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[ EU Processing Trade and Repayment ]
Inward processing means to import raw materials from third countries to the customs territory of the Community and, after the processing phase, export the said raw materials from the Community to the third countries again, and outward processing means to export raw materials to third countries and then import them to the customs territory of the Community after the processing phase.
EU also specially handles the processing trade for the promotion of trades and economic activities and, especially, the characteristics of this appears obviously to the determination on duty payments.
Ⅱ. Inward Processing
The inward processing has the two following types related to duty payments:
① Suspension system
The system to import raw materials, without such articles being subject to import duties, from third countries and then re-export the said raw materials after the processing phase within the Community.
② Drawback system
The system to grant the repayment of import duties already paid for raw materials imported from third countries and then re-exported, after the processing phase, within the Community.
Any enterprise that export articles after the inward processing within the customs territory of the Community is given the right to choose either of them freely and, if any obvious case that complete products shall be exported, the suspension system is generally used.
On the other hand, when a person concerned imports raw materials and, if any uncertain case or no export plan, the import duties should be paid first to import, and then the drawback system is recommended once the exportation of compensating goods is eventually completed.
The inward processing via the suspension system must be granted by the competent customs authorities, and the valid period(the period of the re-exportation by processing the imported raw materials) is determined by the said customs authorities with consideration for the factors such as the economic conditions of an applicant.
Further re-examinations must be implemented regularly for each period laid down in the permission granted where such valid period is exceeded the period of 2 years and, to agricultural products, such valid period must be exceed the period of 3 months.
■ Meaning of Inward Processing and Target
Processing means every undertaking that includes the assembling, combining and/or attaching of the goods to other articles, and that enhances and/or facilitates the recovery, repair, mending and production of the goods and others.
The target goods of the inward processing could be any article with no specific restriction.
■ Authorization of Inward Processing
ㅇ The inward processing via the suspension system, which did not pay import duties for raw materials, must be granted the authorization of the inward processing, with the declaration preliminarily submitted to the competent customs authorities by the importer.
For the suspension system procedures are crucially exceptional to the authority to collect, the authorization of the competent customs authorities is mandatory, and the duty-free raw materials imported to the customs territory of the Community is in need of constant managements, until the re-exportation after the processing.
ㅇ Those who are given the authorization of the inward processing must be enterprises registered within the customs territory of the Community and, of them, who implement or arrange directly for the inward processing.
Exceptionally, in case of importations of non-commercial nature, such authorization can be granted to enterprised within third countries. However, such authorization must fulfill the following requirements:
① Imported goods can be identical to compensating goods and/or prove their compliance of regulated requirements on substitutes, ② Outward processing procedures can help create the utmost favourable conditions for the export or re-export of compensating goods, provided that the essential interests of the Community producers are not adversely affected.
■ Operation of Outward Processing Procedures
1. General Procedures
Specific operations of the outward processing procedures have notable procedures as the followings:
1) Period of Exportation or Re-Exportation
The period of exportation or re-exportation for outward processing of raw materials imported to the customs territory of the Community is specified by the competent customs authorities with consideration of the period in need of carrying out the processing operations and disposing of the compensating goods.
The period shall run from the date on which the non-Community goods are placed under the inward processing procedures and, if any duly justified request to the competent customs authorities, the period may be extended. Additionally, specific periods may be laid down in accordance with the committee procedures for certain processing operations or for certain import goods.
2) Setting the Rate of Yield or Method of Determining
The rate of yield, which is the ratio of the processed or produced complete products made of raw materials imported in the customs territory of the Community, or the method of determining it shall be determined on the basis of the actual circumstances in which the processing operation is, or is to be, carried out, by the competent customs authorities.
3) Determination and Payment on Duly Justified Duties
In case that the raw materials or others imported are considered to be released, after the suspension system procedures, while they did not used for such processing operations for the processing trade, import duties shall be levied as the other general importations do so. At this point, the determination of duties shall be done on the basis of chargeable elements of the date on which goods are under the inward processing procedures.
4) Processing Operations in Third Countries
In case that the competent customs authorities authorized the processing operation in third countries even if such is granted to be undertaken within the customs territory of the Community, processed or unprocessed products can be granted the temporary importation wholly or partly, for the continuous processing, within the third countries.
If the processed goods are re-imported after the procedures written above, import duties shall be levied as the followings:
① Import duties determined under the method of calculation that is specified above, to processed or unprocessed products, shall be levied.
② Import duties to the goods re-imported after the outward processing shall be calculated, if the goods exported under the outward processing procedures completed the clearance prior to the exportation that is to be carried out, in accordance with the requirements identical to which were supposed to be applied, under the regulations on the outward processing procedures.
