import and export details

For the verification of import and export details quoted on the drawback claim, an integrated system will typically access the Customs transaction database (which holds historical information on Customs import and export transactions for a specific period - e.g. 2 years). Information in this database will enable the system to confirm that the goods on which drawback is being claimed had originally been imported and duty had been paid. Any previous drawback claims or other claims for duty refund on the import entry will also be indicated.

A stand-alone system will store only the data of previous drawback claims. Therefore such a stand-alone system would only be able to confirm that the details quoted on the claim were not used on drawback claims in the past.

4. Matching of export references

Within an integrated system export references quoted on the drawback claim will generate an interrogation of the transaction database to confirm the validity of the references quoted. This process will confirm that the goods have been exported and that no previous drawback claim has been lodged against the export declaration.

Where the drawback system is a stand-alone system, the information stored in the system contains only data from previous drawback claims. Such a system can only ensure that the export reference was not quoted on former drawback claims.

5. Calculation of drawback

The calculation of drawback depends on the status of the goods.

(a)If the goods are exported in the same state as they were imported, the calculation is based either on a definitive percentage of the total amount of duties paid or on fixed rates for certain categories of goods. In those cases an integrated system will access the Customs transaction database to retrieve either the actual total amount of duties paid at importation or the relevant import details in order to calculate the drawback.

A stand-alone system has no access to import and export data. Therefore the claimant has to provide Customs with the necessary information of the referenced import declaration.

(b) If the goods were used for processing or manufacture, the calculation can be performed in two steps. An automated system will need data for the quantity of goods imported, the rate of yield, the accepted percentage of wastage and the quantity of goods exported. In a first step the system will calculate, with the rate of yield and the accepted percentage of wastage, the quantity of imported goods incorporated into the quantity of exported goods quoted on the drawback claim. In a second step the system will calculate the drawback based on this quantity of incorporated goods.

The integrated system will access the Customs transaction database to retrieve the import and export details and will access the trader registration database to retrieve details on the claimant, the rate of yield and the accepted percentage of wastage.

A stand-alone system can also access its trader registration database to retrieve the necessary information. But since there is no access to import and export information, the claimant has to provide Customs with the required information.

6. Transaction tracking

As part of an integrated system, where all import and export information is available, the drawback system could also record and tabulate debits from the declared imported quantities which will be credited to drawback for individual claimants, either by transaction or periodically as provided for in Recommended Practice 10.

This feature would provide accurate transaction tracking for payment of drawback claims and for post audit purposes.

7. Other considerations

7.1. Costs

Where automation is envisaged as one of the methods of implementing effective simplification, administrations which have not already invested in automated systems would have to plan for this expenditure. Automated systems should be integrated to cover the entire range of Customs procedures and not only drawback. Similar arrangements would have to be made by the exporters or claimants. The costs would be balanced by facilitation with rapid verification of data, fewer document requirements or eventual elimination of documents, and reduction of the element of human error.

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Chapter 4

PROCESSING OF GOODS FOR HOME USE

1. Introduction

In general the duties and taxes chargeable on goods imported for home use are well adapted to the tariff policy of the county concerned. However, in certain cases, the level of the import duties and taxes chargeable on imported goods is such that any intended manufacture, processing or further working of the goods after clearance for home use would render the overall commercial operation unprofitable, with a resultant loss to the country because of the transfer of such economic activities to another country.

On the other hand, these economic activities can be encouraged by permitting certain goods to be processed under Customs control prior to being taken into home use.

2. Purpose and scope

The Customs procedure for processing goods for home use is aimed at permitting some imported goods to undergo manufacturing, processing or working so that the amount of duties and taxes at import on the products obtained is less than that which would be applicable to imported goods.

The expression " working " also includes changes in packaging whose effect is to present, for purposes of retail sale, products which, for example, were imported in wholesale packagings.

The amount of import duties and taxes might be lower after processing of the imported goods even if the tariff classification were to remain unchanged. This could occur, for example, because the weight of the products obtained is less than that of the imported goods.

The main advantage of this procedure is that it increases the competitiveness of industry, leading to the transfer of industrial activities to the Customs territory and thus preserving jobs. It may also allow the imported goods to be entered under the procedure with a suspension of import duties and taxes and certain economic restrictions. The import duties and taxes are charged then only on the processed products entered for home use. Any prohibitions or restrictions are also applied only to the processed products.

3. Essential features

The right to import goods for processing may be limited to persons established in the Customs territory.

The granting of approval for processing of goods for home use may be made subject to the condition that the proposed processing operations are regarded by the competent authorities as beneficial to the national economy.

Customs normally give approval for the processing operations to be carried out at a particular place (e.g. the importer's premises) and by specified persons.

Customs may set standard rates of yield for the operations involved in the processing of goods for home use.

Goods may be directly placed under the processing of goods for home use procedure after they are brought into the Customs territory. Goods under temporary admission, including goods under Customs transit, moving from a Customs warehouse or from a free zone, should also be eligible for this processing. Proper discharge of the Customs procedure under which the goods were originally imported may be made a prerequisite for the granting of the processing of goods for home use procedure.

The conditions for granting the processing procedure include, inter alia, the ability for Customs to identify the imported goods in the products obtained from the processing and to ensure compliance with the Customs obligations by the persons placing the goods under this procedure.

4. Definition

E1/F1

5. Principle

Standard 1

Processing of goods for home use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Processing of goods for home use. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 3 on Clearance and other Customs formalities, Chapter 4 on duties and taxes, Chapter 6 on Customs control and Chapter 7 on Information technology should be read in conjunction with this Chapter on Processing of goods for home use.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Standard 2

The granting of the procedure of processing of goods for home use shall be subject to the conditions that :

- the Customs are able to satisfy themselves that the products resulting from the processing of goods for home use have been obtained from the imported goods; and

- the original state of the goods cannot be economically recovered after the manufacturing, processing or working.

According to Standard 2, granting of the processing procedure is subject to two basic conditions.

Firstly, as the processing procedure requires the working of the actual imported goods. It must be possible to identify the use of the imported goods within the products declared for home use. It is therefore not possible to substitute similar goods available in the Customs territory for the imported goods, as permitted under the inward processing procedure.

The person granted the procedure must provide the necessary supporting documents permitting Customs to carry out post-clearance controls and examinations. The supporting documents acceptable to Customs should relate to the type of goods and processing operations envisaged.

Secondly, Customs must also be satisfied that the imported goods cannot be reconstituted from the processed products. The decisive criterion in this respect is that it is not economically viable to convert the goods, even if it is actually possible. The purpose of this condition is to prevent the use of this procedure only to evade the higher amount of duties and taxes applicable to the imported goods.

Granting the procedure is subject to various conditions. These conditions generally relate to the person concerned, Customs and economic factors. These conditions may vary in different administrations.

The authorization is only granted when the Customs surveillance and control operations for the processing procedure do not result in overly high administrative charges compared with the economic need.

Customs must ensure that it is possible to establish that the processed products were manufactured using the imported goods, especially by making use of,
as applicable :

the reference to or description of the specific manufacturing marks or numbers;
seals, stamps or other individual marks;
samples, illustrations or technical descriptions;
analyses;
documentary evidence concerning the operations envisaged (such as contracts, correspondence, invoices) clearly showing that the compensating goods are to be manufactured from temporarily imported goods.

6. Field of application

Standard 3

National legislation shall specify the categories of goods and operations allowed for processing of goods for home use.

The procedure is only granted when it will promote the creation or maintenance of processing activities in the Customs territory. However, these activities must not harm the vital interests of producers of similar goods established in the Customs territory.

A list of manufacturing, working and processing operations for which the procedure is authorized must be prepared and published. This list must indicate the operations considered useful or beneficial for the national economy.

The list must be able to be adapted and enlarged at the request of the traders. In this respect, it is very important to set up a mechanism permitting rapid modification (enlargement) of the list, as there will always be cases not included in the initial list and trade circles should not have to await the outcome of a long process to amend the law. Modification of the list requires a prior detailed examination of the effects on the national economy so as to avoid negative consequences for manufacturers of identical or similar products. This complex examination should be carried out together with the competent services (representatives from the economic branches concerned and the competent authorities/ministries/professional organizations) so as to have an overview of the economic situation and thus avoid unilateral bias.

The list must indicate the goods imported and the corresponding authorized operations. Some categories of operations (e.g. processing into individual samples or collections of samples, processing into waste and residues, destruction, elimination and/or destruction of damaged parts, carrying out treatments that are authorized in the Customs warehouse or in free zones) should be generally authorized, regardless of the type of goods imported.

However, for certain special production operations (e.g. subjecting the goods to a chemical reaction, additional processing of the goods, manufacturing of products on which Customs duties have been suspended), restrictions may be imposed regarding the range of goods imported. The list could indicate that this restriction is indicated by the tariff classification. (See Appendix I which contains a list of goods and operations authorized by the European Community).

Standard 4

Processing of goods for home use shall not be limited to goods imported directly from abroad, but shall also be granted to goods already placed under another Customs procedure.

The principle set out in Standard 4 is valid for all Customs procedures. Hence goods coming, for example, from an inward processing procedure, Customs warehouses, free zones or transit may be placed under the processing of goods for home use procedure. This offers a greater flexibility to traders by providing them economic interdependence and thus the ability to react rapidly to changes (e.g. poor quality, lack of outlets).

To change from one Customs procedure to another, the person authorized for the first procedure does not necessarily have to be the person authorized for the processing for home use. In such cases, it is very important that information exchange be organized and take place between all the interested parties and Customs services concerned (organization of document exchange, post-clearance controls).

Standard 5

The right to process goods for home use shall not be limited to the owner of the imported goods.

Processing of goods for home use is usually granted only to persons established in the country or Customs territory. This condition may be waived for importations of little economic importance (e.g. low quantities, low value, and single operations).

The person authorized must ensure that the procedure is applied correctly, such as maintaining proper accounts and a good record of compliance with Customs law. In some administrations, Customs may seek information from other tax authorities where the applicant is not known.

Since Standard 5 does not limit the right to this procedure to the owner of the imported goods, the field of application of the procedure is extended. Industrial companies can therefore carry out processing operations for other persons and thus make full use of their production capacities.

7. Authorization

Recommended Practice 6

Persons who carry out regular processing of goods for home use should, on request, be granted a general authorization covering such operations.

Granting of a general authorization for traders who perform continuous processing of goods for home use operations is a measure of facilitation to both the trader and Customs. Such traders will normally have established good records of compliance with Customs law and therefore can be eligible for less Customs intervention for each individual transaction. For Customs this reduces the manpower and paperwork requirements for reviewing and granting multiple individual authorizations. The general authorization may be made subject to the condition that the goods held under this procedure should not exceed a certain quantity and that the processing operations should be completed within a prescribed time limit.

7.1. Application for an authorization

In many administrations an authorization for this procedure must be obtained from a competent authority. This competent authority may be Customs or another government agency empowered to approve such authorizations based on economic policy (e.g. the government department responsible for economic affairs or external trade). However, Customs will ensure that all the conditions required for the procedure are fulfilled and issue the authorization.

The authorization is issued at the request of the person who carries out the processing operations or who arranges for them to be carried out. A request for the authorization can be made :

- by a standard request or

- by a simplified request.

7.1.1. Standard request

For a standard request the authorization is obtained in advance, before the goods can be placed under the processing of goods for home use procedure. A standard request is generally applicable for persons who have the intention of carrying on large-scale or continuous processing of goods for home use operations.

The following may be required in the application form and be approved of in the authorization itself :

Name or business name and address

- of the applicant.

- of the processor (if the applicant and the operator are not the same person).

Information on the goods to be processed :

- Indication of the tariff classification.

- Estimated quantity stated by reference to imports over a given period.

- Estimated Customs value stated by reference to imports over a given period.

- Indication of the country of origin envisaged.

Information on the processed products and planned clearance for home use operations :

- The trade and/or technical description. The description for each processed product obtained should be sufficiently clear and detailed to enable a decision to be taken on the application. The description should entail enough particulars to enable Customs to check on the use of the authorization, with particular reference to the expected rates of yield.

- Indication of the tariff classification (for each processed product obtained);

- The processed products;

Expected rate of yield or method of how such rate should be established by Customs.

The rate of yield indicates the quantity or percentage of the processed products obtained from a given quantity of imported goods. To set this rate, account is taken of the losses resulting from the nature of the goods (e.g. evaporation). The rate of yield or the method for determining this rate must be subject to post-clearance verifications by Customs.

To simplify the processing procedure both for Customs and the person concerned, flat rates can be set. These rates of yield apply when processing operations are carried out, under clearly specified technical conditions, on goods with generally uniform characteristics and resulting in processed products of uniform quality. These flat rates of yield are fixed on the basis of actual data noted in advance.

- Description of the nature of processing operations to be carried out on the imported goods in order to produce the processed products.

- Address of the place where the processing operations is to be carried out. The processing operations do not necessarily have to be carried out on the premises of the person granted the authorization. They may be contracted to other companies established in the Customs territory. However the responsibility for compliance with the Customs laws remains with the person granted the authorization.

- Estimation of time needed :

Indication of the average time needed to carry out the processing; operations for a given batch of the goods (expressed by unit or quantity, for example);
Indication of the time likely to elapse between completion of the processing operations and clearance for home use of the processed products;

Customs must specify the period within which the processed products must be cleared for home use. This period should take account of the time required to carry out the processing operations and to dispose of the processed products, as well as the economic conditions in the Customs territory and the specific needs of the applicant. The period normally will begin on the date of registry of the declaration that enters the foreign goods for the processing of goods for home use procedure.

It may not be necessary for the maximum time limit fixed in each case to be automatically granted at importation.

For reasons of simplification, a period that commences in the course of a calendar month or quarter could be ended on the last day of a subsequent calendar month or quarter.

If a general time limit for processing of goods for home use is fixed instead of an individual time limit for each particular case, this may be regarded as granting a greater facility.

- Indication of the most suitable method(s) of identifying the imported goods incorporated in the processed products.

- Suggested Customs office which would be suitable as the :

Customs office responsible for the supervision of the procedure;

Customs office where the Goods declaration for processing of goods for home use can be accepted;

Customs office of discharge where the Goods declaration for the appropriate Customs procedure can be accepted.

- Indication of the period which is planned to import goods for processing of goods for home use (intended duration of the authorization).

Indication of who will prepare the bill of discharge (Customs or the person authorized).

7.1.2. Simplified request

A simplified request for the authorization is made by lodging the Goods declaration for processing of goods for home use. This is normally applied in situations where the authorized person intends to carry out a single and unique processing and where controlling the processing operations can be done quite easily.

Where a simplified request for the processing of goods for home use is permitted, Customs should accept the lodging of the Goods declaration to serve as the request for authorization. In this case, Customs’ registering of the Goods declaration constitutes the authorization and subjects the goods to the conditions governing the authorization.

Where the information in the Goods declaration does not contain all the information necessary to grant the authorization, Customs may require that the declarant submit a separate document containing the following information :

- the name or business name and address of the applicant where the person applying to use the procedure is not the same as the declarant;

- the name or business name and address of the operator where the operator is not the same as the applicant or declarant;

- the nature of the processing operation;

- the trade and/or technical description of the processed products;

- the estimated rate of yield or, where appropriate, the method by which that rate is to be determined;

- the estimated period for clearance for home use; and

- the place where it is intended to carry out the processing operation.

7.2. Security

The processing of goods for home use procedure is usually subject to provision of a security. (See Chapter 5 on Security in the General Annex and its Guidelines.)

7.3. Control and audit

Control and audit are described in Chapter 6 of the General Annex and its Guidelines. Operations allowed under the processing of goods for home use procedure may be carried out at premises authorized by Customs such as the premises of the firm, Customs warehouses and free zones. These establishments usually have to be located in a specified region or place and be approved by Customs. Customs may check that the establishment possesses the necessary equipment for the proposed processing operations. As a facility, users of the system may have Customs examinations carried out at their premises.

Premises used for the processing of goods for home use are not necessarily subject to special Customs surveillance. The main characteristics of control arrangements can be that :

- the competent authorities specify the requirements as to the location and lay-out of the premises for processing of goods for home use; and

- examination of the goods to be used and of the processed products to be removed from the premises will generally be carried out at the premises.

7.4. Examination of the goods

7.5. Administrative and financial responsibility

To ensure correct application of the provisions governing the processing of goods for home use procedure and to facilitate controls, Customs generally requires the person authorized to keep or ensure the keeping of stock records (" processing records"). The records should indicate the quantities of goods entered for the procedure and of processed products obtained, all the particulars needed to monitor the operation, and the correct calculation of any import duties and taxes which may be payable. The term "records" should be interpreted as covering all books of account of the person concerned, including stock accounts.

The "processing records" must be made available to the supervising Customs office to enable it to carry out the checks necessary for the proper implementation of the procedure. Where the processing operations are being carried out in two or more establishments, the stock records should contain the information pertaining to the implementation of the procedure in each establishment.

Where the normal commercial records kept by the person concerned will allow supervision of the procedure, Customs can accept these as the valid "processing of goods for home use records".

8. Termination of processing of goods for home use

Standard 7

Processing of goods for home use shall be terminated when the products resulting from the processing are cleared for home use.

The processing procedure must be terminated within the time limit allowed for the operation.

A Goods declaration for home use should be lodged with the Customs office competent to terminate the procedure. Alternatively a simplified Goods declaration can be submitted using the simplified procedure set out in Recommended Practice 2 in Specific Annex B, Chapter 1 on Clearance for home use and its Guidelines.

With regard to goods that have been imported for processing under this procedure but remain in the same state, they will be entered for home use in the state in which they arrived in the Customs territory. The processing does not have to be carried out.

A separate Goods declaration should be lodged for each partial consignment of compensating products. This is to allow the discharge of the procedure to take place in stages as the goods are placed under an assigned Customs procedure (clearance for home use or another approved Customs procedure), and to allow the controls necessary to ensure final disposition of all the goods to be applied.

8.1. Bill of discharge

The bill of discharge is a document which is used to check whether all the imported goods were cleared as processed products or in the same state within the time limit and whether any applicable duties and taxes are due. Customs will generally examine the quantity of imported goods for which the time limit for processing has expired and whether the products (processed and not processed) have been declared for home use.

If there is a surplus of non-processed products, these will be subject to import duties and taxes. Where there are continuous operations, any production of processed products beyond that foreseen in the period must be taken into account in the next period.

The bill of discharge must contain the following information :

- the authorization reference;

- the nature and quantity of the imported goods, with a reference to the declaration placing the goods under the procedure;

- the tariff classification of the imported goods;

- the Customs value of the imported goods;

- the rate of yield;

- the nature and quantity of the products resulting from processing;

- the amount of processing costs, when this information is necessary for determining the Customs value;

- the tariff classification of the products resulting from the processing; and

- if any products are not cleared for home use but are placed under another Customs procedure, the references to those Goods declarations (as provided for in Standard 8).

The authorization should state whether the bill of discharge should be prepared by Customs or by the person who is granted the authorization.

The date of the bill of discharge depends on the time limit set for the processing operation.

In the case of continuous processing operations, the bill of discharge is prepared regularly. As a simplification measure, goods imported over a given period (e.g. month, quarter) for which the time limit for processing expires on the same date can be grouped together in a single bill of discharge.

The time limit for lodging the bill of discharge is set by law. It must be prepared as quickly as possible (e.g. 30 days after expiry of the time limit for processing).

The provisions applicable to clearance for home use govern the time limit for payment of import duties and taxes.

Appendix I, Part II contains an explanation of elements applied by the European Community when the processing of goods for home use procedure is terminated by clearance for home use.

Standard 8

Standard 8 allows Customs to take account of special circumstances (e.g. lack of commercial outlets, urgent orders from abroad) and to authorize termination of the procedure by placing the goods under another procedure (e.g. Customs warehouse, transit, free zone, inward processing). However, this approval should only be given in exceptional circumstances since the processing of goods for home use procedure is granted on the assumption that the resulting products will be cleared for home use, and that the advantages in terms of import duties and taxes which are inherent in the procedure will be realized.

In cases where products resulting from processing are repeatedly not cleared for home use, Customs should check that the conditions warrant maintaining the authorization.

Placing goods under another Customs procedure means that the conditions for obtaining subsequent procedures (e.g. necessary authorizations) are met and that all the corresponding Customs provisions are satisfied.

Standard 9

Waste or scrap that results from the processing operations will have to be accounted for and, if cleared for home use, applicable import duties and taxes will become payable. Generally the import duties and taxes on waste and scrap are less than those on processed products, because of the lower rates available under the processing for home use procedure.

Wastage is the loss of the imported goods that habitually occurs during processing operations (e.g. evaporation, wastage when transporting by pipeline) and is taken into account in the rate of yield. As a wastage coefficient has already been accounted for in the bill of discharge through the rate of yield, the quantity of processed products obtained from the imported goods is reduced. Therefore this normal wastage does not affect the duties and taxes.

Imported goods destroyed or irretrievably lost by accident or force majeure would be treated under Standard 3.44 of the General Annex.

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Appendix I

Methods of Application

The European Community

Part I

In regard to Standard 3, the European Community has specified the following categories of goods and operations allowed for processing goods for home use.

LIST OF PROCESSING OPERATIONS

Order No	Column 1	Column 2
	Goods for which processing under Customs control is authorized	Processing which may be carried out
1.	Goods of any kind	Processing into samples presented as such or put up into sets
2.	Goods of any kind	Reduction to waste and scrap or destruction
3.	Goods of any kind	Denaturing
4.	Goods of any kind	Recovery of parts or components
5.	Goods of any kind	Separation and/or destruction of damaged parts
6.	Goods of any kind	Processing to correct the effects of damage suffered
7.	Goods of any kind	Usual forms of handling permitted in customs warehouses or free zones
8.	Tobaccos falling within Chapter 24 of the CN code	Processing into 'homogenized' or 'reconstituted' tobacco falling within CN code 2403 91 00 and/or tobacco powder falling within CN code ex 2403 99 90
9.	Raw or unmanufactured tobacco of CN code 2401 10 Raw or unmanufactured tobacco partly stemmed/stripped of CN code ex 2401 20	Processing into partly or wholly stemined/ stripped tobaccos falling within CN code 2401 20 and into tobacco refuse falling within CN code 2401 30 00
10.	Palm oil falling within CN code 1511 10 10	Processing into :
	or Solid fractions of palm oil falling within CN code 1511 90 19	Mixtures of fatty acids falling within CN codes 1519 11 00, 1519 12 00, 1519 19 00, 1519 19 30 and 1519 19 90
	or Fluid fractions of palm oil falling with CN code 1511 90 91	Fatty acids falling within CN codes 2915 70 15, 2915 70 25, 2915 90 10, ex 2915 90 90, ex 2916 15 00 and ex 2916 19 90
	or Coconut oil falling within CN code 1513 11 10	Mixture of methyl esters of fatty acids falling with CN code ex 3823 90 98
	or Fluid fractions of coconut oil falling with CN code ex 1513 19 30	Methyl esters of fatty acids falling within CN codes ex 2915 70 20, ex 2915 70 80, ex 2915 90 90, ex 2916 15 00 and ex 2916 19 90
	or Palm kernel oil falling within CN code 1513 21 11	Mixture of fatty alcohols falling within CN code 1519 30 00
	or Fluid fractions of palm kernel oil falling within CN code ex 1513 29 30	Fatty alcohols falling within CN codes 2905 16 90, 2905 17 00 and 2905 19 90
	or Babassu oil falling within CN code 1513 21 19	Glycerine falling within CN code 1520 10 00
11.	Products falling within CN codes 2707 10, 2707 20, 2707 30, 2707 50, 2707 91 00, 2707 99 30, 2707 99 91, 2707 99 99 and 2710 00	Processing into products falling within CN codes 2710 00 71 or 2710 00 75
12.	Crude oils falling within CN codes 2707 99 11 and 2707 99 19	Processing into products falling within CN codes 2707 10 90,2707 20 90,2707 30 90,2707 50 91,2707 50 99, 2707 99 30, 2902 20 90, 2902 30 90, 2902 41 00, 2902 42 00, 2902 43 00 and 2902 44 90
13.	Dichromium trioxide falling within CN code 2819 10 00	Processing into chromium falling within CN code 8112 20 31
14.	Gas oils with a sulphur content exceeding 0,2 % falling within CN code 2710 00 69 Kerosene falling within CN code 2710 00 55	Mixture of the products in column 1 or a mixture of one and/or other of the products in column 1 with gas oil with a sulphur content not exceeding 0,2 % falling within CN code 2710 00 69 to obtain a gas oil with a sulphur content not exceeding 0,2 % falling within CN code 2710 00 69
15.	Castor oil falling within CN code 1515 30 90	Processing into : - hydrogenated castor oil ("opalwax") of CN code 1516 20 10 – 12-hydroxystearic acid (purity less than 90 %) of CN code 3823 19 10 – 12-hydroxystearic acid (purity90 % or more) of CN code 2918 19 90 – glycerol of CN code 2905 45 00
16.	Skating boots without skates attached, of CN code 6402 Skating boots without skates attached, of CN code 6403 19 00	Processing into : Ice skates of CN code 9506 70 10 Roller skates of CN code 9506 70 30
17.	Motor chassis fitted with cabs, of CN code 8704 21 31	Processing into fire engines fitted with integral fire fighting and/or life-saving equipment, of CN code 8705 30 00
18.	Any electronic type of components, parts, assemblies (including sub-assemblies), or materials (whether or not electronic), which are vital to the electronic working performance of the processed product	Processing into information technology products falling within : a CN subheading found on the "EC-ITA-schedule CXE' of Council Decision 97/359/EC () where a duty exemption operates on the date of authorisation, or 2. a CN subheading provided for in Articles 1, 2 or 3 of Council Regulation (EC) N° 2 216/97 ( *) where an autonomous suspension of duty operates on the date of authorization
19.	PVC Material falling within CN code 3921 9060	Processing into film screens falling within CN code 9010 6000

OJ L 155, 12.6.1997, p. 1 (the Information Technology Agreement).
OJ L 305, 8.11.1997,p.1.

Part II

When goods are processed for home use under the provisions of this Chapter, the European Community applies the following criteria when the goods are submitted for clearance for home use.

Assessment of duties and taxes/taxation elements

With regard to the assessment of import duties and taxes, the date of clearance for home use of processed products is the decisive date for the calculation bases (quality, quantity, value, and rate of duties and taxes).

For imported goods remaining in the same state or products which did not undergo complete processing, the date the goods were placed under the procedure is the date to be used for the calculation bases for import duties and taxes.

See the Guidelines to Chapter 4 of the General Annex.

For determining the value of the products processed at the time the Customs debt is incurred, there are special rules which differ from those applicable to clearance for home use directly after importation. The value can be determined, at the choice of the declarant, on the basis of the following data :

- the value, determined at or about the same time, of identical or similar goods produced abroad,

- the selling price, provided that it was not influenced by a relationship between the buyer and the seller,

- the selling price in the Customs territory of identical or similar goods, provided that it was not influenced by a relationship between the buyer and the seller, or

- the value of the imported goods, plus the processing costs.

Annex G - Temporary admission

Annex G

Temporary admission

CHAPTER 1

Temporary admission

Definition

For the purposes of this Chapter:

E1./ F1.

“temporary admission ” means the Customs procedure under which certain goods can be brought into a Customs territory conditionally relieved totally or partially from payment of import duties and taxes; such goods must be imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any change except normal depreciation due to the use made of them.

Principle

1. Standard

Temporary admission shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Field of application

2. Standard

National legislation shall enumerate the cases in which temporary admission may be granted.

3. Standard

Goods temporarily admitted shall be afforded total conditional relief from import duties and taxes, except for those cases where national legislation specifies that relief may be only partial.

4. Standard

Temporary admission shall not be limited to goods imported directly from abroad, but shall also be granted for goods already placed under another Customs procedure.

5. Recommended Practice

Temporary admission should be granted without regard to the country of origin of the goods, the country from which they arrived or their country of destination.

6. Standard

Temporarily admitted goods shall be allowed to undergo operations necessary for their preservation during their stay in the Customs territory.

Formalities prior to the granting of temporary admission

7. Standard

National legislation shall enumerate the cases in which prior authorization is required for temporary admission and specify the authorities empowered to grant such authorization. Such cases shall be as few as possible.

8. Recommended Practice

The Customs should require that the goods be produced at a particular Customs office only where this will facilitate the temporary admission.

9. Recommended Practice

The Customs should grant temporary admission without a written Goods declaration when there is no doubt about the subsequent re-exportation of the goods.

10. Recommended Practice

Contracting Parties should give careful consideration to the possibility of acceding to international instruments relating to temporary admission that will enable them to accept documents and guarantees issued by international organizations in lieu of national Customs documents and security.

Identification measures

11. Standard

Temporary admission of goods shall be subject to the condition that the Customs are satisfied that they will be able to identify the goods when the temporary admission is terminated.

12. Recommended Practice

For the purpose of identifying goods temporarily admitted, the Customs should take their own identification measures only where commercial means of identification are not sufficient.

Time limit for re-exportation

13. Standard

The Customs shall fix the time limit for temporary admission in each case.

14. Recommended Practice

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

15. Recommended Practice

When the goods granted temporary admission cannot be re-exported as a result of a seizure other than a seizure made at the suit of private persons, the requirement of re-exportation should be suspended for the duration of the seizure.

Transfer of temporary admission

16. Recommended Practice

On request, the Customs should authorize the transfer of the benefit of the temporary admission to any other person, provided that such other person :

(a) satisfies the conditions laid down; and
(b) accepts the obligations of the first beneficiary of t he temporary admission.

Termination of temporary admission

Provision shall be made to permit temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported.

18. Standard

Provision shall be made to permit temporarily admitted goods to be re-exported in one or more consignments.

19. Recommended Practice

Provision should be made for suspending or terminating temporary admission by placing the imported goods under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

20. Recommended Practice

If prohibitions or restrictions in force at the time of temporary admission are rescinded during the period of validity of the temporary admission document, the Customs should accept a request for termination by clearance for home use.

21. Recommended Practice

If security has been given in the form of a cash deposit, provision should be made for it to be repaid at the office of re-exportation, even if the goods were not imported through that office.

Cases of temporary admission

(a) Total conditional relief from import duties and taxes

22. Recommended Practice

Temporary admission with total conditional relief from duties and taxes should be granted to the goods referred to in the following Annexes to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990:

1. “Goods for display or use at exhibitions, fairs, meetings or similar events” referred to in Annex B.1.

2. “Professional equipment” referred to in Annex B.2.

3. “Containers, pallets, packings, samples and other goods imported in connection with a commercial operation” referred to in Annex B.3.

4. “Goods imported for educational, scientific or cultural purposes” referred to in Annex B.5.

5. “Travellers’ personal effects and goods imported for sports purposes” referred to in Annex B.6.

6. “Tourist publicity material” referred to in Annex B.7.

7. “Goods imported as frontier traffic” referred to in Annex B.8.

8. “Goods imported for humanitarian purposes” referred to in Annex B.9.

9. “Means of transport” referred to in Annex C.

10. “Animals” referred to in Annex D.

(b) Partial conditional relief from import duties and taxes

23. Recommended Practice

Goods which are not included in Recommended Practice 22 and goods in Recommended Practice 22 which do not meet all the conditions for total conditional relief should be granted temporary admission with at least partial conditional relief from import duties and taxes.

Guidelines to Annex G

Guidelines to the legal text

Chapter 1

TEMPORARY ADMISSION

1. Introduction

There are many reasons, based on economic, social or cultural considerations, for which governments may favour the temporary importation of goods.

When goods are to stay only temporarily in a Customs territory, the payment of the import duties and taxes applicable to them is not warranted in light of the administrative burden for Customs in collecting these duties and taxes and refunding them after the goods are exported. Furthermore, from an international trader’s perspective, this would cause the same goods to be liable for payment of import duties and taxes each time they were temporarily imported into a Customs territory. In addition, goods temporarily imported free of duties and taxes are not in competition with domestic goods since their use is limited and they must be re-exported within the approved time limit.

For these reasons, the national legislation of most administrations allows conditional relief from import duties and taxes for certain categories of temporarily imported goods.

The Customs procedure that provides for relief from import duties and taxes on goods imported for a specific purpose and on the condition that they are to be re-exported in the same state is the temporary admission procedure.

As a rule, temporary admission allows the total conditional relief from import duties and taxes. In certain particular cases, however, the relief may only be partial.

There are definite economic benefits in allowing enterprises to examine foreign goods, to try them out or even to use them temporarily without having to pay import duties and taxes or with paying only a fraction of the duties and taxes normally applicable. The facilities which this offers to traders are a significant stimulus to international trade.

In particular, by facilitating the exchange of articles of an educational, scientific or cultural nature, this procedure benefits not only cultural development but also education and scientific research, which are vital for the progress of mankind.

One of the most important internationally accepted systems for the movement of goods under temporary admission through multiple Customs territories is that of the ATA carnet system. It relies on an international chain of guaranteeing associations that provide the security for any duties and taxes which may become liable on the temporarily admitted goods. (See the Appendix to these Guidelines).

There are a number of international conventions which address the ATA carnet with its system of international guarantees and which address the temporary admission of specific types of goods. The most recent is the WCO’s Customs Convention on Temporary Admission, known as the "Istanbul Convention", of 26 June 1990. It has entered into force in many countries, most of which are Contracting Parties to the Kyoto Convention. The Istanbul Convention was designed to combine into a single instrument all the existing provisions on temporary admission which are found in a multitude of conventions and agreements, and also to harmonize procedures in pursuit of economic, humanitarian, cultural or touristic objectives.

The Kyoto Convention contains the basic provisions of all Customs procedures and includes the broad fundamental principles concerning temporary admission. The Istanbul Convention on the other hand furnishes details of the procedures covered by the many conventions concerning specific goods that it replaces, as well as details about Customs documents and guaranteeing associations. The Istanbul Convention also describes the ways in which temporary admission is applied. In addition, it is liberal in that it provides for the non-application of prohibitions and restrictions of economic character in relation to temporary admission of goods.

Contracting Parties to the Kyoto Convention are not obligated to accede to the Istanbul Convention. It is nevertheless worth pointing out that both the Kyoto Convention and the Istanbul Convention are instruments of the same Council, and that the WCO equally recommends accession to the Istanbul Convention. The latter intentionally brings together all cases of temporary importation included in other international conventions. Accordingly, even countries which for one reason or another do not wish to accede to the Istanbul Convention will find in it information of practical use for introducing or modifying a temporary importation procedure.

In certain administrations the facilities provided by temporary admission are granted under another Customs procedure, that of drawback. The drawback procedure is dealt with in Chapter 3 of Specific Annex F.

The particular procedures for articles temporarily imported by travellers and intended for their own use and for means of transport for private use are covered in Specific Annex J, Chapter 1. The procedures for commercial means of transport are in Specific Annex J, Chapter 3. These procedures are also covered by the Annexes to the Istanbul Convention and other relevant Conventions that those Annexes are intended to replace. However, national legislation may require that this Chapter or the other Conventions apply to certain goods, such as means of transport for private use or traveller’s personal effects.

2. Definition

E1/F1

“temporary admission” means the Customs procedure under which certain goods can be brought into a Customs territory conditionally relieved totally or partially from payment of import duties and taxes; such goods must be imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any change except normal depreciation due to the use made of them.

3. Principle

The fundamental principle of temporary admission with re-exportation in the same state is to allow, under certain conditions, the importation of goods into the Customs territory of the country of destination for a specified period without collecting the duties and taxes applicable to those goods.

3.1. Provisions governing temporary admission

Standard 1

Temporary admission shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Temporary admission. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 5 on Security should be read in conjunction with this Chapter on Temporary admission.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

3.2. Conditions related to temporary admission

Standard 1.2 of the General Annex requires national legislation to stipulate the conditions that will apply to the temporary admission procedure. In addition, the following conditions will generally apply.

Re-exportation : The fact of temporarily importing goods implies an intention to re-export them later. Temporary admission with conditional relief from duties and taxes is granted on condition that there is a clear intention to re-export the goods, even if that intention may change later. (See the definition of "temporary admission" in this Chapter.)

Identification of the goods : To qualify for temporary admission, the goods must be identifiable so that Customs is able to ensure that the goods presented at re-exportation are the same as those which were presented at temporary importation. That is why Customs generally takes special measures for identification at the time of importation. There are many different possibilities for identification, and these are described in these Guidelines.

Security for duties and taxes : No duties and taxes (see definition in Chapter 2 of the General Annex) are collected while the goods are covered by the temporary admission procedure. Conditional relief from duties and taxes means, however, that Customs requires security to cover these duties and taxes if the conditions applicable to the temporary admission are not complied with (for example, the goods are not re-exported). The security may be furnished by an international guaranteeing chain, by an operator or by another person. Chapter 5 of the General Annex on security is applicable, where appropriate.

Time-limit for re-exportation : Since re-exportation is a primary condition for temporary importation, Customs will specify a time limit in each case. The time-limit for re-exportation may be set in terms of the intended use and, where appropriate, its economic repercussions.

Use of the goods : Unlike certain other Customs procedures, such as transit and Customs warehousing which may restrict access to and use of the goods by application of a Customs seal or placing the goods under Customs control, in a Customs warehouse, or on the premises of an approved consignee, the temporary importation procedure is more liberal in the sense that the goods can, in principle, circulate and be used quite freely. Thus, for example, after declaring a collection of samples to Customs, a travelling salesman can take them by car, unload them at home and take them to different customers without having to make any detailed report to Customs. Such use is, however, limited to the purpose of the temporary admission. For example, a machine temporarily imported for an exhibition can normally be operated by way of demonstration, but it could not be used for production.

3.3. Special conditions

In addition to the actual intended use, the goods may in some cases be subject to special conditions laid down in national legislation. These conditions could concern :

- the ownership of the goods (for example, the goods must be owned by a person established or resident outside the territory of temporary admission);

- the range of users (for example, a person established or resident outside the territory of temporary admission or to be used under that person's direction);

- restrictions as to location (for example, use on the premises of an exhibition, or with a prohibition on internal traffic);

- quantity (for example, that the number be reasonable in terms of the intended use); or

- other criteria (for example, not to constitute a profit-making activity; and, for means of transport, registration in a country other than that of temporary admission).

This list of conditions are examples and it will be necessary to consult the other Standards, Recommended Practices and Guidelines of this Chapter, and any relevant national legislation. The legislation may include conditions that must be fulfilled to qualify for this procedure in general terms. These conditions would primarily include the time-limits for temporary admission and the obligations of persons importing goods under this procedure.

For the applications covered by the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990, see the Annexes to that Convention.

4. Field of application

4.1. Goods for which temporary admission may be granted

Standard 2

National legislation shall enumerate the cases in which temporary admission may be granted.

National legislation must specify the situations when temporary admission may be granted. This does not mean that it is essential to prepare a list of goods to which temporary admission can apply. It may be enough to specify the intended uses or purposes to which the goods can be put.

Section 9 of these Guidelines describes some of the cases in which the temporary admission procedure applies.

4.2. Prohibitions and restrictions

All countries have prohibitions and restrictions applicable to certain goods under national laws and regulations.

Some countries apply the same restrictions and prohibitions for temporary admission that would be applicable to goods that were cleared for home use. This practice, expressly authorized by Article 3 of the Convention, is based on considerations of morality or public order; public safety; public health; veterinary or plant health considerations; the protection of endangered species of wild fauna and flora (see the Washington Convention on international trade in endangered species of wild fauna and flora, 1973); the protection of copyright or intellectual property; or the protection of the environment.

However, when economic restrictions or prohibitions would apply, Contracting Parties are encouraged to have a less restrictive practice. To ensure that the obligation to re-export the goods which may be subject to an economic prohibition or restriction will be fulfilled, Customs may require sufficient security and may also take additional measures if there is a higher risk involved. (See Chapter 5 on Security of the General Annex.)

Examples :

An import quota for clothing has been completely used so that importation for home use cannot be applied. Yet an exhibitor may nevertheless be allowed to show his goods, so as to take orders for the following season.
A firm wants to sell a highly efficient packing machine for butter. But the potential buyer insists on having a trial on the premises of the machine's manufacturer using butter from his own production before signing the important contract. The butter, subject to strict quotas in certain countries because of national overproduction, could nevertheless be temporarily admitted for carrying out the trials.

As regards prohibitions and restrictions that relate neither to health nor to the economy, many administrations nevertheless grant temporary admission provided that subsequent re-exportation can be ensured. The decision to grant these facilities may often be taken by other authorities. Customs should therefore not object to temporary importation if the authority competent for the question of prohibition or restrictions (e.g. the Ministry of Defence) is able to approve it. Examples would be for an arms exhibition or an air show involving fighter aircraft.

When allowing the temporary admission where certain prohibitions or restrictions on the goods are suspended, it would be beneficial to annotate this on the relevant document as proof to be presented to Customs when the procedure is terminated.

Termination of temporary admission by clearance for home use for goods to which prohibitions or restrictions apply implies that the conditions laid down by Customs in regard to the prohibitions or restrictions have been fulfilled. However, if clearance for home use cannot be applied by virtue of the prohibition or restriction, Customs would require a commitment on the part of the declarant to re-export, or would annotate the temporary admission document to specify that clearance for home use is ruled out by reason of those prohibitions or restrictions. This would enable the importer to determine the nature of the restrictions and to take appropriate measures.

It should be noted that not requiring a commitment to re-export, or not including an annotation drawing the importer's attention to prohibitions or restrictions which rule out clearance for home use, does not allow the person concerned to claim the right to clearance for home use when prohibitions or restrictions apply to the goods under temporary admission.

4.3. Total conditional relief and partial conditional relief

Standard 3

Goods temporarily admitted shall be afforded total conditional relief from import duties and taxes, except for those cases where national legislation specifies that relief may be only partial.

Temporarily admitted goods qualify for total conditional relief from payment of import duties and taxes, except in cases where national legislation expressly stipulates that the conditional relief can only be partial.

- Total conditional relief refers to not collecting the import duties and taxes that would be due if the goods were cleared for home use. Nevertheless a security for such duties and taxes is usually required. The temporary admission procedure generally refers to total conditional relief.

Partial conditional relief refers to relief from part of the import duties and taxes that would have been collected if the goods had been brought into home use on the date when they were placed under the temporary admission procedure. Nevertheless, some level of security is generally required. Under the temporary admission procedure, partial conditional relief is rather exceptional and is limited to specific cases provided for in national legislation.

Partial conditional relief may be applied in different manners. Some countries apply it by granting relief on part of the total duties and taxes payable, while others grant relief from certain types of duties or taxes only. Some countries use the term "partial collection".
The term "partial conditional relief" does not apply to any tariff reductions that may be granted, for example, on presentation of proof of origin or under a free trade agreement.
A number of countries do not offer partial conditional relief, either because they grant total conditional relief in all cases or they do not allow commercial utilization of temporarily imported goods.
Taxes that exist in many administrations in one form or another are covered by the concept of "duties and taxes" as defined in the General Annex.

Total conditional relief is the basis of the temporary admission procedure. Care should therefore be taken to apply this fundamental principle wherever possible. However, there are cases where national legislation allows only partial conditional relief. Such cases should be exceptional, but they are still preferable to refusing to grant temporary importation. Standards and Recommended Practices 1 to 2 and 4 to 21 of this Chapter make no distinction as to the nature of the conditional relief granted to goods in temporary admission. These provisions must be applied not only for total conditional relief but also for partial relief. For the Recommended Practices listed above, Contracting Parties should not enter a reservation when they grant only partial conditional relief. However, to facilitate the operations of traders, Customs should adequately inform all parties concerned as required by Chapter 9 of the General Annex.

Recommended Practice 22, on the other hand, expressly recommends total conditional relief for the cases listed. Hence, Contracting Parties which are not able to grant temporary admission for any of the cases listed in Recommended Practice 22, or which grant only partial conditional relief, should enter a reservation (see Section 9.1 of these Guidelines).

4.4. Temporary admission following another procedure

Standard 4

Temporary admission shall not be limited to goods imported directly from abroad, but shall also be granted for goods already placed under another Customs procedure.

Standard 4 requires Customs to grant temporary admission for goods already placed under another Customs procedure. Thus it is not necessary that the goods should have come directly from abroad. In particular, temporary admission can be granted :

- on termination of a transit procedure

This can apply after goods that come from abroad under cover of an international transit document have moved from the frontier to another Customs office or to an approved consignee.

- on termination of a warehousing procedure

This applies if the goods were warehoused for any reason pending a subsequent Customs treatment. This also applies to goods removed from a private Customs warehouse within the meaning of Specific Annex D. However, it does not require those administrations that allow temporary removal from the warehouse without terminating the warehousing procedure to modify this practice.

- for goods leaving free ports or free zones

Goods brought out of free ports and free zones must be treated the same as goods imported directly from abroad, including eligibility for temporary admission. For example, goods may be removed from a free port to be shown in a public exhibition.

4.5. Country of origin of the goods

Recommended Practice 5

Temporary admission should be granted without regard to the country of origin of the goods, the country from which they arrived or their country of destination.

Under Article 3 of the Body of the Convention Contracting Parties are authorized to apply all the prohibitions and restrictions which stem from their national legislation. However, they should not apply prohibitions or restrictions that are based on the origin of the goods, the country they arrived from or their country of destination. Likewise, Contracting Parties should not require reciprocity when granting temporary admission, that is, on the condition that temporary admission be provided for in the national legislation of the country from which the goods arrived or of their country of origin.

Accordingly, Contracting Parties which do require reciprocity must enter a reservation to Recommended Practice 5. Those which accept it without entering any reservation should not invoke Article 3 of the Convention in order to apply such prohibitions.

4.6. Re-exportation in the same state

Standard 6

Temporarily admitted goods shall be allowed to undergo operations necessary for their preservation during their stay in the Customs territory.

Goods are regarded as re-exported in the same state, that is in the same state as when imported, even if :

- there has been normal depreciation due to the use made of them while under temporary admission; or

- depreciation as a loss in value was caused by economic factors (goods less in demand), obsolescence (new technology, change in style), or by the use of the goods in the manner agreed for the temporary admission.

Examples :

- Articles on display for a year (deterioration); equipment needed for drilling as part of geophysical prospecting (wear and tear); printer used for demonstrations at an exhibition open to the public (wear of certain parts, soiling, etc.)

- The goods have undergone operations intended to keep them in good condition, such as

addition of anti-freeze or grease to a machine, or the dry cleaning of a clothing collection.

Thus temporarily admitted machines and apparatus can undergo normal maintenance. Maintenance is intended to prevent excessive wear or breakdown and often involves replacing certain parts (e.g. gaskets). For machines, maintenance work can even cover fairly complex operations. If these operations seem reasonable to Customs, they should be authorized. It should nevertheless be understood that operations needed to keep temporarily admitted articles in good condition are not mandatory.

In cases where fairly substantial repairs are needed, Customs may require that the goods temporarily admitted "with re-exportation in the same state" be first placed under a procedure of temporary admission "for inward processing". Within the meaning of the Kyoto Convention, inward processing also includes goods brought in for repair, whereas the national legislation of certain countries may make a distinction between these two operations (see Guidelines to Recommended Practice 19). Contracting Parties are entirely free to accept repairs under either of the temporary admission procedures.

5. Bringing goods under the temporary admission procedure

5.1. Formalities prior to the granting of temporary admission

5.1.1. Prior authorization

Standard 7

Certain economic requirements may lead countries to exercise control over goods in temporary admission. To facilitate such control, Contracting Parties may require that authorization be obtained from a particular authority before the goods can be placed under temporary admission. Such prior authorization may be obtained before the goods are introduced into the Customs territory; it may also be requested when the goods are already in temporary store or in a Customs warehouse. The competent authority for granting prior authorization may be a Customs authority, such as the central administration, a regional department or an inter-regional department. A non-Customs authority may also be empowered to grant such authorizations, for example the authority responsible for economic affairs, foreign trade, environmental protection or security.

Prior authorization need not be sought for each individual consignment of goods. Thus it may be made valid for operations of the same type carried out by the same person over a specified period or for a particular company.

To make requests for prior authorization mandatory is an obstacle to the speedy completion of the formalities for clearance of the goods. In order to avoid the disadvantages of requiring prior authorization, Customs should endeavour to make the Customs office of entry competent to grant temporary admission to the goods at the time of arrival and to limit as far as possible the cases in which prior authorization is required.

Non-Customs bodies are also required to act promptly on every application for prior authorization. Customs should promote prompt approval of authorizations to these other bodies by proposing to co-ordinate the procedure for establishing authorizations, by improving communication with such bodies and by using electronic data transmission.

The fact that national legislation requires a large number of authorizations does not necessarily prevent an administration from accepting Standard 7, because there may be valid economic reasons why they are unable to reduce the number of such authorizations. Administrations should nevertheless ensure that obtaining an authorization does not become a pure administrative formality whose purpose is never questioned or examined.

5.1.2. Production of the goods at a particular Customs office

Recommended Practice 8

The Customs should require that the goods be produced at a particular Customs office only where this will facilitate the temporary admission.

In the temporary admission procedure, the question of identifying the goods takes on particular importance. Customs wants to be able to be sure that the goods presented at the time of re-exportation or at any other time are indeed the same goods that were presented at importation. That is why they usually take special measures at the time of importation. Some of the possible ways of making goods identifiable are listed in Section 5.4 of these Guidelines. Depending on the means of identification, the goods may need to be produced to Customs for examination.

In accordance with Recommended Practice 8, however, Customs should not require the goods to be produced at a particular Customs office unless this will facilitate the temporary admission. This is in order not to hinder trade. There are, however, cases where identification may prove especially difficult or may require the services of specialists who are not available at every Customs office. In addition, certain Customs offices may have broader powers by reason of their geographical location or other factors. Rather than refuse temporary admission, Customs should propose to the persons concerned that the goods be presented at a specified Customs office that has the capabilities to grant or terminate temporary admission. To the extent possible, the choice of Customs office should be made in consultation with the traders.

Examples :

- The authority which grants prior authorization gives special instructions to a particular Customs office.

Specialists in the identification of precious stones or the control of precious metals are assigned to a particular Customs office where they have the necessary equipment.
Customs office of entry keeps samples for comparison and makes these available to the office of exit.
A Customs office located within a public exhibition allows the stand and display material to be available immediately on arrival, so that identification of the goods can be carried out while the stand is being installed.

In the modern environment many administrations accept and process Goods declarations electronically and grant release of the goods automatically. Often the goods are at the premises of an approved consignee, and hence they are not physically present at a Customs office. This method is the general operation for many Customs administrations. In addition, Transitional Standard 32 of Chapter 3 of the General Annex provides for clearance of the goods at a place other than that where the declaration was lodged. Therefore, in the context of these Guidelines, the term "Customs office" is not limited strictly to the premises and installations of a Customs office. For example, when a transit operation following the discharge of temporary admission begins "at the Customs office", this may be the premises of an approved consignor. (See also the definition in Chapter 2 of the General Annex.)

5.2. Declaration for temporary admission

5.2.1. The Goods declaration

Recommended Practice 9

The Customs should grant temporary admission without a written Goods declaration when there is no doubt about the subsequent re-exportation of the goods.

The Goods declaration is defined in the General Annex. In this case, it is the declaration for temporary admission. Many Customs administrations accept and process Goods declarations electronically and use the techniques of risk management to release the goods automatically. There are also international documents such as the ATA carnet which can take the place of national temporary admission documents for Contracting Parties to the relevant Conventions (Istanbul Convention or ATA Convention). Since these temporary admission papers are covered by an international guaranteeing chain their use may make it unnecessary to provide another form of security when the goods are placed under the temporary admission procedure.

5.2.2. Waiver of the requirement of a Goods declaration

Customs should grant temporary admission without a written Goods declaration when there is no doubt about the subsequent re-exportation of the goods, regardless of their value.

Examples :

- Exchangeable containers and pallets, used for cross-border traffic and intended for re-exportation; equipment for televised reporting.

- Low-value goods.

- Used hand tools, used furniture, everyday articles used by a student while staying in the country of temporary admission.

Temporary admission without a written declaration does not require prior authorization. If deemed necessary, Customs can ask for an inventory and a written undertaking to re-export.

It is worth recalling that temporarily admitted goods may in certain cases be subject to special conditions laid down in national legislation, such as being the property of a person established or resident outside the territory of temporary admission (see Section 3.3).

Customs generally does not require security when it allows temporary admission without a written declaration but may ask for a written undertaking to re-export (see Section 5.2.4).

Examples of such cases are given in Section 9.1.1 of these Guidelines.

5.2.3. Temporary admission papers valid for repeated crossings of the frontier

In cases of temporary admission in which :

admission without a declaration cannot be granted and
the national frontier (or the external frontier of Customs territory) is crossed many times during a relatively short period of time and
there is virtually no risk of substitution of the goods,

Contracting Parties should allow the use of temporary admission documents valid for an unlimited number of frontier crossings during a specified period of time.

Example : A travelling salesman is transporting a consignment of 20 high-value bicycles. He crosses the frontier each week with the same consignment of goods for the purpose of obtaining orders. At the first importation, the goods are declared in accordance with the general rules, with security for any duties and taxes due. At the declarant's request, the temporary admission document is made out for one year with the annotation "temporary admission paper valid for repeated frontier crossings until expiry". To ensure reliable identification, the bicycles are marked with an identification by Customs. Subsequent frontier crossings can be thereby greatly facilitated for the declarant and Customs alike (exit from the country without termination; production of the temporary admission documents on request; subsequent temporary importations without any special formalities; random checks). It is up to the declarant to ask for termination of the temporary admission procedure at the time of the last exportation made during the period of validity of the temporary admission paper. At that time Customs may, if necessary, check the identification of the goods and verify their final exit from the territory.

5.2.4. Security

Security is covered in Chapter 5 of the General Annex and explained in the Guidelines to that Chapter. For temporary admission, security is required to ensure the re-exportation of the goods and that the Customs regulations are respected.

The amount of security to be paid can be calculated as a flat rate if the goods fall under a large number of tariff headings. Calculating the amount of security as a flat rate is a facility both for Customs and for trade circles. This flat rate can be equal to the average rate of the import duties and taxes applicable to the goods being temporarily admitted.

The security can also consist of an undertaking when, for example, the temporary admission concerns non-commercial operations, operations carried out by public establishments for governmental or local authorities, or no written Goods declaration is deemed necessary Customs (See Section 5.2.2).

5.2.5. International instruments relating to temporary admission

Recommended Practice 10

The Convention on Temporary Admission (Istanbul Convention) of 26 June 1990 combines in a single instrument all the provisions concerning temporary admission that are contained in a large number of existing conventions and agreements. It endeavours to simplify and harmonize procedures in pursuit of economic, humanitarian, cultural, social or touristic objectives.

Under the terms of the Istanbul Convention, the temporary admission Conventions mentioned below are still valid for Contracting Parties which have ratified them and are not Contracting Parties to the Istanbul Convention. For the Contracting Parties to the Istanbul Convention, the relevant Annexes to that Convention, if accepted, replace totally (e.g. European Convention on Customs treatment of pallets of 9 December 1960) or partially (e.g. Customs Convention on Containers of 2 December 1972) the previous Customs Conventions applicable to the goods concerned.

Annex of the Istanbul Convention	Corresponding previous temporary admission Convention
Annex A	Customs Convention on the ATA carnet for the temporary admission of goods, Brussels 6 December 1961 (ATA Convention)
Annex B.1.	Customs Convention concerning facilities for the importation of goods for display or use at exhibitions, fairs, meetings or similar events, Brussels, 8 June 1961.
Annex B.2.	Customs Convention on the temporary importation of professional equipment, Brussels, 8 June 1961.
Annex B.3.	Customs Convention on Containers, Geneva, 2 December 1972. European Convention on Customs treatment of pallets used in international transport, Geneva, 9 December 1960. Customs Convention on the temporary importation of packings, Brussels, 6 October 1960. International Convention to facilitate the importation of commercial samples and advertising material, Geneva, 7 November 1952
Annex B.4. : Goods imported in connection with a manufacturing operation	--
Annex B.5.	Customs Convention on the temporary importation of pedagogic material, Brussels, 8 June 1970. Customs Convention on the temporary importation of scientific equipment, Brussels, 11 June 1968. Customs Convention on welfare materials for seafarers, Brussels, 1 December 1964.
Annex B.6.	Convention concerning Customs facilities for touring, New York, 4 June 1954.
Annex B.7.	Additional Protocol to the Convention concerning Customs facilities for touring, relating to the importation of tourist publicity documents and material, New York, 4 June 1954.
Annex B.8. : Goods imported as frontier traffic	--
Annex B.9. : Goods imported for humanitarian purposes	--
Annex C	Customs Convention on the temporary importation of private road vehicles, New York, 4 June 1954. Customs Convention on the temporary importation of commercial road vehicles, Geneva, 18 May 1956. Customs Convention on the temporary importation for private use of aircraft and pleasure boats, Geneva, 18 May 1956.
Annex D : Animals	--
Annex E : Goods imported with partial relief from import duties and taxes	--

Annex A to the Istanbul Convention requires each Contracting Party to accept the ATA carnet in lieu of its national Customs documents and as security for payment of the duties and taxes. In many cases, it provides for temporary admission without a Customs document and without security.

5.3. Identification of the goods

Standard 11

Temporary admission of goods shall be subject to the condition that the Customs are satisfied that they will be able to identify the goods when the temporary admission is terminated.

For temporary admission, the goods must be identifiable at importation so that Customs is able to check at re-exportation that the goods are the same as those that were imported. This principle does not mean, however, that the goods must be physically examined more than is required under other procedures. The principle of risk management as enumerated in Chapter 6 of the General Annex is equally applicable in the temporary admission procedure.

5.4. Identification measures

Recommended Practice 12

For the purpose of identifying goods temporarily admitted, the Customs should take their own identification measures only where commercial means of identification are not sufficient.

The choice of identification measures for temporarily admitted goods does not depend solely on the nature of the goods.

It also takes account of the definite risk of substitution, the amount of import duties and taxes and the concern not to damage the goods. Customs can choose any of several means to identify the goods. Recommended Practice 12 stresses that in the great majority of cases it will not be necessary to take special measures, since existing commercial means of identification will suffice. Very often, the necessary data are already available in commercial documents such as the delivery note, bill of lading, invoice or descriptive list. The indications in these papers are generally sufficient to enable the goods to be identified. In addition, Customs will note the marks, numbers or other indications permanently affixed to the goods. Where appropriate, it can examine the marks and seals affixed by foreign Customs authorities. If identification by these means is not possible or is deemed unsatisfactory, Customs may identify the goods by description, by photographs or by sampling, or by affixing its own marks (see examples below). Though the most reliable means of identification is the affixing of Customs marks, it should be the exception because it considerably slows down clearance formalities.

Modern accounting methods, accounting files and other computerized means can also be highly useful for facilitating identification without delaying Customs clearance operations.

The declarant may propose to Customs an appropriate method of identification by indicating in the Goods declaration the necessary identification elements, for example by mentioning a machine's make, type, number, etc. or by attaching documents that can assist in identification.

Customs can affix marks such as the following :

- Customs seals (for example, lead seals; these should be available in several sizes, appropriate to the goods to be identified)

- Identification band

- Stamp punches (on a malleable metal part or on sealing wax)

- Rubber-stamp marks (on sprayed paint) or corrosive stamps on stainless steel objects.

6. Time-limit for re-exportation

6.1. Principle

Standard 13

The Customs shall fix the time-limit for temporary admission in each case.

Temporary admission implies that the goods will be re-exported within a set time-limit. Standard 13 requires Customs to fix the time-limit for temporary admission in each case and must inform the persons concerned so that they can arrange the necessary measures to comply with this time-limit.

The time-limit can be based on the time needed for the temporary admission of the goods and in accordance with the relevant international conventions and national legislation. The time-limit set should be for an appropriate duration and should not be a constraint for the person concerned. It should be ample for the purpose of the temporary admission, not encourage abuse, and be easy to monitor. Setting a different time-limit for each different type of goods is not recommended since the same goods may be granted temporary admission for different purposes, thereby justifying different time-limits. The duration should depend on the use or purpose of the temporarily admitted goods. In addition, having many different time-limits unnecessarily complicates the application of the procedure both for Customs and for the trader. For that reason, Customs should use only a few set time-limits, such as a general time-limit of one year for most cases and perhaps six months for special cases.

The declarant must be informed of the time-limit, usually by an appropriate annotation on the Goods declaration, manually or electronically, or by any other means. The declarant is responsible for keeping within the time-limit. Thus Customs is not required to issue a reminder when the time-limit is close to expiry.

If Customs does not require a written declaration, it assumes that there is no doubt as to re-exportation of the goods within the time-limit. This may apply, for example, in the case of used hand tools used by a fitter.

The temporary admission documents issued by international chains such as the ATA carnet have a validity period during which the guaranteeing association undertakes to pay the duties and taxes. Customs may nevertheless set a shorter period for re-exportation if so requested by the person granted temporary admission. For example, if the temporary admission document is valid for one year Customs may set a time-limit for exportation that corresponds to the period of use. On the other hand, if Customs were to grant a re-exportation time-limit longer than the one specified by the guaranteeing association in the temporary admission document, the goods would then be in the country of temporary admission without being covered by a valid guarantee. The guaranteeing association's liability for payment of import duties and taxes remains in effect only for temporary admission operations carried out during the validity period laid down for the temporary admission papers.

6.2. Extension of the period

Recommended Practice 14

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

Customs must take into account the needs of traders. Thus when requested by a person concerned and they agree the reasons to be appropriate, Customs should extend a time limit, particularly if the conditions for temporary admission are still being fulfilled.

The following elements can assist Customs in arriving at a decision on a request to extend the time-limit :

- Location of the goods

- Transfer of the temporary admission

- Any change in use of the goods since importation

- Any change in ownership since importation without request for transfer of the benefit of the temporary admission (see Section 7 of these Guidelines)

- Likely duration of use

- Economic considerations which argue against extension.

These elements may serve to detect an unauthorized use of the goods, such as the sale of an article in an exhibition without clearance for home use, or use of a machine for production when it was imported for demonstration purposes.

Requests for extension of the time-limit should normally be made in writing by the person concerned before the expiry of the temporary admission. The person concerned may be the declarant and need not necessarily be the importer or the person who has the goods. Customs may require the declarant requesting an extension of the time-limit to provide additional information, such as the present location of the goods.

If Customs refuses the request shortly before expiry of the temporary admission document, it should allow a reasonable period beyond the validity of the temporary admission to enable the goods to be re-exported or, where allowed, placed in a free port, a free zone, or a Customs warehouse or placed under another Customs procedure.

In general, requests for extension after the expiry of the time-limit for temporary admission are not accepted by Customs. However there may be special circumstances surrounding the request which allow Customs to consider it. Should Customs accept such a request, it is important that national legislation specify the conditions under which an extension may be granted.

If a temporary admission document issued by an international guaranteeing chain (such as an ATA carnet) expires when the goods are still in the territory of temporary admission, and the issuing association does not renew the document and hence the guarantee, the declaration could be replaced by a national declaration of temporary admission provided that the conditions for extension are fulfilled and valid security can be furnished. In this case, Customs must certify on the temporary admission document issued by an international guaranteeing chain that it has been replaced by a national temporary admission declaration. With the temporary admission document certified in this way, the person concerned should regularize the temporary exportation with Customs of the country that the goods were shipped from and request discharge of the carnet from the issuing association.

6.3. Seizure

Recommended Practice 15

To avoid the difficulties that will be entailed in exporting goods granted temporary admission in the event of seizure, the requirement to re-export them should be suspended for the duration of a seizure. This does not apply to a seizure made at the suit of private persons. The person concerned should inform Customs of the seizure as soon as possible and provide any appropriate documents as proof.

If a security expires during the period of seizure and the goods are subsequently released, the person concerned should provide Customs with a new security.

7. Transfer of temporary admission

Recommended Practice 16

On request, the Customs should authorize the transfer of the benefit of the temporary admission to any other person, provided that such other person :

(a) satisfies the conditions laid down; and

(b) accepts the obligations of the first beneficiary of the temporary admission.

There are many reasons why a trader may request that Customs allow the transfer of his obligations under the temporary admission procedure to another party. Customs should normally authorize this transfer provided that the other person satisfies the necessary conditions (e.g. the person's domicile or the security) and accepts the obligations of the first beneficiary of the temporary admission (e.g. to comply with the declared purpose of the temporary use, to re-export the goods within the specified time-limit, and to submit to Customs controls).

The request for transfer of temporary admission is made to Customs by the present beneficiary and the potential future beneficiary.

Once approved, the first beneficiary is discharged of his obligations under the temporary admission procedure.

The transfer of temporary admission does not require any special physical controls by Customs. Thus the goods need not be produced to Customs.

By accepting the transfer, the new beneficiary accepts the first beneficiary's obligations to Customs and cannot claim that a mistake was made previously by the first beneficiary, for example, that the consignment was incomplete at the time of temporary admission or that a partial re-exportation not notified to Customs took place before the transfer.

If Customs feels that there are valid reasons for doing so, transfer of the temporary admission should also be granted even if the official request was made after the transfer was made. This concession would not, however, influence any penalties applicable if, in making the transfer without referring the matter to Customs, the person concerned failed to comply with obligations to Customs.

8. Termination of temporary admission

8.1. Principle

Declarations made to terminate temporary admission should include a reference to the initial temporary admission document and contain all the particulars needed to effect the termination.

8.2. Termination by re-exportation of the goods

8.2.1. Customs office of re-exportation

Standard 17

Provision shall be made to permit temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported.

Although Recommended Practice 8 allows Customs to require the goods to be produced at a particular Customs office where this will facilitate temporary admission, Standard 17 allows re-exportation through a Customs office other than that of importation.

The possibility of re-exporting temporarily admitted goods through a Customs office other than that of importation is a measure designed to facilitate operators' logistics. This facility permits the declarant to choose the most direct and most economical route available should he, for example, wish to declare the goods (including means of transport) for temporary admission in the neighbouring country.

However, re-exportation through a particular Customs office may also bring certain advantages for the trader such as :

- Where a simplified declaration (a list or manifest, etc.) is used both for temporary admission and for termination in connection with a particular event.

- When certain administrations have the temporary admission declaration terminated by Customs within a fair or exhibition while the stand is being dismantled, and make random checks on the spot. Thus no control is carried out in the transport unit, and release is given as soon as the consignment is loaded.

8.2.2. Partial re-exportations

Standard 18

Provision shall be made to permit temporarily admitted goods to be re-exported in one or more consignments.

Re-exportation of the goods is the normal end-result of temporary admission. Temporarily admitted goods may also be re-exported in two or more consignments. Each partial re-exportation should be covered by a declaration to terminate the temporary admission for those goods re-exported and to account for the final re-exportation of all the goods. If the balance of the goods is not to be re-exported later (see Section 8.3 "Other possible cases of termination"), the person concerned should inform Customs as soon as possible. This will allow the temporary admission declaration to be terminated, provided that re-exportation of the goods is not expressly prescribed.

If the temporary admission document has expired before all the goods have been re-exported, duties and taxes will not be collected on those goods which were re-exported within the time-limit, provided that the conditions and formalities applicable to them have been respected. If they were exported without closure of the temporary admission and the person concerned can prove the re-exportation, Customs should accept it.

8.3. Termination by placing under another Customs procedure

Recommended Practice 19

Recommended Practice 19 provides for the possibility of suspending or terminating temporary admission by placing the imported goods under another Customs procedure. When temporary admission is terminated by placing the goods under another procedure Customs would normally take the measures as if the goods had been re-exported directly, for example, by discharging the temporary admission document and reimbursing any security that may have been required. The new procedure will be governed by the applicable provisions in the General Annex (e.g., security). In the great majority of cases, if another Customs procedure replaces temporary admission, there will be termination. Suspension can constitute a provisional break in the temporary admission procedure or a complement to it.

For example, in principle, upon placement of the goods into free ports, free zones or Customs warehouses, the temporary admission procedure should be terminated immediately. In some countries, however, the temporary admission procedure is not terminated but merely suspended pending the physical exportation of the goods or their being placed under another Customs procedure, for example, clearance for home use. Thus the temporary admission procedure is provisionally interrupted and will be terminated upon the entry of the goods into the subsequent procedure.

Other Customs procedures would include :

Transit

Placing the goods under a Customs transit procedure prior to re-exportation can occur when the re-exportation formalities are completed at an inland Customs office or at the premise of an approved consignor, but the goods must still be moved to the frontier for export.

International transit enables temporary admission to be terminated without reservation as soon as the goods are placed under this procedure. When the transit operation to another country as destination has been carried out, the goods have been exported. However, if the transit operation was not terminated, this would be an irregularity which would be treated as a delivery of goods in transit that have not first been cleared for home use.

National transit, i.e. to another Customs office in the same country, is also possible. If the temporary admission is terminated when the goods are placed under the national transit procedure, the office of destination will regard the goods as "foreign". If the temporary admission is only suspended, the office of destination will receive the goods under their former status of "temporarily admitted goods".

Introduction into free zones, free ports or Customs warehouses

Commercial operators may wish to place the goods into free zones, free ports, public Customs warehouses, or approved private warehouses. An example would be to avoid difficulties when the re-exportation time-limit is close to expiry but the person concerned is not able to re-export the goods and Customs is not willing to extend this time-limit.

Free zones and free ports are regarded as being outside Customs territory and the act of placing goods in them is equivalent to exporting those goods. Public Customs warehouses and private warehouses within the meaning of Chapter 1 of Specific Annex D are not generally ex-territorial from Customs standpoint. However, the fact of placing goods in these warehouses can be regarded as equivalent to exporting because when the goods leave the warehouse, they must be placed under Customs transit or be cleared at importation like any other goods intended for home use.

Many countries allow free choice of the procedure to be used on removal from a warehouse (transit, home use, temporary admission, inward processing, etc.), regardless of the procedure prior to warehousing. However, the foregoing provisions do not prevent Customs from requiring the goods to be re-exported when they leave the warehouse.

Clearance for home use

Although importing goods temporarily implies an intention to re-export them later, the situation may alter while the goods are in the country of temporary admission.

To the extent that national legislation does not provide for any prohibition or restriction within the meaning of Section 4.2 of these Guidelines, termination of the temporary admission should be allowed by clearing the goods for home use if all the conditions are met.

Customs, in allowing clearance for home use, should not require the importer to prove that re-exportation of the goods is economically unjustifiable or cannot take place because of force majeure.

In determining the value, quantity and the point in time to be taken for the imposition of duties and taxes applicable when temporarily admitted goods are cleared for home use, Chapter 4 of the General Annex should be consulted.

Inward processing

Certain administrations allow temporarily imported goods for which re-exportation in the same state was declared to benefit from the inward processing procedure. The administrations concerned will decide whether this procedure can be granted after termination or with suspension of the first temporary admission procedure or even as a supplement to it. Termination followed by placing the goods under the inward processing procedure is often the easiest solution, but the approach will also depend on circumstances.

Examples :

Some professional equipment under the temporary admission procedure was damaged during unloading and now has to be repaired in a specialized workshop (generally regarded as equivalent to inward processing). Repair of the goods is not one of the purposes of temporary admission with re-exportation in the same state. In such instances, Customs may allow suspension of the temporary admission while the equipment is repaired under the inward processing procedure.
A machine shown at an international fair catches the eye of another manufacturer. The latter proposes to make exhibitor's machine even more efficient by installing some more sophisticated components. This processing operation cannot be carried out under cover of temporary admission "for exhibition" with re-exportation in the same state.

It should be noted that termination of temporary admission with re-exportation in the same state is not possible for certain procedures. This is particularly the case for outright exportation and temporary exportation for outward processing which may only be applied to goods in free circulation. These are goods for which there is free disposal without Customs restriction, and this is obviously not the case of temporarily admitted goods if they are not first cleared for home use. Drawback is another procedure that cannot be applied to terminate temporary admission.

8.4. Rescinding of prohibitions and restrictions

Recommended Practice 20

While prohibitions and restrictions may be waived for temporary admission of goods, they are nevertheless applicable if the goods are cleared for home use. On the other hand, under Recommended Practice 20, if the prohibitions or restrictions are rescinded during the period of the temporary admission, Customs should allow termination of the temporary admission by clearance for home use. This would be the case if, for example, a new quota has been opened and is still available at the time of clearance for home use, whereas at the time of temporary importation the previous quota was fully used up.

Acceptance of the request for termination by clearance for home use does not call into question the objective of the prohibitions and restrictions. In effect, when placed under the temporary admission procedure the goods have not entered economic channels (for example : they are for demonstration or exhibition, but not sale and use in the domestic market of the territory) and hence have not affected the economy. At the time of clearance for home use, if the market is open to outright importation of these goods from abroad, clearance for home use following temporary admission is fully appropriate.

Recommended Practice 20 applies when prohibitions or restrictions are rescinded between the time of placing the goods under the temporary admission procedure and the termination of that procedure and need not necessarily apply to any reductions in the rates of duty which may occur during that period. Provisions of Chapter 4 of the General Annex should be used for determining the point of time in the application of the rates of duties and taxes in such cases.

8.5. Repayment of security

Recommended Practice 21

If security has been given in the form of a cash deposit, provision should be made for it to be repaid at the office of re-exportation, even if the goods were not imported through that office.

Chapter 5 of the General Annex provides that discharge of any security furnished must be granted as soon as possible after total termination of the procedure. Repayment of security given in the form of a cash deposit should as far as possible be made by any exit office competent for termination of temporary admission, even if the goods were not imported through that office.

Admittedly this provision can lead to difficulties of application, particularly in a Customs territory consisting of a large number of countries having their own currencies or because of local lack of cash. However, the introduction of a single currency for the entirety of certain Customs territories, the development of electronic transmission for modern modes of payment and other measures in this direction should facilitate the application of this Recommended Practice.

9. Field of application

9.1. Temporary admission with total conditional relief from import duties and taxes

Recommended Practice 22

Temporary admission with total conditional relief from duties and taxes should be granted to the goods referred to in the following Annexes to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990 :

(1) “Goods for display or use at exhibitions, fairs, meetings or similar events” referred to in
Annex B.1.

(2) “Professional equipment” referred to in Annex B.2.

(3) “Containers, pallets, packings, samples and other goods imported in connection with a commercial operation” referred to in Annex B.3.

(4) “Goods imported for educational, scientific or cultural purposes” referred to in Annex B.5.

(5) “Travellers’ personal effects and goods imported for sports purposes” referred to in
Annex B.6.

(6) “Tourist publicity material” referred to in Annex B.7.

(7) “Goods imported as frontier traffic” referred to in Annex B.8.

(8) “Goods imported for humanitarian purposes” referred to in Annex B.9.

(9) “Means of transport” referred to in Annex C.

(10) “Animals” referred to in Annex D.

Recommended Practice 22 provides that temporary admission with total conditional relief from import duties and taxes should be granted to the goods listed under paragraphs (1) to (10) (see also Section 4.4). This Recommended Practice refers to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990. It does not require Contracting Parties to the Kyoto Convention to accede to it. However, for the Kyoto Convention Contracting Parties, the Istanbul Convention contains much useful information for application of this Recommended Practice. There are definitions, conditions and other provisions that can assist in ensuring that all Customs administrations, whether Contracting Parties to the Istanbul Convention or not, agree on the meaning and scope of the relevant terms.

The cases listed in Recommended Practice 22 are also intended to make Contracting Parties aware of the specific cases for which they should grant temporary admission. Through the information communicated to the depositary of both Conventions by Contracting Parties, the trade community will be informed of the situation prevailing in the different Customs territories. Contracting Parties unable to grant temporary admission in certain of the cases listed in Recommended Practice 22 or which grant it only with partial conditional relief can limit the reservations they must make under the Convention to those cases alone.

Below are the cases listed in Recommended Practice 22, supplemented by an illustrative list.

(1) "Goods for display or use at exhibitions, fairs, meetings or similar events" referred to in Annex B.1 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

This is an extremely wide range of goods, which have in common that they are for display or use at events of a commercial or cultural nature.

To qualify for temporary admission, the quantity of each article imported must be reasonable having regard to the purpose of importation. Furthermore, the goods must not be loaned or used in any way for hire or compensation or be removed from the place of the event.

Illustrative list (for full text refer to Article 2, Annex B.1 to the Istanbul Convention):

- Goods intended for display or demonstration;

- Goods necessary for the purpose of demonstrating foreign machinery or apparatus to be displayed;

- Construction and decoration material for stands;

- Advertising and demonstration material which is clearly publicity material for the foreign goods displayed, for example, sound and image recordings, films and lantern slides;

- Equipment, including interpretation equipment, sound and image recording apparatus and films of an educational, scientific or cultural character, intended for use at international conferences.

(2) "Professional equipment" referred to in Annex B.2 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

Any equipment necessary for the exercise of the calling, trade or profession of a person visiting the territory of another country to perform a specified task can be categorized as professional equipment. The range of such equipment is very broad, but does not include equipment to be used for the industrial manufacture or packaging of goods, equipment (except hand tools) for the exploitation of natural resources, or equipment for the construction, repair or maintenance of buildings or for earthmoving and similar projects. In addition to professional equipment, component parts imported for repair of professional equipment are also covered here.

The owner, importer and user must be one or more persons established or resident outside the territory of temporary admission.

Illustrative list of equipment for the press or for sound or television broadcasting (for full text refer to Appendix I, Annex B. 2 to the Istanbul Convention) :

- Equipment for the press - personal computers and software; fax equipment; typewriters; cameras of all kinds; sound or image transmitting, recording or reproducing apparatus; sound or image recording media, blank or recorded; testing and measuring instruments and apparatus; lighting equipment; operational accessories for these types of equipment;

- Sound broadcasting equipment - telecommunication equipment such as broadcast transmitter-receivers or transmitters, terminals connectable to network or cable, satellite links; audio frequency production equipment; testing and measuring instruments and apparatus; operational accessories; sound recording media, blank or recorded;

- Television broadcasting equipment - television cameras; telecinema; testing and measuring instruments and apparatus; transmission and retransmission apparatus; communication apparatus; sound or image recording or reproducing apparatus; lighting equipment; editing equipment; operational accessories; sound or image recording media, blank or recorded; "film rushes"; musical instruments, costumes, scenery and other stage properties, pedestals, make-up material, hair dryers;

- Vehicles designed or specially adapted for the purposes specified above - television transmitting vehicles; vehicles for television accessories; video tape recording vehicles; sound recording and reproducing vehicles; slow motion vehicles; light vehicles.

Illustrative list of cinematographic equipment (for full text refer to Appendix II, Annex B. 2 to the Istanbul Convention) :

- Cameras of all kinds; testing and measuring instruments and apparatus; camera "dollies" and booms; lighting equipment; editing equipment; sound or image recording or reproducing apparatus; sound or image recording media, blank or recorded; "film rushes"; operational accessories; musical instruments, costumes, scenery and other stage properties, pedestals, make up material, hair dryers);

- Vehicles designed or specially adapted for the purposes specified above.

Illustrative list of other equipment necessary for the exercise of the calling, trade or profession of a person visiting the territory of another country to perform a specified task (for full text refer to Appendix III, Annex B. 2 to the Istanbul Convention) :

- Equipment for erection, dismantling, testing, commissioning, checking, control, maintenance or repair of machinery, plant and means of transport (tools; measuring, checking or testing equipment and instruments, including electrical instruments and jigs; apparatus and equipment for taking photographs of machines and plant during or after erection; apparatus for survey of ships);

- Equipment necessary for businessmen such as personal computers; typewriters; sound or image transmitting, recording or reproducing apparatus; calculating instruments and apparatus;

- Equipment necessary for experts undertaking topographical surveys or geophysical prospecting work such as measuring instruments and apparatus; drilling equipment; transmission and communication equipment;

- Equipment necessary for experts combating pollution;

- Instruments and apparatus necessary for doctors, surgeons, veterinary surgeons, midwives and members of similar professions;

- Equipment necessary for archaeologists, palaeontologists, geographers, zoologists and other scientists;

- Equipment necessary for entertainers, theatre companies and orchestras (all articles used for public or private performances, musical instruments and their accessories, such as amplifiers, loud speakers, mixing tables, audio-visual equipment, scenery and costumes);

- Equipment necessary for lecturers to illustrate their presentations;

- Equipment necessary for photography (cameras of all kinds, cassettes, exposure meters, lenses, tripods, accumulators, battery belts, battery chargers, monitors, lighting equipment, fashion goods and accessories for models, etc.);

- Vehicles designed or specially adapted for the purposes specified above, such as mobile inspection units, travelling workshops and travelling laboratories.

(3) "Containers, pallets, packings, samples and other goods imported in connection with a commercial operation" referred to in Annex B.3 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

These are goods which are imported temporarily in connection with a commercial operation but whose importation does not in itself constitute a commercial operation. This means that the goods are not themselves the subject of a sale or a purchase.

Scope :

Packings for repeated use which are imported filled for re-exportation empty or filled, or are imported empty for re-exportation filled;
Containers, whether or not filled with goods, and accessories and equipment for temporarily admitted containers, which are either imported with a container to be re-exported separately or with another container, or are imported separately to be re-exported with a container (de-mountable bodies are regarded as containers);
Component parts intended for the repair of containers granted temporary admission under Paragraph (b) above;
Pallets;
Samples (articles which are representative of a particular category of goods already produced or are examples of goods the production of which is contemplated);
Advertising films (consisting essentially of images showing the nature or operation of products or equipment put up for sale or hire by a person established or resident outside the territory of temporary admission, provided that the films are of a kind suitable for exhibition to prospective customers);
Any other goods imported in connection with a commercial operation but whose importation does not in itself constitute a commercial operation, i.e. :

Goods for testing, checking, experiments or demonstrations;
Goods for use in testing, checking, experiments or demonstrations;

- Printed and developed cinematographic film, positives and other recorded image-bearing media intended for viewing prior to their commercial use;

- Films, magnetic tapes, magnetized films and other sound or image-bearing media intended for sound tracking, dubbing or reproduction;

- Data-carrying media, sent free of charge, for use in automatic data processing;

- Articles (including vehicles) which, by their nature, are unsuitable for any purpose other than advertising of specific articles or publicity for a specific purpose.

The above provisions do not cover goods imported for demonstration at exhibitions, fairs or similar events (covered under Section 9.1 (1) above) or packings that are not suitable for repeated use. Filling materials such as wool, scraps of paper, wood, and plastic shavings, paper, plastic sheets and the like are not regarded as packing materials and are generally cleared for home use.

(4) "Goods imported for educational, scientific or cultural purposes" referred to in Annex B.5 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

The temporary importation of these goods is intended to promote scientific research and educational or vocational training. The goods covered are imported exclusively for educational, scientific or cultural purposes; also included are spare parts for scientific equipment and pedagogic material which has been granted temporary admission, and tools specially designed for the maintenance, checking, gauging or repair of such equipment.

To qualify for temporary admission, goods imported for educational, scientific or cultural purposes must be owned by a person established outside the territory of temporary admission and must be imported by approved (e.g. public or public utility) institutions in reasonable quantities having regard to the purpose of the importation. They must not be used for commercial purposes.

Illustrative list of scientific equipment and pedagogic material (for full text refer to Appendix I, Annex B. 5 to the Istanbul Convention) :

Sound or image recorders or reproducers (slide and filmstrip projectors; cinematographic projectors; back-projectors and episcopes; magnetophones, magnetoscopes and video equipment; closed-circuit television equipment);
Sound and image media (slides, filmstrips and microfilms; cinematographic films; sound recordings; videotapes);
Specialized material (bibliographic equipment and audio-visual material for libraries; mobile libraries; language laboratories; simultaneous interpretation equipment; programmed teaching machines, mechanical or electronic; material specially designed for the educational or vocational training of handicapped persons);
Other material (wall charts, models, graphs, maps, plans, photographs and drawings; instruments, apparatus and models designed for demonstrational purposes; collections of items with visual or audio pedagogic information, prepared for the teaching of a subject; instruments, apparatus, tools and machine-tools for learning a trade or craft; equipment, including specially adapted or designed vehicles for use in relief operations, which is imported for the training of persons involved in relief operations).

Illustrative list of welfare material for seafarers (for full text refer to Appendix II, Annex B. 5 to the Istanbul Convention) :

Reading material (books; correspondence courses; newspapers, journals and periodicals; pamphlets on welfare facilities in ports);
Audio-visual material (sound and image reproducing instruments; tape-recorders; radio sets, television sets; cinematographic and other projectors; recordings on tapes or discs; films, exposed and developed; film slides; videotapes);
Sports gear (sportswear; balls; rackets and nets; deck games; athletic equipment; gymnastic equipment);
Hobby material (indoor games; musical instruments; material for amateur dramatics; materials for painting, sculpture, woodwork and metalwork, carpet making, etc.);
Equipment for religious activities;
Parts and accessories for welfare material.

Illustrative list of other goods imported in connection with educational, scientific or cultural activities (for full text refer to Appendix III, Annex B. 5 to the Istanbul
Convention ):

Costumes and scenery items sent on loan free of charge to dramatic societies or theatres;
Music scores sent on loan free of charge to music theatres or orchestras.

(5) "Goods imported for sports purposes" referred to in Annex B.6 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

Goods imported for sports purposes are sports requisites and other articles for use by tourists, athletes, business travellers, delegates to meetings of international organizations, students, etc. in sports contests or demonstrations or for training in the territory of temporary admission. Specific Annex J, Chapter 1 provides for temporary admission of articles imported by travellers and can be read in conjunction with this Chapter. However, these goods are included here since they may be temporarily imported by separate means of transport (a lorry with canoes and kayaks to be used for training purposes by a club that is domiciled outside the country; the canoes and kayaks belong to the members of the sports club).

To qualify for temporary admission, goods imported for sports purposes must be owned by a person established or resident outside the territory of temporary admission, and must be imported in reasonable quantities in the light of their intended use.

Illustrative list (for full text refer to Appendix II, Annex B. 6 to the Istanbul Convention):

Track and field equipment (hurdles; javelins, discuses, poles, shots, hammers);
Ball game equipment (balls of any kind; rackets, mallets, clubs, sticks and the like; nets of any kind; goalposts);
Winter sports equipment (skis and sticks; snowboards; skates; bobsleighs; curling equipment, ice hockey equipment, etc.);
Sportswear, shoes, gloves, headgear, etc., of any kind;
Water sports equipment (canoes and kayaks; sail and row boats, sails, oars and paddles; surfboards and sails);
Motor vehicles and craft, (cars; motor cycles; motor boats);
Equipment for miscellaneous events (sports arms and ammunition; non-motorized bicycles; archer's bows and arrows; fencing equipment; gymnastics equipment; compasses; wrestling mats and tatamis; weight-lifting equipment; riding equipment, sulkies; hang-gliders, delta wing, windsurfers; climbing equipment; music cassettes to accompany the performance);
Auxiliary equipment (measuring and score display equipment; blood and urine test apparatus).

(6) "Tourist publicity material" referred to in Annex B.7 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

The temporary importation of these goods is intended to promote international tourism by facilitating the circulation of tourist publicity documents and other material aimed at encouraging the public to visit a foreign country.

To qualify for temporary admission, tourist publicity material must be owned by a person established outside the territory of temporary admission, and must be imported in reasonable quantities in the light of its intended use.

Illustrative list (for full text refer to Appendix, Annex B. 7 to the Istanbul Convention) :

Material intended for display in the offices of the accredited representatives or correspondents appointed by the official national tourist agencies or in other places approved by Customs of the territory of temporary admission : pictures and drawings, framed photographs and photographic enlargements, art books, paintings, engravings or lithographs, sculptures and tapestries and other similar works of art;
Display material (show-cases, stands and similar articles), including electrical and mechanical equipment required for operating such display;
Documentary films, records, tape recordings and other sound recordings intended for use in performances at which no charge is made, but excluding those whose subject lend themselves to commercial advertising and those which are on general sale in the territory of temporary admission;
A reasonable number of flags;
Dioramas, scale models, lantern-slides, printing blocks, photographic negatives;
Specimens, in reasonable numbers, of articles of national handicrafts, local costumes and similar articles of folklore.

(7) "Goods imported as frontier traffic" referred to in Annex B.8 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

To qualify for temporary admission, goods imported as frontier traffic must be owned by a frontier zone inhabitant of the frontier zone adjacent to that of temporary admission, and are used by that person.

Definition of goods imported as frontier traffic :

Goods carried by frontier zone inhabitants for the performance of their profession or trade (doctors, craftsmen, etc.);
Personal or household effects of frontier zone inhabitants imported by them for repair, manufacture or processing;
Equipment intended for working on land located within the frontier zone of the territory of temporary admission (for agricultural and forestry work, such as the unloading or transport of timber, or for fish farming);
Equipment owned by an official body, imported in connection with a relief operation (fire, floods, etc.).

(8) "Goods imported for humanitarian purposes" referred to in Annex B.9 to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

The efforts made in the interest of humanity can be effectively assisted by facilitating the importation of urgently needed medical, surgical and laboratory equipment and of relief consignments forwarded as aid to those affected by natural disasters and similar catastrophes. Relief consignments cover all goods, such as vehicles and other means of transport, blankets, tents, prefabricated houses or other goods of prime necessity. The temporary importation of vehicles and other means of transport transporting relief consignments into the affected country are specifically covered by Specific Annex J, Chapter 5 of the Kyoto Convention.

To qualify for temporary admission, goods imported for humanitarian purposes must be owned by a person established outside the territory of temporary importation and must be loaned free of charge.

Definition of goods imported for humanitarian purposes :

Medical, surgical and laboratory equipment and relief consignments.

Relief consignments : All goods, such as vehicles and other means of transport, blankets, tents, prefabricated houses or other goods of prime necessity, forwarded as aid to those affected by natural disaster and similar catastrophes.

(9) "Means of transport" referred to in Annex C to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

The international movement of goods and persons must be facilitated by simplifying the temporary admission facilities for the means of transport used for their carriage.

Means of transport for commercial use are specifically covered in Specific Annex J, Chapter 3 and means of transport for private use are covered by Specific Annex J, Chapter 1.

(10) "Animals" referred to in Annex D to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990.

Animals are called upon to perform many and diversified functions in the modern society. Live animals of any species owned by a person established or resident outside the territory of temporary admission and imported for the purposes listed below are regarded as "animals" for the purposes of this item.

To qualify for temporary admission, animals must be owned by a person established or resident outside the territory of temporary admission.

Purposes of temporary importation :

Dressage
Training
Breeding
Shoeing or weighing
Veterinary treatment
Testing (for example, with a view to purchase)
Participation in shows, exhibitions, contests, competitions or demonstrations
Entertainment (circus animals, etc.)
Touring (including pet animals of travellers)
Exercise of function (police dogs or horses; detector dogs, dogs for the blind, etc.)
Rescue operations
Transhumance or grazing
Performance of work or transport
Medical purposes (delivery of snake poison, etc.)

9.1.1. Waiver of the requirement of a written declaration

[Recommended Practice 22; illustrative list relating to Recommended Practice 9]

The following list sets out cases of temporary admission with total conditional relief from duty and taxes where Customs should waive the requirement for a written Goods declaration when there is no doubt about the subsequent re-exportation of the goods. A simple inventory, supplemented, if necessary, by an undertaking (see Sections 5.2.2 and 5.2.4 in these Guidelines) can usefully be substituted for the Goods declaration. In certain cases, production of the inventory is even waived.

The following is merely an illustrative list to encourage Contracting Parties to adopt a facilitative approach. There is, moreover, nothing to prevent them from extending these facilities to other temporarily admitted goods.

The conditions for granting temporary admission for cases also dealt with by the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990 are set out in the Specific Annexes to that Convention.

Temporarily admitted equipment or material	Customs treatment
Sound or television production and broadcasting equipment and vehicles specially adapted for sound or television broadcasting, purposes and accessories therefor.	Temporary admission without a Customs document or security being required. Customs may require the production of a detailed list or inventory of the equipment, accompanied by a written undertaking to re-export.
Containers, pallets, and packings	Temporary admission without a Customs document or security being required. Customs may require a written undertaking to re-export, possibly also in the form of an overall undertaking.
Scientific equipment and pedagogic material; welfare material for seafarers	Temporary admission without a Customs document or security being required. Customs may require an inventory and a written undertaking to re-export in the case of scientific equipment and pedagogic material.
Goods imported for sports purposes (including sports vehicles)	Temporary admission without a Customs document or security being required. Customs may require an inventory and a written undertaking to re-export.
Goods imported as frontier traffic	Temporary admission without a Customs document or security being required. Customs may require an inventory and a written undertaking to re-export.
Medical, surgical and laboratory equipment; relief consignments	Temporary admission without a Customs document or security being required. Customs may require an inventory and a written undertaking to re-export.
Means of transport	Temporary admission without a Customs document or security being required (see also Specific Annexes G and J to the Kyoto Convention).

9.2. Temporary admission with partial conditional relief from import duties and taxes

Recommended Practice 23

With a view to promoting trade, total conditional relief should be the rule and partial conditional relief should be the exception which makes it possible still to authorize temporary admission.

Partial conditional relief is therefore preferable to a refusal to grant temporary admission.

Temporary admission should be granted with total conditional relief from import duties and taxes except, as stipulated in Standard 3, where national legislation explicitly specifies that relief may be only partial.

Partial conditional relief applied to the temporary admission of goods subject to re-exportation in the same state is not offered by all countries. It is provided for, inter alia, where total conditional relief would favour imported goods over those produced in the country concerned, e.g. for carrying out certain tasks or for production operations. It is not a protectionist measure but is intended to ensure equal treatment for taxation purposes. States applying partial conditional relief are often those which allow temporary importation in specific cases where other countries generally do not allow temporary admission.

9.3. Other cases of temporary admission

In the case of goods temporarily admitted for commercial use, for carrying out certain tasks or production operations, many countries grant temporary admission with partial conditional relief, levying part of Customs duties which would be payable in the case of importation. For the purposes of calculating the amount of any duties and taxes payable upon such goods, national legislation may provide for the consideration of the duration of their stay in the Customs territory, of the depreciation consequent upon the use made of them or of the hire charges paid for them.

Countries are increasingly allowing commercial utilization during the temporary importation procedure, though Specific Annex G, Chapter 1 does not contain any Recommended Practice in this respect. This applies particularly to machines imported temporarily to perform specific tasks (e.g. construction machinery, production machinery, production trials). This possibility is justified by the fact that the home use procedure for high technology machines with high rates of duties and taxes would seem to be a disproportionate measure if the machines are used only for a short time (e.g. special work on a site for a few weeks only).

Goods imported as part of a production operation should also be admitted under the temporary admission procedure, at least with partial conditional relief.

These goods should, in principle, be owned by a person domiciled or resident outside the territory of temporary admission.

Such use, however, must not affect the sales of goods produced in the Customs territory or imported for home use. Hence national legislation can provide for taxation (e.g., value-added tax at the local rate) on the basis of the value of the services rendered. This can be either on the rental price paid by the person concerned or a lump sum estimated by Customs on the basis of the value of the machine and the period of use in the territory of temporary admission.

Methods of charging tax differ greatly from one country to another. In some places this tax is collected by Customs at re-exportation or at a later stage or by a non-Customs administration at some point in time. Collecting part of the amount of duties and taxes in this way is regarded as partial conditional relief. Certain Goods declarations issued by international guaranteeing chains (such as the ATA carnet) do not lend themselves to temporary importation for commercial use with a charge on the services rendered. The administrations concerned therefore use national documents.

Illustrative list of instruments, apparatus, machinery and goods imported temporarily :

Material for stands at exhibitions or similar events, hired by a person domiciled in the country of temporary importation;
Material for stands, advertising material for display cabinets and the like belonging to a person domiciled outside the territory of temporary admission, for private exhibitions (at private premises, e.g. shops, garages, commercial art galleries) with a view to the sale of goods;
Machinery for working or manufacturing goods;
Data-processing machines used in a production operation;
Instruments and machines hired to bridge the gap until new machinery is received (problem of delivery dates) or to overcome the temporary breakdown of existing machines (repair);
Machinery and apparatus intended to undergo testing or for development, with production of goods during the evaluation stage;
Any other goods imported as part of a production operation which may not meet the conditions for temporary importation with total conditional relief of duties and taxes.

Goods, machinery, apparatus and accessories imported on the basis of a multi-year rental contract or a leasing contract are not regarded as being temporarily admitted and are therefore cleared for home use. In fact, very few countries provide for repayment of the duties and taxes, even partial repayment, unless the goods could not be used in accordance with the contract (e.g. delivery not in accordance with the order, defective apparatus taken back by the supplier, etc.).

In many countries, the actual means of transport carrying out the internal transport of goods (cabotage) is subject to special treatment for transport-policy and economic reasons. That means of transport is not covered by the above provisions on "commercial use", but by Specific Annex J, Chapter 3 and/or Specific Annex E, Chapter 3 of the Kyoto Convention.

The cases referred to in the illustrative list below are not covered by Recommended Practice 22. Some of the goods are the same as those referred to in the Istanbul Convention. However, they may not meet all the conditions for the application of total conditional relief under the Istanbul Convention. This illustrative list is intended solely to suggest that Contracting Parties grant temporary admission to the following goods, unless they are admitted with outright exemption under national legislation. This list is not exhaustive and Contracting Parties are urged also to grant temporary admission in cases not provided for in Specific Annex G, Chapter 1 and in these Guidelines.

Illustrative list :

The following cases are not referred to in other international instruments :

Used removable articles belonging to a person taking up temporary residence in the country of importation;
Articles, (including vehicles) which, by their nature, are unsuitable for any purpose other than advertising of specific articles or publicity for a specific purpose;
Data carrying media for use in the automatic data processing;
Drawings, plans and models to be used in the manufacture of goods;
Matrices, blocks and similar reproduction equipment, sent on loan or on hire, for printing illustrations in periodicals or books;
Matrices, blocks, moulds and the like, sent on loan or on hire and to be used in the manufacture of articles to be delivered abroad.
Instruments, apparatus and machinery for testing or checking;
Costumes and scenery items sent on loan or on hire to dramatic societies or theatres;
Goods which have to undergo a change in packing prior to their delivery abroad;
Works of art, collectors' pieces and antiques for display in exhibitions, including those organized by the artists themselves;
Books sent on loan to persons resident in the country of importation;
Photographs, slides, films, videos, digital discs, etc. intended for an exhibition or competition for photographers or film-makers;
Specialized equipment arriving by ship and used on shore at ports of call for the loading, unloading or handling of cargo;
Machinery and apparatus for testing or development;
Goods to be photographed; goods for appraisal or certification;
Materials for testing machines;

Explanation : Companies which intend to purchase a machine often wish to be sure that it meets their requirements. They therefore provide the machine's manufacturers with a specific material which they ask them to machine then send back for checking.

Parts of machinery, instruments and apparatus intended to be adapted or adjusted.

Explanation : These are parts intended to be adjusted or adapted to machinery, installations or parts thereof produced in the country of temporary importation. The parts have to be re-exported in the same state. This must not involve processing (see Specific Annex F, Chapter 1). Mounting on the machine, etc. in the country of temporary importation is therefore excluded.

This section also covers computer hardware that the owner temporarily makes available to the manufacturer of software to test a software package manufactured in the country of temporary importation.

9.4. Goods for which sale is uncertain :

There is nothing to prevent goods on consignment (which remain the property of a person established or resident outside the territory of temporary admission for as long as they remain unsold) being granted temporary admission as goods whose sale is uncertain. However, this principle should be applied with caution. Unlike goods which are intended for presentation at a fair or exhibition and are not intended to be sold or to be moved outside the location of the event, the goods covered here are primarily intended to be sold in the country concerned, it being understood that it will not be possible to sell all of the goods or it is not certain that the envisaged transaction will be successfully concluded. For practical reasons, if all goods on consignment were granted temporary admission, the disadvantages would outweigh the advantages. Nevertheless, Contracting Parties which allow goods whose sale is uncertain to be covered by the temporary importation procedure have not noted any significant abuses or difficulties in the practical application.

Some countries grant this temporary admission as a greater facility, while others would not and require the goods to be imported under bond.

Examples:

- As part of a sales exhibition, a fashion house domiciled outside the territory of temporary importation imports 300 coats and re-exports 180 which remain unsold at the end of the event;

- To enable retailers immediately to present new articles, a travelling salesman transports a certain stock of goods. During his stay in the country of temporary admission, he sells 250 items;

- Someone wishes to purchase a very expensive oriental carpet. That person has selected three and, before making the final choice, wishes to have them presented at his/her home. Two of the three carpets will be re-exported in the short-term.

Explanation : In these three examples, the declarant knows that some of the goods will be sold and the rest re-exported. Many countries require that all the goods are cleared for home use and, if appropriate, they make a partial repayment at re-exportation. The temporary admission procedure for goods whose sale is uncertain could have advantages for the declarant, particularly because this procedure does not necessarily require immediate outlay of funds (e.g. furnishing of general security).

- Paintings or works of art, jewellery and other objects imported for sale by auction;

Explanation : Unlike ordinary goods, the selling price at auction is not known at the time the goods are imported. Customs may require security covering the highest amount that the goods may make at sale. When the procedure is terminated by clearance for home use, the amount obtained for the items sold has to be proved on the basis of supporting documents (invoices). In the case of unsold goods, re-exportation by termination of the temporary admission procedure is simpler than a procedure for repaying the duties and taxes paid at entry for clearance for home use.

Benefit for Customs : In the case of sold items, duties are levied on the basis of a proven value not yet known at the time of importation.

Benefit for the declarant : The security furnished may be general; there is therefore no compulsory outlay of funds as required for clearance for home use at the time of importation; moreover, the security would be too high if the anticipated sale value were not achieved.

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Appendix 1

The ATA System, an Instrument for Promoting International Trade

One of the first initiatives to demonstrate close co-operation between Customs and the Trade is the international system of temporary admission of goods based on internationally accepted guarantees. Thanks to a joint initiative between the Customs Co-operation Council (now known as the World Customs Organization) and the International Bureau of Chambers of Commerce (IBCC) operating within the framework of the International Chamber of Commerce (ICC), on 6 December 1961 the Customs Co-operation Council adopted the Customs Convention on the ATA carnet for the temporary admission of goods. The goal of this Convention and the ATA carnet system is to facilitate the free movement of goods under cover of a single document and with conditional relief from duties and taxes.

Since the inception of the ATA system, the World Customs Organization and the IBCC have continued to expand their co-operation to ensure the system’s functioning and application at the international level. As a result of this close collaboration, the ATA system now plays a major role in international trade.

The ATA system

The ATA is a system allowing the free movement of goods across frontiers and their temporary admission into a Customs territory with relief from duties and taxes. The goods are covered by a single document known as the ATA carnet that is secured by an international guarantee system.

The term “ATA” is a combination of the initial letters of the French words “Admission temporaire” and the English words “Temporary Admission”.

Thanks to this system, the international business community enjoys considerable simplification of Customs formalities. No import duties or taxes are collected for the temporary importation of goods covered by the system since internationally valid security has been established by the national associations issuing the ATA carnets. These national associations are approved by Customs and are affiliated to an international guaranteeing chain administered by the International Bureau of Chambers of Commerce (IBCC).

The ATA carnet is now the document most widely used by the business community for international operations involving temporary admission of goods.

Establishment of the ATA system

The ATA carnet system was developed in response to the needs of various types of business to move their products to trade fairs or international exhibitions, as samples to potential buyers, or simply as their own professional equipment . These goods must be able to be easily and rapidly transported across frontiers.

As a result the Customs Co-operation Council (now the World Customs Organization) adopted the Customs Convention on the ATA carnet for the temporary admission of goods (ATA Convention) in 1961. In addition a number of other international Conventions for the specific types of goods were established.

Modernization of the ATA system (Istanbul Convention)

Between 1950 and 1970, there was a proliferation in the number of international Conventions, Recommendations, Agreements and other instruments on temporary admission, creating confusion for the international business community and complicating the work of Customs. In the early 1990’s the WCO decided to take draft a world-wide Convention on temporary admission to combine, into a single international instrument, 13 existing temporary admission agreements.

The Convention on Temporary Admission was adopted in Istanbul in 1990 and became known as the "Istanbul Convention". Its objectives and principles are :

To devise a single instrument for the simplification and harmonization of temporary admission formalities, replacing all the existing Conventions or Recommendations dealing solely or principally with temporary admission. The subjects covered by the former Conventions are now covered by the Annexes to the Istanbul Convention.
Each Annex authorizes the temporary admission of goods imported for a specific purpose, e.g. Annex B.1. covers goods for display or use at fairs or exhibitions.
Goods imported duty-free cannot remain indefinitely in the country of temporary importation. The period fixed for re-exportation is laid down in each Annex.
The goods must be re-exported in the same state. They must not undergo any change during their stay in the country of temporary importation, except normal depreciation due to the use made of them.
Economic prohibitions or restrictions at importation are not applied since they generally relate to goods cleared for home use, thus serving as a national protection measure.

Practical benefits of the ATA system for the business community

The ATA carnet system (ATA Convention and Istanbul Convention) is beneficial to all parties, traders and travellers as well as Customs.

The ATA carnet replaces national Customs formalities for temporary admission or transit, thus saving costs in clearing goods at each frontier.

Any duties and taxes that may come due are guaranteed merely by the presentation of the carnet and its acceptance by Customs offices. There is therefore no need to furnish a cash deposit or other forms of security.

The ATA carnet covers the transport of goods in Customs transit while en route to or returning from a country of temporary importation and, where applicable, within that country.

For the period of validity of the ATA carnet (normally one year), the goods can be temporarily imported under the same carnet in the Customs territories of as many Contracting Parties, and as often, as the carnet holder wishes.
The seals affixed or the identification of the goods by a Customs office can be recognized by the Customs offices of other Contracting Parties where the goods subsequently pass. This facilitates Customs controls and saves the carnet holder time when the goods cross frontiers.

Annex H - Offences

Annex H

Offences

CHAPTER 1

Customs offences

Definitions

For the purposes of this Chapter:

E1./ F2.

“administrative settlement of a Customs offence ” means the procedure laid down by national legislation under which the Customs are empowered to settle a Customs offence either by ruling thereon or by means of a compromise settlement;

E2./ F3.

“compromise settlement ” means an agreement under which the Customs, being so empowered, consent to waive proceedings in respect of a Customs offence subject to compliance with certain conditions by the person(s) implicated in that offence;

E3./ F1.

“Customs offence ” means any breach, or attempted breach, of Customs law.

Principles

1. Standard

The investigation, establishment and administrative settlement of Customs offences by the Customs shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

National legislation shall define Customs offences and specify the conditions under which they may be investigated, established and, where appropriate, dealt with by administrative settlement.

Field of application

3. Standard

National legislation shall specify which persons can be held responsible in connection with the commission of a Customs offence.

4. Standard

National legislation shall specify a period beyond which proceedings in connection with Customs offences may no longer be taken and shall fix the date from which that period shall run.

Investigation and establishment of Customs offences

5. Standard

National legislation shall specify the conditions under which the Customs are empowered to :

examine goods and means of transport;
require the production of documents or correspondence;
require access to computerized databases;
search persons and premises; and
secure evidence.

6. Standard

Personal searches for Customs purposes shall be carried out only when there are reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious.

7. Standard

The Customs shall not search premises unless they have reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious.

8. Standard

The Customs shall inform the person concerned as soon as possible of the nature of the alleged offence, the legal provisions that may have been contravened and, as appropriate, the possible penalties.

Procedure to be followed when a Customs offence is discovered

9. Standard

National legislation shall specify the procedure to be followed by the Customs after it has been discovered that a Customs offence has occurred and the measures they may take.

10. Recommended Practice

The Customs should set out the particulars of Customs offences and the measures taken in offence reports or administrative records.

Seizure or detention of the goods or means of transport

11. Standard

The Customs shall seize goods and/or means of transport only when :

they are liable to forfeiture or confiscation; or
they may be required to be produced as evidence at some later stage in the procedure.

12. Standard

If a Customs offence relates only to part of a c onsignment, only that part shall be seized or detained, provided that the Customs are satisfied that the remainder of the consignment did not serve, directly or indirectly, in the commission of the offence.

13. Standard

When the Customs seize or det ain goods and/or means of transport, they shall furnish the person concerned with a document showing:

the description and quantity of the goods and means of transport seized or detained;
the reason for the seizure or detention; and
the nature of the offence.

14. Recommended Practice

The Customs should release seized or detained goods against adequate security, provided that the goods are not subject to any prohibitions or restrictions or needed as evidence at some later stage in the procedure.

15. Recommended Practice

The Customs should release from seizure or detention means of transport that have been used in the commission of a Customs offence where they are satisfied that:

the means of transport have not been constructed, adapted or altered or fitted in any manner for the purpose of concealing goods; and
the means of transport are not required to be produced as evidence at some later stage in the procedure; and
where required, adequate security can be given.

16. Recommended Practice

Means of transport should only be forfeited or confiscated where:

the owner, operator or person in charge was, at the time, a consenting party or privy to the Customs offence, or had not taken all reasonable steps to prevent the commission of the offence; or
the means of transport has been specially constructed, adapted or altered or fitted in any manner for the purpose of concealing goods; or
restoration of the means of transport which has been specially altered or adapted is not possible.

17. Recommended Practice

Unless they are likely to deteriorate quickly or it would, due to their nature, be impracticable for the Customs to store them, seized or detained goods should not be sold or otherwise disposed of by the Customs before they have been definitively condemned as forfeited or confiscated or have been abandoned to the Revenue.

Detention of persons

18. Standard

National le gislation shall specify the powers of the Customs in connection with detention of persons and shall lay down the conditions therefor, in particular the period after which detention becomes subject to a review by a judicial authority.

Administrative settlement of Customs offences

19. Standard

The Customs shall take the necessary measures to ensure, where applicable, that as soon as possible after a Customs offence is discovered:

the administrative settlement of the latter is in itiated; and
the person concerned is informed about the terms and conditions of the settlement, the avenues of appeal and the time limits for such appeals.

20. Recommended Practice

Where during clearance of the goods a Customs offence has been di scovered which is regarded as of minor importance, it should be possible for the offence to be settled by the Customs office which discovers it.

21. Recommended Practice

Where a traveller is regarded as having committed a Customs offence of minor importance, it should be possible for the offence to be settled without delay by the Customs office which discovers it.

22. Standard

National legislation shall lay down the penalties applicable to each category of Customs offence that can be dealt with by administrative settlement and shall designate the Customs offices competent to apply them.

23. Standard

The severity or the am ount of any penalties applied in an administrative settlement of a Customs offence shall depend upon the seriousness or importance of the Customs offence committed and the record of the person concerned in his dealings with the Customs.

24. Standard

Where untrue particulars are furnished in a Goods declaration and the declarant can show that all reasonable steps had been taken to provide accurate and correct information, the Customs shall take that factor into account in considering the imposition of any penalty.

25. Standard

Where a Customs offence occurs as a result of force majeure or other circumstances beyond the control of the person concerned and there is no question of negligence or fraudulent intent on his part, no penalty shall be applied provided that the facts are duly established to the satisfaction of the Customs.

26. Standard

Goods that have been seized or detained, or the proceeds from the sale of such goods after deduction of any duties and taxes and all other charges and expenses incurred, shall be:

turned over to the person entitled to receive them as soon as possible after the Customs offence has been definitively settled; or
when this is not possible, held at their disposal for a specified period,

provided that the goods have neither been condemned as forfeited or confiscated nor abandoned to the Revenue as a result of a settlement.

Right of Appeal

27. Standard

Any person implicated in a Customs offence that is the subject of an administrat ive settlement shall have the right of appeal to an authority independent of the Customs unless he has chosen to accept the compromise settlement.

Guidelines to Annex H

Guidelines to the legal text

Chapter 1

CUSTOMS OFFENCES

1. Introduction

The primary task of Customs is to ensure compliance with Customs law. To assist in dealing with Customs offences or suspected offences, it is necessary that Customs have powers to investigate and, where appropriate, to impose sanctions against those who are not in compliance.

Chapter 1 of Specific Annex H deals with the investigation and establishment of breaches of Customs law and with the administrative settlement of offences by Customs. The repression of Customs offences, by application of suitable penalties, is also addressed but only to the extent that it falls within the competence of Customs.

This Chapter does not cover measures taken by Customs under bilateral or multilateral mutual administrative assistance agreements nor the measures provided for in the international Convention on mutual administrative assistance with a view to the prevention, investigation and repression of Customs offences of 9 June 1977 (Nairobi Convention).

This Chapter does not specify the procedures to be followed or the various measures that Customs can take to collect fines or execute judgements or sentences handed down by the courts or tribunals.

This Chapter also does not cover measures taken as part of Customs control such as normal inspections carried out for Revenue purposes, auditing of books kept at a place of manufacture, or inspections of Customs warehouses.

Other offences, such as theft, forgery, and assaults upon Customs officers engaged in the performance of their duties, that are committed in connection with a Customs offence are similarly outside the scope of this Chapter.

It should be noted that in many administrations, Customs derive investigatory and other powers under their penal codes beyond those relating to Customs law. The exercise of these powers need not necessarily result in matters relating to Customs law. The scope of this Chapter is not intended to limit the powers granted under national legislation that may be wider that those stipulated in the Chapter, nor to extend its scope to other areas of law. This Chapter fundamentally addresses Customs offences as defined in the legal text and does not affect other powers granted to Customs officers under national legislation.

2. Objectives of the Chapter

This Chapter sets standards aimed to combine the adequate investigation of Customs offences with a minimal disruption of trade. This is because long and costly criminal proceedings as a reaction to frequently occurring minor irregularities may impose disproportionate burdens on trade. Similarly, severe penalties for minor breaches of Customs law are inappropriate.

The Chapter also sets out Standards and Recommended Practices on the administrative settlement of offences by Customs, thus allowing a means to avoid criminal proceedings while at the same time offering procedural guarantees to the parties involved. The provisions of the Chapter ensure that investigations and penalties are proportionally related to the seriousness of the offence as well as to the culpability of the offender.

3. Definitions

E1/F2	“administrative settlement of a Customs offence” means the procedure laid down by national legislation under which the Customs are empowered to settle a Customs offence either by ruling thereon or by means of a compromise settlement;
E2/F3	“compromise settlement” means an agreement under which the Customs, being so empowered, consent to waive proceedings in respect of a Customs offence subject to compliance with certain conditions by the person(s) implicated in that offence;
E3/F1	“Customs offence” means any breach, or attempted breach, of Customs law.

4. General Provisions

Standard 1

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied as appropriate when dealing with Customs offences. Where a specific applicability is not relevant, the general principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on clearance and other Customs formalities, Chapter 5 on Security and Chapter 10 on Appeals should be read in conjunction with this Chapter on Customs offences.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Standard 2

National legislation shall define Customs offences and specify the conditions under which they may be investigated, established and, where appropriate, dealt with by administrative settlement.

Standard 2 requires national legislation to define what are Customs offences. It is essential to Customs in understanding their role and actions in investigating any offence committed. This is also important to assist the trade in their compliance with Customs law and make them aware of the actions that can be anticipated for an infringement.

Customs offence is defined in this Chapter as “any breach, or attempted breach, of Customs law”. Customs law is defined in the General Annex as “the statutory and regulatory provisions relating to the importation, movement and storage of goods, the administration and enforcement of which are specifically charged to Customs and any regulation made by Customs under their statutory powers”.

Most countries also consider the obstruction or hindrance of Customs control measures and the presentation of false invoices or other false documents as Customs offences. However other offences, such as theft and assault upon Customs officers engaged in the performance of their duty, are in some countries dealt with under general criminal law and not treated specifically as Customs offences.

Customs in many countries also investigate offences relating to narcotic drugs and to value-added tax on importation. Consequently, for these countries such offences can also be considered as Customs offences.

In many countries Customs is empowered to investigate offences related to financial operations, in particular exchange controls. This category of offences may also be considered Customs offences insofar as they relate to the importation and exportation of goods. In this connection, see Chapters 4 and 5 of the General Annex on duties and taxes and security.

In some countries, any person who has prepared or caused to be prepared or who has procured documents which are falsified or intended to deceive Customs and are used in a foreign country is regarded as having committed a Customs offence in the country where the documents were prepared. This is a mutual assistance measure expressly provided for in certain preferential trade agreements.

Standard 3

National legislation shall specify which persons can be held responsible in connection with the commission of a Customs offence.

4.1. Liability of natural persons

Standard 3 imposes an obligation to specify in national legislation which persons can be held responsible in connection with a Customs offence. The term “legislation” in this Standard should not be interpreted too narrowly. It allows for common law countries to determine who is an offender under common law jurisprudence. Equally, it allows for civil law countries to have the concept of liability be determined by case law in their legislation.

Customs offences frequently involve more than one person. The extent of their involvement can vary, and the legislation of countries varies in classifying the different degrees of participation. Even though a person may not have been directly involved in all the events constituting the offence, any person who was substantially involved is still considered to be a principal offender in many countries. Liability can also result from aiding and abetting offences. The liability can include being knowingly involved in the offence by financing or insuring the operations constituting the offence.

In some countries the offender and his accomplice are each held liable for the payment of monetary penalties imposed upon them individually. In others, however, each of these persons may be held jointly liable for the monetary penalties incurred by the other.

Where a Customs offence is committed by a natural person acting for or on behalf of a legal person, that legal person may be held liable for the monetary penalties incurred.

Where a Customs offence arises from untrue particulars furnished in the Goods declaration, the declarant's liability may be limited if he has simply reproduced information communicated to him by his principal and had taken reasonable steps to ensure the validity of the information provided. (See also the Guidelines to Standard 24 of this Chapter.)

4.2. Liability of legal persons

The term “person” includes a legal person which is a company or business entity. However, Standard 3 leaves it to national legislation to determine whether or not, or under which conditions, legal persons can be held liable. Because the economic operators involved in the import or export of goods are often a legal person, Customs offences can be linked to them as legal persons. Due to the size of modern enterprises this frequently means that it is not always possible to identify a natural person who can either benefit from the offence or be the single actor determining the events within a company. In particular, in the case of negligence, the offence is frequently not so much the result of a decision by a single person but that of the general corporate culture in which the failure to use reasonable care results in offences being committed. This economic and social reality has increasingly been acknowledged by legislators. While common law countries, and some individual civil law countries, have long accepted the liability of legal persons, other legal systems have only recently begun to address this issue.

The theories used to arrive at the liability of legal persons vary widely. The range of natural persons whose actions or omissions can result in the liability of the legal persons differs from one country to another. Some countries also prefer not to address the issue under their system of criminal law, but under a separate system of sanctions imposed under administrative law.

4.3. Period of limitation

Standard 4

National legislation shall specify a period beyond which proceedings in connection with Customs offences may no longer be taken and shall fix the date from which that period shall run.

Standard 4 embodies a generally accepted practice that a “period of limitation” is set in the national legislation that would restrict the period beyond which Customs can take action against offences. As far as natural persons are concerned, two reasons can be identified for the existence of a period of limitation. Firstly, many countries accept the principle that persons should not be punished for events lying too far in the past, unless the offences are extremely serious. The second reason is related to the risk of miscarriages of justice, and is a valid justification for a period of limitation on the liability of a legal person as well. The passage of time may not only make it difficult to establish the facts which indicate that a Customs offence has been committed. It will also be difficult to establish any evidence to support the charge. Consequently the chances of a miscarriage of justice may increase with the passage of years.

While some countries may have the period of limitation laid down in Customs legislation, in others the statute of limitation is laid down in a separate legislation meant for a general application for all criminal offences, which also includes Customs offences.

For many Customs offences documentary evidence contained in the records of companies can be particularly relevant. Therefore a link between the period of limitation and the period in which importers and exporters are obliged to retain their business records is important. This is particularly valid for administrations which use the modern audit-based methods of risk management, as contained in the General Annex. The periods of limitation for Customs offences can vary from three to twelve years.

The period of limitation can start either from the moment that the offence was committed or, in the event of a continuing breach of Customs law, from the date on which that breach comes to an end. In some countries a new period of limitation runs from the date that Customs initiate proceedings before the expiry of the first period of limitation (for example by preparing an offence report).

5. The investigation and establishment of Customs offences

5.1. Investigation powers of Customs

Standard 5

National legislation shall specify the conditions under which the Customs are empowered to :

- examine goods and means of transport;

- require the production of documents or correspondence;

- require access to computerized databases;

- search persons and premises; and

- secure evidence.

Standard 5 provides for the investigative powers relating to objects as well as persons. In the course of investigating and establishing a Customs offence, Customs will have to take various necessary measures. The Standard requires that national legislation should specify these investigative powers and the conditions under which the measures can be taken.

The measures that Customs can take in the course of normal Customs control are not to be confused with the measures Customs can take when exercising their investigative powers. In some legal systems the person concerned must be advised by Customs that they are now under investigation.

Investigative powers may be established under common law in some countries, while in civil law countries there may be situations where investigative powers are, in part, determined by case law. Therefore the term “legislation” is not to be taken as restricting investigative powers under either legal system.

National legislation may also provide for certain investigation measures to be decided upon or to be taken only by Customs officers of a particular grade.

Standard 5 does not restrict Customs officers from requesting the assistance of other national authorities in the investigation of Customs offences.

5.2. Searches

Standard 6

Personal searches for Customs purposes shall be carried out only when there are reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious.

Standard 7

The Customs shall not search premises unless they have reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious.

5.2.1. Search of persons

International trade naturally involves the movement of persons, either because they accompany or carry goods or have to negotiate on contracts relating to the import and export of goods. Consequently, minimizing Customs interference with persons is a facilitation of international trade. Standard 6 provides that, as part of an investigation, persons should only be physically searched when there are reasonable grounds to suspect smuggling.

It is an internationally accepted practice that personal searches should only be carried out by an officer of the same sex. It is also a basic additional requirement that intimate searches be conducted by persons with adequate medical training. This means a person with sufficient medical training to carry out such a search without any risk to the health of the person being searched. In some countries such searches may only be carried out by qualified medical personnel.

The types and degrees of personal searches carried out depend on the reasonableness of the grounds for suspicion. Intrusive personal searches may be appropriate when there is a high level of suspicion, whereas a frisk or pat down of persons would be appropriate when there is a lesser level of suspicion.

5.2.2. Search of premises

Searching premises under this provision is different from the normal inspections carried out on a routine basis by Customs to ensure compliance with Customs law, for example to audit books kept at a place of manufacture or to inspect Customs warehouses.

Searches may involve not only commercial premises but also the homes of private persons. It is left to the national legislation to specify the conditions applicable to the searching of premises and, in particular, cases where a search warrant may be required. Many countries have the principle that the search of premises can only be carried out with a warrant granted by a judicial authority.

5.3. Procedural guarantees

Standard 8

The Customs shall inform the person concerned as soon as possible of the nature of the alleged offence, the legal provisions that may have been contravened and, as appropriate, the possible penalties.

Standard 8 requires Customs to inform the person concerned of the nature of the alleged offence committed, including the legal provisions that may have been contravened. They must also cite the possible penalties applicable. This notification is to be given as soon as possible after the discovery of the offence. However, in some situations this information may be delayed if it is in the interest of the investigation, for example, when Customs want to track down any accomplices involved in the commission of the offence. Nevertheless, it is important that the person concerned is informed quickly. Not only does this increase the possibilities of establishing any circumstances relating to the offence, but it also may help to prevent further offences taking place. In general, quickly informing the person concerned may also increase the speed at which the offence may be dealt with by an administrative settlement.

Standard 9

National legislation shall specify the procedure to be followed by the Customs after it has been discovered that a Customs offence has occurred and the measures they may take.

Standard 9 requires that the procedures to be followed and the measures Customs can take when an offence is discovered be laid down in national legislation. The intention of this provision is to protect the alleged offender, as well as Customs, in ensuring that all the technicalities involved have been complied with in accordance with the law. Such procedures address the seizure of goods; detention of persons and goods; search of persons, goods and premises; arrest and bail; first information report, etc.

In some countries, these procedures are established in a general code relating to criminal procedure.

Recommended Practice 10

The Customs should set out the particulars of Customs offences and the measures taken in offence reports or administrative records.

This provision recommends that Customs maintain a record of all the measures taken in relation to an offence and articulate the grounds for their actions. This record usually contains such particulars as the nature of the offence discovered; the laws violated; date and location of discovery of the offence; persons implicated; description of any goods, conveyances or documents involved; nature of the investigations undertaken and their results; and officers involved in the discovery and investigation of the offence from the time of the discovery of the offence to the time it is finally settled by an administrative settlement, court proceedings or just closed without any further action. Some administrations maintain such a record in an investigation paper or file.

It should be noted that recording the measures taken in the offence report or in the administrative record is not only to protect the rights of the defendants, as well as Customs, but also to compile statistics and build risk assessment techniques. In addition, this will later facilitate to establish what happened.

6. Seizure and detention of goods and means of transport

Standard 11

The Customs shall seize goods and/or means of transport only when :

- they are liable to forfeiture or confiscation; or

- they may be required to be produced as evidence at some later stage in the procedure.

The investigation of Customs offences frequently means that a consignment is seized. This seizure of goods can have considerable consequences for the person concerned. He may fail to comply with time limits set in contracts. In the case of just in time production, serious financial losses may be caused if the production process has to be interrupted as a result of seizure. Standard 11 therefore is intended to limit the seizure of goods and/or the means of transport to situations where they are liable to forfeiture or confiscation or when they are required to be produced as evidence.

Seizure is the legal term used to describe the act of Customs by which they physically take control of any goods. Seizure does not mean that the owner has lost title to the goods. It only means that Customs has custody of the goods and the owner no longer has physical control over them.

Within most legal systems in continental Europe, this would mean that the owner could still enter into a contract, obliging himself to sell the goods, but is no longer able to deliver the goods because he has does not physically have them. Many legal systems require the delivery of the goods as an essential part of the transfer of ownership of goods; consequently, seizure usually limits the possibility of the owner transferring the title over to a buyer. This latter aspect is not a part of Customs law and it would be for each country to deal with this as provided in their national laws.

Confiscation and forfeiture are the next stage following seizure. Both confiscation and forfeiture mean that the person concerned loses the ownership of the goods. The use of the two different terms depends upon the prevailing legal system, the common law system or the civil law system. (See Recommended Practice 16 for cases of forfeiture/confiscation of means of transport.) It should be noted that not all seized goods are confiscated or forfeited. The decision to confiscate or forfeit the goods depends upon on the factors of each case and the result of the appeals process.

Continued custody of goods and/or means of transport under seizure, although liable to forfeiture or confiscation, may not be necessary in some instances unless the investigation warrants their continued custody. There may also be instances when a photograph of the goods or conveyance or a sample of the goods is sufficient as evidence in court proceedings. In such situations Customs could release the evidence provided that adequate security is given and that the goods and/or means of transport are not subject to any restrictions or prohibitions. (See also Guidelines to Standard 14 and Recommended Practice 15). Customs is therefore encouraged to review their continued custody of seized goods from time to time.

6.1. Goods not related to an offence

Standard 12

If a Customs offence relates only to part of a consignment, only that part shall be seized or detained, provided that the Customs are satisfied that the remainder of the consignment did not serve, directly or indirectly, in the commission of the offence.

In general, persons not involved in the commission of an offence can be affected by an investigation or seizure in two ways. Firstly, the goods of another owner may be part of the same consignment in which an offence has been committed. This usually happens in consolidated consignments, a common industry practice, where consignments belonging to more than one person are combined into a single shipment for logistical purposes. Standard 12 is intended to protect these owners, whose goods are not the subject of the offence, by seizing or detaining only that part of the consignment for which an offence has been committed. Therefore when the offence arises from only part of a consignment and the other part did not serve, directly or indirectly, in the commission of the offence, Customs are obliged to release the remainder of the goods subject to the Customs formalities pertaining to those goods.

The second situation may arise for goods belonging to a single owner where only a part of the goods may have become the subject of the alleged offence and the remainder are not involved, directly or indirectly, in the commission of the offence. In these cases, too, Customs is not to seize or detain the legitimate goods; the principle being that the seizure or detention of goods not involved in the offence should not serve as a punitive sanction to offenders.

However, where legitimate goods are used directly or indirectly in committing the offence, Customs is free to seize or detain them.

6.2. Documentation

Standard 13

When the Customs seize or detain goods and/or means of transport, they shall furnish the person concerned with a document showing :

- the description and quantity of the goods and means of transport seized or detained;

- the reason for the seizure or detention; and

- the nature of the offence.

Standard 13 requires Customs to furnish the person concerned with a document listing the description and quantity of the goods seized or detained. This document should also specify the reason for the seizure or detention as well as the nature of the offence allegedly committed. However, this list should not bind Customs in deciding how to charge a person at any later stage.

6.3. Release of goods or means of transport

Recommended Practice 14

Recommended Practice 14 provides a facilitation measure by requiring Customs to release seized or detained goods against adequate security being furnished. This release is conditional upon the goods not being restricted or prohibited or not being required as evidence at some later stage.

This provision applies to goods which are liable to forfeiture or confiscation under the provisions of Standard 11. Normally the amount of security required to be furnished would be not more than the value of the goods plus any duties and taxes liable on the goods.

Recommended Practice 15

The Customs should release from seizure or detention means of transport that have been used in the commission of a Customs offence where they are satisfied that :

- the means of transport have not been constructed, adapted or altered or fitted in any manner for the purpose of concealing goods; and

- the means of transport are not required to be produced as evidence at some later stage in the procedure; and

- where required, adequate security can be given.

Standard 11 stipulates that means of transport should only be seized or detained when they are liable to forfeiture or confiscation, or when they will be needed for an on-going investigation or as evidence later. Recommended Practice 15, on the other hand, requires Customs to release seized or detained means of transport if certain conditions are established to the their satisfaction. These conditions are that the means of transport have not been constructed, adapted, altered or fitted in any manner in order to conceal goods; that they will not be needed later as evidence in the administrative or criminal procedure; and that adequate security can be furnished if required. This does not prevent Customs from seizing or detaining means of transport that are themselves the subject of the offence. In these cases the means of transport should be regarded as the goods rather than as the conveyance of the goods.

6.4. Forfeiture or confiscation of means of transport

Recommended Practice 16

Means of transport should only be forfeited or confiscated where :

- the owner, operator or person in charge was, at the time, a consenting party or privy to the Customs offence, or had not taken all reasonable steps to prevent the commission of the offence; or

- the means of transport has been specially constructed, adapted or altered or fitted in any manner for the purpose of concealing goods; or

- restoration of the means of transport which has been specially altered or adapted is not possible.

Recommended Practice 16 restricts forfeiture or confiscation of the means of transport to three situations. The first situation is when the owner, operator or person in charge was a consenting party or privy to the offence at the time is was committed, or that person did not take reasonable steps to prevent the offence. This restriction is intended to protect the operators of commercial vehicles against the forfeiture of their means of transport, provided that the operator himself is not implicated in the offence in any way. The second situation is when the means of transport has been constructed, adapted, altered or fitted in any manner so as to conceal goods. The third situation arises when the means of transport was altered, adapted or fitted to conceal goods but subsequently could be released at the end of the administrative or criminal proceedings, however it cannot be restored to its original, legitimate condition. In this case Customs can forfeit or confiscate the conveyance on the premise that this would prevent its being used again illegitimately in the future.

Recommended Practice 17

Recommended Practice 17 deals with the sale of seized or detained goods. Customs can obtain the right to dispose of these goods either through the process of forfeiture or confiscation, or through their being abandoned by the owner during the administrative process dealing with the offence. The phrase “condemned as forfeited” means the confirmation that forfeiture has, in fact, taken place. In some jurisdictions this confirmation can occur through a court proceeding or by the expiration of a specified claim period.

Customs will usually sell these goods through an agent or by auction depending on the administrative procedure of each administration.

There are other situations, however, when Customs should dispose of the goods even before they have been forfeited, confiscated or abandoned to the Revenue. This occurs when the goods are physically deteriorating, when by their nature they would diminish in value, or because they become obsolete or rendered commercially valueless. These include perishable goods, animals and goods for which adequate storage facilities are not available (e.g. chemicals or other bulk materials). The sale is to protect the interests of the owner of the goods as well as Customs while awaiting the outcome of the investigation or any administrative or judicial proceedings. In these situations Customs will retain the proceeds of the sale in lieu of the actual goods.

In some countries, the option to buy the goods is given to the person from whom the goods were seized. Guidelines to Standard 26 should be consulted with regard to disposal of the proceeds of sale.

7. Detention of persons

Standard 18

National legislation shall specify the powers of the Customs in connection with detention of persons and shall lay down the conditions therefor, in particular the period after which detention becomes subject to a review by a judicial authority.

The detention of persons (with or without being arrested) is a considerable interference with a person’s liberties. In most jurisdictions the term “detention” means that the person may not have the freedom to leave until Customs has satisfied themselves as to the particulars of the person’s declaration for the procedure concerned.

Persons should only be detained when there is a reason for Customs to suspect that the person or the goods are not in compliance with Customs law and they take measures to determine this. Some examples of when a person may be detained would be while awaiting the completion of a search of the person’s vehicle, personal belongings or premises, or when the person is suspected of carrying narcotics internally, while awaiting medical results.

It is a generally accepted practice that the detained person has the right to access to legal advice as soon as the detention begins. Therefore the powers of detention and the circumstances under which such detention is permissible should be stipulated in the national legislation.

In some countries Customs do not themselves detain persons, but where they do Standard 18 requires national law to determine a period beyond which Customs need the permission of a judicial authority for the continued detention of a person.

In some countries, the maximum period for detention without judicial review is 24 hours, while other countries allow a maximum period of four days’ detention without the need for judicial permission.

It is also a generally accepted practice that once a judicial authority must review the case, the detained person should have access to the judge in order to present his case.

8. Administrative settlement of Customs offences

8.1. Administrative settlement

Standard 19

The Customs shall take the necessary measures to ensure, where applicable, that as soon as possible after a Customs offence is discovered :

- the administrative settlement of the latter is initiated; and

- the person concerned is informed about the terms and conditions of the settlement, the avenues of appeal and the time limits for such appeals.

Administrative settlement is a facilitation of trade by providing an alternative to costly and lengthy court proceedings. Standard 19 requires Customs to initiate such a settlement, where appropriate, so that offences can be settled faster and without burdening the time of the courts. Most national legislation empowers Customs to settle offences without having to go to a judiciary.

It should be noted that for the purposes of this Convention administrative settlements only apply to offences settled by the Customs administration. In many countries the authority to administratively settle Customs offences may be limited to certain categories of offence, to the seriousness of the offence or to goods below a certain value. Nevertheless the person concerned will always have the right to submit the case to a judicial authority.

Administrative settlement of a Customs offence is defined in this Chapter as “the procedure laid down by national legislation under which Customs are empowered to settle a Customs offence either by a ruling thereon or by means of a compromise settlement". Thus there are two types of Customs administrative settlements.

The first type is described as settlement by a ruling. The term “ruling” in this context means a unilateral act by Customs which is independent of the consent of the person concerned. A wide variety of terms are used in the legal systems of various countries to describe this ruling. Some countries describe it as an administrative fine, while other countries refer to it as a civil penalty or a compound. The person concerned will always have the right to reject the ruling and submit an appeal. (See Chapter 10 of the General Annex.)

The second type of administrative settlement is described in the definition as a “compromise settlement”. This type depends on the consent of the person concerned. However, this consent does not require as a precondition the admission of guilt by the person.

Administrative settlements, especially compromise settlements, can be used more widely if the persons concerned are aware of this possibility. Standard 19 not only requires that the administrative settlement should be initiated as soon as possible after the offence has been discovered, but also that the person concerned should be informed of the terms and conditions of the settlement. This is a requirement contained in the General Annex, Chapter 10 on Appeals, but the principle is repeated here to emphasize the particular importance for Customs to notify persons of their right to appeal in the serious matter of an offence. Consequently, Standard 19 provides that the person should be informed of any avenues of appeal open to him in an administrative settlement and of any time limits for such appeals. Avenues of appeal may be closed once the person has accepted a compromise settlement of a Customs offence, since the person would have chosen the compromise settlement over proceedings before a court or other authority independent of Customs.

8.2. Settlement by local Customs office

Recommended Practice 20

Where during clearance of the goods a Customs offence has been discovered which is regarded as of minor importance, it should be possible for the offence to be settled by the Customs office which discovers it.

Given the nature of international trade and the number of parties that can have responsibilities for the goods and the data related to them, there will be situations when minor offences are committed at the time of clearance of goods. In these cases, administrative settlements are a practical and facilitative measure to resolve the offences. When Customs decides to settle an offence administratively, it is a further facilitation if that settlement can take place quickly.

Therefore it is most practical to allow the Customs office which discovered the offence to grant the administrative settlement for a minor offence and thereby speed up the conclusion of the settlement for both Customs and the party involved. However, the Organization of Customs, the degree of centralization and the level of training of Customs officers at field or port locations vary from administration to administration. Recommended Practice 20 therefore limits cases of administrative settlement to minor offences only. Nevertheless, in some administrations the practice of allowing the settlement of offences by the Customs office that discovered them is also extended to offences that may be more than simply of minor importance.

It should be noted that this Chapter does not specify what is meant by “an offence regarded as of minor importance”. Customs administrations will need to decide which offences fall into this category and what rank of officer will be delegated to deal with them. For examples of some minor offences, see the Guidelines to Standard 3.39 of the General Annex. It is also important that the offence should not be settled by the officer who discovered it, in order to maintain an element of objectivity in deciding the settlement. This should be done by any officer of equivalent rank or higher.

Administrations may also need to take into account that in cases involving large amounts for the settlement or in more important cases, the involvement of higher levels within the Customs organisation may provide an additional guarantee for correct and consistent decision-making.

Recommended Practice 21

Where a traveller is regarded as having committed a Customs offence of minor importance, it should be possible for the offence to be settled without delay by the Customs office which discovers it.

As in the Recommended Practice 20, it is equally important that the Customs office that discovered the offence should also administratively settle minor offences committed by travellers. This settlement should be effected as soon as possible so as not to disrupt the movement of travellers.

Standard 22

Most administrations, in order to reduce the burden of the courts, provide for the administrative settlement of Customs offences by imposition of a penalty on the offender. This should be considered as a measure to more rapidly settle cases. Standard 22 requires national legislation to specify the amount of penalties that can be applied for each type of Customs offences to be dealt with through the administrative settlement.

In most countries, the legislation lays down a maximum and sometimes a minimum penalty that can be imposed. This range of a maximum and a minimum penalty is given so that some amount of discretion may be used considering the circumstances of the offence.

In some administrations only Customs locations having officers of a certain grade are allowed to offer administrative settlement of Customs offences. This is to avoid any misuse of the powers granted as these officers are usually better trained and have more responsibilities that include such decision-making. Standard 22 also requires these Customs locations to be designated in national legislation.

By having these important factors clearly enumerated in national legislation, the administrative settlement process is more transparent to international traders and travellers. This also promotes some assurance that the settlements will be more uniformly administered throughout the Customs territory.

The penalties commonly applicable are fines, forfeiture of the goods and, where appropriate, forfeiture of the means of transport. The term “fine” is commonly used to refer to the amounts payable by the offender under an administrative settlement procedure. This term should be interpreted in its general sense and not in the legal sense given to it in certain countries, where fines can be imposed only by the courts.

In a compromise settlement Customs may require the abandonment of the goods and/or the means of transport. The same may also be applied for a settlement by a Customs ruling. However, in some administrations the forfeiture of goods and/or means of transport cannot be done by an administrative settlement.

Where the compromise settlement procedure is used, national legislation should specify a range of maximum and minimum penalties that can be applied, as well as the minimum penalties applicable to each category of offence.

8.3. Principle of proportionality

Standard 23

The severity or the amount of any penalties applied in an administrative settlement of a Customs offence shall depend upon the seriousness or importance of the Customs offence committed and the record of the person concerned in his dealings with Customs.

Standard 23 contains the principle commonly referred to as the principle of proportionality. It is intended to prevent excessively severe penalties from being applied for minor offences. It states that the severity or the amount of penalties applied must be commensurate with the seriousness of the offence and with the Customs record of the offender.

In many countries the amount of any penalty imposed under the administrative settlement is not based on the value of the goods but relates to the amount of duties and taxes evaded or unduly repaid, as it is this latter amount that reflects the extent of loss to the Revenue. This Standard does not preclude the application of severe penalties in cases of repetition of Customs offences, which in isolation would be regarded as of minor importance.

8.4. Liability of the declarant

Standard 24

Standard 24 applies to the special position of declarants who are acting on behalf of another party. These declarants are important to international trade as their services can facilitate the import and export of goods for those unfamiliar with local requirements. Although their knowledge of Customs legislation may impose on them an additional duty of care when making a declaration, they usually do not have access to the business administration of their principal. As a result their possibilities for verifying the information provided by their principal are limited.

Based on this, Standard 24 allows that if the declarant had taken all reasonable steps to verify the validity of the information provided by his principal, his liability should be limited. Thus it is acknowledged that a limited requirement for due care rests with the declarant to question information which is unusual or incongruous. However, this does not require that he necessarily verify every particular furnished.

In reviewing the circumstances of an offence and determining the size of any penalty, Customs should take these factors into account. (See also Standard 3.39 of the General Annex and its Guidelines.)

8.5. Force majeure

Standard 25

Standard 25 requires Customs not to impose any penalty when offences are committed as a result of force majeure or other circumstances beyond the control of the person concerned. This also reflects the principle of proportionality. It provides for situations in which the person concerned may be fully aware of the fact that he is committing an irregularity but is forced to do so because of circumstances beyond his control. Examples may be the non-compliance with time limits imposed on the movement of goods under Customs control that are caused by mechanical failure of the means of transport, bad weather or landing in an airport not approved for the handling of the goods because of an emergency. However the person concerned should be able to substantiate such reasons and circumstances to the satisfaction of Customs.

This Standard does not apply to offences where there is negligence or fraudulent intent on the part of the person concerned.

9. Return of seized or detained goods and discharge of security

Standard 26

Goods that have been seized or detained, or the proceeds from the sale of such goods after deduction of any duties and taxes and all other charges and expenses incurred, shall be :

- turned over to the person entitled to receive them as soon as possible after the Customs offence has been definitively settled; or

- when this is not possible, held at their disposal for a specified period,

provided that the goods have neither been condemned as forfeited or confiscated nor abandoned to the Revenue as a result of a settlement.

The results of a settlement of a Customs offence will determine the disposition of the goods that were detained or seized. When the settlement determines that the goods will be condemned as forfeited or confiscated or they are abandoned to the Revenue, the goods or the proceeds of sale of the goods become the property of the government. When the goods are subject to restrictions or prohibitions Customs may require them to be re-exported or destroyed.

Where the goods are neither condemned as forfeited or confiscated nor abandoned to the Revenue, Standard 26 requires Customs to turn them over to the person entitled to receive them if they were seized or detained in accordance with Standard 11. If they were released in accordance with Recommended Practice 14 or 15, then Customs is required to discharge any security furnished.

In the event the goods are sold or otherwise disposed of in accordance with Recommended Practice 17, the proceeds of the sale should be turned over to the person entitled. However, Customs may deduct any duties and taxes and all other charges and expenses incurred in the sale before turning over the proceeds.

10. Right of appeal in an administrative settlement

Standard 27

Any person implicated in a Customs offence that is the subject of an administrative settlement shall have the right of appeal to an authority independent of Customs unless he has chosen to accept the compromise settlement.

Standard 27 on the right of appeal in an administrative settlement distinguishes between the two types of administrative settlement, i.e administrative settlement by a Customs ruling and a compromise settlement.

One of the purposes of a compromise settlement is to avoid court proceedings that can be costly and time-consuming. As this settlement depends on the consent of the person involved, most countries do not provide for a subsequent right of appeal to an independent authority. These countries consider that the access to an independent authority is ensured when the person does not consent to the compromise settlement of the offence and elects to bring it to a court of law.

Some countries make this compromise settlement subject to the approval or supervision of judicial authorities. In other countries Customs must inform the judicial authorities of the settlement. Both requirements are to ensure that the person has access to a court of law if he believes that undue pressure is exerted on him by Customs.

In an administrative settlement by a unilateral decision of Customs, the person concerned must have a right of appeal to an authority independent of the Customs administration. Countries may also create the right of appeal to a higher authority within the Customs administration, but this cannot replace the right of appeal to an independent authority in the final instance. For a detailed explanation on the right of appeal, see Chapter 10 of the General Annex and its Guidelines.

Annex J - Special procedures

Annex J

Special procedures

CHAPTER 1

Travellers

Definitions

For the purpose of this Chapter:

E1./ F2.

“dual-channel system ” means a simplified Customs control system allowing travellers on arrival to make a declaration by choosing between two types of channel. One, identified by green symbols, is for the use of travellers carrying goods in quantities or values not exceeding those admissible duty-free and which are not subject to import prohibitions or restrictions. The other, identified by red symbols, is for other travellers;

E2./ F4.

“means of transport for private use” means road vehicles and trailers, boats and aircraft, together with their spare parts and normal accessories and equipment, imported or exported exclusively for personal use by the person concerned and not for the transport of persons for remuneration or the industrial or commercial transport of goods, whether or not for remuneration;

E3./ F5.

“traveller ” means:
(1) any person who temporarily enters the territory of a country in which he or she does not normally reside (“non-resident”) or who leaves that territory; and
(2) any person who leaves the territory of a country in which he or she normally resides (“departing resident”) or who returns to that territory (“returning resident”);

E4./ F3.

“personal effects ” means all articles (new or used) which a traveller may reasonably require for his or her personal use during the journey, taking into account all the circumstances of the journey, but excluding any goods imported or exported for commercial purposes;

E5./ F1.

“temporary admission ” 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 imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any change except normal depreciation due to the use made of the goods.

Principles

1. Standard

The Customs facilities applicable to travellers shall be governed by th e provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

The Customs facilities provided for in this Chapter shall apply to travellers irrespective of their citizenship/nationality.

Field of application

3. Standard

The Customs shall designate the Customs offices at which Customs formalities relating to travellers may be accomplished. In determining the competence and location of these offices, and their hours of business, the Customs shall take into account in particular the geographical situation and existing volumes of passenger traffic.

4. Standard

Subject to compliance with the appropriate Customs controls, travellers entering or leaving the country by their means of transport for private use shall be permitted to accomplish all necessary Customs formalities without, as a matter of course, having to leave the means of transport in which they are travelling.

5. Recommended Practice

Travellers entering or leaving the country by road vehicle for commercial use or train should be permitted to accomplish all necessary Customs formalities without, as a matter of course, having to leave the means of transport in which they are travelling.

6. Recommended Practice

The dual-channel system should be used for the Customs control of travellers and the clearance of goods carried by them and, where appropriate, their means of transport for private use.

7. Recommended Practice

Regardless of the mode of transport us ed, a separate list of travellers or of their accompanying baggage should not be required for Customs purposes.

8. Recommended Practice

The Customs, in co-operation with other agencies and the trade, should seek to use internationally standardized advance passenger information, where available, in order to facilitate the Customs control of travellers and the clearance of goods carried by them.

9. Recommended Practice

Travellers should be permitted to make an oral declaration in respect of th e goods carried by them. However, the Customs may require a written or electronic declaration for goods carried by travellers which constitute an importation or exportation of a commercial nature or which exceed, in value or quantity, the limits laid down in national legislation.

10. Standard

Personal searches of travellers for the purposes of Customs control shall be carried out only in exceptional cases and when there are reasonable grounds to suspect smuggling or other offences.

11. Standard

Goods carried by travellers shall be stored or kept, subject to the conditions prescribed by the Customs, pending clearance under the appropriate Customs procedure, re-exportation or other disposal in accordance with national legislation in the following cases:

at the traveller’ s request;
when the goods concerned cannot be cleared immediately; or
where the other provisions of this Chapter do not apply to such goods.

12. Standard

Unaccompanied baggage (i.e. baggage arriving or leaving before or after the traveller) shall be cleared under the procedure applicable to accompanied baggage or under another simplified Customs procedure.

13. Standard

Any authorized person shall be allowed to present unaccompanied baggage for clearance on behalf of the traveller.

14. Recommended Practice

A system of flat-rate assessment should be applied to goods declared for home use under the facilities applicable to travellers, provided that the importation is of a non-commercial nature and that the aggregate value or quantity of the goods does not exceed the amounts laid down in national legislation.

15. Recommended Practice

Wherever possible, the use of credit cards or bank cards should be acceptable as a means of payment for services rendered by the Customs and for duties and taxes.

Entry

16. Recommended Practice

The quantities of tobacco goods, wine, spirits and perfume allowed to be imported free of import duties and taxes by travellers should be not less than:

a. 200 cigarettes or 50 cigars or 250 grams of tobacco, or an assortment of these products of a total weight not exceeding 250 grams;

b. 2 litres of wine or 1 litre of spirits;

c. ¼ litre of toilet water and 50 grams of perfume.

The facilities provided for tobacco goods and alcoholic beverages may, however, be restricted to persons who have reached a certain age and may not be granted, or may be granted in reduced quantities only, to persons who cross the border frequently or who have been out of the country for less than 24 hours.

17. Recommended Practice

In addition to the consumable p roducts allowed to be imported free of import duties and taxes within specified quantitative limits, travellers should be permitted to import, free of import duties and taxes, goods of a strictly non-commercial nature up to an aggregate value of 75 Special Drawing Rights (SDRs). A lower amount may be fixed for persons less than a certain age or for persons who cross the frontier frequently or who have been out of the country for less than 24 hours.

18. Standard

Returning residents shal l be permitted to re-import free of import duties and taxes personal effects and their means of transport for private use which they took with them at the time of their departure from the country and which were in free circulation in that country.

19. Standard

The Customs shall not require a Customs document or security for the temporary admission of personal effects of non-residents unless:

they exceed, in value or quantity, the limits laid down in national legislation; or
they are deemed b y the Customs to be a risk to the Revenue.

20. Standard

In addition to clothing, toilet articles and other articles obviously of a personal nature, the following shall in particular be considered to be non-residents’ personal effects:

personal j ewellery;
still and motion picture cameras together with a reasonable supply of films, tapes and accessories therefor;
portable slide or film projectors and accessories therefor together with a reasonable quantity of slides or films;
binoculars;
portable musical instruments;
portable sound reproduction devices including tape recorders, compact disc players and dictating machines with tapes, records and discs;
portable radio receivers;
cellular or mobile telephones;
portable television sets;
portable typewriters;
portable personal computers and accessories;
portable calculators;
baby carriages and strollers;
wheelchairs for invalids;
sporting equipment.

21. Standard

Where it is necessary to lodge a temporary admission declaration for non-residents' personal effects, the time limit for temporary admission shall be fixed by reference to the length of the traveller's stay in the country, provided that any limit laid down in national legislation is not exceeded.

22. Standard

At the request of the traveller, and for reasons deemed valid by the Customs, the latter shall extend the period of temporary admission initially fixed for a non-resident’ s personal effects, provided that any limit laid down in national legislation is not exceeded.

23. Standard

Non-residents shall be granted temporary admission in respect of their means of transport for private use.

24. Standard

Fuel carried in the normal tanks of the means of transport for private use shall be admitted free of import duties and taxes.

25. Standard

The facilities granted in respect of means of transport for private use shall apply whether the means of transport are owned, rented or borrowed by non-residents and whether they arrive with, before or after the traveller.

26. Recommended Practice

The Customs should not require a Customs document or security for the temporary admission of non-residents' means of transport for private use.

27. Recommended Practice

Where a Customs document or security is required for the temporary admission of non-residents' means of transport for private use, the Customs should accept standard international documents and securities.

28. Standard

Where it is necessary to lodge a temporary admission declaration for temporary admission of non-residents' means of transport for private use, the time limit for temporary admission shall be fixed by reference to the length of the non-resident’ s stay in the country, provided that any limit laid down in national legislation is not exceeded.

29. Standard

At the request of the person concerned, and for reasons deemed valid by the Customs, the latter shall extend the period of temporary admission initially fixed for a non-resident’ s means of transport for private use, provided that any limit laid down in national legislation is not exceeded.

30. Standard

Any replacement parts required for the repair of a means of transport for private use temporarily in the country shall be granted temporary admission.

Re-exportation

31. Standard

The Customs shall allow non-residents’ temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported.

32. Standard

The Customs shall not require the re-exportation of non-residents' means of transport for private use or personal effects which have been seriously damaged or destroyed through accident or force majeure.

Departure

33. Standard

The Customs formalities applicable to departing travellers shall be as simple as possible.

34. Standard

Travellers shall be permitted to export goods for commercial purposes, subject to compliance with the necessary formalities and payment of any export duties and taxes chargeable.

35. Standard

At the request of residents leaving the country, the Cus toms shall take identification measures for certain articles when it will facilitate the re-importation free of duties and taxes.

36. Standard

Only in exceptional cases shall the Customs require a temporary exportation document for the personal effects and means of transport for private use of residents leaving the country.

37. Recommended Practice

If security has been given in the form of a cash deposit, provision should be made for it to be repaid at the office of re-exportation, even if the goods were not imported through that office.

Transit passengers

38. Standard

Transit passengers who do not leave the transit area shall not be required to pass through any Customs control. However, the Customs shall be allowed to maintain general surveillance of transit areas and to take any action necessary when a Customs offence is suspected.

Information concerning the Customs facilities applicable to travellers

39. Recommended Practice

Information concerning the Customs facilities applicable to travellers should be made available in the official language or languages of the country concerned and in any other language deemed to be useful.

CHAPTER 2

Postal traffic

Definitions

For the purposes of this Chapter:

E1./ F1.

“CN22/23 ” means the special declaration forms for postal items as described in the Acts of the Universal Postal Union currently in force;

E2./ F3.

“Customs formalities in respect of postal items ” means all the operations to be carried out by the interested party and the Customs in respect of postal traffic;

E3./ F2.

“postal items ” means letter-post and parcels, as described in the Acts of the Universal Postal Union currently in force, when carried by or for postal services;

E4./ F5.

“postal service ” means a public or private body authorized by the government to provide the international services governed by the Acts of the Universal Postal Union currently in force;

E5./ F4.

“the Universal Postal Union ” means the inter-governmental organization founded in 1874 by the Treaty of Bern as the “General Postal Union” which, in 1878, was renamed the “Universal Postal Union (UPU)” and which since 1948 has been a specialized agency of the United Nations.

Principles

1. Standard

The Customs formalities in respect of postal items shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

National legislation shall specify the respective responsibilities and obligations of the Customs and of the postal service in connection with the Customs treatment of postal items.

Clearance of postal items

3. Standard

The clearance of postal items shall be carried out as rapidly as possible.

(a) Customs status of goods

4. Standard

The exportation of goods in postal items shall be allowed regardless of whether they are in free circulation or are under a Customs procedure.

5. Standard

The importation of goods in postal items shall be allowed irrespective of whether they are intended to be cleared for home use or for another Customs procedure.

(b) Production to the Customs

6. Standard

The Customs shall designate to the postal service the postal items which shall be produced to them for the purposes of Customs control and the methods of production of these items.

7. Standard

The Customs shall not require postal items to be produced to them at exportation for the purposes of Customs control, unless they contain:

goods the exportation of which must be certified;
goods which are subject to export prohibitions or restrictions or to export duties and taxes;
goods having a value exceeding an amount specified in national legislation; or
goods which are selected for Customs control on a selective or random basis.

8. Recommended Practice

The Customs should not, as a general rule, require the following categories of imported postal items to be produced to them:

a. postcards and letters containing personal messages only;

b. literature for the blind;

c. printed papers not subject to import duties and taxes.

(c) Clearance against forms CN22 or CN23 or against a Goods declaration

9. Standard

When all the information required by the Customs is available from the CN22 or CN23 and supporting documents, the form CN22 or CN23 shall be the Goods declaration, except in the case of:

goods having a value exceeding an amount specified in national legislation;
goods which are subject to prohibitions or restrictions or to export duties and taxes;
goods the exportation of which must be certified;
imported goods intended to be placed under a Customs procedure other than clearance for home use.

In these cases, a separate Goods declaration shall be required.

Postal items in transit

10. Standard

Postal items shall not be subject to Customs formalities whilst they are being conveyed in transit.

Collection of duties and taxes

11. Standard

The Customs shall make the simplest possible arrangements for the collection of duties and taxes on the goods contained in postal items.

CHAPTER 3

Means of transport for commercial use

Definitions

For the purposes of this Chapter:

E1./ F2.

“Customs formalities applicable to means of transport for commercial use ” means all the operations to be carried out by the person concerned and by the Customs in respect of means of transport for commercial use arriving in or departing from the Customs territory and during their stay therein;

E2./ F1.

“declaration of arrival ” or “declaration of departure ”, as the case may be, means any declaration required to be made or produced to the Customs upon the arrival or departure of means of transport for commercial use, by the person responsible for the means of transport for commercial use, and containing the necessary particulars relating to the means of transport for commercial use and to the journey, cargo, stores, crew or passengers;

E3./ F3.

“means of transport for commercial use ” means any vessel (including lighters and barges, whether or not ship-borne, and hydrofoils), hovercraft, aircraft, road vehicle (including trailers, semi-trailers and combinations of vehicles) or railway rolling stock, which is used in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration, together with their normal spare parts, accessories and equipment, as well as lubricants and fuel contained in their normal tanks, when carried with the means of transport for commercial use.

Principles

1. Standard

Customs formalities applicable to means of transport for commercial use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Recommended Practice

Customs formalities applicable to means of transport for commercial use should apply equally, regardless of the country of registration or ownership of the means of transport for commercial use, of the country from which they arrived or their country of destination.

Temporary admission of means of transport for commercial use

3. Recommended Practice

Means of transport for commercial use, whether loaded or not, should be a llowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes, provided that such means of transport for commercial use are not used for internal transport in the Customs territory of the country of temporary admission. They must be intended for re-exportation without having undergone any change except normal depreciation due to their use, normal consumption of lubricants and fuel and necessary repairs.

4. Standard

The Customs shall require security or a temporary admission document for means of transport for commercial use duly registered abroad only when they consider it essential for the purposes of Customs control.

5. Standard

Where the Customs fix a time limit for the re-exporta tion of means of transport for commercial use, they shall take into account all the circumstances of the transport operations intended.

6. Recommended Practice

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

Temporary admission of parts and equipment

7. Recommended Practice

Special equipment for the loading, unloadi ng, handling and protection of cargo, whether or not it is capable of being used separately from the means of transport for commercial use, which is imported with the means of transport for commercial use and is intended to be re-exported therewith, should be allowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes.

8. Recommended Practice

Parts and equipment which are to be used, in the course of repair or maintenance, as replacements for parts and equipment incorporated in or used on a means of transport for commercial use already temporarily imported in a Customs territory, should be allowed to be brought temporarily into that territory conditionally relieved from payment of import duties and taxes.

Arrival

9. Standard

When a declaration of arrival is required to be lodged with the Customs on arrival of means of transport for commercial use, the particulars required to be given thereon shall be limited to the minimum necessary to ensure compliance with Customs law.

10. Standard

The Customs shall reduce, as far as possible, the number of copies of the declaration of arrival required to be submitted to them.

11. Standard

No documents to be produced to or lodged with the Customs in connection with the arrival of means of transport for commercial use shall be required to be legalized, verified, authenticated or previously dealt with by any representatives abroad of the country into which means of transport for commercial use arrive.

Subsequent calls in the Customs territory

12. Standard

Where means of transport for commercial use call at subsequent places in the Customs territory without intermediate calls in another country, the applicable Customs formalities shall be kept as simple as possible and shall take into account any Customs control measures already taken.

Departure

13. Standard

Customs formalities applicable upon the departure of means of transport for commercial use from the Customs territory shall be limited to measures to ensure that:

a. where required, a declaration of departure is duly lodged with the competent Customs office;

b. where appropriate, Customs seals are affixed;

c. where required for control purposes, specified Customs routes are followed; and

d. no unauthorized delay occurs in the departure of means of transport for commercial use.

14. Recommended Practice

The use of declaration of departure forms identical to those prescribed for declaration of arrival forms should be allowed by the Customs provided that their use for purposes of departure is clearly indicated.

15. Standard

Means of transport for commercial use shall be permitted to depart from the Customs territory through a Customs office other than that through which they arrived.

CHAPTER 4

Stores

Definitions

For the purposes of this Chapter:

E1./ F6.

“carrier ” means the person actually transporting goods or in charge of or responsible for the operation of the means of transport;

E2./ F1.

“Customs formalities applicable to stores ” means all the operations to be carried out by the person concerned and by the Customs in respect of stores;

E3./ F5.

“Customs treatment of stores ” means all the facilities to be accorded and all the Customs formalities applicable to stores;

E4./ F2.

“stores ” means :
- stores for consumption; and
- stores to be taken away;

E5./ F3.

“stores for consumption ” means :
- goods intended for consumption by the passengers and the crew on board vessels, aircraft or trains, whether or not sold; and
- goods necessary for the operation and maintenance of vessels, aircraft or trains including fuel and lubricants but excluding spare parts and equipment; which are either on board upon arrival or are taken on board during the stay in the Customs territory of vessels, aircraft or trains used, or intended to be used, in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration;

E6./ F4.

“stores to be taken away ” means goods for sale to the passengers and the crew of vessels and aircraft with a view to being landed, which are either on board upon arrival or are taken on board during the stay in the Customs territory of vessels and aircraft used, or intended to be used, in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration.

Principles

1. Standard

Customs treatment of stores shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Recommended Practice

Customs treatment of stores should apply equally, regardless of the country of registration or ownership of vessels, aircraft or trains.

Stores on board arriving vessels, aircraft or trains

(a) Exemption from import duties and taxes

3. Standard

Stores which are carried in a vessel or aircraft arriving in the Customs territory shall be exempted from import duties and taxes provided that they remain on board.

4. Recommended Practice

Stores for consumption by the passengers and the crew imported as provisions on international express trains should be exempted from import duties and taxes provided that:

a. such goods are purchased only in the countries crossed by the international train in question; and

b. any duties and taxes chargeable on such goods in the country where they were purchased are paid.

5. Standard

Stores for consumption necessary for the operation and maintenance of vessels, aircraft and trains which are on board these means of transport arriving in the Customs territory shall be exempted from import duties and taxes provided that they remain on board while these means of transport are in the Customs territory.

(b) Documentation

6. Standard

When a declaration concerning stores on board vessels arriving in the Customs territory is required by the Customs, the information required shall be kept to the minimum necessary for the purposes of Customs control.

7. Recommended Practice

The quantitie s of stores which are allowed by the Customs to be issued from the stores held on board should be recorded on the declaration concerning stores produced to the Customs upon arrival of the vessel in the Customs territory and no separate form should be required to be lodged with the Customs in respect thereof.

8. Recommended Practice

The quantities of stores which are supplied to vessels during their stay in the Customs territory should be recorded on any declaration concerning stores which has been required by the Customs.

9. Standard

The Customs shall not require the presentation of a separate declaration of stores remaining on board aircraft.

(c) Issue of stores for consumption

10. Standard

The Customs shall allow the issue of stores for consumption on board during the stay of a vessel in the Customs territory in such quantities as the Customs deem reasonable having regard to the number of the passengers and the crew and to the length of the stay of the vessel in the Customs territory.

11. Recommended Practice

The Customs should allow the issue of stores for consumption on board by the crew while the vessel is undergoing repairs in a dock or shipyard, provided that the stay in a dock or shipyard is considered to be of reasonable duration.

12. Recommended Practice

When an aircraft is to land at one or more airports in the Customs territory, the Customs should allow the issue of stores for consumption on board both during the stay of the aircraft at such intermediate airports and during its flight between such airports.

(d) Customs control

13. Standard

The Customs shall require the carrier to take appropriate measures to prevent any unauthorized use of the stores including sealing of the stores, when necessary.

14. Standard
The Customs shall require the removal of stores from the vessel, aircraft or train for storage elsewhere during their stay in the Customs territory only when they consider it necessary.

Supply of stores exempted from duties and taxes

15. Standard

Vessels and aircraft which depart for an ultimate foreign destination shall be entitled to take on board, exempted from duties and taxes:

a. stores in such quantities as the Customs deem reasonable having regard to the number of the passengers and the crew, to the length of the voyage or flight and to any quantities of such stores already on board; and

b. stores for consumption necessary for their operation and maintenance, in such quantities as are deemed reasonable for operation and maintenance during the voyage or flight having regard also to any quantities of such stores already on board.

16. Standard

Replenishment of stores exemp ted from duties and taxes shall be allowed for vessels and aircraft which have arrived in the Customs territory and which need to replenish their stores for the journey to their final destination in the Customs territory.

17. Standard

The Customs shall allow stores for consumption supplied to vessels and aircraft during their stay in the Customs territory to be issued under the same conditions as are applicable in this Chapter to stores for consumption held on board arriving vessels and aircraft.

Departure

18. Recommended Practice

No separate declaration concerning stores should be required upon departure of vessels from the Customs territory.

19. Standard

When a declaration is required concerning stores taken on board vessels or aircraft upon departure from the Customs territory, the information required shall be kept to the minimum necessary for the purpose of Customs control.

Other disposal of stores

20. Standard

Stores on board vessels, aircraft and trains having arrived in the Customs territory shall be allowed:

a. to be cleared for home use or to be placed under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case; or

b. subject to prior authorization by the Customs, to be transferred respectively to other vessels, aircraft or trains in international traffic.

CHAPTER 5

Relief consignments

Definition

For the purposes of this Chapter:

E1./ F1.

“relief consignments ” means :
- goods, including vehicles and other means of transport, foodstuffs, medicaments, clothing, blankets, tents, prefabricated houses, water purifying and water storage items, or other goods of prime necessity, forwarded as aid to those affected by disaster; and
- all equipment, vehicles and other means of transport, specially trained animals, provisions, supplies, personal effects and other goods for disaster relief personnel in order to perform their duties and to support them in living and working in the territory of the disaster throughout the duration of their mission.

Principles

1. Standard

Clearance of relief consignments shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

2. Standard

Clearance of relief consignments for export, transit, temporary admission and import shall be carried out as a matter of priority.

Field of application

3. Standard

In the case of relief consignments the Customs shall provide for :

lodging of a simplified Goods declaration or of a provisional or incomplete Goods declaration subject to completion of the declaration within a specified period;
lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods, and their release upon arrival;
clearance outside the designated hours of business or away from Customs offices and the waiver of any charges in this respect; and
examination and/or sampling of goods only in exceptional circumstances.

4. Recommended Practice

Clearance of relief consignments should be granted without regard to the country of origin, the country from which arrived or country of destination.

5. Recommended Practice

In the case of relief consignme nts any economic export prohibitions or restrictions and any export duties or taxes otherwise payable should be waived.

6. Recommended Practice

Relief consignments received as gifts by approved organizations for use by or under the control of such organizations, or for distribution free of charge by them or under their control, should be admitted free of import duties and taxes and free of economic import prohibitions or restrictions.

Guidelines to Annex J

Guidelines to the legal text

Chapter 1

TRAVELLERS

1. Introduction

The great increase in international travel has had a considerable effect upon the work of Customs administrations, since travellers with their goods and means of transport must pass through Customs control during their journey.

It is in the interest both of the traveller and of the authorities concerned to facilitate movement through the necessary Customs control, but nevertheless this should not be accomplished at the expense of other responsibilities assigned to Customs such as protecting the Customs territory’s fiscal, economic and other essential interests, preventing the importation and exportation of prohibited articles and preventing other Customs offences.

Chapter 1 of Specific Annex J provides what are considered to be the minimum facilities for travellers and in this context particular attention is drawn to the recommendation made in Article 2 of the Convention to grant greater facilities wherever possible.

The Chapter relates to the Customs facilities applicable to all travellers, irrespective of whether they are non-residents or departing or returning residents or of their mode of transport. It applies to the goods carried by travellers whether on their person, in their baggage or in the means of transport, as well as to their means of transport for private use

(see the definition of the term means of transport for private use).

The Chapter applies also to workers who live in one country but work in another, to crew members and to other persons crossing the border frequently. However these types of travellers may be excluded from the benefit of some facilities.

The Chapter does not cover the case of persons transferring their residence from one country to another.

These Guidelines are designed to assist Customs administrations in understanding the scope of the legal provisions in the Chapter.

2. Definitions

E1/F2	“dual-channel system” means a simplified Customs control system allowing travellers on arrival to make a declaration by choosing between two types of channel. One, identified by green symbols, is for the use of travellers carrying goods in quantities or values not exceeding those admissible duty-free and which are not subject to import prohibitions or restrictions. The other, identified by red symbols, is for other travellers;
E2/F4	“means of transport for private use” means road vehicles and trailers, boats and aircraft, together with their spare parts and normal accessories and equipment, imported or exported exclusively for personal use by the person concerned and not for the transport of persons for remuneration or the industrial or commercial transport of goods, whether or not for remuneration;
E3/F5	“traveller” means : 1. any person who temporarily enters the territory of a country in which he or she does not normally reside (“non-resident”) or who leaves that territory; and 2. any person who leaves the territory of a country in which he or she normally resides (“departing resident”) or who returns to that territory (“returning resident”);
E4/F3	“personal effects” means all articles (new or used) which a traveller may reasonably require for his or her personal use during the journey, taking into account all the circumstances of the journey, but excluding any goods imported or exported for commercial purposes;
E5/F1	“temporary admission” 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 imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any change except normal depreciation due to the use made of the goods.

3. Scope

The following notes clarify, where necessary, the scope of some of the definitions used in the Chapter and, where appropriate, certain terms or words used within those definitions.

The term “means of transport for private use” , as defined in the Convention, covers all conceivable types of road vehicle, regardless of their means of propulsion. For example, the term includes engine, electric and solar powered road vehicles, and all forms of cycles including motorcycles, bicycles and tricycles, as well as trailers towed by such vehicles. Vehicles referred to generically as “off-road vehicles”, having four wheel drive and capable of being driven both on or off defined roads are included within the definition.

The term also covers boats, whether motorised or not, and aircraft, whether motorised or not.

The essential distinction to be made in determining whether the “means of transport” together with spare parts and normal accessories and equipment should be accorded the facilities of this Chapter is whether or not they are imported or exported exclusively for the personal use of the traveller concerned. Means of transport which are transporting persons for remuneration or are engaged in the industrial or commercial transport of goods, whether or not for remuneration, are excluded from the provisions of the Chapter.

The concept of “traveller” as defined in the Chapter is much wider in scope than the traditional concept of “tourist” which is treated in a number of existing international instruments concerning travel and tourism. The term covers all persons travelling to or from another country regardless of their reason for travel. Reasons may include, for example, tourism and other forms of recreation, business, education and family purposes.

The word “country” as used in the definition of “traveller” should be interpreted as including, where applicable, particular regions or groups of countries, for example, the European Union, as well as non-States such as Hong Kong.

A person may be treated as normally residing in a country if principally or permanently resident in that country. However, the place where a person normally resides is determined in accordance with national legislation.

In the definition of “personal effects ”, the word “journey” refers to the traveller’s voyage itself as well as to any intermediate stays.

In the definition of “temporary admission” the phrase “normal depreciation due to the use made of the goods” during their stay in the Customs territory does not prevent the goods from being regarded as re-exported in the same state.

Goods temporarily admitted may also undergo operations necessary for their preservation. For example, normal maintenance is permitted for temporarily admitted machines and appliances. Where goods under temporary admission require substantial repairs, Customs may require that they first be placed under the procedure of temporary admission for inward processing.

4. Principles

4.1. Application of Customs facilities

Standard 1

The Customs facilities applicable to travellers shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Travellers. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 6 on Customs control, Chapter 7 on Information technology and Chapter 9 on Information, decisions and rulings supplied by the Customs should be read in conjunction with this Chapter on Travellers.

Contracting Parties should particularly note Standard 1.2 and ensure that their national legislation specifies the conditions to be fulfilled and the formalities to be accomplished for the procedures and practices covered in this Chapter.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

4.2. Equity

Standard 2

The Customs facilities provided for in this Chapter shall apply to travellers irrespective of their citizenship/nationality.

The intention of this Standard is to avoid discrimination as to Customs treatment on the grounds of citizenship/nationality. On the other hand, travellers may have different entitlements depending on their status as residents or non-residents.

5. Field of application Designated Customs offices

Standard 3

Customs offices designated as those at which formalities relating to travellers may be accomplished may be located at the border or inland (e.g. at an airport or railway station).

In some cases joint controls have been established at common frontiers with Customs offices of the countries concerned installed at the same place and sometimes in the same building. In addition to countries which have established joint controls, some countries have established mutual juxtaposed Customs offices where a single official acts on behalf of two Customs administrations. (See also the Guidelines to Transitional Standards 3.4 and 3.5 of the General Annex)

Another method of expediting the passage of travellers through Customs control is that of providing pre-clearance facilities in the country of departure.

The term "pre-clearance" refers to a system used at a number of international airports which allows passengers departing on flights for a certain country to fulfil all Customs formalities for that country prior to the departure of the aircraft. The Customs clearance is carried out by Customs officers of the foreign country who, upon prior agreement with the host country, are stationed at the airport in the host country. The legal status of the actions performed and the enforcement measures used by the foreign Customs officers within the host country are based strictly upon the powers these officers are granted by the host country.

The object of the "pre-clearance" system is to utilise waiting time prior to the departure of an aircraft in order to carry out formalities which might otherwise delay passengers upon arrival of that aircraft at destination.

Some administrations provide for the accomplishment of the necessary Customs formalities for travellers on international trains, ferries and cruise ships.

In determining the hours of business of Customs offices at which formalities relating to travellers may be accomplished, Customs administrations are required to take into account the needs of the travelling public as well as the administrative feasibility of providing wide service. The main Customs offices at which Customs formalities applicable to travellers may be accomplished should be open 24 hours a day where the needs of traffic so warrant or, if this is not necessary, at specified hours during which travellers may be expected to enter or leave the country. (See also the Guidelines to Standard 3.1 of the General Annex)

"Specified" hours should not merely be confined to those times when commercial goods are being cleared but should be expanded beyond these hours as the needs of traffic so warrant. For example, the daily hours for the clearance of travellers might include normal commercial business hours as well as several hours prior to and/or following these hours.

5.2. Accomplishing formalities in means of transport

Standard 4

Recommended Practice 5

These provisions are to be taken as a general rule, to be applied as a matter of course. However, it should not be construed as preventing Customs from occasionally requesting persons to leave their means of transport for private use.

Circumstances whereby travellers entering or leaving a country are required to leave their means of transport for private use to accomplish procedures not administered by Customs (e.g. immigration or quarantine procedures), or where it would be more practicable to accomplish a particular Customs procedure (e.g. temporary admission documentation) away from the means of transport for private use, do not constitute a breach of this Standard or Recommended Practice.

The Guidelines to Standard 4 also apply to Recommended Practice 5. Likewise Recommended Practice 5 is not breached merely because travellers are required to leave buses or trains that terminate at the border.

5.3. Dual-channel system

Recommended Practice 6

The dual-channel system should be used for the Customs control of travellers and the clearance of goods carried by them and, where appropriate, their means of transport for private use.

The dual-channel system is a simplified system which enables Customs to improve the flow of arriving international travellers and to deal efficiently with an increasing number of travellers without reducing the effectiveness of Customs control and without a corresponding increase in the number of Customs staff. The dual-channel system can be used with other controls, for example, exchange controls and control of motor vehicle insurance certificates. However the benefits of the dual-channel system would be lost if the circumstances require full control of all travellers, their baggage and, where applicable, their vehicles.

The dual-channel system is described in the WCO Recommendations on Simplified Customs control, based on the dual-channel system, of passengers arriving by air (8^th June 1971) and the Simplified Customs control, based on the dual-channel system, of passengers arriving by sea (5^th June 1972). These Recommendations are attached at Appendix I.

Customs should endeavour to implement the dual-channel system at all suitable Customs entry points including airports, ports, railway terminals and road border crossings. With regard to rail travellers, the system may be installed at those railway stations where it provides definite facilitation advantages over other forms of Customs clearance and where the following conditions exist:

1. the arrival platforms of the station allow for the channeling of passengers in a way that ensures efficient Customs control; and

2. the station is both a train's first stop after entering a country and the terminus of that train.

5.4. Lists of travellers and/or their baggage

Recommended Practice 7

Regardless of the mode of transport used, a separate list of travellers or of their accompanying baggage should not be required for Customs purposes.

This Recommended Practice flows from and enlarges upon the scope of a Resolution which was adopted by the Council on 22 May 1976, concerning passengers arriving or departing by air.

The “separate lists” referred to can be described generically as passenger manifests for Customs purposes. Such manifests are considered to be of questionable value to Customs and the preparation and lodgement of which would impose an unreasonable administrative burden on airlines, shipping companies, etc. Therefore, if required, a passenger list should be accepted from the carrier’s normal records.

However, the Recommended Practice does not preclude the Customs from requesting information concerning the number of travellers arriving or departing on a particular means of transport.

5.5. Advance Passenger Information

Recommended Practice 8

Advance passenger information (API) differs from the “separate lists” referred to in Recommended Practice 7, in that API should be readily available from the trade (airlines, shipping companies, etc.) and its provision should be mutually agreed between and be beneficial to both Customs and the trade. However, information availability would depend on data privacy and data protection legislation.

The benefit to Customs is the receipt, in advance of the arrival of travellers, of information that will aid risk management with the objective of more precise targeting of Customs control. A benefit to travellers is that, on the basis of Customs analysis and evaluation of API, their risk status can be determined prior to arrival in the country concerned. Greater precision in Customs targeting should result in the vast majority of travellers being assessed as presenting negligible or no risk and thus subject to minimal or no Customs control on their arrival.

Preferably, API should be available on-line via computer links between Customs and the appropriate companies within the trade. The use of internationally standardized formats (e.g. machine readable passports, EDI messages) should minimize costs and provide a high degree of certainty to all parties.

As API also has benefits for other agencies operating at the border it is recommended that a whole of government approach be adopted in negotiations with the trade about the provision of API. Immigration authorities, in particular, benefit from the availability of API through the ability to confirm a traveller’s immigration status prior to arrival or, as is the case of some existing API arrangements, before the traveller has embarked on their journey from abroad. Consequently, immigration authorities may be in a position to provide further benefits to travellers and the trade such as reduced formalities and faster clearance of travellers on arrival.

Contracting Parties should refer to the Joint CCC/IATA Guidelines for Customs administrations and Air carriers on Advance passenger information (June 1993) for guidance and in particular the legal aspects of API.

5.6. Oral Declaration

Recommended Practice 9

Travellers should be permitted to make an oral declaration in respect of the goods carried by them. However, the Customs may require a written or electronic declaration for goods carried by travellers which constitute an importation or exportation of a commercial nature or which exceed, in value or quantity, the limits laid down in national legislation.

The written or electronic declaration for goods envisaged in this Recommended Practice may be the declaration usually required for clearance for home use or a simplified declaration. Customs may require as an alternative the production of a commercial invoice or other commercial document.

This Recommended Practice would not prevent Customs from requiring a written declaration when they suspect that a Customs offence has been committed.

5.7. Personal Search

Standard 10

Personal searches of travellers for the purposes of Customs control shall be carried out only in exceptional cases and when there are reasonable grounds to suspect smuggling or other offences.

The essential element of this Standard is to make it clear that personal searches of travellers are carried out only when Customs has no other reasonable method for dealing with a suspected serious offence.

5.8. Storing or keeping goods carried by travellers

Standard 11

- at the traveller’s request;

- when the goods concerned cannot be cleared immediately; or

- where the other provisions of this Chapter do not apply to such goods.

Circumstances in which a traveller has the right to request that goods be stored or kept pending clearance under the appropriate Customs procedure include :

- where the goods attract Customs duty and the traveller is carrying insufficient funds to pay immediately;

- where the traveller must leave the Customs area to obtain evidence as to the correct identity and/or Customs value of the goods;

- where the importation of goods is restricted and the traveller has the option of applying for the necessary permit;

where the importation of goods is restricted or prohibited and the traveller elects to re-export the goods (if that option is available);
where a written Goods declaration is required as described in Recommended Practice 9 and the traveller needs time to arrange for lodging the Goods declaration.

There is a fine distinction between storing or keeping goods “at the travellers request” and “when the goods concerned cannot be cleared immediately”. In some cases the circumstances for each can be identical. However, in the above examples different choices are available to the traveller including an option to abandon the goods. So the procedure to be adopted is ultimately at the discretion of the traveller as long as there is a Customs reason for the storage and it is not solely for the traveller’s convenience.

Any conditions prescribed in relation to storing or keeping goods are a matter for national legislation. Some administrations will allow the goods to be placed in a private storage facility or Customs warehouse under a simplified procedure. Other administrations have storage facilities that can be used by travellers for a very limited period of time.

5.9. Unaccompanied Baggage

Standard 12

The concept of unaccompanied baggage used in this Chapter relates directly to the term as used in the ICAO Facilitation Annex 9 where it is defined as being baggage carried as freight whether on the same aircraft with the passengers or crew to whom it belongs or on a different aircraft. Nevertheless, this provision asserts that travellers' unaccompanied baggage should be considered distinct from normal cargo.

The admission free of import duties and taxes applicable to goods other than personal effects contained in accompanied baggage does not necessarily apply to those goods contained in unaccompanied baggage and a Goods declaration may be required.

Where admission free of import duties and taxes is claimed for goods in a traveller's unaccompanied baggage, Customs may require proof that the person concerned is in fact arriving from abroad.

Simplified procedures for the clearance of unaccompanied baggage include a system used by some Customs territories whereby a written “unaccompanied baggage declaration" is completed by the owner of the baggage. Based on that declaration and any other relevant information available, Customs use risk management techniques in deciding whether or not to examine the unaccompanied baggage. Ultimately, delivery is authorized by a written or electronic (where available) delivery authority to the party responsible for keeping the baggage under Customs control.

An example of a simplified Customs procedure for registered baggage carried by rail is described in the Recommendation of the Customs Co-operation Council concerning the Customs treatment of registered baggage carried by rail (5 June 1962, amended 21 June 1988). This Recommendation appears in Appendix II.

5.10. Clearance by authorised person

Standard 13

Any authorized person shall be allowed to present unaccompanied baggage for clearance on behalf of the traveller.

As a general rule, when dealing with baggage that was sent unaccompanied, an authorized person must be able to satisfy Customs that he is entitled to act on behalf of the owner of the baggage. In some administrations he may be required to produce a written authority to act as the owner’s agent in the clearance of such baggage. Any person may be so authorized, for example, a Customs broker. However, in the case of baggage that has become unaccompanied baggage only by virtue of being mishandled by the relevant transport provider (e.g. airline, shipping company or railway) Customs may regard an employee or agent of that transport provider also as an “authorized person” without the need for written authority from the owner of the unaccompanied baggage.

The responsibilities assigned to authorised persons within the context of this Standard are a matter for national legislation. In the vast majority of circumstances it is unlikely that an authorised person could be held accountable by Customs for the contents of unaccompanied baggage. Therefore, the responsibilities of such authorized persons will generally be limited to providing Customs with all available information in relation to the unaccompanied baggage, opening any baggage which Customs select for inspection and repacking and closing the baggage.

5.11. Flat-rate assessment

Recommended Practice 14

An importation is usually considered to be of a non-commercial nature when it is occasional and consists only of goods for personal use or consumption by the traveller or his family or to be disposed of by the traveller as gifts in the country, and does not suggest by the nature or quantity that the goods are imported for commercial purposes.

A “best practice” flat-rate system should :

- lay down rates that cover all types of duties and taxes (In some countries this is specified in Chapters 98 and 99 of the Harmonized Commodity Description and Coding System.);

- not deprive the goods of the benefit of any duty-free admission facilities to which they are otherwise entitled;

- provide that goods may, if the traveller so requests, be charged at their own appropriate rates of import duties and taxes, in which case, however, Customs may require that all dutiable and taxable goods be so charged; and

- not rule out the possibility for Customs to determine special rates for high duty goods or even to exclude some goods from the benefit of the flat-rate system.

One of the possible choices for a system of flat-rate assessment is contained in a Council Recommendation concerning the application of a flat rate assessment system to goods sent in small consignments to private individuals or carried in travellers’ baggage (flat-rate assessment) (11 June 1968). This Recommendation is attached at Appendix III.

5.12. Credit cards/bank cards

Recommended Practice 15

Wherever possible, the use of credit cards or bank cards should be acceptable as a means of payment for services rendered by the Customs and for duties and taxes.

The acceptance by Customs of credit or bank cards for payment provides positive facilitation and minimizes the circumstances whereby goods are required to be stored or kept pending clearance (see Standard 11).

Customs will normally limit the amount of transactions using such cards to the actual amount due to Customs.

6. Entry

6.1. Tobacco goods, wine, spirits and perfume

Recommended Practice 16

The quantities of tobacco goods, wine, spirits and perfume allowed to be imported free of import duties and taxes by travellers should be not less than :

(a) 200 cigarettes or 50 cigars or 250 grams of tobacco, or an assortment of these products of a total weight not exceeding 250 grams;

(b) 2 litres of wine or 1 litre of spirits;

(c) ¼ litre of toilet water and 50 grams of perfume.

The quantities specified in this Recommended Practice are provided in the interests of promoting international harmonization. However, national legislation will specify the quantities, if any, to be allowed to be imported free of import duties and taxes into individual countries, taking into account the economic, social and religious circumstances of each country.

The facilities provided for may be made subject to the condition that the products are for personal consumption by the traveller or accompanying family or are to be disposed of as gifts in the country, and that they be carried in accompanied baggage, on their person or in hand baggage.

Persons who cross the border frequently include, for example, persons living near the frontier, persons who live in one country but work in another, professional drivers and crew members in international transport.

6.2. Free importation to aggregate value

Recommended Practice 17

In addition to the consumable products allowed to be imported free of import duties and taxes within specified quantitative limits, travellers should be permitted to import, free of import duties and taxes, goods of a strictly non-commercial nature up to an aggregate value of 75 Special Drawing Rights (SDRs). A lower amount may be fixed for persons less than a certain age or for persons who cross the frontier frequently or who have been out of the country for less than 24 hours.

The facilities provided for in this Recommended Practice may be made subject to the condition that the goods are for personal use or consumption by the traveller or accompanying family or are to be disposed of as gifts in the country, and that they be carried in accompanied baggage, on their person or in hand baggage.

Non-residents who are only passing through the country may be allowed greater facilities. In some countries, for example, travellers who are in transit with goods purchased in another country may be permitted to import goods of an aggregate value higher than normally permitted to travellers.

Persons who cross the frontier frequently include persons living near the frontier, persons who live in one country but work in another, professional drivers and crew members in international transport.

6.3. Returning residents

Standard 18

Returning residents shall be permitted to re-import free of import duties and taxes personal effects and their means of transport for private use which they took with them at the time of their departure from the country and which were in free circulation in that country.

The term " in free circulation " refers to goods which may be disposed of without Customs restriction. This includes goods on which duty has been paid as well as goods produced within the country itself.

The provision does not relate to any goods which have undergone major alteration or repair while the traveller has been on a journey outside the resident country.

In order to ensure that goods referred to in this Standard are entitled to such duty and tax relief, it may be desirable to encourage travellers to carry proof of purchase of the goods or to allow travellers to have their goods identified or documented by Customs prior to their exportation.

7. Non-residents

Many of the following provisions are related to similar facilities contained in the Customs Convention on temporary admission (Istanbul 26 June 1990) and the Customs Convention on the temporary importation of private road vehicles (New York, 4 June 1954)

7.1. Non-residents personal effects

Standard 19

The Customs shall not require a Customs document or security for the temporary admission of personal effects of non-residents unless :

- they exceed, in value or quantity, the limits laid down in national legislation; or

- they are deemed by the Customs to be a risk to the Revenue.

Temporary admission of non-residents personal effects should not be granted without a Customs document or security where high value goods are involved and the risk to the revenue is considered unacceptable.

Customs may refuse to grant temporary admission for any goods contained in non-residents personal effects that are subject to import prohibitions or restrictions unless the requisite permits or other appropriate documents are produced.

Standard 20

In addition to clothing, toilet articles and other articles obviously of a personal nature, the following shall in particular be considered to be non-residents’ personal effects :

- personal jewellery;

- still and motion picture cameras together with a reasonable supply of films, tapes and accessories therefor;

- portable slide or film projectors and accessories therefor together with a reasonable quantity of slides or films;

- binoculars;

- portable musical instruments;

- portable sound reproduction devices including tape recorders, compact disc players and dictating machines with tapes, records and discs;

- portable radio receivers;

- cellular or mobile telephones;

- portable television sets;

- portable typewriters;

- portable personal computers and accessories;

- portable calculators;

- baby carriages and strollers;

- wheelchairs for invalids;

- sporting equipment.

The list specified in this Standard should be considered a minimum listing of possible non-residents’ personal effects.

The general rule to be applied in determining eligibility is whether the items are consistent with the traveller’s personal circumstances and reason for travel, and they are not imported for commercial purposes or in such quantity so as to constitute a commercial quantity. The definition of the term " personal effects " (i.e. "articles which a traveller may reasonably require") should give sufficient guidance to Contracting Parties in order to determine what quantities of certain goods imported or exported by travellers constitute a personal effect.

Customs may refuse to admit any goods contained in non-residents’ personal effects that are subject to import prohibitions or restrictions unless the requisite permits or other appropriate documents are produced (e.g. permits for sporting firearms).

It is not possible to be definitive in relation to the sporting equipment covered by this Standard which could conceivably include equipment for a wide variety of sports. The more commonly encountered goods might include golf clubs, angling or fishing rods and tackle, archery equipment and sporting firearms, racquets and accessories for tennis, badminton and like sports, and skiing equipment including water skis.

Other items associated with particular sporting pursuits may be on trailers towed by the principal means of transport and may include, for example, boats such as speedboats, yachts, dinghies, sailboards and jet skis, motor cycles and other recreational motor vehicles, hang gliders, hot air balloons, gliders and ultra-lite aircraft. These items are generally of high value and Customs may elect to require a Customs document or security for their temporary admission if they are deemed to present an unacceptable risk to the revenue. Such items which are deemed by Customs to constitute a means of transport in their own right (e.g. recreational motor vehicles capable of being registered for road use) may be excluded from the provisions of this Chapter.

Portable dialysis and similar medical apparatus carried by travellers for their own use should be considered to be personal effects and should be granted temporary admission without any documents or security being required. The disposable items imported in connection with the use of these apparatus should be granted duty-free admission.

7.2. Temporary admission

Standard 21

Standard 28

Where it is necessary to lodge a temporary admission declaration for temporary admission of non-residents' means of transport for private use, the time limit for temporary admission shall be fixed by reference to the length of the non-resident’s stay in the country, provided that any limit laid down in national legislation is not exceeded.

Individual time limits should be fixed for temporary admission only when there is a temporary admission document. In determining the time limit, account should be taken of the non-resident’s needs.

Where a general time limit is specified for all declarations for the temporary admission of non-residents' personal effects and/or the means of transport, instead of an individual time limit for each particular case, this may be regarded as a greater facility.

Customs should allow personal effects to be re-exported prior to the departure of the traveller. Means of transport for private use may be allowed to stay in the territory even after the traveller has left the territory subject to them being re-exported within the time allowed for temporary admission.

Standard 22

At the request of the traveller, and for reasons deemed valid by the Customs, the latter shall extend the period of temporary admission initially fixed for a non-resident’s personal effects, provided that any limit laid down in national legislation is not exceeded.

Standard 29

At the request of the person concerned, and for reasons deemed valid by the Customs, the latter shall extend the period of temporary admission initially fixed for a non-resident's means of transport for private use, provided that any time limit laid down in national legislation is not exceeded.

There are frequently instances where a non-resident wishes or needs to extend his original period of stay. These may be due to business requirements, health related issues, force majeure which prevents the person from keeping to the original schedule, or travel and tourism purposes. When the non-resident has been granted temporary admission facilities for personal effects and/or the means of transport and Customs are satisfied with the reasons for the extension, Customs must extend the initial period for the admission. This extended period would, however, remain within any limits already prescribed in national legislation.

When granting an extension, in some administrations Customs satisfy themselves that any other necessary approval for extending the non-resident’s stay has been obtained.

Standard 23

Non-residents shall be granted temporary admission in respect of their means of transport for private use.

Generally temporary admission for the means of transport for private use is given under the following conditions :

when the means of transport is registered in a territory other than that of temporary admission;
it is registered in a name of the person established (legal persons) or resident (natural person) in a territory other than that of temporary admission; and
it is imported and used by the persons resident in a territory other than that of temporary admission.

These conditions help to guarantee re-exportation and may enable simplification of Customs formalities. They also serve to distinguish foreign means of transport (which receive temporary admission) from national ones (which are in free circulation). These conditions also prevent national residents from avoiding the payment of import duties and taxes by registering abroad the means of transport they purchase. Temporary admission may also be granted for of animals and non-self-propelled vehicles used as a means of transport by non-residents.

Temporary admission may also be granted for animals and non-self propelled vehicles used as a means of transport by non-residents.

Standard 24

Fuel carried in the normal tanks of the means of transport for private use shall be admitted free of import duties and taxes.

Since the fuel or a part of it will be used up while in the Customs territory of temporary admission, Standard 24 provides for outright relief from import duties and taxes. However this facility should be granted only to fuel contained in the normal tanks of the means of transport. For fuel contained in other tanks, for example in reserve tanks, temporary admission subject to re-exportation may be granted or it may be made subject to the payment of import duties and taxes.

A "normal tank" is a fuel tank that is designed by the manufacturer for all means of transport of the same type as the means of transport in question and whose permanent fitting enables a fuel to be used directly to propel the means of transport. Tanks designed for the direct use of other types of fuel and which are fitted to means of transport shall also be considered to be normal tanks.

Standard 25

Standard 25 requires Customs to grant temporary admission to the means of transport for private use of non-residents irrespective of the ownership of the means of transport. Therefore the means of transport could be owned, rented or borrowed by the non-resident and brought into the country of temporary admission for use while there. There is also no restriction on when the means of transport arrives in the territory, and it may arrive before or after the non-resident enters the territory of temporary admission.

It should be noted that the use by a company employee of a company car for a business trip would be considered private use rather than commercial use.

Recommended Practice 26

The Customs should not require a Customs document or security for the temporary admission of non-residents' means of transport for private use.

Since the admission of non-residents’ means of transport for private use is intended to be of a fixed duration, with eventual export from the Customs territory, these means of transport normally would pose no risk to the revenue. In order to facilitate the international movement of these conveyances, Recommended Practice 26 encourages Customs to admit non-residents’ private means of transport temporarily with a minimum of controls and without requiring any Customs document or security. This same principle of facilitation also appears in other international instruments on temporary admission, such as the Istanbul Convention, Annex C and the Customs Convention on the Temporary importation of private road vehicles, and in bilateral and multilateral agreements.

Although most such conveyances would arrive across a land frontier, this Recommended Practice would apply as well to conveyances arriving by vessel, rail or air.

7.3. Customs document/security

Recommended Practice 27

Examples of standard international documents or securities which Customs should accept include those set out in the Customs Convention on temporary admission (Istanbul 26 June 1990), the Customs Convention on the ATA carnet for the temporary admission of goods (Brussels 6 December 1961), the New York Customs Convention on the temporary importation of private road vehicles (4 June 1954) and the Customs Convention on the temporary importation for private use of aircraft and pleasure boats.

7.4. Temporary admission - replacement parts

Standard 30

Any replacement parts required for the repair of a means of transport for private use temporarily in the country shall be granted temporary admission.

This temporary admission facility for replacement parts for a means of transport already admitted into the Customs territory applies only to parts directly needed as replacements, and not to tools needed for the repair of the means of transport. It also does not allow the establishment of a stock of replacement parts. The replaced parts must either be re-exported or disposed of in any other manner Customs allows. (See Standard 3.44 of the General Annex for goods rendered commercially valueless or destroyed.)

Standard 31

The Customs shall allow non-resident's temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported.

The possibility to re-export the temporarily admitted goods of a non-resident through a Customs office other than that of importation is a measure designed to facilitate the traveller as well as the tourism industry. This facility permits the traveller to choose the route most direct and economical for his onward journey.

8. Re-exportation

Standard 32

Standard 32 does not cover loss or theft. Since this Chapter does not prescribe rules concerning the discharge of temporary importation obligations for goods seriously damaged or destroyed through accident or force majeure, Contracting Parties should consult Standard 3.44 of the General Annex and its Guidelines. Contracting Parties are also free to rely on the provisions for the discharge of temporary admission that are contained in their own national legislation.

9. Departure

9.1. Departing travellers

Standard 33

The Customs formalities applicable to departing travellers shall be as simple as possible.

It is not feasible to eliminate all Customs formalities for departing travellers. For example, Customs formalities may be necessary to obtain exemption from or reimbursement of internal duties and taxes. Formalities might also be required for discharging a temporary admission document or for obtaining return of security, or in connection with the application of export prohibitions or restrictions or other requirements.

Notwithstanding such circumstances, there are many situations where it should be possible to reduce formalities to a requirement for travellers to depart from a designated Customs point.

9.2. Export of commercial goods

Standard 34

Travellers shall be permitted to export goods for commercial purposes, subject to compliance with the necessary formalities and payment of any export duties and taxes chargeable.

Commercial goods which a traveller might conveniently take when leaving a country include, for example, commercial samples, or small volume high value goods.

No quantity or value limits are imposed by this Standard but the traveller would, of course, be required to complete any other formalities specified in national legislation.

9.3. Identification for re-importation

Standard 35

At the request of residents leaving the country, the Customs shall take identification measures for certain articles when it will facilitate the re-importation free of duties and taxes.

The usual measures taken in this respect consist of noting the particulars needed to ensure identification on re-importation by recording a description of the articles or the marks, numbers (in particular, model and serial numbers) or other indications permanently affixed to the articles or by affixing Customs identification marks or seals.

The recorded description may be stamped or otherwise endorsed by Customs and given to the traveller for eventual presentation at the actual point of re-importation. Some Customs administrations carry stocks of forms specifically for this purpose.

9.4. Temporary exportation procedure

Standard 36

Only in exceptional cases shall the Customs require a temporary exportation document for the personal effects and means of transport for private use of residents leaving the country.

This provision refers only to Customs documents and does not affect any requirement for the application of a temporary exportation procedure under cover of other types of documents.

9.5. Repayment of cash deposit

Recommended Practice 37

If security has been given in the form of a cash deposit, provision should be made for it to be repaid at the office of re-exportation, even if the goods were not imported through that office.

Chapter 5 of the General Annex provides that the discharge of any security that has been furnished must be granted as soon as possible after termination of the procedure. Repayment of security given in the form of a cash deposit should as far as possible be made by any exit office even if the goods were not imported through that office.

10. Transit passengers

10.1. General surveillance

Standard 38

The transit area referred to in this Standard is an area, generally at airports, where passengers arriving on international flights and departing again for a foreign territory can remain until departure without Customs formalities. Although the transit area is under Customs control, Customs generally do not enforce any control measures on passengers who remain in the transit area. However, this does not prevent Customs from maintaining a general surveillance on such passengers.

11. Information concerning the Customs facilities applicable to travellers

11.1. Languages and availability

Recommended Practice 39

The languages, other than the official languages, deemed to be useful might be determined by reference to the particular demographics of travellers to the country concerned.

The availability recommended for such information would be all Customs offices, airline shipping and rail offices, travel agents and overseas missions of the country concerned so that prospective travellers may familiarize themselves with the information before beginning their journeys. Such information could also usefully be made available on ships, aircraft and international trains. In implementing this Recommended Practice, special attention is drawn to Transitional Standard 9.3 of the General Annex and its Guideline.

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Appendix I

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL FOR A SIMPLIFIED CUSTOMS CONTROL, BASED ON THE DUAL-CHANNEL SYSTEM, OF PASSENGERS ARRIVING BY AIR

(8th JUNE 1971)

THE CUSTOMS CO-OPERATION COUNCIL,

HAVING REGARD to Recommendation No. B-3 of the Seventh Session of the Facilitation Division of the International Civil Aviation Organization, as adopted by the Council of that Organization in December 1968, relating to the establishment at international airports of dual-channel systems for speedy clearance of inbound baggage;

HAVING REGARD to Recommendation No. 11 adopted by the Second Intermediate Session of the European Civil Aviation Conference in July 1969 on the dual-channel or red/green system;

DESIRING to contribute to the efforts to improve the flow of passenger traffic at international airports;

CONSIDERING that this aim can be achieved by introducing a simplified procedure, based on the dual-channel system, for the Customs control of passengers and their baggage;

CONSIDERING that such a system can be adopted without reducing the effectiveness of the control and that it enables Customs authorities to deal efficiently with an increasing number of Customs staff;

CONSIDERING that harmonization of the features of this system, as between the various countries, is essential to its smooth operation;

RECOMMENDS that Members of the Council and Members of the United Nations Organization or its specialized agencies, and customs or Economic Unions introduce, at their major international airports, in close co-operation with the airport operators and other agencies concerned, the dual-channel system outlined below for the clearance inwards of passengers and their baggage :

1. The system shall allow the passengers to choose between two types of channel :

(a) one (green channel) for passengers having with them no goods or only goods which can be admitted free of import duties and taxes and which are not subject to import prohibitions or restrictions; and

(b) the other (red channel) for other passengers.

2. Each channel shall be clearly and distinctively marked so that the choice between them can easily be understood by passengers. The basic distinctive marking shall be :

(a) for the channel referred to under 1.(a), green, in the shape of a regular octagon, and the words "NOTHING TO DECLARE" ("RIEN A DECLARER");

(b) for the channel referred to under 1.(b), red, in the shape of a square, and the words "GOODS TO DECLARE" ("MARCHANDISES A DECLARER").

In addition, the channels should be identified by an inscription including the word "CUSTOMS" ("DOUANE").

3. The texts referred to in paragraph 2. shall be in English and/or French and in any other language or languages deemed useful for the airport concerned.

4. Passengers must be sufficiently well informed to choose between the channels. For this purpose it is important:

(a) that passengers be informed about the functioning of the system and about the descriptions and quantities of goods they may have with them when using the green channel. This may be done by means of posters or panels at the airport or by means of leaflets available to the public at the airport or distributed through tourist agencies, airlines and other interested bodies;

(b) that the route to the channels be clearly signposted.

5. The channels shall be located beyond the baggage delivery area so that passengers have all their baggage with them when choosing their channel. Moreover, the channels shall be so arranged that the passenger flow from that area to the exits from the airport is as direct as possible.

6. The distance between the baggage delivery area and the entrances to the channels shall be sufficient to allow passengers to decide which channel to choose and to move into that channel without causing congestion.

7. In the green channel passengers shall not be subject to any Customs formalities but the Customs may make spot checks; in the red channel passengers shall accomplish the formalities required by the Customs;

POINTS OUT that the dual-channel system is not necessarily incompatible with the application of other controls, for example, exchange control, unless the relevant regulations require full control of the passengers and their baggage;

REQUESTS Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions who accept this Recommendation to notify to the Secretary General :

(a) their acceptance and the date from which they will apply the Recommendation;

(b) the names of the airports where the dual-channel system is applied.

The Secretary General will transmit this information to the Customs Administrations of Members, to the Secretary General of the International Civil Aviation Organization (ICAO) and to the Director General of the International Air Transport Association (IATA). He will also transmit it to the Customs administrations of the Members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions which have accepted this Recommendation.

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GUIDELINES ON DUAL-CHANNEL SYSTEMS IN AIRPORTS

PREAMBLE

These Guidelines have been prepared by the Permanent Technical Committee with a view to assisting the Customs administrations of Member countries in the implementation of the dual-channel system. In this respect, it is anticipated that these Guidelines will prove valuable not only to any Member currently contemplating the implementation of the system but also to those Members who already oeprate the system but wish to identify and eliminate, so far as possible, any problems which they are experiencing with such operation.

The Guidelines should be regarded as practical advice given with a view to facilitating the implementation of those principles embodied in the Recommendation itself and ensuring the uniform application of the system.

They do not constitute a rigid framework to which Members must conform. The configuration of the dual-channel system can vary with the structure of the airport and other circumstances.

Legal responsibility of the passenger

Proper implementation of the dual-channel system can only be achieved if national legislation provides that the act of entering the red or green channel by a passenger arriving from abroad is deemed to constitute a Customs declaration. Therefore, if a passenger enters a green channel he is making a statutory declaration that he has no goods in excess of the duty-free allowance and no prohibited or restricted goods. If he is found to be in possession of such goods, he is liable to be prosecuted, and the goods are subject to forfeiture.

Main features in the design of an effective dual-channel system are as follows :

1. Baggage reclaim area

The baggage reclaim area should, wherever possible, be separate from the briefing area, so that passengers who are in the process of reading the notices and choosing their channel are not interfered with or distracted by people who are collecting their baggage. This applies whether baggage is delivered by trolley, carousel, conveyor belt or is carried in by porters.

2. Briefing area

Lying between the baggage reclaim area and the entrances to the red and green channels, the briefing area should be sufficiently large to permit passengers to move about freely and to enable them to identify the channel through which to move without causing congestion. This area should also be equipped for the prominent display of large briefing notices. It should not be possible to leave the briefing area without going through either the red or green channel.

In order to provide the passenger with clear and adequate opportunity to select the appropriate channel, sufficient notification can be provided by notices sited along the arrival route up to and including the entrance to the red and green channels and by leaflets. The content of the leaflets and notices should include guidance to passengers on the functioning of the system, including the description and quantities of duty-free goods passengers are allowed when selecting the green channel.

The wording of all signs, leaflets, notices, etc. should be in the language or languages of most use at the airport concerned. The use of pictograms is also recommended.

3. Customs control of the crew and their baggage

Where, for clearance purposes, the crew and their baggage are regarded as separate from the passengers, they should be able to pass, with their baggage, through an area specially identified for their use.

4. Entrances to the red and green channels

The briefing area should be separated from the red and green channels by partitioning. This is necessary for several reasons. If there were no partitioning the whole of the red and green areas would be exposed and passengers would tend to make their way to the nearest examination counter without realizing the significance of crossing the Customs line. It is essential that the entrance should be prominent and as important looking as possible, and this can be achieved only if there is a solid partition with properly indicated entrances. The partitions should be fixed to withstand contact by persons, baggage, luggage trolleys, etc. The fitting of partitioning at the entrance to the channels also facilitates the mounting and display of large briefing notices.

Solid partitioning does, however carry disadvantages. The main one is that Customs officers in the channels cannot easily see what is happening in the briefing area. This is often useful since it enables the selection of passengers who appear to be waiting for a crowd of people to pass through the green channel. The ideal arrangement, therefore, is a one-way glass as the partition, but this does add to the expense of installing a self-selection system. Another possibility is to station Customs officers in civilian clothes in the baggage reclaim area to assist in identifying passengers for examination.

The red and green entrances should be of the same width so that, as far as accessibility is concerned, there is no difference between them. The actual width of the entrances depends on the nature and volume of the traffic, but 1.5 m is usually sufficient with a space of 2.4 m between the entrances. Between the entrances should be mounted directional colour signs with arrows pointing to the appropriate entrance.

5. The red channel

The red channel should be equipped with enough duty desks and examination counters to deal with that proportion of the arriving passengers who have duty to pay, and manned accordingly.

Desk units are suitable for this purpose; the number required is determined in the light of experience of the incidence of duty-paying by the particular traffic. The incidence of duty-paying can fluctuate enormously; and it is necessary to ensure that the arrangements are sufficiently flexible to enable more staff and more duty positions to be operational in the red channels if needed be. It is important to avoid congestion in the red channel, otherwise there is a disincentive to passengers to choose it. Moreover facilities for privacy during baggage examination should be provided.

6. The green channel

The green channel should, whenever possible, lead directly from the entrance to the exit. Two meters forty is usually an adequate width for ordinary foot passengers carrying their own baggage. Examination counters should, ideally, be arranged on both sides of the channel along its length or in herring-bone fashion. Obviously, where space or layout of the baggage hall does not permit counters on both sides of the channel, only one side should be used. Moreover, facilities for privacy during baggage examination should be provided.

The channel should be long enough to give officers a reasonable opportunity to select passengers for examination of their baggage, if necessary, as they pass through.

Search/interview rooms for the carrying out of thorough examinations of passengers' baggage and, where necessary, of passengers themselves should be provided behind the examination counters, preferably with access from both red and green channels.

The green channel and the red channel can be separated from each other by a simple barrier : partitioning is not necessary here. The barrier should be so arranged that Customs staff can move easily between the channels.

7. Access to the exits

Once passengers have passed through the controls there is no valid reason why red and green channel passengers should not be mixed and use the same exit from the baggage hall.

8. Model designs

Two examples of designs which incorporate the essential and desirable features of the dual-channel system are given at the Annex hereafter.

EXAMPLES

System 1

Diagram 1 Overall plan

Diagram 2 Detailed plan of the green/red channels

Diagram 3 Diagram of one of the two entries to the channel

System 2

Diagram 4 Overall plan

Diagram 5 Detailed plan of the green/red channels

The advantage of both these systems is that their narrow configuration means that they can be installed where space is limited.

OVERALL PLAN SYSTEM I

DETAILED PLAN OF THE GREEN / RED CHANNELS SYSTEM I

DIAGRAM OF ONE OF THE TWO ENTRIES TO THE CHANNEL SYSTEM I

OVERALL PLAN SYSTEM II

DETAILED PLAN OF THE GREEN / RED CHANNELS SYSTEM II

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL FOR A SIMPLIFIED CUSTOMS CONTROL, BASED ON THE DUAL-CHANNEL SYSTEM, OF PASSENGERS ARRIVING BY SEA

(5th JUNE 1972)

THE CUSTOMS CO-OPERATION COUNCIL,

HAVING REGARD to its Recommendation of the 8th June 1971 for a simplified Customs control, based on the dual-channel system, of passengers arriving by air;

HAVING REGARD to the wish expressed by the Inter-Governmental Maritime Consultative Organization (IMCO), to see the dual-channel system also adopted for the control of passengers arriving by sea;

DESIRING to contribute to the efforts to improve the flow of passenger traffic at international seaports;

CONSIDERING that this aim can be achieved by introducing a simplified procedure, based on the dual-channel system, for the Customs control of passengers, their baggage and their vehicles;

CONSIDERING that such a system can be adopted - in particular for the control of passengers making short sea voyages (such as those using regular ferry-services) - without reducing the effectiveness of the control and that it enables Customs authorities to deal efficiently with an increasing number of passengers without a corresponding increase in the number of staff;

CONSIDERING that the harmonization of the features of this system, as between the various countries, is essential to its smooth operation;

RECOMMENDS that Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions introduce, at suitable international seaports, in close co-operation with the port authorities, shipping companies and other agencies concerned, the dual-channel system outlined below for the clearance inwards of passengers, their baggage and their vehicles :

1. The system shall allow the passengers, whether or not travelling in their vehicle, to choose between two types of channel :

(b) the other (red channel) for other passengers.

2. Each channel shall be clearly and distinctively marked so that the choice between them can easily be understood by passengers. The basic distinctive marking

shall be :

(a) for the channel referred to under 1.(a), green, in the shape of a regular octagon, and the words "NOTHING TO DECLARE" ("RIEN A DECLARER");

(b) for the channel referred to under 1.(b), red, in the shape of a square, and the words "GOODS TO DECLARE" ("MARCHANDISES A DECLARER").

In addition, the channels should be identified by an inscription including the word "CUSTOMS" ("DOUANE").

3. The texts referred to in paragraph 2. shall be in English and/or French and in any other language or languages deemed necessary.

4. In the case of passengers travelling in their vehicle, and where the marshalling of vehicles into the proper lanes and the clearance procedure will be facilitated thereby, the driver of each motor vehicle may be provided with red and green stickers bearing the markings referred to in paragraph 2.(a) and (b), and instructed to attach to the windscreen of the vehicle :

(a) the green sticker where the motor vehicle itself and any goods it contains, including goods belonging to, or carried by, passengers in the vehicle, can be admitted without Customs formalities and are not subject to import prohibitions or restrictions; and

(b) the red sticker in other cases.

5. Passengers must be sufficiently well informed to choose between the channels and where appropriate between the red and green stickers. For this purpose it is important :

(a) that passengers be informed about the functioning of the system and about the description and quantities of goods they may have with them when using the green channel. This may be done by means of posters or panels at the seaport or by means of leaflets available to the public at the port of embarkation, on board ship or distributed through tourist agencies, shipping companies and other interested bodies;

(b) that, where the red and green stickers referred to in paragraph 4. are to be used, the driver of each vehicle should be provided with the stickers before arrival at the port of destination;

6. The channels shall be located beyond any baggage delivery area so that passengers have all their baggage with them when choosing the appropriate channel. Moreover, the channels shall be situated in such a position that the passenger-flow to the exits from the seaport is as direct as possible.

7. The distance between the ships, or the baggage delivery area, and the entrances to the channels shall be sufficient to allow passengers to decide which channel to choose and to move into the channel without causing congestion.

8. In the green channel passengers shall not be subject to any Customs formalities but the Customs may make spot checks; in the red channel passengers shall accomplish all the formalities required by the Customs.

POINTS OUT that a system involving the use of only one lane, but under which vehicles displaying the red sticker, or those selected for spot-checks, are directed to a designated parking area, may be regarded as meeting the requirements of the dual-channel system.

POINTS OUT that the dual-channel system is not necessarily incompatible with the application of other controls, e.g., exchange control and control of international motor vehicle insurance certificates, unless the relevant regulations require full control of all passengers and their baggage or vehicles;

(a) their acceptance and the date from which they will apply the Recommendation;

(b) the seaports where the dual-channel system is applied and the types of maritime traffic to which it is applied in these ports.

The Secretary-General will transmit this information to the Customs Administrations of Members and to the Secretary General of the Inter-Governmental Maritime Consultative Organization (IMCO). He will also transmit it to the Customs administrations of the Members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions which have accepted this Recommendation.

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Appendix II

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE CUSTOMS TREATMENT OF REGISTERED BAGGAGE CARRIED BY RAIL

(5th JUNE 1962 amended on 21st JUNE 1988)

THE CUSTOMS CO-OPERATION COUNCIL,

CONSIDERING that the efforts made by the railway authorities to ensure efficiency in the international transport of registered baggage deserve to be supported,

DESIRING, to that end, to facilitate the expeditious handling of such baggage by simplifying Customs formalities,

CONSIDERING that, in so far as possible, passengers should not be required to report in person to the Customs authorities of the countries of departure and destination for the clearance of their registered baggage, and should be able to claim their baggage immediately on arrival at their destination,

RECOMMENDS that Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, apply the following provisions with regard to registered baggage :

1. When having their baggage registered by the railway authorities, passengers shall have the possibility of making a declaration on the appended form in order to expedite Customs formalities;

2. The form shall be printed either on the back of the consignment note made out by the railway authorities or on a separate sheet to be glued to the consignment note; it shall be printed in the language (or one of the official languages) of the country of departure, but the passenger shall be given the opportunity to obtain a translation in another language;

3. The declaration shall be presented by the railway authorities to the Customs authorities of the countries of departure and destination where so required;

4. The written declaration shall be regarded as being in substitution for, and shall have the same effect as, the declaration normally required from passengers;

5. The Customs authorities shall, so far as they deem it possible, waive the examination of the contents of baggage covered by a written declaration;

6. Where the Customs authorities waive examination of the contents of baggage, it shall be released immediately to the railway authorities for forwarding to destination;

7. The Customs authorities remain free to adopt any control measures they deem necessary in order to prevent abuses;

NOTWITHSTANDING the provisions of paragraph 1 above, the declaration form may be adapted where appropriate by agreement between Customs Administrations,

REQUESTS Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions which accept this Recommendation to notify the Secretary General of the Council of the date from which they will apply the Recommendation and of the conditions of its application. The Secretary General will transmit this information to the Customs administrations of all Members of the Council. He will also transmit it to the Customs administrations of the Members of the United Nations Organization or its specialized agencies and to Customs or Economic Unions which have accepted this Recommendation. He will also transmit it to the International Unions of Railways.

--------------------------

Annex

Customs declaration for registered baggage

1. I HEREBY DECLARE

(a) that the baggage referred to below contains only articles of personal use normally used when travelling, such as clothing, household line, toiletries, books and sports equipment, and that these articles are not being imported for commercial purposes;

(b) that the baggage does not contain :

- foodstuffs, tobacco, alcoholic beverages, anethol, firearms, sidearms, ammunition, explosives, drugs, live animals, plants, radio tramsitters or transmitter-receivers, currency, species and products obtained from species protected under the Washington Convention of 3 March 1973 on international trade in species of fauna and flora in danger of extinction; articles forbidden by the laws of the country of destination on the protection of public decency and morality;

- goods intended for distribution free of charge or otherwise or for professional or commercial purposes;

- goods bought or received by myself outside the Customs territory of my country and not yet declared to the Customs authorities of my country of normal residence (this restriction applies only when returning to the country of normal residence).

2. I HEREBY AUTHORIZE the railway authorities to carry out all Customs formalities.

3. I KNOW that making a false statement renders me liable to prosecution and seizure of my goods.

CUSTOMS DECLARATION FOR REGISTERED BAGGAGE

Notice to passengers

1. The declaration for registered baggage made by passengers on the green "Customs declaration" form saves them, in so far as possible, from having to report in person to the Customs authorities in the countries of departure and destination to clear their registered baggage, and thus enables them to collect their baggage as soon as they arrive at their destination.

2. The declaration form must be duly completed and signed by passengers and submitted to the railway authorities at the time when baggage is registered. It has the same legal force and effects as the declaration usually required of passengers.

3. Even if this declaration form is used, the Customs authorities retain the right to adopt, as and when necessary, any control measures which they consider necessary in order to prevent abuse.

4. Before signing the "Customs declaration" form, passengers must ensure that the contents of their baggage is as stated in the declaration. In this regard the following should be taken into account:

(a) Anethol : this product is prohibited in registered luggage sent to a station in France.

(b) Articles prohibited under laws on the protection of public decency and morality : such articles are prohibited under the laws of certain countries, in particular the United Kingdom. It is therefore advisable if they lack detailed information concerning the legislation of the country of destination, for travellers not to sign the declaration form if their registered baggage contains articles of this kind.

(c) Species and products obtained from species protected under the Washington Convention of 3 March 1973 : the Washington Convention is designed to prevent a large number of plants and animals from becoming extinct and, to that end, contains rules on the importation and exportation of endangered species. The Convention applies both to firms and to private individuals, irrespective of whether they are engaged in trade, who transport such species from one country to another or simply have them in their possession.

According to the level of protection required, trade in and the movement of such species are either totally prohibited or subject to authorization.

In addition to live animals and plants, the prohibitions and restrictions prescribed in the Convention apply to:

- dead animals, such as stuffed or preserved animals;

- parts of animals, such as furs, skins, elephants' tusks, tortoiseshell, antlers, horns, whalebone, birds' feathers, etc;

- products obtained from animals, such as clothing made from fur, objects (e.g. bags, footwear, reptile skin bracelets, ornaments or accessories of ivory, horn, shell etc; even if such products are for their own use and are transported in either hand baggage or registered baggage.

Detailed information on this Convention and its implementation in specific cases can be obtained either from government departments (usually the Ministry of Agriculture or the Ministry of the Environment) or from organizations for the conservation of nature (the WWF, for instance):

As the scope of the Washington Convention is very extensive, passengers are urged to consult such government departments or organizations, in order to avoid the risk of articles covered by that Convention being detained or even confiscated by the responsible authorities.

--------------------------------

Appendix III

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL CONCERNING THE APPLICATION OF A FLAT RATE ASSESSMENT SYSTEM TO GOODS SENT IN SMALL CONSIGNMENTS TO PRIVATE INDIVIDUALS OR CARRIED IN TRAVELLERS' BAGGAGE

(FLAT RATE ASSESSMENT)

(11th JUNE 1968)

THE CUSTOMS CO-OPERATION COUNCIL,

CONSIDERING that the assessment of import duties and taxes chargeable on goods sent in small consignments to private individuals or carried in travellers' baggage is a source of problems for Members' Customs Services in view of the number and diversity of such importations, of the need to handle them expeditiously and of the wide range of goods thus imported, usually in limited quantities;

CONSIDERING that, in general, a flat rate assessment system can simplify and expedite the clearance of such goods and, subject to certain conditions, safeguard Members' revenue and economic interests;

HAVING REGARD to the experience gained by Member States who apply such a system and to Resolution (66)43 of the Committee of Ministers of the Council of Europe addressed to the Customs Co-operation Council on this subject;

RECOMMENDS that Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should :

1. apply a system of flat rate assessment to goods sent in small consignments to private individuals or carried in travellers' baggage, provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed a figure which, so far as possible, and having regard to national economic circumstances, should not be less than 60 US dollars;

2. determine the flat rate so as to cover all the types of import duties and taxes chargeable;

3. ensure that the formalities relating to flat rate assessment are as simple as possible;

POINTS OUT :

1. that where several consignments are sent at the same time by the same consignor to the same addressee, the aggregate value of the importation shall be taken to be the total value of all those consignments;

2. that the application of a flat rate system shall not deprive the goods of the benefit of duty-free admission under other provisions if all the conditions laid down by those provisions are fulfilled;

3. that a flat rate system may include provision for the addressee or traveller to claim that the goods be charged at their own appropriate rates of import duties and taxes, provided that all the dutiable and taxable goods shall then be so charged;

4. notwithstanding the terms of this Recommendation, Members remain free to withhold its facilities from certain goods;

STRESSES that this Recommendation does not prevent the application of greater facilities which certain Members grant or may grant in future by unilateral provisions or by virtue of bilateral or multilateral agreements;

--------------------

Appendix IV

Methods of Application

1. AUSTRALIA

ADVANCE PASSENGER INFORMATION

Advance Passenger Information (API)

Australian Customs air and seaport processing strategies are based on the use of Advance Passenger Information (API) to accelerate immigration and customs passenger processing and enhance border control.

The preferred method for collecting API is the Advance Passenger Processing (APP) System developed on the Electronic Travel Authority System (ETAS) platform.

Advance Passenger Processing (APP)

APP is designed to provide the level of facilitation sought by airlines, both on and off-shore, and deliver high integrity API to Customs and Immigration.

The APP System is a seamless part of the check-in process that allows collection of passenger data at the point of embarkation and transmission of the data to Australian border agencies prior to flight arrival. (The attached document provides a brief overview of the functionality, operation and aims of the APP System.).

A Memorandum of Understanding (MOU) formalises the agreement between the Australian Government and those carriers that use the APP System.

The APP System allows carriers to confirm that passengers have authority to enter Australia before boarding. This in turn reduces the carriage of inadequately documented passengers and subsequent fines incurred. Passengers are then afforded express lane clearance upon arrival.

Australian Border Agencies’ receipt of API enhances border control and enables more effective and efficient processing of passengers on arrival.

API and express lane clearance is currently provided to Qantas Airways, Ansett, Singapore Airlines and Air New Zealand passengers. The Australian Department of Immigration and the Australian Customs Service have formed a strategic management alliance to vigorously market the APP System to all airlines.

An API model has been developed for the cruise ship industry in order to automate the collection, processing and transmission of sea passenger data. As a result the level of fines incurred by shipping companies for carriage of inadequately documented passengers has been significantly reduced.

-------------------------------------

Australian Customs Service

Advance Passenger Processing (APP)

The System

APP is a system that integrates the ETA and allows airlines to send API (the ICAO defined set of passenger bio data and flight information) to border agencies using the SITA communications network (used by airlines).

The information is used to pre screen passengers, which results in a subsequent reduction in the time taken to process passengers at the primary line.

Costs

Funding of APP is based on a pricing structure where CPS, the system provider, obtains a fee for each transaction conducted.

The Process

At check-in the airline staff key in the passengers nationality, passport number and the first four characters of their family name. (The same as the current TIETAC entry).
This data is sent via the SITA network to a central system that checks that the passenger is on the database and has any necessary visas or ETAs.

Within 2-4 seconds the system advises the airline if the passenger is OK to board. If the passenger is not OK the system will advise the appropriate action.

This activity replaces the need to physically check the passenger's passport for visas, and eliminates any fine that the airline may incur for inadequately documented passengers.
In some cases the passenger's arrival card will include the words EXPRESS LANE while in other cases the entire flight will be allocated EXPRESS LANE.
On arrival in Australia the passenger will be directed to the appropriate processing lanes by dynamic signage. Passengers on flights with EXPRESS LANE are expected to be cleared in about half the time of flights that do not use APP.

System Design

The APP system has been designed as an extension of the ETA system.

Consultation with airlines has ensured a minimal impact on check-in and minimal computer system development.

The check-in procedure is basically identical to the ETAC. The key benefit to this approach is that airlines that use the ETA immediately have access to standard APP.

The APP system will handle entries of up to five passengers at a time, providing all passengers are uniquely identified. The system provides some flexibility for airlines that may wish to tailor their interface to meet their own market place needs.

There are two options within APP :

STANDARD APP uses the identical infrastructure of the ETA system.

There is no development required by airlines that have implemented the standard ETA System.

This solution presents screens generated by the APP System to enable check-in staff to process the passenger. There is a simple entry that enables the airline to semi-automate the entry of the flight details - only once at each airport.

There are only two APP entries - an APP entry and an APP cancellation.

INTEGRATED APP is available for airlines that wish to fully automate the capture of passenger BIO data and print it on the front of the arrivals card. The information is simultaneously coded onto the cards magnetic swipe section.

The check-in staff entries are the same as for the STANDARD APP. However the entries are made in the airline's departure control system, which then sends the data to the APP system. This option requires some development work by the airline.

Data Protection / Privacy

When the Australian Customs Service began to receive API in late 1995 there were no legal impediments to airlines providing API or other information. Australia’s Privacy Act applied only to government bodies and did not impose restrictions on private individuals, companies or organizations.

However, in December 1998 the Government announced that it intended to legislate to support and strengthen self-regulatory privacy protection in the private sector. The Privacy Amendment (Private Sector) Bill 2000, which will be introduced into Parliament in March 2000, will contain a provision that will authorize the disclosure to Customs of information relating to the movement of people and goods into and out of Australia.

____________________

Chapter 2

POSTAL TRAFFIC

1. Introduction : purpose and scope

The Post has always been one of the most widely used methods in personal and commercial relations of sending not only greetings and information but also gifts and other goods.

Customs are necessarily involved in international postal traffic since, just as in the case of goods imported and exported by other means, they have to ensure that the appropriate duties and taxes are collected, to enforce import and export prohibitions and restrictions, and in general to ensure compliance with the laws and regulations which they are responsible for enforcing. At the same time they seek to confine any checks to the minimum necessary by employing risk assessment techniques.

Because of the volume and largely unreported nature of postal traffic, the Customs formalities for items carried by post are somewhat different from those applied to goods carried by other means. While individual postal items are restricted in size, their numbers are enormous and, to avoid creating unacceptable delays, administrative arrangements have been made to deal with them. These administrative arrangements and related risk assessment techniques may change in some administrations as national postal services become deregulated, start to compete in new markets and increase their efforts in developing standard electronic messages for postal traffic.

In virtually all countries the postal services, whether a public or private body, provide international services governed by the Acts of the Universal Postal Union[1] .

This Chapter covers the Customs procedures relating to postal traffic (letter post and parcels) which must operate in accordance with these Acts. Some postal services also make available an Express Mail Service (EMS) as described in the UPU Convention. For the purposes of this Chapter, Customs administrations which apply these procedures to the EMS service are considered to be granting a greater facility in accordance with Article 2 of the Kyoto Convention. Other administrations treat EMS items in the same way as items carried by private operators.

2. Definitions

E1/F1

“CN22/23” means the special declaration forms for postal items as described in the Acts of the Universal Postal Union currently in force;

E2/F3

“Customs formalities in respect of postal items” means all the operations to be carried out by the interested party and the Customs in respect of postal traffic;

E3/F2

“postal items” means letter-post and parcels, as described in the Acts of the Universal Postal Union currently in force, when carried by or for postal services;

E4/F5

“postal service” means a public or private body authorized by the government to provide the international services governed by the Acts of the Universal Postal Union currently in force;

E5/F4

“the Universal Postal Union” means the inter-governmental organization founded in 1874 by the Treaty of Bern as the “General Postal Union” which, in 1878, was renamed the “Universal Postal Union (UPU)” and which since 1948 has been a specialized agency of the United Nations

3. Principle

Standard 1

The Customs formalities in respect of postal items shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Postal traffic. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 3 of the General Annex on Clearance and other Customs formalities, Chapter 6 on Customs control and Chapter 7 on Information technology should be read in conjunction with this Chapter on Postal traffic.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilitation than those provided for in this Chapter.

4. Administrative responsibility

Standard 2

National legislation shall specify the respective responsibilities and obligations of the Customs and of the postal services in connection with the Customs treatment of postal items.

Postal services and Customs have certain obligations and responsibilities which derive from the Acts of the Universal Postal Union with the parts relevant to Customs having been established in consultation with Customs. In particular these relate to the documents accompanying postal items, the information to be supplied and the methods of forwarding the items and documents. Other responsibilities and obligations of the postal services and Customs may be decided upon by mutual agreement between the two administrations and, as required by Standard 2, must be laid down in national legislation.

Many Customs administrations enter into formal memorandums of understanding with their postal services committing to agreed standards of service delivery and delineating practical responsibilities in detail. These agreements should be encouraged and their development fostered. In many instances the level of detail established under these agreements would fall outside the scope of this provision, nevertheless it is good practice to make the details publicly available for interested parties. (See also Paragraph 10.3.)

The postal services are usually responsible for the conveyance, storage and production to Customs of postal items and, at the request of Customs, may open them for the purposes of Customs control. However, in some countries the actual conveyance, storage and production to Customs of postal parcels is undertaken, by agreement, not by the postal services themselves but by railway authorities and other approved enterprises. Such practical arrangements would mean that in these countries certain of these obligations may become the responsibility of the approved enterprise.

To promote fast Customs clearance of postal items in the country of destination, the postal services in the country of origin must check the presence and correct, full completion of the CN 22 labels and CN 23 declarations. In particular they must ensure that these are signed by the sender. When the declarations are missing or obviously incomplete, the postal services must draw the sender's attention to the relevant Customs regulations and may, as necessary, refuse the relevant item.

4.1. Location of Customs clearance

Joint Customs/Post offices may be set up or Customs officers may be stationed permanently or for certain hours of the day at post offices. In these latter circumstances the postal services may provide Customs with office accommodation.

Customs offices may be set up at exchange post offices, which are post offices responsible for exchanging postal consignments with the appropriate foreign postal service.

At importation, exchange post offices forward postal items received from foreign postal services to the post offices of final destination, while at exportation they forward items posted in the post offices of their country to postal services abroad. In cases of transit, they forward items received from one foreign postal service to another foreign postal service.

5. Clearance of postal traffic

Standard 3

The clearance of postal items shall be carried out as rapidly as possible.

As postal traffic is subject to the normal payment of applicable duties and taxes and to national legislation relating to prohibitions and restrictions there will be consequential delays to delivery times. Standard 3 requires Customs to limit these delays to the greatest extent possible. However, nothing in this provision should be seen as limiting Customs controls. (See Chapter 6 of the General Annex).

As a general rule, there are three possible levels of involvement by the postal service in the clearance of goods imported by post :

a. The postal service's role is confined to presenting items requiring clearance to Customs;

b. The postal service carries out certain operations, under Customs control, which are normally the responsibility of Customs;

c. The postal service acts as a Customs clearing agent, in particular in dealing with EMS items.

Brief summaries of the procedures used in certain administrations follow which illustrate these scenarios. They are provided as examples of current arrangements in certain administrations which aim for the clearance formalities of postal items to be completed as rapidly as possible. It is not necessary for administrations to develop arrangements to meet these scenarios. Flexible approaches should be developed to meet local needs cognisant of national legislation, resource considerations and national commitment under the Acts of the Universal Postal Union.

5.1. Customs clearance with limited postal involvement

Postal items are cleared through Customs "automatically", i.e. on the basis of the CN 22 or CN 23 declarations and other documents prepared by the sender. This procedure requires no co-operation on the part of the postal services or of the sender and his representative as declarant of the goods.

The procedure for submission to Customs control is usually as follows :

Postal parcels :

- through presentation of the documents accompanying the parcels to the Customs office which then indicates the parcels to be produced for verification; or

- through presentation of the items to the Customs office set up in the post office since the documentation is normally attached to the parcel.

EMS items and letter-post items : through presentation of the items to the Customs office set up in the post office.

Customs staff process the items manually or by computer to :

- calculate duties and taxes and prepare the Customs receipt;

- capture data for trade statistics;

- keep accounts for the exchange post office (which maintains a centralized record); and

- provide data electronically to the postal service to verify payments.

In principle, the addressee is not advised of the arrival of the postal items before delivery and the duty is charged on the goods without their involvement. However, in case additional information (copy of the invoice, licence, etc) is needed, the addressee is notified and invited to provide the necessary documents for the completion of Customs formalities.

If the Customs administration is computerised, the automated system produces the combined Customs/Post form comprising the Customs receipt and the postal inpayment/COD slip designed for optical reading and used to settle the amount for collection from the addressee when the items are delivered. The Customs system can then transmit the list of all Customs receipts to the postal service's automated system for verifying the amounts collected.

These amounts are registered electronically by the postal service’s banking facility and also sent to the postal service accounting centre. This procedure permits fully automated checking.

Customs bills the postal service on a monthly basis for all charges due and likewise, the postal service pays the total amount to Customs on a monthly basis.

5.2. The Postal service acts on behalf of Customs for certain operations

Items are cleared through Customs by the postal service if they feature a CN 22 label or are accompanied by a CN 23 declaration. Without this documentation the items are presented to Customs to deal with.

The procedure described below applies to all postal items.

The speed with which the postal service executes the Customs clearance of postal items depends on application of the following measures :

a. The postal service decides whether the item has any commercial value or is of negligible value and can be admitted duty free. Postal staff separate dutiable items and non-dutiable items under the supervision of Customs which assists the postal service in the event of difficulties.

b. In all cases, the postal service determines the duty to be collected and prepares the payment or duty receipt. For its part, Customs confines itself to validating that receipt and to helping the postal service with any difficulties in precisely identifying the tariff item.

c. In general, duty is charged on the goods without involving the addressee who is not advised of arrival of the item before delivery. However, additional information (copy of the invoice, licence, etc) may sometimes be necessary, in which case the addressee is notified and invited to provide the required documents for the completion of Customs formalities.

The postal service pays Customs the total amount of duty and tax to be collected in advance.

The postal Customs clearance centre then affixes a "Customs duty" label on the item, with the indication of release by Customs and an attached sheet detailing the duty to be collected.

The item is transmitted to the office of delivery for handover to the addressee against collection of the Customs duty. The latter pays the duty into the financial account of the postal Customs clearance centre.

If a dutiable item was not delivered or has to be redirected abroad because the addressee refuses it or for some other reason, the office of destination returns the item, along with all accompanying documents, to the postal Customs clearance centre which requests reimbursement of the duty paid to Customs in advance.

To speed up the Customs clearance procedure, the postal service may use information technology and electronic interfaces with Customs to transmit the duty receipts automatically to Customs.

5.3. The Postal service acts as a Customs clearing agent

Postal services that are keen to provide their customers with a quality service, especially for Customs clearance of EMS items and postal parcels, may decide to act as Customs clearing agents. When public administrations are involved this status is often granted without an obligation to provide a security.

Thus in some countries on arrival of the items the postal service acting as declarant/agent :

- May provide Customs with a simplified Goods declaration featuring the data required by Customs

a. sender's name and address;

b. addressee's name and address;

c. item number;

d. gross weight of the item;

e. description of the goods;

f. goods tariff classification (based on the Harmonized System);

g. Customs value of the goods;

h. amount of duty and tax to be collected;

i. VAT base;

j. VAT rate applicable;

k. VAT number of the addressee if liable to tax;

l. amount of any other charges to be collected;

m. total amount of Customs duty and tax.

- May provide a declaration requiring less information to Customs for items of negligible value.

Customs has a mutually agreed time to physically check the items. Once this time is up, the postal service can dispatch the items to the delivery offices.

At the beginning of each month, the postal service provides Customs with an additional, global declaration summarising items cleared during the previous month and pays the total amount of duty due. This procedure has the advantage of not requiring Customs duty to be paid in advance. However, very often Customs administrations demand interest on late payment of duty and tax.

5.4. Other Customs procedures

Standard 4

The exportation of goods in postal items shall be allowed regardless of whether they are in free circulation or are under a Customs procedure.

Standard 5

The importation of goods in postal items shall be allowed irrespective of whether they are intended to be cleared for home use or for another Customs procedure.

Standards 4 and 5 are self-explanatory and serve to clarify that exportation and importation must be allowed regardless of the Customs procedure under which the goods have been or will be placed. This principle applies equally to postal items, providing of course that all normal formalities prescribed for the particular procedure are complied with.

6. Production to Customs

Standard 6

The Customs shall designate to the postal service the postal items which shall be produced to them for the purposes of Customs control and the methods of production of these items.

Standard 7

The Customs shall not require postal items to be produced to them at exportation for the purposes of Customs control, unless they contain :

- goods the exportation of which must be certified;

- goods which are subject to export prohibitions or restrictions or to export duties and taxes;

- goods having a value exceeding an amount specified in national legislation; or

- goods which are selected for Customs control on a selective or random basis.

Recommended Practice 8

The Customs should not, as a general rule, require the following categories of imported postal items to be produced to them :

(a) postcards and letters containing personal messages only;

(b) literature for the blind;

(c) printed papers not subject to import duties and taxes.

Standard 6 requires Customs to designate to the postal service the postal items which must be produced to them and the manner of their production. Many low risk goods, such as those detailed in Recommended Practice 8, are presented routinely to Customs simply on the basis of their postal category. This Standard allows Customs to designate not only what is presented to Customs, but also how the items are to be presented for inspection, and thus provides a platform for overcoming these practical difficulties.

In determining which goods should be produced, Customs should take into account the provisions of Standard 7 and Recommended Practice 8 which limit the items that Customs may request to be presented to them.

Customs may always select items for control on a selective or random basis at either importation or exportation. In this respect and in an endeavour to deal with increasing volumes of mail and to apply effectively risk management techniques, some Customs administrations arrange with the postal services to separate, within the letter-post category, postcards and letters containing personal messages only and other items (small packets up to 2 kg).

It is generally recognised that letters containing personal messages present a relatively low risk whereas the other items within this class, like postal parcels, are large enough to present a greater risk. Separation of this type can be of benefit to both Customs and the postal services since Customs will be in a better position to provide a low level of interference to letters containing personal messages and thus facilitate the majority of the mail (in some cases as much as 90% of the total).

Many Customs administrations also employ a simple application of risk management by indicating to the postal service the countries of origin of mail they are particularly interested in examining. The postal service will then be able to readily supply the mail directly after its arrival from a particular country. X-ray machines as well as detector dogs are also frequently employed by Customs in order to identify illicit drugs or other prohibited items carried in the mail.

At export goods may need to be certified if the exportation is temporary, if they are being exported on drawback or after temporary admission. In these circumstances, Customs may wish the items to be presented to them.

As a general rule, postal services present the postal items and documents to Customs simultaneously. In many countries Customs work in the post offices so that both the documents and the postal items are readily available to Customs and Customs can therefore select the items they wish to control.

However, some countries employ a documentary clearance system for postal items, where only the documents and not the items themselves are first submitted to Customs. Customs then indicate to the postal services which items must be produced to them for Customs control. This system has clear practical benefits in that most of the parcels themselves do not need to be physically processed.

Postal services should also transmit Customs data electronically wherever possible.

7. Postal items and their Customs documentation

7.1. Types of postal item

Postal items as described in the Acts of the UPU comprise letter-post items and postal parcels (which this Chapter covers specifically) and EMS items.

7.2. Description of postal items

Under the Acts of the Universal Postal Union the term "letter-post items" includes :

- letters, the weight of which must not exceed 2 kilogrammes and which may contain articles subject to import duties and taxes unless they are addressed to countries which have expressly entered a reservation to this effect in the Acts of the Universal Postal Union;

- postcards;

- printed papers, the weight of which must not exceed 5 kilogrammes (items containing books or brochures may weigh up to 10 kilogrammes by arrangement between the administrations concerned).

- literature for the blind, the weight of which must not exceed 7 kilogrammes;

- small packets, the weight of which must not exceed 2 kilogrammes and which must be clearly marked "petit paquet" (small packet) or its equivalent known in the country of destination.

There is a postal item category termed "insured letters" which are letters containing securities, valuable documents and other articles, the contents of which are insured for the value declared by the sender. For Customs purposes in general, and for the purposes of this Chapter, insured letters are covered by the term "letter-post items".

Under the UPU Convention the term "postal parcels" means parcels of which the individual weight does not exceed 31.5 kilogrammes.

The EMS service is defined in Article 57 of the Universal Postal Convention. The relevant provisions in the Acts of the UPU are applicable to EMS items (e.g. freedom of transit, ownership of postal items, items not admissible – prohibitions, Customs matters, etc.)

7.3. Documentation

Standard 9

When all the information required by the Customs is available from the CN22 or CN23 and supporting documents, the form CN22 or CN23 shall be the Goods declaration, except in the case of :

- goods having a value exceeding an amount specified in national legislation;

- goods which are subject to prohibitions or restrictions or to export duties and taxes;

- goods the exportation of which must be certified;

- imported goods intended to be placed under a Customs procedure other than clearance for home use.

In these cases, a separate Goods declaration shall be required.

Use of CN 22 or CN 23

In most cases the forms provided for in Standard 9 will be a de-facto Goods declaration. It should be noted that, in accordance with Standard 15 of Chapter 3 of the General Annex, Customs can require the original CN 22 or CN 23 and only the minimum number of copies necessary.

In addition to the CN 22 or CN 23, Customs may require any document (invoices, export licences, import licences, certificates of origin, phytosanitary certificates, etc.) necessary for Customs clearance in the country of departure and in the country of destination.

Letter-post items to be submitted to Customs control should bear a CN 22 label. If the value of the contents declared by the sender exceeds a certain amount, or if the sender prefers, the items should be accompanied by the prescribed number of separate CN 23s.

For small packets, the contents of the item should be shown in detail on the CN 22. Descriptions of a general character, such as "gift", are not admitted.

In order to facilitate and expedite Customs clearance operations, it is recommended that Customs encourage postal services to ask senders of postal items to use the CN 23 declaration only, irrespective of the value of the goods, and to attach an invoice.

For parcels, a CN 23 should be attached to each parcel.

7.4. Goods declaration

A Goods declaration is required for

- goods having a value exceeding an amount specified in national legislation,

- goods which are subject to prohibitions or restrictions or to export duties and taxes,

- goods the exportation of which must be certified, and

- imported goods intended to be placed under a Customs procedure other than clearance for home use.

The Goods declaration may be a national document which is the same as that prescribed for importations by other means or it may be specially designed for importations by post. Alternatively, some Customs administrations accept an international document such as an ATA carnet.

Customs administrations that do not require a separate Goods declaration and clear these goods with the CN 22 or CN 23 are granting a greater facility as recommended in Article 2 of the Kyoto Convention.

The Goods declaration may be completed by the postal services, by the addressee or by an authorised agent.

7.5. Documentation – Practical difficulties

The difficulties experienced by Customs officers because of the inexact or inadequate Customs declarations are largely due to the sender’s ignorance of Customs requirements. It is recommended that the postal services be requested to lend their assistance in order to improve this situation. To facilitate co-operation between Customs and the postal service in the country of destination, it is essential that the sender should make out a Customs declaration in accordance with the provisions of the Acts of the UPU and that his attention should be drawn to the necessity of strictly observing the instructions on the back of forms CN 22 and CN 23. For this purpose, it is recommended that postal services :

a. check that all letter-post items containing goods and all postal parcels are accompanied by a CN 22 or CN 23 as prescribed in the Acts of the UPU;

b. ensure that the CN 22 or CN 23 are completed in accordance with the instructions given on the back of these forms;

c. when a CN 22 or CN 23 is obviously incomplete, draw the sender's attention to the Customs regulations and accept only items accompanied by complete declarations; and

d. advise exporters of commercial items of the need, where appropriate, to attach a certificate of origin to each parcel.

The problems with missing or incomplete Customs declarations can be usefully discussed between Customs and postal administrations in an effort to find solutions. Some Customs administrations insert a note for the addressee in any such parcel that was opened explaining that the parcel had been examined because the CN 23 declaration was missing or was not sufficiently complete for Customs clearance purposes and suggesting that they advise senders to ensure that the declaration be properly completed.

8. Transit

Standard 10

Postal items shall not be subject to Customs formalities whilst they are being conveyed in transit.

Standard 10 applies only to those transit movements carried by postal services that form part of the truly international movement of the items and are carried out under cover of an international consignment document. The expression "whilst they are being conveyed in transit" is to be interpreted in this sense. Thus, notwithstanding Standard 6.1 of the General Annex which provides that all goods are subject to Customs control, by virtue of Standard 10 these items are not subject to the normal Customs transit procedure and formalities in Specific Annex E, Chapter 1.

Subsequent internal movements carried out under cover of a national document are excluded and the Standard does not prevent Customs from imposing Customs formalities in respect of such purely national movements.

In accordance with the WCO/UPU formal opinion on items in transit in closed mails or à découvert suspected of containing narcotics or psychotropic substances, Customs in the transit country may take appropriate measures to inform Customs in the country of destination of their suspicions.

9. Collection of duties and taxes and simplified procedures

Standard 11

The Customs shall make the simplest possible arrangements for the collection of duties and taxes on the goods contained in postal items.

Usually Customs assess the import duties and taxes due on postal items and the amount of duty/taxes to be collected is entered on a document affixed to the item or enclosed with it. This is a resource-intensive exercise for Customs and contrary to many administrations’ self-assessment arrangements for importation by other modes. To overcome this inefficiency, in some countries the postal service assesses duties and taxes on behalf of the importer. In other countries legislation has been introduced to simplify the assessment basis, e.g. flat-rate assessment. Customs should explore potential simplification arrangements with their respective postal services.

The postal service normally collects the import duties and taxes from the addressee at the time of delivery and makes periodic payment to Customs, for example at the end of each quarter. However, the postal service may pay the import duties and taxes to Customs on behalf of the addressee when an item is released to them for delivery.

Once any examination considered necessary has been carried out and any duties and taxes assessed, the postal items may be released to the postal service for delivery and collection of Customs duty.

Under certain optional provisions in the Acts of the Universal Postal Union the sender of a postal item may, in some cases, undertake to pay all charges including import duties and taxes, to which the item is subject at delivery.

Goods which are subject to export duties and taxes are usually cleared by Customs before posting, with the export duties and taxes being paid before the goods are passed to the postal service for exportation.

9.1. Simplified procedures

9.1.1. Flat-rate assessment

The WCO recommends a system of flat-rate assessment for non-commercial goods imported for home use up to a value specified in national legislation. Each country has full scope to determine the amount of the aggregate value of the goods on the basis of the economic conditions in that country.

An importation is usually considered to be of a non-commercial nature when it is occasional and consists only of goods for personal use or consumption by the addressee or his family and where there is no suggestion, by their nature or quantity, that they are imported for commercial purposes.

The addressee may request that the goods be charged at their own appropriate rate of import duties and taxes. Some countries may allow this only if the addressee is present at clearance.

9.1.2. Gifts

Another WCO Recommendation allows for admission free of import duties and taxes for gifts up to an aggregate value to be specified in national legislation. Each country has full scope to determine the amount of the aggregate value on the basis of the prevailing retail prices in the country of consignment, according to its economic conditions.

A gift is usually considered to be personal if it :

a. is sent to a private person by or on behalf of another private person resident abroad;

b. is occasional; and

c. consists only of goods for personal use by the addressee or his family, and the nature and quantity of the goods imported are such that the consignment is obviously not of a commercial nature.

To facilitate the speedy clearance of gift consignments at importation, the sender generally indicates on the CN 22 or CN 23 that the consignment is a gift, and states its contents and value.

9.2. Repayment or remission

Postal services will normally request that Customs cancel or repay duties and taxes on items returned to origin, destroyed because of total damage to the contents or redirected to a third country and for postal parcels abandoned by the sender.

In cases of rifled or damaged parcels, cancellation of fees must be requested only to the value of the missing contents or the depreciation suffered by the contents.

In practice, postal services will normally present Customs with a periodic list of items which fall into the above categories and where duty and tax needs to be cancelled. (See also the provisions on repayment and remission in Chapter 4 of the General Annex and its Guidelines.)

10. Other considerations

10.1. Examination

The examination of postal items is covered by the General Annex and the full details of risk management techniques are given in Chapter 6 on Customs control and in the Guidelines.

In some countries when postal items are opened for examination, Customs may advise the addressee by inserting a note or adding a stamp indicating that they have opened the parcel.

10.2. Use of information technology

Information technology can be used by Customs and postal services to improve both the speed and accuracy of the processes related to the clearance of postal items. Various applications have been developed by Customs and postal services to address specific requirements of Customs. This could be a computer system to calculate, assign, record and reconcile duties and taxes assessed on items. For the postal service this might be a system to record Customs-related information on certain items and to track items undergoing Customs clearance.

Electronic interfaces between Customs and postal services offer the following advantages :

- clerical errors are virtually eliminated;

- the declarant is immediately informed of his errors which result in rejection of the declaration;

- the Customs value in foreign currency is converted by the computer

- consultation of the Ministry of Finance VAT file makes it possible to obtain a customer's VAT number; and

- consultation of the exchange-rate file which is updated daily.

Customs and postal services can also agree on a bilateral or multilateral basis to use other technological means to work together more efficiently. Information technology, whether EDI, electronic mail or a shared database, can be used for a range of mutually beneficial reasons, such as :

- providing information on the types of mail received or expected in order to assist in risk assessment and workload planning;

- providing mail volume data to help measure productivity; and

- providing advance information related to mail arrival (origin country, flight number, dispatch particulars, item content, item value, etc) to expedite clearance and duty assessment.

There is also co-operation between Customs and the Posts at the international level on this subject through the WCO–UPU Contact Committee and other bodies. International standards in the area of information technology – EDI in particular – will be important as more Customs and postal services employ information technology to achieve their objectives.

Information about current projects using Information Technology to exchange data between the postal services and Customs is contained in Appendix I.

10.3. Information exchange and co-operation

Co-operation between Customs and the postal services is of particular importance given the special nature of the procedure. For example the postal services have an important role in ensuring the accuracy of forms CN 22 and CN 23 and also in assisting in the fight against illicit drug smuggling. For these reasons, most administrations find it invaluable to form a joint Customs/Post committee at a national level.

In addition to this close co-operation between Customs and postal services at the national level, there is close collaboration at the international level between the Universal Postal Union (the international organisation whose rules and regulations govern postal traffic) and the WCO. These two international organisations have, for example, established a Contact Committee at which Customs and postal experts meet to discuss and find internationally acceptable solutions to problems which cannot be resolved nationally or bilaterally. They have also signed a Memorandum of Understanding concerning co-operation on the prevention of drug smuggling, a copy of which is attached at Appendix II. All administrations are encouraged to implement such an MOU at a national level as well.

Such MOUs encourage a greater co-operative effort between the two agencies. For instance postal service staff are usually well placed to bring suspicious postal articles to the attention of Customs. This can be particularly helpful in the detection of illegally imported goods such as narcotics or weapons. These MOUs can also be helpful for postal services as they can address service delivery standards.

As a further illustration of international co-operation on postal matters, Appendix III contains the Framework Agreement between the Post and Customs elaborated by PostEurop (Association of European Public Postal services).

10.4. Training

Customs administrations should consider offering specific training to postal staff responsible for accepting postal items for international shipment and to postal staff in offices of exchange.

At the same time, postal services should ensure that such staff remain in their jobs for some time to ensure this training is put to best use.

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Appendix I

USE OF INFORMATION TECHNOLOGY

I. Introduction

1. The following outlines a few of the cooperative efforts postal services and Customs have undertaken in the field of EDI and information technology. These efforts seem to typically be the result of agreement :

between a postal service and its respective Customs administration;
between a dispatching postal service and a receiving Customs administration (in co-operation with the receiving postal service); or
among a specific group of countries.

2. These different interfaces will be monitored within the work programmes of the WCO and the UPU and their usage expanded to other countries. To the extent that the data elements exchanged are common, these can be used as the basis for standards for information on postal items.

II. Projects Underway

Item Level

3. To facilitate Customs clearance the US Postal Service has developed electronic data reporting at the item level in connection with its Global Package Link (GPL) service. GPL is a bulk parcel consignment service that uses a platform known as the Customs Pre - Advisory Service (CPAS) to pre-advise the destination Customs of the details of the items. CPAS is used for bulk parcel shipments to France, the UK, Japan, Germany, Mexico and Singapore.

4. The use of the electronic interface and operating procedures vary by country. Customs in the UK uses the full pre-advice and duty calculation capabilities of the system, French Customs use the system to print a consolidated report of the items received, and the other countries receive a data file but perform their normal Customs clearance for mail.

5. The data elements generally fall under these categories :

Item description
Value
Country of Origin
Sender’s Name and Address
Addressee’s Name and Address

6. Since the data elements for GPL or other bulk parcel shipments are fairly standard (certain countries require other data such as tax ID numbers), one approach could be to develop an EDI message reflecting current practice among several countries for bulk parcel shipments.

7. Another initiative involving electronic information exchange at the item level involves parcels from Canada to the US. US Customs at JFK Airport receives an electronic data transfer from a large parcel mailer located in Canada. The information regarding the parcels is pre-advised to Customs so that they know exactly what will be arriving and they can pre-select which items they wish to see, primarily for potential duty assessment. This information is conveyed to the US Postal Service so it knows which items Customs wishes to physically examine. The basic data elements provided to Customs are representative of what most Customs administrations would require for individual shipments and are listed as follows :

header identifier
customer account number
shipment date
manifest number
detail identifier
shipment mode
receptacle identifier
package identifier
package value
package weight
subtotal duty/tax
subtotal duty/tax fee
consignee name
consignee address
consignee account number
oversize surcharge
additional insurance
delivery confirmation
product identifier
product name
quantity of goods
product value
product weight
country of origin
duty amount
tax amount
excise amount
VAT amount
exchange rate

8. The EMS Overnight service from London to New York provides another example of item-level electronic data exchange. US Customs receives pre-advised information about individual EMS items (i.e. from individual mailers, not a single large mailer). The British Post Office's Parcel Force enters data from the items’ Customs declarations and sends these data to a dedicated terminal in advance of the actual items so that Customs can pre-determine the items they wish to see. Data on the items designated for inspection and the bags in which they are located are entered into portable scan guns and used by ramp clerks to identify which bags can bypass Customs. Upon arrival, the bag tags are scanned and the bags containing the items for Customs inspection are held aside. The other items are immediately injected into the US Express Mail stream.

9. Norway Post provides Norway's Customs with electronic reporting at the item level. Having obtained the status of a forwarding agent, Norway Post handles Customs clearance activities completely (commercial Customs clearance) on behalf of customers on an equal footing with other operators. Norway Post clears dutiable mail on-line with Customs using the CUSDEC and CUSRES messages. Customs clearance is based on information included in the invoice or postal Customs declaration.

10. Norway Post has a 7-month training program for staff who handle Customs clearance assignments on behalf of customers. Many large business customers have a Customs credit account to which Norway Post is allowed to charge Customs duties and VAT. In other cases, the Post advances the amount due and collects it upon delivery or pick up of the items.

11. Norway Post would like certain data, i.e. Customs clearance information, to be transmitted to them in order to speed up and facilitate Customs clearance. They would like to see an agreement by all Posts to interact the same way with Customs using standardized documentation and messages.

12. Sweden Post uses a software product which acts as a message application integrator and translates data received over a range of electronic mediums into the format required. This includes EDI and Internet applications. Sweden Post sends import and export declarations to Swedish Customs as standard EDI-messages; i.e. using the same messages as other companies. Swedish Customs does not see any need for messages developed solely for the mail.

13. It is clear that it is possible to pre-advise Customs of bulk parcel dispatches from large mailers if there is a mailer-prepared database which can be transmitted along with any additional information added by the postal service, such as transport or item identifier information. It is also possible to send this data on individual items to Customs, either by a pre-advice message or after it arrives. For individual items, the data could be entered by either the origin or destination postal service or in the future through the Internet and kiosks designed for this purpose.

Bag Level

14. Most postal services share data regarding the bags containing postal items that they transport and exchange. This information is widely automated between postal services.

15. US Customs is working with the US Postal Service on a system to handle a range of activities related to the processing of international mail through Customs. Along with pre-advice at the item level, the US Postal Service EDI messages for information at the bag level will eventually be shared with US Customs. This data will therefore inform Customs about what is arriving by air from overseas, similar to the cargo declaration which the airlines provide. It is anticipated that once this message is shared with Customs, they will send a response message to US Postal Service informing them which bags they need to see. It will also help them know what volumes and type of mail to expect and can help them with risk assessment and targeted enforcement activities. France will be the test country for this.

16. It is recommended that other countries share such messages at the bag level with their Customs if it will be useful. Although there is more benefit to be gained from item level data, this is not yet possible for all classes of mail, and so a pre-advice at the dispatch or bag level may be a first step toward electronic exchanges between postal services and Customs.

III. European developments

17. Within Europe, there is an effort to establish a project to support electronic links to Customs.

18. The European Community has developed the "Single Administrative Document" (SAD) which is a standard Europe-wide document to be used for Customs clearance. They are also developing an EDIFACT version of this document, called the Single Administrative Message (SAM). The SAM will be introduced into Community Law and the Customs Code and will be offered as an alternative to national systems and national messages. Any standards for postal traffic within Europe may have to be incorporated into SAD and SAM.

IV. Conclusion

20. Progress is being made in a number of areas for electronic data exchanges between postal and Customs administrations. In some cases, the solutions developed are unique to mail, and in some cases, the mail conforms to Customs applications for other types of goods. Participation in such initiatives should be encouraged.

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Appendix II

MEMORANDUM OF UNDERSTANDING BETWEEN THE CUSTOMS CO-OPERATION COUNCIL AND THE UNIVERSAL POSTAL UNION MEMORANDUM OF UNDERSTANDING BETWEEN THE WORLD CUSTOMS ORGANIZATION (WCO) ^* AND THE UNIVERSAL POSTAL UNION (UPU)

Recognizing

that the mission of the World Customs Organization (WCO) is to enhance the efficiency and effectiveness of member customs administrations, thereby helping them to contribute successfully to national development goals, particularly in the areas of trade facilitation, revenue collection, community protection and national security,

Recognizing also

that the mission of the Universal Postal Union (UPU) is to stimulate the lasting development of efficient and accessible universal postal services of quality in order to facilitate communication between the inhabitants of the world by: guaranteeing the free circulation of postal items over a single postal territory composed of interconnected networks; encouraging the adoption of fair common standards and the use of technology; ensuring cooperation and interaction among stakeholders; promoting effective technical cooperation and ensuring the satisfaction of customers' changing needs,

Realizing

that UPU member countries support the concept of the single postal territory, and agree that all customers are entitled to a universal postal service based on the permanent provision of quality basic postal services at all points in their territory at affordable prices,

Realizing also

that the UPU and the WCO pursue common goals to ensure and facilitate free and secure movement of global trade in line with WTO rules while abiding by the fundamental principles of the international postal service such as freedom of transit and customs clearance of postal items,

Recalling

that resolution C 62/2004 of the UPU Bucharest Congress recognized that the cooperation between the UPU and the WCO, which has existed since 1965, is in the best interests of both organizations, and should be continued in order to pursue the study of common problems,

Recalling also

that a WCO–UPU Contact Committee was set up in 1965 with a view to establishing a close working relationship between the two organizations,

Recognizing

that the Revised Kyoto Convention which came into force on 3 February 2006 includes a new chapter on Postal Traffic contained in a specific Annex J, Chapter 2, which provides for specific customs procedures in respect of postal items,

Recognizing further

that the nature of postal traffic is specific because of its mass volumes and the restricted site of postal items,

Noting also the need to ensure efficient customs clearance of postal items,

Aware

that the use of information and communication technologies and electronic data interchange systems is of vital importance in further improving the speed, security and quality of customs clearance of postal items,

Aware also

that collaboration in capacity-building initiatives would be to the benefit of both organizations,

Convinced

that the complexity of the international mail transportation network requires the implementation of physical and procedural security measures based on a risk analysis of the current threats and vulnerabilities,

Noting also

that offences against customs laws, particularly money laundering, the transport of illicit materials, drugs, counterfeit goods and other contraband are prejudicial to the economic, social, fiscal and security interests of States and the interests of all parties involved in legitimate international trade,

Believing

that this cooperation in promoting efficient customs clearance would be of benefit to members of both organizations,

Recognizing

the need to identify clearly the possible areas of cooperation between the two organizations,

The Parties agree that the above-mentioned objectives shall be pursued through the following cooperation and consultation activities set out in this Memorandum of Understanding (hereinafter referred to as the "MOU"):

I. Areas of cooperation and consultation

The Parties agree to seek each other's expertise in the following areas:

i To examine and develop together ways in which cooperation and consultation between postal administrations and customs authorities could be improved with a view to combating drug trafficking by post and to contributing to mail security while abiding by the fundamental principles of the international postal service, in particular the freedom of transit.

ii To seek to ensure a better understanding by postal administrations of customs authorities' tasks and problems and vice versa, thereby facilitating a productive exchange of information between the two parties with a view to encouraging the resolution of problems at national level.

iii To consider practical ways in which postal administrations and customs authorities can assist one another in the detection of postal items which might contain drugs or other prohibited materials, and facilitate the rapid processing of mail while maintaining customs control measures.

iv To consider practical measures to increase and facilitate the use of electronic data interchange systems between Posts and Customs.

v To identify and address the training needs of their respective member countries in areas of common interest such as E-learning and improving compliance with customs declarations.

vi To pursue the development of minimum security standards and procedures to facilitate the overall security of the international mail transportation network and expedite the customs clearance process.

vii To encourage Posts and Customs to form joint Customs–Post committees at the national level to:

– ensure efficient customs clearance of postal items, in particular packets and parcels, by ensuring improved compliance with the rules regarding customs declarations;

– adopt a joint strategy to combat smuggling of drugs, money laundering, counterfeit goods, illicit materials and other contraband;

– facilitate a productive exchange of information between the two parties with a view to encouraging the resolution of problems at the national level,

viii To promote the role of Customs and Posts as vehicles for economic growth and social development through capacity-building.

ix To update the joint WCO–UPU publications: Customer Guide and Operations Guide.

II. Guidelines on Cooperation

The Guidelines on Cooperation between Customs Authorities and Postal Administrations are attached to the present MOU in order to define in concrete terms the areas of cooperation and consultation listed in Part I above, with particular attention to combating illicit trafficking by post.

III. Entry into force, duration and termination

The Memorandum of Understanding shall come into effect on the date of its signature and shall remain in force unless terminated by mutual consent or by either Party giving three months' written notice of termination to the other Party. The provisions shall, however, remain in force beyond the date of such termination to the extent necessary to permit an orderly completion of activities.

IV. Amendment

The present Memorandum of Understanding may be modified by mutual written consent.

Any dispute over the interpretation or application of any provision herein shall be settled through negotiations or by other means as the Parties shall mutually agree.

The Parties hereby agree that this MOU and its annexes shall replace and supersede the Memorandum of Understanding and its annexes previously signed by the Parties on 15 September 1994.

In witness whereof, the Parties hereto, each acting through its duly authorized representative, have duly affixed their signatures on the two originals of this Memorandum of Understanding in the English and French languages, both texts being equally authentic.

Done at Berne on 5 July 2007	Done at Brussels on 5 July 2007
For the Universal Postal Union:	For the World Customs Organization:
Edouard Dayan	Michel Danet
Director General	Secretary General

Guidelines on cooperation between Customs Authorities and Postal Administrations

1 Introduction

1.1 In recent years, the smuggling of drugs, false passports, currency for money laundering, items that are protected by intellectual property rights and other prohibited goods has increased significantly, with traffickers using all means of international transport to smuggle drugs.

1.2 This illicit traffic has placed an increasing burden upon customs authorities, which have come to recognize that, to combat it more effectively, they need the cooperation of those parties regularly involved in international trade and transport.

1.3 As one of those parties, the Universal Postal Union (UPU) has recognized the need to cooperate to combat this illicit traffic. The UPU has accepted the offer by the World Customs Organization (WCO) to provide it with assistance and advice to prevent postal items being used for drug smuggling.

1.4 Formal recognition of the need for cooperation between customs authorities and postal administrations has taken the form of a Memorandum of Understanding (MOU) concluded between the WCO and the UPU. This MOU provides a basis for Guidelines on how customs authorities and postal administrations might cooperate in the prevention of smuggling through the post. Both the WCO and the UPU have agreed to recommend these Guidelines to their respective members and to report on their implementation.

1.5 This paper contains these Guidelines, which incorporate measures that postal administrations should take to reduce or inhibit smuggling. These measures will necessarily vary depending on the source and destination of the postal items.

1.6 Also incorporated in the Guidelines are measures which customs authorities should take to enable postal administrations to contribute more usefully to customs efforts and to encourage them to participate in the battle against the illicit trafficking of prohibited goods.

1.7 The measures recommended are not intended to be exhaustive. Customs authorities and postal administrations may apply additional measures to take account of national conditions.

1.8 The WCO Secretariat and the UPU International Bureau would welcome any suggestions from their members for the improvement of these Guidelines.

2 Objectives

2.1 The objectives of these Guidelines are to:

a promote increased cooperation between customs authorities and postal administrations and to heighten the latters' awareness of the problem and effects of smuggling;

b encourage postal administrations to increase security with a view to ensuring the security of the supply chain and inhibiting smuggling;

c increase the ability of customs authorities to detect and forestall attempts to smuggle illicit goods by post;

d respond favourably to requests from customs authorities for access to commercially held information in order to combat the illicit traffic of prohibited commodities, but not where such action would be in breach of any law or regulation;

e assist customs authorities in their efforts against those criminal elements involved in smuggling;

f facilitate, to the greatest extent possible consistent with the application of adequate customs controls, the UPU's objective of ensuring efficient organization and improvement of postal services worldwide.

2.2 In order to provide consistency and uniformity, the following principles should be recognized:

a The prime responsibility of postal administrations lies in the safe and expeditious handling of postal items.

b Postal administrations should not be asked to act as law enforcement entities.

c Customs authorities are aware that some information held by postal administrations may be considered "commercially confidential", while postal administrations should treat customs inquiries about postal staff, their procedures and services as confidential. This is why all information exchanged between the parties must be considered confidential.

d Postal administrations may wish to enter voluntarily into formal agreements with customs administrations to support or implement these Guidelines. Such agreements would not remove any existing legal obligations on the parties concerned.

e Measures taken nationally by postal administrations in accordance with these Guidelines may be augmented or varied at regional or local level according to the perceived risk of smuggling at that level.

3 General comments

3.1 The measures designed to prevent the use of postal administrations' means of transport and facilities and of postal items are intended to:

a improve the security of facilities and services to make it more difficult for illicit goods to be introduced into means of transport or to be conveyed in postal items;

b increase the chances of the timely detection of illicit goods;

c facilitate cooperation with the appropriate authorities so that they can identify those persons or parties involved in smuggling.

3.2 Customs authorities and postal administrations (possibly with other bodies operating in this field, such as airlines and shipping companies, etc.) are encouraged to examine their security measures in order to identify shortcomings and to consider improvements.

3.3 Customs authorities and postal administrations should establish contact points at national or local level and organize regular consultative meetings for the ongoing exchange of information.

3.4 The WCO Framework of Standards to Facilitate and Secure Global Trade (SAFE Framework) sets out minimum security standards. This document should form the basis of security measures within postal facilities.

4 Measures recommended to UPU member countries

Introduction

4.1 Postal administrations should take account of postal regulations and legislation, which should lay down the conditions for cooperation with the appropriate authorities where legal proceedings are under way.

Documentation

4.2 On request, postal administrations should normally supply customs authorities with information relating to international mail.

4.3 Particular attention should be given to exploiting the advantages of modern data processing and telecommunication techniques.

4.4 Postal administrations should notify customs authorities of any unusual or suspicious documentation or requests for information on items.

4.5 Insofar as possible, postal administrations should, on request, instruct customs officers in the use of information systems for locating and tracking mail or other postal items.

Security of mail and other postal items

4.6 Postal administrations should be able to request customs authorities' assistance to instruct and train postal employees in how to recognize and report items which may contain illicit goods.

4.7 Postal administrations should check that their national policies are compatible with the prevailing legislation on the security and integrity of mail and, if necessary, should make the changes needed to achieve progress in this respect. The standards within the SAFE Framework should form the basis of the security policy.

4.8 Upon dispatch or receipt of mail, postal employees should alert the customs authorities if they notice that the integrity of postal bags/sacks and postal items has been breached.

4.9 If necessary, postal administrations should examine their measures regarding mail security, with a view to preventing illicit access to the contents of items. These measures may relate, inter alia, to the checking of seals.

Security of facilities

4.10 Postal administrations should be able to provide Customs with information on measures taken to ensure the security of their facilities.

4.11 They should draw up a list, by category, of staff employed in post offices and sorting centres.

4.12 They should limit the parking of vehicles belonging to the postal service, customers and staff to the designated areas.

4.13 Any vehicle allowed one-time access to postal premises should be issued with a dated pass, and parking should be restricted to the authorized or controlled areas; vehicle registration numbers should be recorded and made available to customs authorities on request.

4.14 Where the facilities have electronic security systems, such as closed-circuit television, customs authorities should be given access on request.

4.15 Postal administrations should permit only authorized staff and vehicles displaying proper identification within postal premises and parking areas.

General security

4.16 Postal administrations should conduct regular reviews of existing security and control measures and correct any identified deficiencies.

4.17 Postal administrations should provide timely notification to customs authorities when employees discover suspect postal items. Those items should remain undisturbed and under surveillance pending customs intervention.

4.18 Postal administrations should use all appropriate means and may, inter alia, place warning signs in post offices indicating the criminal-law sanctions applicable if the post is used for the illicit traffic of drugs and other prohibited materials.

4.19 On request, postal administrations should provide customs authorities with details of any subcontractors and companies which provide support services at their facilities.

Personnel security

4.20 Postal administrations should take all necessary precautions when recruiting staff to ensure that they have never been convicted of drug trafficking, and do not have a history of drug abuse or a criminal record.

4.21 Postal administrations' surveillance staff and trainers should receive training in:

- recognizing indications that a postal official may be susceptible to drug-related offences;

- identifying trade practices which might indicate a drug-related offence or the possibility of trafficking in illicit goods.

General

4.22 Postal administrations should instruct all their employees to comply with these Guidelines and bring them to the attention of any private companies involved in postal activity, e.g. road transport companies, airlines, etc.

4.23 Postal administrations should seek customs authorities' advice regarding assistance and possibly training to:

a help their staff assess the vulnerability of the postal service in respect of smuggling by post;

b draw up and implement measures to minimize that vulnerability.

4.24 With the assistance of customs authorities, postal administrations should educate their staff in the dangers of drug abuse and methods of identifying drugs.

5 Measures recommended to customs administrations

General security

5.1 Customs authorities should ensure that all their officers having business in a post office carry proper authorized identification.

5.2 Customs authorities should provide postal administrations with readily accessible contact details, including telephone numbers of customs officials who can be contacted for advice or instructions when it is suspected that a smuggling offence is being or may be committed.

5.3 Customs authorities should encourage postal administrations to exercise control over access to their facilities and should recommend that postal staff carry proper identification.

Security of facilities

5.4 Customs authorities should seek to foster cooperation with postal employees.

5.5 Customs authorities should encourage postal administrations to ensure that lists are kept of the staff employed at post offices and sorting centres.

5.6 Customs authorities should encourage postal administrations to ensure that the parking of vehicles with regular access to their facilities is limited to designated areas.

5.7 Customs authorities should encourage postal administrations to ensure that control is exercised over one-time vehicle access to postal facilities, through the issuing and recording of dated passes, or recording of vehicle identification details in a register.

5.8 Customs authorities should regularly discuss the security of postal facilities, procedures and items with postal administrations and with the other bodies involved (airlines, shipping companies, etc.) with a view to identifying and correcting any reported deficiencies.

5.9 Customs authorities should ensure that publicity materials highlighting the dangers of, and penalties for, smuggling are available and widely circulated.

Training and information

5.10 Insofar as their resources allow, customs authorities should provide postal administrations' training services with educational materials and expert guidance on relevant smuggling trends.

5.11 Information should be made available to postal administrations on means of identifying unusual situations which may indicate smuggling.

5.12 Postal employees dealing with CN 22 and CN 23 customs declarations or responsible for security should be advised about telltale indicators of anomalies in the data provided which might indicate the possibility of a customs offence. The staff should also be alerted to the possibility that other employees may be subject to corruption or coercion.

5.13 Customs authorities should familiarize themselves with the documentation and procedures used by postal services at national and local level in respect of postal items, procedures and facilities.

General

5.14 Customs authorities should not request or require postal administrations to initiate any action or inaction which would conflict with the UPU's Constitution and Convention, or with the laws, regulations or control requirements of that country; nor should any action or inaction be encouraged in a foreign country which could result in a conflict with the laws of that country.

5.15 In consultation with postal administrations, customs authorities should regularly review the facilitation and enforcement aspects of their procedures to ensure that the needs of both parties are fully considered. Customs authorities which have already established this consultative machinery should be prepared to cooperate, through existing liaison channels, with other customs authorities and advise them on establishing similar arrangements.

6 Maintenance

Customs authorities and postal administrations recognize that these Guidelines represent a first step in the development of cooperative measures to implement the spirit of the MOU. It is hoped and expected that the Guidelines will be reviewed and improved in the light of experience in the context of the WCO–UPU Contact Committee's activities, without in any respect departing from the basic principles embodied in the MOU.

------------------------

Appendix III

Recommendation concerning the Framework Agreement between the Post and Customs elaborated by PostEurop

recalling

the elaboration, by Task Force 1.8 of PostEurop, of a Framework Agreement which aims at optimizing, in each country, the relations between the postal operator and the Customs authority and to simplify, harmonize and accelerate the procedures of customs clearance,
the contemporary elaboration by the Task Force of a structure for the annex to this Framework Agreement precising all operational and technical aspects of customs clearance,
the approval, by the Plenary Assembly in 1994, of the Framework Agreement and the invitation made by it to all Members, to sign such an agreement with their Customs Authorities.

considering

that commercial exchanges are growing worldwide thanks to the possibilities offered by Internet,
that the requirements of our clients are increasing in our extremely concurrential society and that our competitors have negotiated very good conditions for customs clearance,
that postal services need simple rapid procedures for customs clearance in order to stay on the marketplace,

remarking

that in many countries no national agreements have been signed on this subject and noting the difficulties deriving therefrom to the processing of postal items,

decides

to recommend to all postal services to sign with there respective Customs authorities a Framework Agreement in accordance to that proposed by PostEurop in order to simplify, harmonize and accelerate the procedures of customs clearance, as far as these matters are not regulated satisfactorily or more favourably by existing rules and agreements.

Framework Agreement between the Postal Operator and the Customs authority

Art 1.

The Public Postal Operator, hereinafter called the Post, and the Customs authority, hereinafter called the Customs, shall undertake to cooperate for carrying out the various operations within there competencies rationally and quickly in order to offer postal clients the best possible service and at the same time guarantee that the established procedures and conditions are respected, and that the legal requirements are satisfied.

Art 2.

The Post and the Customs shall formulate by common agreement proposals aimed to restructure rationally the postal and the customs service, studying procedures for a simple and fast customs clearance, and using whereas possible the exchange of a computerized information system (telematics).

They also shall undertake to examine any other problem that might arise in the relations between the Post and the Customs concerning operations, management and legal issues.

Art 3

Customs will examine the possibility of granting facilities to the Post in order to improve the operations of the postal service. The control of the items by Customs must not, as far as possible, cause delays in the processing of the mail.

Art 4.

The Post and the Customs shall undertake to cooperate in the aim of guaranteeing the security of the zones and locations designed for customs clearance.

The Post will ensure that Customs are provided with the necessary premises and installations for the exploitation of customs clearance in locations specially designed for it.

Art 5.

The Post and the Customs shall undertake every effort to intensify their cooperation in the fight against illegal traffic of drugs, contraband and any other kind of commercial fraud, within their competencies.

Art 6.

The Post and the Customs shall organize regular meetings at national and local level.

Detailed procedures for the exploitation of the operations at national level (eg selection by postal staff of items instead of customs operators and fix standards for the processing of postal items by Customs) shall be enclosed to the present agreement.

Signed on	Signed on
in	in
for the Post	for the Customs

PostEurop

Structure for the "Annex" to the Framework Agreement between the Postal Operator and the Customs authority

Preamble

Reference is made to the national and international legal provisions (domestic and international customs rules, national postal rules and UPU provisions).

Chapter I General Provisions

Definitions of the terms used in the Agreement
Principles
Organization of the cooperation

a. Obligations of the Post Office vis-à-vis the Customs

b. Obligations of the Customs vis-à-vis the Post Office

c. Contact bodies at central and local level

Chapter II Customs Clearance Offices

a. Competencies

b. Products (parcels, letters, EMS)

c. Contact persons and addresses

d. Premises and technical equipment

e. Working days and working hours

f. Traffic flows

Chapter III Quality of Service

a. Minimum time necessary for customs clearance for each category of postal items

b. Free circulation of correspondence

Chapter IV Description of Procedures

Exportation a. Basic information

b. Presentation to Customs

c. Documents used

d. Inspection of items

(Special arrangements, formalities, temporary exportation, tasks of the Post and of the Customs.)

Importation a. Basic information

b. Presentation to Customs

c. Documents used

d. Inspection of items

(Pre-selection, customs clearance of special goods, refused and returned items, tasks of the Post and of the Customs.)

Transit

Chapter V Other

Date of entry into force, amendments and expiracy of the Annex.

PostEurop

Framework Agreement between the postal operator and the Customs authority.

General Guidelines for the implementation of the structure of the Annex.

The structure for the Annex, proposed in this document covers, in general terms, the main subjects and areas that are essential for effective cooperation between the Post Office and the Customs. These terms will have to be covered by each individual postal operator when drafting the annex to their own agreement, taking the national situation into account.

If the actual agreement does not already cover these aspects, right at the beginning of the Annex, in the preamble, the domestic and international legal framework governing postal services and Customs in the different countries, should be mentioned.

The Annex should comprise four parts or chapters.

Chapter I called "General provisions" should cover aspects concerning definitions of terms, principles, organization and cooperation.

The section called "Organization" should cover commitments of general nature entered into by both parties.

For instance, the Customs authority could help the Post in training Post office employees, so that the initial selection process of postal items to be cleared through Customs, can be carried out by postal staff in a satisfactory way for both the Customs and the Post.

Moreover, the Customs could provide a basic training course in order to enable the Post Office to fill in the importation customs forms on behalf of the recipient.

Customs should commit to ensure that the postal rules and regulations, as far as standard times for processing the clearance of postal items are concerned, are respected.

In this context, the Annex should also mention that a permanent customs assistant at the international offices of exchange of the Post is required for customs clearance on the basis of the accompanying documentation of items and spot check controls by Customs on postal items.

The postal operator on its side shall undertake to submit to Customs all items it has requested to check.

The postal authority could enter into the following obligations in front of the Customs authority: guarantee safety of postal items during internal transport and in areas specially designed for customs clearance.

For Customs it is very important that post office staff are totally reliable in terms of prevention and control of fraud.

A Central Contact Committee, at national level, could ensure mutual exchange of information between the parties on regular scheduled meetings, about issues concerning customs clearance of mail.

Chapter II could contain a list of customs clearance offices, their address and telephone numbers, information about technical equipment available to Customs, working days and hours. It should also contain information about the service available for each kind of product, traffic flows for incoming and outgoing mail as well as any other additional service offered.

This chapter could also be drawn up as a separate list to be updated more frequently than the rest of the document.

Chapter III should lay down fundamental rules to ensure quality of service by indicating the necessary time for customs clearance for each kind of service, the appropriate checks and free circulation of correspondence.

Chapter IV may contain a description of all procedures and if possible of simplifications agreed upon, identifying the main aspects concerning exportation of items: detailed general description, submission to Customs, documents to be used, inspection of items.

The same for importation, describing all procedures and mentioning pre-selection of items by postal staff, inspection, threshold under which no customs fees are due for both private and commercial items.

No particular formalities are foreseen for what concerns transit items of the international traffic.

In Chapter V "Other", the date of entry into force of the Annex, the date of expiry and amendment formalities could be laid down. In this chapter the two parties can also agree the Annex to be revised and renewed on a mutual basis.

Of course, the proposed structure for the Annex does not pretend to cover all possible situations, but it has the scope to render the cooperation between the Post and the Customs as smooth and as rapid as possible.

In fact, from the experience made to date, all facilities offered by Customs to the Post are based on relations of reciprocal confidence and respect.

-----------------------------

[1] The Acts of the Universal Postal Union comprise the UPU Convention, its Detailed Regulations and the Agreement on Postal Parcels.

* Established in 1952 as the Customs Cooperation Council.

-----------------------------

Chapter 3

MEANS OF TRANSPORT FOR COMMERCIAL USE

1. Introduction

The Customs are obliged to control international transport in their territory in order to safeguard the Revenue, combat fraud and ensure compliance with national legislation in other respects. This involves not only the control of the goods and the passengers carried, but also of the means of transport used in international traffic. Towards this end, national legislation in many Customs territories contains provisions which the Customs is responsible for enforcing concerning the movement of means of transport for commercial use to, in and from the Customs territories, the designated Customs offices or other approved places of call where means of transport for commercial use must be reported, and the related documentary formalities, etc.

It is important that the Customs formalities for applicable to means of transport for commercial use be as minimal as possible and carried out as rapidly as possible. Thus the measures taken by the Customs should be adapted to meet the needs in each case according to factors such as the purpose and duration of the stay of the commercial means of transport in the Customs territory.

This Chapter 3 of Specific Annex J deals with temporary admission procedures related to means of transport for commercial use that which are used in international traffic for the transport of persons for remuneration or for the industrial or the commercial transport of goods, whether or not for remuneration. Where appropriate, the provisions of thise Chapter also apply to means of transport for commercial use owned and registered in the territory concerned.

This Chapter applies to simplified arrangements for the arrival and departure of means of transport for commercial use used in international traffic. PProcedures relating to the temporary admission of goods are covered in Chapter 1 of Specific Annex G. While means of transport for commercial use can be regarded as goods and therefore could be covered by Chapter 1 of Specific Annex G, this Chapter of Specific Annex J contains provisions specifically aimed at further simplifying the treatment of means of transport for commercial use. The Chapter does not cover means of transport for private use and military or government means of transport not engaged in commercial activities.

2. Definitions

E1/F2

“Customs formalities applicable to means of transport for commercial use” means all the operations to be carried out by the person concerned and by the Customs in respect of means of transport for commercial use arriving in or departing from the Customs territory and during their stay therein;

E2/F1

“declaration of arrival” or “declaration of departure” , as the case may be, means any declaration required to be made or produced to the Customs upon the arrival or departure of means of transport for commercial use, by the person responsible for the means of transport for commercial use, and containing the necessary particulars relating to the means of transport for commercial use and to the journey, cargo, stores, crew or passengers;

E3/F3

“means of transport for commercial use” means any vessel (including lighters and barges, whether or not ship-borne, and hydrofoils), hovercraft, aircraft, road vehicle (including trailers, semi-trailers and combinations of vehicles) or railway rolling stock, which is used in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration, together with their normal spare parts, accessories and equipment, as well as lubricants and fuel contained in their normal tanks, when carried with the means of transport for commercial use.

In the definition of the term “means of transport for commercial use”, the quantities of spare parts that would be considered normal would generally vary according to the particular journey involved. For example, on long routes it is customary to provide means of transport for commercial use with considerable quantities of spare parts, in particular where difficulties can be expected in obtaining the necessary parts in Customs territories along the route.

3. Principles

Standard 1

Customs formalities applicable to means of transport for commercial use shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Means of transport for commercial use. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 6 on Customs control and Chapter 7 on Information technology should be read in conjunction with this Chapter on Means of transport for commercial use.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Recommended Practice 2

Customs formalities applicable to means of transport for commercial use should apply equally, regardless of the country of registration or ownership of the means of transport for commercial use,of the country from which they arrived or their country of destination.

The objective of Recommended Practice 2 is to exclude any discrimination in the form of more strict respect of Customs formalities applied to means of transport for commercial use based on the Customs territory of ownership ,or registration or from which the Customs territories on their immediate itineraryy they arrived or their country of destination. This provision does not in no way precludes or discourages the granting of special facilitation measures, such as fewer the reduction of Customs formalities for to administrations with which bilateral or multilateral agreements have been made.

This provision also places no restriction on administrations countries varying the degree of Customs control exercised due to particular existing circumstances. For example, more such as the necessity to apply strict Customs control measures may be exercised for on routes where smuggling is could be expected to be more likely to occur. However, in the exercisinge of this control function, Aadministrations should apply the risk management techniques enumerated in in the Guidelines to Chapter 6 of the General Annex and its Guidelines.

4. Temporary admission of means of transport

Recommended Practice 3

Means of transport for commercial use, whether loaded or not, should be allowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes, provided that such means of transport for commercial use are not used for internal transport in the Customs territory of the country of temporary admission. They must be intended for re-exportation without having undergone any change except normal depreciation due to their use, normal consumption of lubricants and fuel and necessary repairs.

Most administrations allow the means of transport for commercial use to enter without relieved from payment of duties and taxes whether or not they carry goods from a destination outside the Customs territory, they intend to carry goods from their territory concerned to a destination outside it or they are passing through the Customs territory empty.the territory. One of the Cconditions iare iiimposed is that the foreign means of transport for commercial use is y should not be used for internal transport within the Customs territory. This provision also stipulates that the means of transport for commercial use should be re-exported in the same state, with allowances being given forto normal depreciation due to the use within the Customs territory, normal consumption of lubricants and fuel and any necessary repairs. Any Customs territory which does allow internal transport for a foreign means of transport for commercial use would be granting a greater facility under Article 2 of the Convention.

Administrations will have to enter a reservation to Recommended Practice 3 if they impose restrictions on the temporary admission of foreign means of transport for commercial use imported and used by enterprises operating outside their territory; if they fix maximum limits for duty and tax-free importation of lubricants and fuel contained in the normal tanks; or if they impose additional conditions for certain means of transport.

The need for Customs formalities for question of temporary admission does not generally apply for arise in respect of means of transport for commercial use owned and registered in the territory concerned, which are either hdomestically produced or have previously paid any import duties and taxes to which they were liable.

Provisions of Specific Annex B, Chapter 2 on Rre-importation in the same state may apply for returning national means of transport for commercial use. Some administrations, on the other hand, provide duty-free treatment because the national means of transport for commercial use is considered an instrument of international traffic.

Standard 4

This Standard 4 restricts the cases when Customs should imposes the requirementof a security or a document of temporary admission for means of transport for commercial use only when the Customs consider it necessary for the purposes of Customs control. Therefore it is not necessary to impose these requirement in all cases. Many administrations waive the requirement for Some security for road vehicles that which are registered abroad on the grounds that such vehicles could not be registered in the foreign Customs territory without evidence that any duties and taxes had been properly paid.

Normally the requirement for a security or temporary admission document is wWaivedrs from one for both these requirements may be granted to means of transport for commercial use which operate on international routes regularly and which have a good record of compliance with Customs formalities. Even when a security is required, it should be kept to the minimum that would ensure the re-exportation of the commercial means of transport. Guidelines to Chapter 5 of the General Annex and its Guidelines should be consulted for further details on security.

In any event, if either any of these requirements are imposed, they should be provided for in the national legislation.

Administrations should also refer to Chapter 6 on Customs control of the General Annex for information on risk management.

Standard 5

Where the Customs fix a time limit for the re-exportation of means of transport for commercial use, they shall take into account all the circumstances of the transport operations intended.

The requirement that means of transport for commercial use be re-exported is normally met as a result of commercial considerations. Many Customs do not therefore impose time limits. However, where Customs fix a time limit for control purposes, it is fixed usually begins from the date the commercial means of transport enters into the Customs territory. Standard 5 requires Customs to consider all the circumstances of the transport operations in fixing this time limit, such as the length of journey inwards into the territory,; the loading, unloading and handling of the cargo;, and the return journey to the place of re-export, etc. in fixing this time limit. Therefore the time period fixed for re-exportation should be of a sufficient duration to enable the operator to accomplish his operations within the Customs territory and to re-export the commercial means of transport within the stipulated time.

Recommended Practice 6

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

Time periods are fixed by Customs for re-exportation of the means of transport for commercial use mainly to avoid of any abuse of the temporary admission facility granted. Yet iIt is always possible that there will be are circumstances when the means of transport for commercial use can not be re-exported within thise periodtime fixed by the Customs. Such circumstances can do arise when there is a breakdown of the means of transport breaks down and that requires repair or parts to be brought in from a destination outside the territory, or when there are delays in the operations to be carried out, or and for various other reasons. In these such situations, this provision Recommended Practice 6 provides for the Customs, when a request is received from the person concerned, to consider all the circumstances and in granting an requested extension of the period time for the re-exportation whenever possible.of the commercial means of transport.

5. Temporary admission of parts and equipment

Recommended Practice 7

Special equipment for the loading, unloading, handling and protection of cargo, whether or not it is capable of being used separately from the means of transport for commercial use, which is imported with the means of transport for commercial use and is intended to be re-exported therewith, should be allowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes.

The special equipment referred to in Recommended Practice 7 this provision covers the equipment for the loading, unloading, handling and protection of the cargo. They are generally firmly installed on the means of transport for commercial use. In some cases they se are movable equipment which that can be used separately. This provision requires that such equipment be allowed temporary admission along with the means of transport for commercial use relieved from duties and taxes.

Some Customs administrations allow temporary admission of this such equipment on subject to the condition that it is used only in the immediate vicinity of the means of transport for commercial use, for example within an airport or on shore at ports of call.

Normally a separate security or temporary admission document is not required for this such equipment.

Recommended Practice 8

It is an acceptedable practice that means of transport for commercial use carry with them parts and equipment with them to be used as replacements parts and equipment when the need arises for repair and maintenance. These parts and equipment should be differentiated from those special equipment referred to in Recommended Ppractice 7 that would be which are necessary for a particular function that they are expected to carry out such as loading, unloading, etc. This provision Recommended Practice 8 provides for the temporary admission of additional such parts and equipment for repairs and maintenance of means of transport for commercial use already in the Customs territory. Such treatment is often accorded to road vehicles.

Some Customs administrations require a temporary admission document and, in some instances, security for these parts and equipment, although many some administrations have found it possible to dispense with these requirements. Other administrations base their duty-free treatment on a special tariff provision.

The conditions for re-exportation conditions also apply to these parts and equipment. In cases where the such parts and equipment are not re-exported, the person concerned may they may be, at the request of the person concernedthat they be :

- cleared for home use in their existing state as if they had been imported in that state; or

- destroyed or rendered commercially valueless under Customs control, without expense to the Revenue; or

- abandoned free of all expenses to the Revenue with the consent of the Customs abandoned free of all expenses to the Revenue.

The expression “‘rendered commercially valueless”’ is taken to means that the goods have been reduced to such a condition that their remnants thereof not only have no value in the field of commerce for which the goods were originally intended but also have no value or in any other field of commerce, and they thereby ceaseing to be of concern any interest to the Revenue.

The word “‘equipment”’ is not meant to include temporarily imported tools, which are covered in Annex B.2 of the Istanbul Convention, nor to any items of a consumable nature.

The Convention on Facilitation of International Maritime Traffic (London, 9 April 1965, IMO FAL Convention) and Annex 9 to the Convention on International Civil Aviation (Chicago, 7 December 1944, ICAO Chicago Convention) have defined the term ‘”equipment”’ in relation to ships and aircraft as follows:

IMO

“Articles, other than ships’ spare parts, on board a ship for use thereon which are removable but not of a consumable nature, including accessories such as life-boats, life-saving devices, furniture, ships’ apparel and similar items.”

ICAO

“Articles, other than stores and spare parts of a removable nature, for use on board an aircraft during flight, including first aid and survival equipment.”

Temporary admission under Recommended Practice 8 this provision is granted only to parts and equipment which are directly needed as replacements in the course of the purposes of repair or maintenance in the Customs territory where they are imported. It is not intended to allow for the possibility of merely replenishment ingof the stock of spare parts on board a means of transport for commercial use or to allow the establishment of such stocks of parts and equipment in the territory concerned. However, many administrations do allow temporary importation of parts and equipment for the “‘replenishment of stocks”’, and this may be considered as granting a greater facility than is required by this provision.

6. Arrival

Standard 9

If and when a declaration of arrival is required, this Standard 9 requires that the particulars required should be kept to the minimum. However a A number of international agreements also specify lay down the maximum information that which may be required to be given on the declaration.

, e.g.- the General Declaration in the Annex to the Convention on Facilitation of International Maritime Traffic (London, 9 April 1965)

- the General Declaration in Annex 9 to the Convention on International Civil Aviation (Chicago, 7 December 1944)

In some administrations the declaration of arrival simply announces the presence of the means of transport for commercial use, with minimum information about the journey, cargo, crew and passengers.

Nothing in this Standard prevents the Customs that from accepting an oral declaration of arrival. It would be considered as granting a greater facility in accordance with Article 2 of thise Convention.

Standard 10

The Customs shall reduce, as far as possible, the number of copies of the declaration of arrival required to be submitted to them.

The international agreements referred to above generally lay down the number of copies required. There may be a need in some administrations for an additional copy of the declaration of arrival for statistical purposes or for the port or airport authority.

Standard 11

It is not an international practice to require legalization, verification or authentication of such documents. However, this does not prevent Customs from carrying out any necessary inquiries if they have reasons to believe that there is an abuse of the temporary admission facility by way of such documents, or that they are used in the commission of an offence.

7. Subsequent calls in the Customs territory

Standard 12

It is normal for the means of transport, particularly ships and aircraft, to call at more than one place within the Customs territory. When such subsequent calls are made, Standard 12 requires that the Customs formalities at the subsequent place(s) of call should be kept to the minimum taking into account the Customs interventions at the earlier places of call.

Where appropriate, as a facilitative measure, copies of documents previously lodged with or produced to Customs should be allowed to be used to for the purposes of accomplishing the Customs formalities at the subsequent places of call.

8. Departure

Standard 13

Customs formalities applicable upon the departure of means of transport for commercial use from the Customs territory shall be limited to measures to ensure that :

(a) where required, a declaration of departure is duly lodged with the competent Customs office;

(b) where appropriate, Customs seals are affixed;

(c) where required for control purposes, specified Customs routes are followed; and

(d) no unauthorized delay occurs in the departure of means of transport for commercial use.

As a matter of facilitation Customs formalities for applicable to departure of the means of transport for commercial use should be kept to the minimum as a matter of facilitation. Normally Customs would may require that a declaration of departure be lodged and ensure that the relevant Customs seals are affixed. Where the means of transport for commercial use is to call at another place within the Customs territory, concerned specified Customs routes may be assigned. The primary objective, concern however, should be is that there is no delay in the departure of the means of transport for commercial use.

Recommended Practice 14

When a declaration upon departure is required for a All departing means of transport for commercial usewould be expected to lodge a declaration upon departure, . Aas in the case of the declaration of arrival, it may an oral declaration should be allowed to be made orally as a facilitative measure. If a written declaration is required, Recommended Practice 14 this provision stipulates that the declaration be made in a form similar to that of the arrival declaration. It is also to be noted that tThe particulars required should also be kept to the minimum. For the purposes of harmonization, It is recommended that the model forms specified in laid down by relevant international instruments should be used.

Standard 15

Means of transport for commercial use shall be permitted to depart from the Customs territory through a Customs office other than that through which they entered.

Means of transport for commercial use, whether carrying goods or persons or arriving empty, frequently travel inland in the Customs territory to arrive at their final destination. For logistical reasons they may call at subsequent ports, airports, Customs offices or traders’ premises within the Customs territory to load or unload goods or passengers before departing for a destination outside the Customs territory. For these reasons, Standard 15 allows the means of transport for commercial use to depart the Customs territory from a Customs office other than the one through which they entered to facilitate the commercial operators of these conveyances. It allows them to choose the most direct and the most economical route available to them in the international transport of goods and persons.

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Chapter 4

STORES

1. Introduction

Most Customs territories provide an exemption from import duties and taxes for stores which are carried on board vessels, aircraft and trains arriving in the Customs territory and which are intended to meet the needs of passengers and crew, as well as the needs of the means of transport themselves. Exemption is granted because, as a rule, such stores remain on board and may be regarded as being temporarily imported with a minimum of Customs formalities. For obvious reasons, however, some of the stores may be used or consumed while the means of transport stay in the Customs territory.

Similarly, stores for vessels and aircraft departing for an ultimate foreign destination are usually supplied free of any applicable duties and taxes. This is granted since these stores are regarded as exported and thus receive the same benefits as goods exported directly.

The level of Customs control for stores is usually adapted according to the requirements of each means of transport and, in some cases, according to the revenue status of the stores themselves. The measures normally taken include general supervision, documentary control and placing certain stores under Customs seal.

Chapter 4 of Specific Annex J covers stores for vessels, aircraft and trains which are used, or intended to be used, in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration. It does not cover stores for means of transport for private use or for military or government means of transport not engaged in commercial activities. It also does not cover means of transport for commercial use engaged in the carriage of goods coastwise.

2. Definitions

*E1/F6*	*“carrier”* means the person actually transporting goods or in charge of or responsible for the operation of the means of transport;
*E2/F1*	*“Customs formalities applicable to stores”* means all the operations to be carried out by the person concerned and by the Customs in respect of stores;
*E3/F5*	*“Customs treatment of stores”* means all the facilities to be accorded and all the Customs formalities applicable to stores;
*E4/F2*	*“stores”* means : - stores for consumption; and - stores to be taken away;
*E5/F3*	*“stores for consumption”* means : - goods intended for consumption by the passengers and the crew on board vessels, aircraft or trains, whether or not sold; and - goods necessary for the operation and maintenance of vessels, aircraft or trains including fuel and lubricants but excluding spare parts and equipment; which are either on board upon arrival or are taken on board during the stay in the Customs territory of vessels, aircraft or trains used, or intended to be used, in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration;
*E6/F4*	*“stores to be taken away”* means goods for sale to the passengers and the crew of vessels and aircraft with a view to being landed, which are either on board upon arrival or are taken on board during the stay in the Customs territory of vessels and aircraft used, or intended to be used, in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration.

3. Principles

Standard 1

Customs treatment of stores shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Stores. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 8 on Relationship between the Customs and third parties and Chapter 9 on Information, decisions and rulings supplied by the Customs should be read in conjunction with this Chapter on Stores.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

Recommended Practice 2

Customs treatment of stores should apply equally, regardless of the country of registration or ownership of vessels, aircraft or trains.

The objective of Recommended Practice 2 is to exclude any discrimination in the Customs treatment of stores based on the Customs territory of registration or ownership of the conveyances. Nevertheless Customs might vary the degree of Customs control due to particular circumstances, such as more strict control measures on routes where smuggling is more likely to occur. In exercising their control functions, Customs should apply the risk management techniques that are detailed in Chapter 6 of the General Annex and its Guidelines.

4. Stores on board arriving vessels, aircraft or trains

4.1. Exemption from import duties and taxes

Standard 3

Stores which are carried in a vessel or aircraft arriving in the Customs territory shall be exempted from import duties and taxes provided that they remain on board.

Standard 3 covers stores that are intended for consumption by the passengers and crew on board vessels or aircraft or that are for sale to the passengers and crew, as well as goods necessary for the operation and maintenance of the vessel or aircraft. This Standard relates only to stores on two of the types of conveyances covered by the definition and excludes those on trains. This is because vessels and aircraft generally remain in the Customs territory for as short a time as possible and are in the controlled environment of a port or airport. Stores on trains are covered under Recommended Practice 4.

Stores that are sold or given free of charge to passengers or members of the crew may be liable to duties and taxes when taken out of the vessels or aircraft.

Recommended Practice 4

Stores for consumption by the passengers and the crew imported as provisions on international express trains should be exempted from import duties and taxes provided that :

(a) such goods are purchased only in the countries crossed by the international train in question; and

(b) any duties and taxes chargeable on such goods in the country where they were purchased are paid.

Most international express trains normally provide foodstuffs, non-alcoholic beverages, beer and wine as an added service to their passengers and crew. Recommended Practice 4 provides for these types of provisions to enter free of any duties and taxes on two conditions. They must have been purchased in the Customs territories crossed by the international train and, if any duties and taxes are due in the Customs territory of purchase, they have been paid.

These stores on international trains are exempted from duties and taxes by virtue of their having been duty and tax paid in the Customs territory in which they were purchased. Thus they may not be totally duty and tax-free for the owner of the train, but they will receive a facilitation treatment in subsequent Customs territories.

Customs generally do not apply Customs controls to these stores for consumption. However some administrations do subject spirits and tobacco on board the trains to the usual Customs control.

Standard 5

Standard 5 provides for exemption of duties and taxes on goods such as fuel and lubricants meant for the operation and maintenance of vessels, aircraft and trains. Other items normally considered as stores for consumption necessary for the operation and maintenance of vessels are :

- boiler compounds, fuel oil treatment preparations and filter sponges;

- cleaning compounds and materials;

- paints, varnishes and solvents, and corrosion and rust inhibitors;

- gas for welding purposes; and

- products for the preservation, treatment or preparation on board of the goods carried.

Customs treatment of the normal spare parts and equipment upon arrival in the Customs territory, as well as parts and equipment imported separately, are dealt with in this Specific Annex in Chapter 3 on Means of transport for commercial use.

4.2. Documentation

4.2.1. Stores on board vessels

Standard 6

Standard 6 relates only to stores on board vessels. This is because vessels stay in ports for a longer period than other means of transport, and are used as passenger lines and cruise vessels. Therefore Customs may, for the purposes of control, require a declaration of stores. However Standard 6 limits the information to be submitted to the minimum.

Generally only goods that are subject to high import duties, such as tobacco products, beer, spirits and wine, and goods subject to import restrictions or prohibitions, such as narcotics for medical use or firearms, must be listed in detail in such a declaration. Therefore this Standard should not be interpreted as justification to require a declaration listing in detail everything on board the vessel. The overriding consideration should be facilitation and appropriate proportions of control.

If a declaration is required, many administrations use that set out in the International Maritime Organization (IMO) FAL Convention.

It should be noted, however, that many administrations dispense with the requirement of a written declaration concerning any kind of stores.

Recommended Practice 7

The quantities of stores which are allowed by the Customs to be issued from the stores held on board should be recorded on the declaration concerning stores produced to the Customs upon arrival of the vessel in the Customs territory and no separate form should be required to be lodged with the Customs in respect thereof.

Recommended Practice 7 is intended to minimize document requirements and facilitate the issue of stores by using only the declaration produced upon arrival of the vessel for recording the quantities issued.

As a measure of facilitation in accounting for stores, some Customs administrations have agreed to use a separate document on which all changes in the quantities of stores that have been placed under Customs seal are recorded by Customs. This document is drawn up by Customs at the first port of call, on the basis of the ship’s stores declaration. The master of the vessel will then produce this document to Customs at the subsequent ports of call in any of those Customs territories.

Recommended Practice 8

The quantities of stores which are supplied to vessels during their stay in the Customs territory should be recorded on any declaration concerning stores which has been required by the Customs.

If and when stores are supplied to the vessels during their stay in the Customs territory, the supply should be recorded in the declaration originally submitted upon arrival. No separate document should be required, thus minimizing the number of forms provided by the vessel operator.

As in Standard 6, many administrations have dispensed with the requirement of this written declaration. Likewise if a declaration is deemed necessary, only stores which are subject to high import duties and taxes and/or restrictions and prohibitions (narcotics for medical use, tobacco products, beers, spirits and wine) should need to be recorded in detail.

4.2.2. Stores on board aircraft

Standard 9

The Customs shall not require the presentation of a separate declaration of stores remaining on board aircraft.

Since aircraft generally remain in an airport as short a time as possible, the level of facilitation should be increased and the level of controls on stores less stringent. Customs should accept an oral declaration of the quantities of stores on board an arriving aircraft or make use of the airline company’s internal documents.

Standard 9 thus provides for Customs not to require a separate declaration. It should also be noted that Annex 9 to the Convention on International Civil Aviation (Chicago, 1944) contains a corresponding provision in Chapter 2 under the heading “Description, Purpose and Use of Aircraft Documents”.

4.3. Issue of stores for consumption

4.3.1. Issue of stores on vessels

Standard 10

It is usual that vessels tend to stay longer in a Customs territory than aircraft due to the time needed for berthing, loading and unloading of cargo, and refueling. Therefore it is important that the passengers and crew be issued with sufficient quantities of stores during their stay. Standard 10 requires Customs to allow the issue of these stores in reasonable quantities and based on appropriate considerations.

In most administrations this facility for passengers is subject to the condition that no passengers or cargo are embarked at one port of call in the Customs territory for disembarkation at another port in that territory. This would make any Customs controls difficult to maintain.

In some administrations, standard quantities of alcoholic beverages and tobacco products can be issued for consumption by the passengers and crew on board during the stay of a vessel in the Customs territory. The daily amounts per person, for example, may be :

- ¼ liter of spirits, ¾ liter of wine and 1 liter of beer; and

- 40g. of tobacco or an equivalent amount in cigars and cigarettes.

In order to simplify the arrangements, overall quantities of such products may be issued at one time. As a matter of control, certain limits may be set for these overall quantities.

Customs should also allow an additional issue of stores if the vessel’s departure is delayed for one reason or another.

Customs also normally allow an additional issue of stores for consumption to be served at functions organized on board, whether or not against the payment of any duties and taxes, when persons other than passengers and the crew also attend.

Recommended Practice 11

When a vessel has to undergo repairs in a dock or a shipyard, the crew is not expected to stay on the vessel unless the duration of the repair is a short one. Since it is reasonable that the crew be allowed the quantities of stores for consumption that would be issued if they remained on board, Recommended Practice 11 provides for Customs to allow the issue of these stores in this situation.

4.3.2. Issue of stores on aircraft

Recommended Practice 12

With the increase in the volume of air passengers, an aircraft from a foreign place of departure may frequently land at one or more airports in a Customs territory. In such circumstances, Recommended Practice 12 encourages Customs to allow the consumption of stores on board during the stay and during their flights between domestic airports.

In this regard Annex 9 to the Convention on International Civil Aviation (Chicago, 1944) contains a corresponding provision in Chapter 4 under the heading “Sale and Use of Commissary Supplies on Board Aircraft”.

4.4. Customs control

Standard 13

The Customs shall require the carrier to take appropriate measures to prevent any unauthorized use of the stores including sealing of the stores, when necessary.

Standard 13 is intended to place responsibility for compliance on the carrier to prevent any abuse of the stores. Appropriate measures could include requesting Customs to seal the stores if necessary.

Although the responsibility is with the carrier, this Standard does not prevent Customs from taking appropriate control measures to safeguard the interest of the Revenue when deemed necessary. These could include taking stock of the stores on board from time to time, or placing the stores under Customs seal after permitting the issue of a required quantity. It must be pointed out, however, that generally only goods subject to high import duties and taxes and susceptible to smuggling, mainly alcoholic beverages and tobacco products are placed under Customs seal. Chapter 6 on Customs control in the General Annex and its Guidelines should be consulted for further details.

In many Customs administrations sealing is carried out only if so requested by the carrier. Customs also may waive the sealing of stores on vessels that stay in the Customs territory only for a short time and on cruise vessels.

Standard 14

The Customs shall require the removal of stores from the vessel, aircraft or train for storage elsewhere during their stay in the Customs territory only when they consider it necessary.

It is possible that aircraft, vessels or trains may have to remain in the Customs territory for a longer period of time than anticipated, for example, when there is a breakdown or unusual weather conditions. Standard 14 limits Customs requiring the removal of the stores for storage elsewhere. This should be rare and used only when there is a high probability of abuse. For aircraft, Customs would normally keep them under general supervision or, in the case of a long stay at the airport, place the stores on board under Customs seal.

5. Supplies of stores exempted from duties and taxes

Standard 15

Vessels and aircraft which depart for an ultimate foreign destination shall be entitled to take on board, exempted from duties and taxes :

(a) stores in such quantities as the Customs deem reasonable having regard to the number of the passengers and the crew, to the length of the voyage or flight and to any quantities of such stores already on board; and

(b) stores for consumption necessary for their operation and maintenance, in such quantities as are deemed reasonable for operation and maintenance during the voyage or flight having regard also to any quantities of such stores already on board.

Standard 15 requires Customs to allow vessels and aircraft bound for a foreign destination to take on board the supply of all reasonable stores necessary for their journey, having regard to the stores already on board. In some Customs territories this facility is also granted to vessels and aircraft which leave the Customs territory although their ultimate destination is not foreign.

The supply of such stores for the voyage and the flight should generally include both the outward and return journeys and, for frequent and regular traffic on short routes, Customs should consider supplying, at any one time, quantities that would meet the requirements of several journeys. This is a facilitative measure that would avoid the need for additional paperwork, formalities and supervision by Customs.

As a further facility, Customs may also accept requests for the supply of stores for quick turn-around vessels and aircraft in advance of their arrival in the port or airport.

In determining the quantities of alcoholic beverages and tobacco products to be supplied, the number of passengers need not necessarily be the exact number of passengers on a voyage or flight. The quantity may be fixed having regard to the passenger capacity of the conveyance or, in the case of vessels, to an average number of passengers carried at a given time of the year.

The exemption from duties and taxes referred to in this Standard may be granted as a remission, a refund or a repayment, as the case may be.

Stores exempted from duties and taxes are a risk to the Revenue and, as such, Customs could institute appropriate control measures as elaborated in the Guidelines to Standard 13 above.

Standard 16

Replenishment of stores exempted from duties and taxes shall be allowed for vessels and aircraft which have arrived in the Customs territory and which need to replenish their stores for the journey to their final destination in the Customs territory.

Standard 16 requires Customs to allow replenishment of stores for vessels or aircraft enroute along their journey. Such replenishment may cover not only replenishments for the journey to the final destination, but also quantities that will make it unnecessary for a further supply at a subsequent destination before the return journey abroad.

This replenishment also should take into account the number of passengers and crew and the length of the journey involved.

Standard 17

Standard 17 requires that if any conditions are laid down by Customs for the supply of stores for consumption to vessels or aircraft, they should be the same as those for stores held on board. No additional conditions or differing conditions should be imposed. The conditions would generally relate to the security of the stores (sealing or other controls) and the amounts allowed for issue or sale to passengers or crew.

6. Departure

Recommended Practice 18

No separate declaration concerning stores should be required upon departure of vessels from the Customs territory.

When a vessel departs from the Customs territory, any necessary information about the stores is usually available from a declaration produced upon arrival, supplemented with any notations referred to in Recommended Practices 7 and 8, and from any documents covering stores loaded on board during the stay in the Customs territory. Thus Recommended Practice 18 states that a separate declaration should not be made necessary.

Some Customs territories have mutually established a system to prevent smuggling of alcoholic beverages and tobacco products carried on board as stores in maritime traffic between their territories. The quantities on board upon departure from one Customs territory are recorded on a document which the person responsible for the vessel is required to produce to Customs upon arrival in another Customs territory. This system does not apply to passenger vessels in scheduled service.

Standard 19

As with other similar provisions regarding declarations at departure, Standard 19 limits the information Customs can require and the reasons for it. The need for control may arise when, for example, a vessel or aircraft initially departs from the Customs territory with the intention of returning before the stores on board have been consumed, or in the absence of any preceding declaration. If a declaration is required, the information should be limited to only goods subject to high duties and taxes and restricted or prohibited goods.

7. Other disposal of stores

Standard 20

Stores on board vessels, aircraft and trains having arrived in the Customs territory shall be allowed :

(a) to be cleared for home use or to be placed under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case; or

(b) subject to prior authorization by the Customs, to be transferred respectively to other vessels, aircraft or trains in international traffic.

Standard 20 provides for additional facilitation measures that allow various means of disposal of stores arriving in the Customs territory, subject to compliance with the relevant Customs formalities applicable to the chosen procedure.

The facility provided for under (b) above may be granted, for example, between conveyances belonging to the same company. In some administrations, such transfers are dealt with under the transhipment procedure as covered in Specific Annex E, Chapter 2.

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Chapter 5

RELIEF CONSIGNMENTS

1. Introduction

Certain goods, either because of their nature or because of the special circumstances surrounding their shipment, need to be conveyed rapidly from one country to another and cleared through Customs with a minimum of delay. These goods are usually referred to as urgent consignments, examples of which are perishable goods, live animals and newspapers.

There are two categories of urgent consignments, those goods which are urgent due to their nature and goods which are urgently required because of the circumstances in which they are being sent. The basic provisions of Chapter 3 of the General Annex address the simplified procedures leading to the rapid clearance of urgent consignments. In particular, Standard 3.34 of the General Annex requires Customs administrations to process live animals, perishable goods and other goods which the Customs accept are urgently required, as a matter of priority. In some instances, for those goods which fall under the category of urgently required, the importer/exporter may be required to provide a request for urgent examination by Customs and indicate the reason why the goods are urgently needed.

One type of consignment that clearly falls within the category of goods which are urgently required is relief consignments. This Chapter provides for rapid clearance of goods such as medicaments, vaccines, and replacement parts, etc., which are intended to aid those affected by disasters. Goods used by disaster relief personnel in order to perform their duties would also be considered relief consignments. Goods such as firefighting and rescue equipment, scientific and medical equipment, equipment for use in searches, investigations and salvage in connection with accidents, are examples of goods used by disaster relief personnel in order to perform their duties.

2. Purpose and scope

In the event of a natural disaster (e.g., earthquakes) and similar catastrophes (e.g., dam failures), aid to those affected by such catastrophes obviously needs to be delivered and moved across international boundaries efficiently and expeditiously. The effectiveness of humanitarian assistance is dependent to a large extent on the speed with which it can be furnished. It is therefore imperative that Customs administrations be as facilitative as possible and be prepared to rapidly clear goods that, as a result of catastrophic events, are being forwarded as aid.

In recognition of the significance of rapid clearance of these goods and to support and contribute to the efforts made in the interest of humanity to assist victims of disasters, the Convention contains a separate Chapter on the subject. Specific Annex J, Chapter 5 outlines the provisions that Customs administrations should establish. The Chapter expands upon the previous Customs Co-operation Council (CCC) Recommendation to Expedite the Forwarding of Relief Consignments in the Event of Disasters (see Appendix 1). The special provisions included in this Chapter do not apply to goods sent via post, nor do they apply in respect of alcohol, alcoholic beverages, tobacco or tobacco products.

The clearance of relief consignments is an important matter. It has been the subject of discussions held between the World Customs Organization (WCO) and the United Nations Department of Humanitarian Affairs (UNDHA). In cooperation with the WCO, the UNDHA drew up a Model Agreement on Customs Facilitation in International Emergency Humanitarian Assistance to establish a framework to encourage the expedited delivery of relief goods in connection with humanitarian assistance and emergency relief work (see Appendix II). The provisions found in this Chapter are wholly consistent with this co-operative effort.

The provisions of Chapter J.5 apply to the Customs formalities involved in the clearance of relief consignments, at any stage of their transportation, be it at exportation, during transit or at importation. Goods cleared under these provisions are subject to the same controls and formalities as are the consignments of goods described in the General Annex.

Generally, however, this Chapter deals with the greater facilities provided for relief consignments as compared with the provisions relating to the Customs treatment of other goods where no urgency is involved. When Customs is clearing relief consignments, Customs control should be restricted to the absolute minimum necessary to ensure compliance with the laws and regulations which the Customs are responsible for enforcing. This is consistent with Standard 2 in Chapter 6 of the General Annex regarding Customs Control.

3. Essential features

3.1. Benefits

Administrations that establish simplified and standardized provisions for the rapid clearance of relief consignments across international borders help to ensure that the aid actually reaches the victims in times of need. The resulting uncomplicated and expeditious delivery of humanitarian aid and emergency relief work can lead to the elimination, or at the very least, reduction of the continued effects of the destruction and devastation. Timely aid can also accelerate the recovery process for the people affected by the catastrophes.

Customs procedures should not be an obstacle in such situations. Instead they should facilitate the process to the maximum extent possible within the confines of the law. In most cases, the potential risks associated with the quick and efficient clearance of this type of consignment are minimal, if not non-existent. In fact, relief consignments are normally coordinated, shipped and cleared through the management of the major relief agencies and humanitarian organizations such as the Red Cross, which is known as the Red Crescent in some countries.

4. Definition

E1 /F1

“relief consignments” means :

- goods, including vehicles and other means of transport, foodstuffs, medicaments, clothing, blankets, tents, prefabricated houses, water purifying and water storage items, or other goods of prime necessity, forwarded as aid to those affected by disaster; and

- all equipment, vehicles and other means of transport, specially trained animals, provisions, supplies, personal effects and other goods for disaster relief personnel in order to perform their duties and to support them in living and working in the territory of the disaster throughout the duration of their mission.

5. Application of the procedure

Standard 1

Clearance of relief consignments shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Relief consignments. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles and Chapter 3 on Clearance and other Customs formalities should be read in conjunction with this Chapter on Relief consignments.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

5.1. Requirements

Standard 2

Clearance of relief consignments for export, transit, temporary admission and import shall be carried out as a matter of priority.

To ensure that humanitarian assistance and emergency relief work reach the people in need as soon as possible, Customs must, when establishing workloads, give absolute priority to the clearance of relief consignments before other goods. Standard 2 explicitly points out this basic requirement and highlights that the facilitative provisions relating to the clearance of relief consignments are also applicable when the goods are under another Customs procedure, i.e., export, transit, temporary admission or warehouse.

Standard 3

In case of relief consignments the Customs shall provide for:

- lodging of a simplified Goods declaration or of a provisional or incomplete Goods declaration subject to completion of the declaration within a specified period;

- lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods, and their release upon arrival;

- clearance outside the designated hours of business or away from Customs offices and the waiver of any charges in this respect; and

- examination and/or sampling of goods only in exceptional circumstances.

The provisions of Chapter 3 of the General Annex regarding Clearance and Other Customs Formalities generally apply to the clearance of relief consignments. However, Standard 3 of this Chapter extends beyond those basic provisions. Standard 3 includes and highlights the necessary facilitative measures that Customs must put in place to expedite the clearance of goods used in emergency relief work and humanitarian assistance.

Standard 3 of Chapter 5 mandates that Customs permit the lodging of a simplified, provisional or incomplete Goods declaration prior to the arrival of relief consignments. This is in accordance with Standard 3.13 of the General Annex which allows for such declarations when valid reasons exist. Where the goods are cleared frequently by the same person, Customs should allow a single Goods declaration to cover all such consignments cleared by that person in a given period. Also, for some Customs administrations, national legislation may provide for an oral declaration to be acceptable when processing relief consignments.

Advance lodgement of the Goods declaration does not affect the point in time to be taken into consideration in determining the rates of duties and taxes that may be applicable. The point in time is always the point which is specified in national legislation. Also, the person(s) clearing the goods should be authorized to defer the payment of duties and taxes without interest charges. The period and conditions of the deferment should comply with the relevant Standards found in Chapter 4 of the General Annex regarding Duties and Taxes. Further facilitative measures concerning duties and taxes in this Chapter are discussed below under Recommended Practices 5 and 6.

In view of the importance attached to health and safety considerations, especially under these extraordinary circumstances, sometimes it may be necessary for Customs to make it a condition for release that the controls provided for in national legislation (veterinary, health, phytopathological, etc.) be carried out by the relevant competent authority. However, all efforts should be made to expedite the process and prevent delay in the delivery of the aid.

Standard 3 also indicates that Customs must provide for the checking of the Goods declaration prior to arrival of the goods to allow for the rapid release of the goods upon arrival. These provisions are also consistent with the provisions in Chapter 3 of the General Annex and specifically, Standard 25. In some instances, to be as facilitative as possible, it may be necessary for Customs to release the goods prior to the lodgement of the Goods declaration. To allow this, the Customs must first be satisfied that the declarant will subsequently accomplish all formalities in respect of the clearance of goods.

Also, due to the unpredictable circumstances surrounding the need for such goods, the clearance of relief consignments may be required outside of the designated hours of business or away from Customs offices. Standard 3 mandates that Customs always endeavour to grant this facility. Of course, Customs will be able to comply with such requests only insofar as staff and any necessary facilities can be made available. This Standard also indicates that Customs should waive any related charges in granting this facility. This provision is much more facilitative than that outlined in Standard 2 of Chapter 3 of the General Annex.

Another progressive measure, which is recommended and has been successfully implemented during several prototype projects conducted between some countries, is one in which the Customs of the importing country accepts, as evidence of the contents of a relief consignment, a detailed list certified by the Customs authorities of the exporting country. In order to avoid delays in the forwarding of relief consignments at later stages in their journey, Customs of the exporting country should, on application by the person concerned, examine where appropriate by random checks, the contents of relief consignments against such detailed lists. Customs can then certify the results of this examination on that list and where possible and appropriate, place such consignments under Customs seal.

With respect to transhipment or transit, many administrations allow operators, under supervision of the public authorities concerned, to disassemble transhipment cargo including shipments in containers and on pallets, so that they may sort and reassemble shipments for onward carriage. This should be completed without examination, except for reasons of security or in special circumstances, and should be subject only to simple documentation where required. Many administrations also facilitate as far as possible the carriage of relief consignments and possessions of disaster relief personnel in Customs transit.

Recognizing that Customs should not delay the delivery of humanitarian assistance unless absolutely necessary, the final provision outlined in Standard 3 indicates that examination and/or sampling of the goods should occur only in exceptional circumstances. If it is determined that an examination is indispensable, i.e., for security or narcotics/contraband control purposes, the extent of the examination should be limited to that necessary to ensure compliance with the laws and regulations which the Customs are responsible for enforcing and should be conducted as quickly as possible. Also, in order to expedite the delivery of the goods, Customs should allow the examination and release to be conducted at a place other than the Customs office. For instance, it can be carried out at the premises of the person concerned, on premises with appropriate equipment, at a Customs office other than that at which the goods are to be cleared, or at the place of destination.

Recommended Practice 4

Clearance of relief consignments should be granted without regard to the country of origin, the country from which arrived or country of destination.

Recommended Practice 5

In the case of relief consignments any economic export prohibitions or restrictions and any export duties or taxes otherwise payable should be waived.

It is also recommended, to ensure rapid processing of relief consignments, that the Customs clear the goods without regard to the country of origin of the goods or country of destination. This is an important progressive principle which is present in many other Specific Annexes of the Convention and is particularly relevant in the context of relief consignments.

Recognizing the unusual circumstances surrounding the requirement for relief consignments and the fact that such goods are provided as humanitarian assistance, Contracting Parties should consider the establishment of policies that eliminate the charging of duties and taxes on these goods. Recommended Practice 5 specifically recommends that Contracting Parties waive economic export prohibitions or restrictions and any export duties or taxes otherwise payable when processing relief consignments.

Recommended Practice 6

The final Recommended Practice found in this Chapter specifically recommends that Customs allow the admittance of relief consignments received as gifts by approved organizations for use by or under the control of such organizations free of import duties and taxes and free of economic import prohibitions or restrictions. The competent authorities normally approve national organizations which are responsible for the receipt and distribution of relief consignments. Information concerning these approved organizations and the procedure to be adopted, in the event of the arrival of relief consignments, should be brought to the attention of the competent Customs offices. This would ensure that the provisions of this Chapter concerning relief consignments are implemented without delay. The provisions of this Recommended Practice do not prevent the Customs authorities from collecting import duties and taxes on any goods which are sold after use by the organizations concerned.

In relation to the above Recommended Practice, relief consignments consisting of equipment loaned free of charge, e.g., water purifying, transmission and communication equipment, etc., to approved organizations should be granted temporary admission without the requirement of security and with minimum delay. However, an undertaking to re-export such equipment may be required from the approved organization.

It sometimes happens that certain items of heavy equipment (e.g., trucks), after having been cleared by the Customs and entered into free circulation, are subsequently purchased by approved organizations for use in relief work in the event of a disaster occurring within a country. Although such a situation is not specifically covered by this Chapter, individual countries are urged to consider, at the domestic level, all of the alternatives available to ensure that such equipment is treated as liberally as possible.

In many countries, proof of exportation is not usually required for goods consumed or destroyed in response to an emergency. After the emergency situation is under control, the goods may be accounted with minimal documentation and any reasonable form of proof should be accepted. An example of reasonable proof would be a statement signed by a responsible individual attesting to the consumption or destruction of the goods.

All of these Customs facilitation measures should be adopted to the maximum extent possible by all Customs administrations. Customs are free to enact rules on aspects of relief consignments not covered by the specific provisions of Chapter J.5 and are encouraged to grant greater facilities than those provided for in the Chapter.

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Appendix I

RECOMMENDATION OF THE CUSTOMS CO-OPERATION COUNCIL TO EXPEDITE THE FORWARDING OF RELIEF CONSIGNMENTS IN THE EVENT OF DISASTERS

(8th JUNE 1970)

THE CUSTOMS CO-OPERATION COUNCIL,

DESIRING to contribute to the efforts made in the interest of humanity to assist victims of disasters;

CONSIDERING that the effectiveness of such assistance is dependent to a large extent on the speed with which it can be furnished;

CONSIDERING that the simplification and harmonization of Customs formalities, by facilitating the crossing of frontiers, would expedite the forwarding of relief consignments in the event of disasters;

RECOMMENDS that Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions, should :

1. waive any economic export prohibitions or restrictions, and any export duties or taxes, in respect of goods contained in relief consignments destined to countries having suffered disasters;

2. accept at exportation, as a general rule, the written declarations made out by the exporters of relief consignments as evidence of the contents and of the intended use of such consignments;

3. take such steps as may be necessary in order that, on application being made by the persons concerned, the Customs authorities of the exporting country may be in a position to:

(a) examine, where appropriate by random checks, against a detailed list, the contents of relief consignments, and certify the results of this examination on that list; and

(b) where possible place such consignments under Customs seals

where such action is likely to avoid delays in the forwarding of the goods at later stages in their journey;

4. facilitate as far as possible the carriage of relief consignments in Customs transit, with due regard to any action taken under paragraph 3 above;

5. allow admission free of import duties and taxes and free of economic import prohibitions or restrictions in respect of all relief consignments received as gifts by organizations approved by the competent authorities, for distribution free of charge by such organizations or under their control to the victims of a disaster in their territory, in particular where such consignments consist of foodstuffs, medicaments, clothing, blankets, tents, prefabricated houses, or other goods of prime necessity;

6. facilitate the temporary admission, with conditional relief from import duties and taxes, of any equipment loaned free of charge to organizations approved by the competent authorities to be used under the control of such organizations in action undertaken to alleviate the effects of a disaster; and wherever possible not require security but be content with an undertaking given by the approved organization to re-export such equipment;

7. authorize as far as possible, relief consignments to be cleared outside the hours and places normally prescribed, and, in such circumstances, waive, if possible, any charges for Customs attendance;

POINTS OUT that :

1. the term "disaster" shall be taken to cover both natural disasters and similar catastrophes;

2. the facilities provided for in this Recommendation shall not apply in respect of alcohol, alcoholic beverages or tobacco goods;

3. the provisions of this Recommendation shall not preclude the application of prohibitions or restrictions imposed under national laws and regulations on grounds of public morality or order, public security, public hygiene or health or based on veterinary or phytopathological considerations;

4. this Recommendation does not prevent the application of greater facilities which certain Members grant or may grant in future by unilateral provisions or by virtue of bilateral or multilateral;

INVITES Members of the Council and Members of the United Nations Organization or its specialized agencies, and Customs or Economic Unions :

1. to approve without delay the national organizations which under paragraphs 5 and 6 above would be responsible for the receipt and distribution of relief consignments; and

2. to issue as soon as possible to the competent Customs offices such instructions as may be necessary to ensure, should the case arise, the immediate implementation of the provisions of this Recommendation;

----------------------------------------

Appendix II

MODEL AGREEMENT

between the United Nations and the State/Government of _________________concerning measures to expedite the import, export and transit of relief consignments and possessions of relief personnel in the event of disasters and emergencies;

Whereas paragraph 3 of the Annex to United Nations General Assembly Resolution 46/182 underlines that humanitarian assistance should be provided in accordance with the consent of and in principle on the basis of an appeal by the affected country, and that the sovereignty, territorial integrity and national unity of States must be fully respected in accordance with the Charter of the United Nations;

Whereas paragraph 6 of the said Annex calls upon the States, whose populations are in need of humanitarian assistance, to facilitate the work of intergovernmental and non-governmental organizations in implementing this assistance;

Whereas paragraph 7 of the said Annex urges the States in proximity to emergencies to participate closely with the affected countries in international efforts, with a view to facilitating, to the extent possible, the transit of humanitarian assistance;

Whereas paragraph 28 of the said Annex instructs the United Nations to continue to make appropriate arrangements with interested Governments and intergovernmental and non-governmental organizations to enable it to have more expeditious access, when necessary, to their emergency relief capacities, including food reserves, emergency stockpiles and personnel, as well as logistic support;

Whereas paragraph 29 of the said Annex further instructs the United Nations to develop special emergency rules and procedures to enable all organizations to procure quickly emergency supplies and equipment;

Whereas paragraph 30 of the said Annex requests disaster-prone countries to develop special emergency procedures to expedite the rapid procurement and deployment of equipment and relief supplies;

Whereas paragraph 4 of United Nations General Assembly Resolution 47/168 calls upon potential donors to adopt necessary measures to increase and expedite their contributions, including setting aside, on a stand-by basis, financial and other resources that can be disbursed quickly to the United Nations system in response to the consolidated appeals of the Secretary General;

Whereas paragraph 8 of the said Resolution requests the Secretary General, after consultations with Governments, to report on ways and means to improve further United Nations capability in the areas of prevention and preparedness in relation to natural disasters and other emergencies, in particular emergencies involving food, medicines, shelter and health care, as provided in General Assembly Resolution 46/182;

Whereas the United Nations Department of Humanitarian Affairs serves as the central focal point in the United Nations with Governments, intergovernmental and non-governmental organizations concerning the United Nations emergency relief operations;

Whereas the Customs Co-operation Council adopted, on 8 June 1970, a Recommendation to expedite the forwarding of relief consignments in the event of disasters;

Whereas the International Convention on the simplification and harmonization of Customs procedures (Kyoto Convention), the Customs Convention on the ATA carnet for the temporary admission of goods (ATA Convention), the Convention on Temporary Admission (Istanbul Convention), the Convention on International Civil Aviation (Chicago Convention) and the International Maritime Organization Convention on Facilitation of International Maritime Traffic recommend simplified procedures and other facilitation measures to be applied, inter alia, to the transborder movement of relief consignments and possessions of disaster relief personnel;

Whereas the State/Government of ___________________ wishes to contribute to the expeditious delivery of international humanitarian assistance to the disaster-affected population;

Now therefore, the United Nations represented by the United Nations Department of Humanitarian Affairs or a designated United Nations Agency and the State/Government of _____________ represented by ________________ hereby agree as follows :

ARTICLE 1

Definitions

For the purpose of this Agreement the term :

1.1. "Disaster" means :

A serious disruption of the functioning of the society, causing widespread human, material, or environmental losses which exceed the ability of affected society to cope using only its own resources.

The term covers all disasters irrespective of their cause (i.e both natural and manmade).

1.2. "Disaster relief personnel" means:

Individuals, groups of individuals, teams and constituted units executing delivery of humanitarian assistance within the framework of a United Nations relief operation.

Examples of disaster relief personnel that can be involved in any particular disaster are :

UN delegates;

Experts on mission for the United Nations;

Emergency response personnel to assist refugees and internally displaced persons;

International Search and Rescue teams;

Medical teams;

Specialized teams provided by foreign military, civil defense and civil protection organizations (MCDA teams);

United Nations Disaster Assessment and Co-ordination (UNDAC) team.

1.3. "Possessions of disaster relief personnel" means :

All equipment, provisions, supplies, personal effects and other goods brought for and/or by disaster relief personnel in order to perform their duties and to otherwise support them in living and working in the country of the disaster throughout the duration of their mission.

1.4. "Relief consignment" means :

Goods, such as vehicles and other means of transport, foodstuffs, medicaments, clothing, blankets, tents, prefabricated houses, water purifying and water storage items, or other goods of prime necessity, forwarded as aid to those affected by disaster.

1.5. "United Nations relief operation" means :

Assistance and/or intervention, by the UN, a United Nations Agency or on its behalf, during or after disaster to meet the life preservation and basic subsistence needs. It can be of emergency or protracted duration.

1.6. "Emergency" means :

A sudden and usually unforeseen event that calls for immediate measures to minimize its adverse consequences.

ARTICLE 2

Organizations involved in United Nations relief operations

Included are :

- United Nations (UN)

- UN Agencies

- Governmental (GOV), intergovernmental (IGO) and non-governmental (NGO) organizations certified by the UN as bona fide participants within the framework of a United Nations relief operation

- Transport carriers contracted by the UN, a UN agency or a UN certified GOV/IGO/NGO for transportation of relief consignment(s) and/or possessions of disaster relief personnel.

ARTICLE 3

Facilitation measures for United Nations relief operations

The State/Government of _____________ agrees to :

3.1. With respect to exports :

3.1.1. Waive any economic export prohibitions or restrictions, and any export duties or taxes, in respect of goods contained in relief consignments destined for countries having suffered disasters and in possessions of disaster relief personnel;

3.1.2. Accept at exportation, as a general rule, the written summary declarations made out by the UN, or its agencies, or organizations involved in UN relief operations as detailed in Article 2 of this Agreement, of relief consignments as evidence of the contents and of the intended use of such consignments;

3.1.3. Take such steps as may be necessary in order that the Customs authorities where the exports are made are in a position to :

(a) expeditiously examine, only when necessary for security or narcotics/contraband control purposes and where appropriate by applying sampling or selective techniques against the summary declaration, the contents of the relief consignments and possessions of disaster relief personnel, and certify the results of this examination on that declaration;

(b) where possible, place such consignments under Customs seals where such action is likely to avoid delays in the forwarding of the goods at later stages in their journey;

(c) permit such consignments to be presented for export clearance at any approved Customs office and, in stock-pile States, in advance of the need for actual export; and

(d) permit such consignments to be placed in a Customs warehouse for subsequent export, for providing humanitarian assistance;

3.2. With respect to transhipment or transit :

3.2.1. Allow operators, under supervision of the public authorities concerned, to disassemble transhipment cargo including shipments in containers and on pallets, so that they may sort and reassemble shipments for onward carriage without examination, except for reasons of security or in special circumstances, and subject only to simple documentation where required;

3.2.2. Facilitate as far as possible the carriage of relief consignments and possessions effects of disaster relief personnel in Customs transit, with due regard to any action taken under paragraph 3.1.3. above;

3.3. With respect to imports :

3.3.1. Allow admission free of import duties and taxes or charges having an equivalent effect and free of economic import prohibitions or restrictions in respect of :

(a) all relief consignments imported by the UN, or its agencies, or organizations involved in UN relief operations as detailed in Article 2 of this Agreement, for distribution free of charge by them or under their control to victims of disaster in their territory, in particular where such consignments consist of foodstuffs, medicaments, clothing, blankets, tents, prefabricated houses or other goods of prime necessity;

(b) possessions of disaster relief personnel delivering humanitarian assistance;

3.3.2. Facilitate the temporary admission, with conditional relief from import duties and taxes, of any equipment required by the UN or its agencies or organizations involved in disaster relief detailed in Article 2 of this Agreement, and used by them or under their control in action undertaken to alleviate the effects of a disaster; and whenever possible not to require security but accept an undertaking given by them to re-export such equipment;

This equipment covers inter alia :

- transmission and communication equipment;

- water purifying and water storage items;

- all equipment, machinery, tools and electronic devices required by technical specialists, such as doctors, engineers, communications technicians, logisticians, community workers, etc. to perform their duties;

- equipment not directly involved in relief operations but used to fight and eliminate the consequences of natural and similar disasters, e.g. for elimination of pollution of all types, decontamination of buildings and territories, inspection of industrial structures, etc.;

- administrative support items such as office equipment (e.g., computers, photocopiers and typewriters), expendable supplies, staff security items and administrative manuals and documents;

- tents, prefabricated and mobile staff accommodation units and associated materials including cooking and dining equipment and supplies, sanitation requirements and compound safety/security items;

- possessions of disaster relief personnel;

- means of transport and spare parts and equipment for their repair;

- animals for rescue operations, e.g. specially trained dogs;

3.3.3. Authorize and make suitable arrangements for the relief consignments, including those in containers and on pallets, and the possessions of disaster relief personnel to be examined and/or released outside the hours and places normally prescribed, and to waive any charges for Customs attendance;

3.3.4. Allow operators and importers to submit manifest and entry details to Customs prior to arrival of the relief consignments in order to facilitate immediate release;

3.3.5. Accomplish physical examination of cargo, when required, on a sampling or selective basis, and carry out such examination as rapidly as possible;

3.3.6. Make arrangements whereby the maximum number of relief consignments can be released promptly after arrival upon presentation of a provisional entry document or a legally acceptable electronic equivalent, subject to complete fulfilment of Customs and other requirements within a specified time limit.

ARTICLE 4

Application of facilitation measures

The measures in Article 3 shall be applied :

- to relief consignments and possessions of disaster relief personnel sent to disaster-affected areas by any of the organizations referred to in Article 2 of this Agreement;

- by Customs at the points of entry and/or exit, whether or not they have been informed by their superior administration of a particular relief consignment and/or possessions of disaster relief personnel.

ARTICLE 5

Ad-hoc adjustments

The United Nations and the State/Government of _________________ may conclude ad-hoc adjustments to the present Agreement.

ARTICLE 6

Non-waiver of immunity

Nothing contained in this Agreement shall be deemed a waiver, express or implied, of any immunity from suit or legal process, or of any privilege, exemption or other immunity enjoyed or which may be enjoyed by the United Nations and its personnel by virtue of the 1946 Vienna Convention on the Privileges and Immunities of the United Nations.

ARTICLE 7

Entry into force, amendment and termination

7.1. This Agreement shall enter into force (within __ days) upon its signature by both parties.

7.2. This Agreement may be amended only by a written instrument signed by both parties.

7.3. This Agreement may be terminated by either party on 90 days written notice to the other party.

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Draft Model UN Certificate

Issuing Organization ......................................

......................................

(United Nations Department of Humanitarian Affairs or a designated UN agency)

TO WHOM IT MAY CONCERN

This is to certify that

......................................................................................................................................................(name of an organization, individual, group of individuals, team, constituted unit, etc.)

......................................................................................................................................................................................................

is a bona fide participant of the United Nations relief operation undertaken at the request of the Government/Customs or Economic Union of

........................................................................................................................................................................ (name of requesting country)

in order to provide international assistance to meet the life preservation and basic subsistence needs resulting from

..................................................................................................................................................................................(name of the natural disaster, complex emergency, environmental emergency, etc.)

......................................................................................................................................................................................................

and as such is entitled to the application of the Customs facilitation measures which are applied to the relief consignment(s) and/or possessions of disaster relief personnel involved in United Nations relief operations by Customs authorities at the points of entry and/or exit.

All those whom it may concern are requested to extend to the bearer the facilities, privileges and immunities which pertain to and facilitate by all suitable means the execution of the mission on which he is engaged.

The holder of this certification and his representative(s) will be held responsible for compliance with the laws and regulations of the country/Customs territory of departure and the countries/Customs territories of temporary admission.

This certification is valid until ...............................

(year/month/day)

Done in .................................................(place)

on ............................................ (year/month/day)

Signature of authorized Official and stamp of the Issuing Organization ______________

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Annex K - Origin

Annex K

Origin

CHAPTER 1

Rules of origin

Definitions

For the purposes of this Chapter:

E1./ F2.

“country of origin of goods ” means the country in which the goods have been produced or manufactured, according to the criteria laid down for the purposes of application of the Customs tariff, of quantitative restrictions or of any other measure related to trade;

E2./ F3.

“rules of origin ” means the specific provisions, developed from principles established by national legislation or international agreements ("origin criteria"), applied by a country to determine the origin of goods;

E3./ F1.

“substantial transformation criterion ” means the criterion according to which origin is determined by regarding as the country of origin the country in which the last substantial manufacturing or processing, deemed sufficient to give the commodity its essential character, has been carried out.

1. Standard

The rules of origin necessary for the implementation of the measures which the Customs are responsible for applying both at importation and at exportation shall be laid down in accordance with the provisions of this Chapter and, insofar as applicable, by the provisions in the General Annex.

Rules of origin

2. Standard

Goods produced wholly in a given country shall be taken as originating in that country.

The following only shall be taken to be produced wholly in a given country :

a. mineral products extracted from its soil, from its territorial waters or from its sea-bed;

b. vegetable products harvested or gathered in that country;

c. live animals born and raised in that country;

d. products obtained from live animals in that country;

e. products obtained from hunting or fishing conducted in that country;

f. products obtained by maritime fishing and other products taken from th e sea by a vessel of that country;

g. products obtained aboard a factory ship of that country solely from products of the kind covered by paragraph (f) above;

h. products extracted from marine soil or subsoil outside that country's territorial waters, provided that the country has sole rights to work that soil or subsoil;

i. scrap and waste from manufacturing and processing operations, and used articles, collected in that country and fit only for the recovery of raw materials;

j. goods produced in that country solely from the products referred to in paragraphs (a) to (ij) above.

3. Recommended Practice

Where two or more countries have taken part in the production of the goods, the origin of the goods should be determined according to the substantial transformation criterion.

4. Recommended Practice

In applying the substantial transformation cri terion, use should be made of the International Convention on the Harmonized Commodity Description and Coding System.

5. Recommended Practice

Where the substantial transformation criterion is expressed in terms of the ad valorem percentage rule, the values to be taken into consideration should be:

for the materials imported, the dutiable value at importation or, in the case of materials of undetermined origin, the first ascertainable price paid for them in the territory of the country in which manufacture took place; and
for the goods produced, either the ex-works price or the price at exportation, according to the provisions of national legislation.

6. Recommended Practice

Operations which do not contribute or which contribute to only a small extent to the essential characteristics or properties of the goods, and in particular operations confined to one or more of those listed below, should not be regarded as constituting substantial manufacturing or processing:

a. operations necessary for the preservation of goods during transportation or storage;

b. operations to improve the packaging or the marketable quality of the goods or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, repacking;

c. simple assembly operations;

d. mixing of goods of different origin, provided that the characteristics of the resulting product are not essentially different from the characteristics of the goods which have been mixed.

Special cases of qualification for origin

7. Recommended Practice

Accessories, spare parts and tools for use with a machine, appliance, apparatus or vehicle should be deemed to have the same origin as the machine, appliance, apparatus or vehicle, provided that they are imported and normally sold therewith and correspond, in kind and number, to the normal equipment thereof.

8. Recommended Practice

An unassembled or disass embled article which is imported in more than one consignment because it is not feasible, for transport or production reasons, to import it in a single consignment should, if the importer so requests, be treated as one article for the purpose of determining origin.

9. Recommended Practice

For the purpose of determining origin, packings should be deemed to have the same origin as the goods they contain unless the national legislation of the country of importation requires them to be declared separately for tariff purposes, in which case their origin should be determined separately from that of the goods.

10. Recommended Practice

For the purpose of determining the origin of goods, where packings are deemed to have the same origin as the goods, account should be taken, in particular where a percentage method is applied, only of packings in which the goods are ordinarily sold by retail.

11. Standard

For the purpose of determining the origin of goods, no account shall be taken of the origin of the energy, plant, machinery and tools used in the manufacturing or processing of the goods.

Direct transport rule

12. Recommended Practice

Where provis ions requiring the direct transport of goods from the country of origin are laid down, derogations therefrom should be allowed, in particular for geographical reasons (for example, in the case of landlocked countries) and in the case of goods which remain under Customs control in third countries (for example, in the case of goods displayed at fairs or exhibitions or placed in Customs warehouses).

Information concerning rules of origin

13. Standard

Changes in the rules of origin or in the procedures for their application shall enter into force only after sufficient notice has been given to enable the interested persons, both in export markets and in supplying countries, to take account of the new provisions.

CHAPTER 2

Documentary evidence of origin

Definitions

For the purposes of this Chapter:

E1./ F2.

“certificate of origin ” means a specific form identifying the goods, in which the authority or body empowered to issue it certifies expressly that the goods to which the certificate relates originate in a specific country. This certificate may also include a declaration by the manufacturer, producer, supplier, exporter or other competent person;

E2./ F3.

“certified declaration of origin ” means a “declaration of origin” certified by an authority or body empowered to do so;

E3./ F4.

“declaration of origin ” means an appropriate statement as to the origin of the goods made, in connection with their exportation, by the manufacturer, producer, supplier, exporter or other competent person on the commercial invoice or any other document relating to the goods;

E4./ F5.

“documentary evidence of origin ” means a certificate of origin, a certified declaration of origin or a declaration of origin;

E5./ F1.

“regional appellation certificate ” means a certificate drawn up in accordance with the rules laid down by an authority or approved body, certifying that the goods described therein qualify for a designation specific to the given region (e.g. Champagne, Port wine, Parmesan cheese).

Principle

1. Standard

The requirement, establishment and issue of documentary evidence relating to the origin of goods shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Requirement of documentary evidence of origin

2. Recommended Practice

Documentary evidence of origin should be required only when it is necessary for the application of preferential Customs duties, of economic or trade measures adopted unilaterally or under bilateral or multilateral agreements or of measures adopted for reasons of health or public order.

3. Recommended Practice

Documentary evidence of origin should not be required in the following cases:

a. goods sent in small consignments ad dressed to private individuals or carried in travellers' baggage, provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed an amount which shall not be less than US$100;

b. commercial consi gnments the aggregate value of which does not exceed an amount which shall not be less than US$60;

c. goods granted temporary admission;

d. goods carried in Customs transit;

e. goods accompanied by a regional appellation certificate as well as certain specific goods, where the conditions to be met by the supplying countries under bilateral or multilateral agreements relating to those goods are such that documentary evidence need not be required.

Where several consignmen ts of the kind referred to in (a) or (b) are sent at the same time, by the same means, to the same consignee, by the same consignor, the aggregate value shall be taken to be the total value of those consignments.

4. Recommended Practice

When rules relating to the requirement of documentary evidence of origin have been laid down unilaterally, they should be reviewed at least every three years to ascertain whether they are still appropriate in the light of changes in the economic and commercial conditions under which they were imposed.

5. Recommended Practice

Documentary evidence from the competent authorities of the country of origin should be required only in cases where the Customs of the country of importation have reason to suspect fraud.

Applications and form of the various types of documentary evidence of origin

(a) Certificate of origin

Form and content

6. Recommended Practice

When revising present forms or preparing new forms of certificates of origin, Contracting Parties should use the model form in Appendix I to this Chapter, in accordance with the Notes in Appendix II, and having regard to the Rules in Appendix III.

Contracting Parties which have aligned their forms of certificate of origin on the model form in Appendix I to this Chapter should notify the Secretary General of the Council accordingly.

Languages to be used

7. Recommended Practice

Certificate of origin forms should be printed in the language(s) selected by the country of exportation and, if these languages are neither English nor French, also in English or French.

8. Recommended Practice

Where the certificate of origin is made out i n a language that is not a language of the country of importation, the Customs of that country should not require, as a matter of course, a translation of the particulars given in the certificate of origin.

Authorities and other bodies empowered to issue certificates of origin

9. Standard

Contracting Parties accepting this Chapter shall indicate, either in their notification of acceptance or subsequently, the authorities or bodies empowered to issue certificates of origin.

10. Recommended Practice

Where goods are not imported directly from the country of origin but are forwarded through the territory of a third country, certificates of origin should be allowed to be drawn up by the authorities or bodies empowered to issue such certificates in that third country, on the basis of a certificate of origin previously issued in the country of origin of the goods.

11. Recommended Practice

Authorities or bodies empowered to issue certificates of origin should retain for not less than two years the applications for, or control copies of, the certificates of origin issued by them.

b) Documentary evidence other than certificates of origin

12. Recommended Practice

Where documentary evidence of origin is required, a declarati on of origin should be accepted in the following cases:

a. goods sent in small consignments addressed to private individuals or carried in travellers' baggage, provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed an amount which shall not be less than US$500;

b. commercial consignments the aggregate value of which does not exceed an amount which shall not be less than US$300.

Where several consignments of the kind referred to in (a) or (b) are sent at the same time, by the same means, to the same consignee, by the same consignor, the aggregate value shall be taken to be the total value of those consignments.

Sanctions

13. Standard

Provision shall be made for sanctions agains t any person who prepares, or causes to be prepared, a document containing false information with a view to obtaining documentary evidence of origin.

APPENDIX I

APPENDIX II

Notes

1. The size of the certificate should be the international ISO size A4 (210 x 297 mm, 8.27 x 11.69 inches). The form should be provided with a 10 mm top margin and a 20 mm left-hand filing margin. Line spacing should be based on multiples of 4.24 mm (1/6 inch) and width-spacing on multiples of 2.54 mm (1/10 inch). The layout should be in conformity with the ECE layout key, as illustrated in Appendix I. Minor deviations in the exact size of boxes, etc., should be permissible if required for particular reasons in the issuing country, such as the existence of systems other than metric measurement, features of national aligned systems of documents, etc.

2. Where it is necessary to provide for applications for certificates of origin, the form of application and the form of certificate should be compatible to permit completion in one run.

3. Countries may determine standards concerning the weight per m 2 of the paper, and the use of a machine-turned background to prevent falsification.

4. For the guidance of users, rules for the establishment of the certificate of origin may be printed on the back of the certificate.

5. Where requests for post-facto control may be submitted under a mutual administrative assistance agreement, a space may be provided for that purpose on the back of the certificate.

6. The following comments refer to the boxes in the model form :

Box No. 1:

"Consignor", "producer", "supplier", etc. may be substituted for "exporter".

Box No. 2:

There should be only on e original certificate of origin, identified by the word "Original" adjacent to the document title. If a certificate of origin is issued in replacement of an original certificate that has been lost, the replacement certificate shall be identified by the word "Duplicate" adjacent to the document title. Copies of an original or of a duplicate certificate shall bear the word "copy" adjacent to the title.

This box is also intended for the name (logotype, emblem, etc.) of the issuing authority and should leave space for other official purposes.

Box No. 3:

The particulars provided for in this box may be replaced by " to order " and, possibly, the country of destination.

Box No. 4:

This box can be used for additional information on means of transport, rou te, etc., which can be inserted if so desired by, for example, the issuing authority.

Box No. 5:

If an indication of "Item No." is required this can be inserted, preferably in the margin to this box or at the beginning of each line in the box. "Marks and Nos." can be separated from "Number and kind of packages" and "Description of the goods" by a vertical line. If a line is not used, these particulars should be distinguished by adequate spacing. The description of the goods can be supported by adding the number of the applicable Harmonized System heading, preferably in the right-hand part of the column. Particulars of the origin criteria, if required, should be given in this box and should be separated from the other information by a vertical line.

Box No. 6:

Normally, gross weight should suffice for the identification of the goods.

Box No. 7:

This column is left blank for any additional details that might be required, such as measurements, or for reference to other documents (e.g., commercial invoices).

Boxes Nos. 6 and 7:

Other quantities which the exporter may state in order to facilitate identification can be entered in either box 6 or box 7, as appropriate.

Box No. 8:

This area is reserved for the details of the certification by the competent body (certification legend, stamps, signatures, date and place of issue, etc.). The precise wording of texts, etc., is left to the discretion of the issuing authority, the wording used in the model form serving only as an example. This box may also be used for a signed declaration by the exporter (or the supplier or manufacturer).

APPENDIX III

Rules for the establishment of certificates of origin

The rules for the establishment of certificates of origin (and where applicable, of applications for such certificates) are left to the discretion of national authorities, due account being taken of the Notes set out above. However, it may be necessary to ensure compliance with, inter alia, the following provisions:

The forms may be completed by any process, provided that the entries are indelible and legible.
Neither erasures nor super impositions should be allowed on the certificates (or applications). Any alterations should be made by striking out the erroneous material and making any additions required. Such alterations should be approved by the person who made them and certificated by the appropriate authority or body.
Any unused space s should be crossed out to prevent any subsequent addition.
If warranted by export trade requirements, one or more copies may be drawn up in addition to the original.

CHAPTER 3

Control of documentary evidence of origin

Definitions

For the purposes of this Chapter:

E1./ F1.

E2./ F2.

“certified declaration of origin ” means a “declaration of origin” certified by an authority or body empowered to do so;

E3./ F3.

E4./ F4.

“documentary evidence of origin ” means a certificate of origin, a certified declaration of origin or a declaration of origin.

Principle

1. Standard

Administrative assistance for the control of documentary evidence of origin shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

Reciprocity

2. Standard

The competent authority of the Contracting Party which has received a request for control need not comply with it if the competent authority of the requesting Contracting Party would be unable to furnish that assistance if the positions were reversed.

Requests for control

3. Recommended Practice

The Customs administration of a Contracting Party which has accepted this Chapter may request the competent authority of a Contracting Party which has accepted this Chapter and in whose territory documentary evidence of origin has been established to carry out control of such evidence :

a. where there are reasonable grounds to doubt the authenticity of the document;

b. where there are reasonable grounds to doubt the accuracy of the particulars given therein;

c. on a random basis.

4. Standard

Requests for control on a random basis, as provided for in Recommended Practice 3 (c) above, shall be identified as such and be kept to the minimum necessary to ensure adequate control.

5. Standard

Requests for control shall :

a. specify the reasons for the requesting Customs administration's doubts about the authenticity of the document produced or the accuracy of the particulars given therein, unless the control is requested on a random basis;

b. specify, where appropriate, the rules of origin applicable to the goods in the country of importation and any additional information requested by that country;

c. be accompanied by the documentary evidence of origin to be checked, or a photocopy thereof, and where appropriate any other documents such as invoices, correspondence, etc. that might facilitate control.

6. Standard

Any competent authority receiving a request for control from a Contracting Party having accepted this Chapter shall reply to the request after having carried out the necessary controls itself or having had the necessary investigations made by other administrative authorities or by bodies authorized for the purpose.

7. Standard

An authority receiving a request for control shall answer the questions put by the requesting Customs administration and furnish any other information it may consider relevant.

8. Standard

Replies to requests for control shall be furnished within a prescribed period not exceeding six months. If the authority receiving the request cannot reply within six months, it shall so inform the requesting Customs administration.

9. Standard

Requests for control shall be made within a prescribed period which, except in special circumstances, should not exceed one year, commencing with the date on which the document was produced to the Customs office of the Contracting Party making the request.

Release of the goods

10. Standard

A request for control shall not prevent the release of the goods, provided that they are not held to be subject to import prohibitions or restrictions and there is no suspicion of fraud.

Miscellaneous provisions

11. Standard

Any information communicated in accordance with the provisions of this Chapter shall be treated as confidential and used for Customs purposes only.

12. Standard

The documents needed for control of documenta ry evidence of origin issued by the competent authorities or authorized bodies shall be retained by them for an adequate period which should not be less than two years following the date on which the documentary evidence was issued.

13. Standard

The Contracting Parties that accept this Chapter shall specify the authorities which are competent to receive requests for control and communicate their address to the Secretary General of the Council who will transmit such information to the other Contracting Parties having accepted this Chapter.

Guidelines to Annex K

Guidelines to the legal text

Chapter 1

The legal texts for Specific Annex K will be reviewed and the Guidelines prepared after the work on the WTO Agreement on Rules of Origin is completed.

Table of Amendments

Amendments accepted at the first Revised Koyto Convention Management Committee (RKC/MC)	Doc. PO0006 (Meeting Report)
Chapters 1 to 4 of Specific Annex F	“34. The Management Committee adopted the Guidelines to the Revised Kyoto Convention (including amendments) previously endorsed by the PTC.” PTC 172^nd Session – April 2001 (PC0082) “19. The Committee adopted all the four Guidelines which are given in Annexes II, III, IV and V attached to PC0082.” See also PW0040
Chapter 7 of the General Annex	PTC 173^rd Session – April 2002 (PC0108)
Chapters 3 and 4 of the General Annex	PTC 174^th Session – March 2003 (PC0128)
Chapter 1 of Specific Annex E	“71. The PTC considered the amended text of the Guidelines at Annex II of the Working Party's draft report (PW0083E/F9) and adopted them. The PTC also approved the insertion of a new Appendix III to the Guidelines on Chapter 3 of the General Annex containing examples of Conventions/arrangements relating to the establishment of juxtaposed national control offices, and the presentation of a New Computerised Transit System (NCTS) applicable within the European Community as Appendix II to the Guidelines on Chapter 1 of Specific Annex E (Customs transit). The examples of Conventions/arrangements relating to the establishment of juxtaposed national control offices were agreements concluded between France and Switzerland in Doc. PC0116 and its addendum”. See also PW0083
Chapters 1, 3, 6 and 7 of the General Annex	PTC 175^th Session – March 2004 (PC0142)
Chapter 1 of Specific Annex E	73. The PTC examined the amended text of the Guidelines set out at Annex II to the Working Party’s report (Doc. PW0089E/F2) and adopted it. 83. The text adopted for the new Guidelines on seals is reproduced at Annex II to this Report (the underlining draws attention to the amendments made by the Committee to the original document). See also PW0089 + PM0128 (ICT Guidelines)
Amendments accepted at the second RKC/MC	Doc. PO0012 (Meeting Report)
Chapter 7 of the General Annex	“52. The Committee agreed to adopt Version 5 of the RKC Chapter 7 ICT Guidelines.”
Amendments accepted at the 3^rd RKC/MC	Doc. PO0017 (Meeting Report)
/	/
Amendments accepted at the 4^th RKC/MC	Doc. PO0023 (Meeting Report)
Chapter 6 of the General Annex	“16. The Committee adopted the amendments to the RKC Guidelines as proposed at Annex 2 to this Report.”
Chapter 7 of the General Annex	30. The Secretariat had incorporated India’s contribution in the Revised Kyoto Convention Chapter 7 Guidelines on Information and Communication Technology that could be consulted at and downloaded from the WCO Members’ Web site, in the ‘IMSC 54 Additional Meeting Documents’ section. At the said meeting, the IMSC had approved draft Version 6 of the Kyoto ICT Guidelines.
Chapter 2 of the Specific Annex J	31. The Committee was then informed that a new Memorandum of Understanding (MOU) between the WCO and the UPU had been signed on 5 July 2007, replacing the MOU of 15 September 1994 which was currently reproduced in Appendix II to Specific Annex J – Chapter 2. This new MOU appeared on the WCO Members’ Web site, as No. 098 in the ‘MOU’ section. 32. At the Chairperson’s request, the Committee adopted these two amendments to the RKC Guidelines.
Amendments accepted at the 5^th RKC/MC	Doc. PO0030 (Meeting Report)
/	/
Amendments accepted at the 6^th RKC/MC	Doc. PO0035 (Meeting Report)
/	/
Amendments accepted at the 7^th RKC/MC	Doc. PO0040 (Meeting Report)
/	/
Amendments accepted at the 8^th RKC/MC	Doc. PO0045 (Meeting Report)
Chapters 1, 3 & 6 of the GA	23. The RKC/MC continued with the review of the RKC and adopted several amendments to the existing Guidelines (see paragraphs 15, 16 and 17).

Contact

WCO Secretariat

Susanne Aigner, Deputy Director, Compliance and Facilitation, susanne.aigner@wcoomd.org ;

Thierry Piraux, Senior Technical officer, Compliance and Facilitation, thierry.piraux@wcoomd.org ;

Shingo Matsuda, Technical officer, Compliance and Facilitation, shingo.matsuda@wcoomd.org

MEMBER	NAME	TEL.	E-MAIL
ANGOLA	Constância Magalhaes and Paula Morais (Liaison Officer)	+244 222 393784	cmagalhaes@alfandega.gv.ao pmorais@alfandega.gv.ao
ARGENTINA	RIAL SERGIO (Director, Customs Operating Coordination and Assessment Directorate)	+54 11 4338 6582	arial@afip.gov.ar
BHUTAN	Sonam Gyaltshen (Dcommissioner)	+975 2 322319	sgyeltshen@mof.gov.bt
BOLIVIA	Luis Javier Navarro (JEFE Departmento Asuntos Internacionales)	+591 22128008	ljnavarro@aduana.gov.bo
BRESIL	Liziane Angelotti Meira (Chief of the Legislation) Antonio Braga Sobrinho (Fiscal Auditor)	+55 61 3412-3453 +55 61 3412-3450	liziane.meira@receita.fazenda.gov.br antonio.braga-sobrinho@receita.fazenda.gov.br
BIELARUS	Tatiana Leshkova (Chief Inspector)	+375 17 218 91 35	odo@gtk.belpak.minsk.by
CAMBODGE	Sao Ly (Assistant Director)	+855 214065	saoly_cust@yahoo.com
CAP VERT	Carlos Guido St Aubyn Figueiredo (Inspecteur douanier)	+238 2617763	carlosguido@mfalf.gov.cv
DOMINICAN REPUBLIC	Elisa Pimentel Malla (Head of Department of International Relations)	+809 5477070 (ex)2238	e.pimentel@dga.gov.do
GEORGIE	Samson Uridia (Deputy Head of Customs Control Department)		S.Uridia@mof.ge
HONG KONG , CHINA	LIU CHEUNG SHING, ALEX (Senior Superintendent) NGYAN KWONG, RONNY (Superintendent)	+852 2852 1439 +852 2852 1404	cs_liu@customs.gov.hk yk_ng@customs.gov.hk
INDONESIE	Mr. Syarif Hidayat (Head Section of WCO)	+62 21 489 1053	Intl_affairs_directorate@beacukai.go.id
JORDAN	Tayseer Younis Director , DG Office	Fax: +962 6 4647791 Mobile: +962 79515 9966	t-younis@customs.gov.jo taysery@yahoo.com
KAZAKHSTAN	Abilova Botagoz (Chief specialist of the International relations)	+007 7172 794549	babilova@q0100.customs.kz
LIBAN	Raymond El-Khoury (Inspecteur principal)		rayelkhouy@yahoo.com
LIBYAN ARAB JAMAHIRIYA	Taib Bahlul (Officer in Charge)	+218914170974	h_hobba@customs.ly
MACEDOINE	Ofelija Bajo (Senior Advisor)	+389 2 329 39 08	ofelija.bajo@customs.gov.mk
MALAWI	Kenneth Matupa (Principal Revenue Officer)	+265 (0) 1 871 877	kmatupa@mra.mw / kmatupa@yahoo.com
MEXICO	Maria Helena Carrillo (Deputy Director)		elena_carrillo@hacienda.gob.mx alfonso.padilla@sat.gob.mx
PHILIPPINES	John M. Simon (Chief International Affairs)	+632 521 4508	jm_simon@hotmail.com
REPUBLIC OF MALDIVES	Ismail Nashid (Director)	3334195	nashid@customs.gov.mv
RUSSIE	Natalia Kovaleva (Deputy Head of the International Law Division)	+7 495 730 06 22	PU_Kovaleva@mail.customs.ru
SAUDI ARABIA	Abdulaziz R. Al Roumi (DG, Int. Programs)	+966 1 404 3214	conventions@customs.gov.sa
SINGAPORE	Pik Wan Sung (Head of International Relations)	+65 6355 2136	customs_international@customs.gov.sg
THAILAND	Krittika Panprasert (Director of International Legal Division)	+662 667-7989	Krittika9@hotmail.com
UKRAINE	Oleh Ovchinnikov (Director, International Relations Department)	38 044 247 2836	inter@customs.gov.ua
URUGAY	Ricardo Prato (Director Nacional de Aduanas)		ricardo.prato@aduanas.gub.uy

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