5) Drawback System to Compensating Goods of Inward Processing
The drawback system to compensating goods of inward processing means the system to grant the remission or repayment of import duties to imported raw materials where the goods made of the materials imported(goods of inward processing), with the payment of duties, from third countries, are considered to be exported from the customs territory of the Community.
However, duly justified exceptional circumstances are present, thereby, the goods shall be excluded from the benefit of the drawback system:
are subject to quantitative import restrictions,
are subject to tariff autonomous suspensive measures under the preferential tariff treat,
are subject to an agricultural levy and/or any other import charge under the common agricultural policy.
6) Remission on Export Duties
Outward processing procedures that are applied the suspension system shall also be applied to the remission of export duties on the goods produced as the Community goods and then exported to third countries.
2. Applicable Procedures on Suspension System
1) Importation of Goods
Raw materials provided for the inward processing under the suspension system shall be the goods imported from third countries or the Community goods(equivalent goods) that have the equivalent value to the said raw materials.
For any raw material as imported goods, such must be the goods legally completed the import clearance with the preparation of documentations for the identification of the goods and estimation of import duties.
To be certainly granted the remission of import duties suspended while importing raw materials, the complete products made of the said imported articles must be re-exported and, if the re-exportation is implemented within the proposed period, the suspended import duties for the said raw materials must be paid.
For this, the competent customs authorities must identify any imported raw materials whose import duties were suspended, and establish every necessary element and measure to manage the articles and the determination of such measures is depend on their judgement.
2) Mooring of Goods
Goods imported whose import duties are suspended under the inward processing operation might take another procedure or processing, but, strict rules shall be applied to this, and this cannot exceed the period of mooring. If a user did not comply with relevant obligations, the competent customs authorities shall require the person concerned to provide the imported goods and cancel the suspension for the import duties to be paid.
① The period of mooring
The period of mooring on the goods of suspended import duties shall be determined by the competent customs authorities within the EU member states and, that is, the said customs authorities shall determine the specific period on the goods with consideration of the completion and commercialization of processing operations of compensating goods.
② The transfer of goods with suspended duties
While raw materials or compensating goods are being hold under the suspension system, they can be transferred to other processing procedures that are being operated within the customs territory of the Community, and the type of such processing are the followings:
1. The transfer may be authorized, under the authorization of an equivalent inward processing procedure, by registering relevant goods for the secondary producer(or follow-up producer) with no additional customs form or inward processing procedure. At this point, the responsibilities belong to the transferred goods shall be the burden of those who acquired the import authorization of the said goods for using the inward processing procedure;
2. In case that the transfer of the authorization of processing trade itself, the said transfer must be implemented under the specific form in which includes every necessary information such as security and payment of duties. At this point, the responsibilities belong to the transferred goods shall be the burden of the secondary producer at the time of the registration of the processing laid down in the ledger, and such registration shall have an effect equivalent to that of the goods newly imported, with the use of the inward processing procedures by the person who acquired the secondary authorization.
③ Temporary exportation
Goods imported under the inward processing procedures can be re-exported temporarily for the complete processing within third countries and, that is, if any authorization by the competent customs authorities, the processed or unprocessed goods can be re-exported wholly or partially for the continuous processing outside the customs territory of the Community and, for this, the competent customs authorities should give the authorization of such within the member state.
3. Applicable Procedures on Drawback System
1) Importation of Goods
Raw materials that paid the payment of import duties shall be imported under the inward processing procedures of the drawback system, by submitting the declaration in which specifies that the imported raw materials are provided for the inward processing.
Then, the both of drawback system recognized respectively under the inward processing procedures of EU and each member state can be used at the same time.
2) Mooring of Goods
The following information must be kept in mind to the mooring of goods under the inward processing procedures of the drawback system.
① Requirements and periods
Unlike the suspension system, no restriction shall be levied on the use of goods and the goods are free from every procedure on duties.
The period of mooring is equivalent to that of the suspension system, and this shall be determined by the competent customs authorities.
② The transfer of goods
Goods that are being hold under the inward processing procedures of the drawback system can be transferred to other producers within the member state. This transfer shall be implemented under the requirements and procedures identical to those of the suspension system.
③ Temporary exportation
Imported goods or compensating goods are, under the drawback system, can be temporarily exported to third countries for the supplementary processing, which is identical to the procedures of the suspension system.
3) Repayment of Import Duties
In case of the re-exportation of compensating goods produced by the abovementioned procedures, the import duties paid for the raw materials at the time of the importation can be repaid.
However, the request of such repayment must be implemented within the period of 6 months from the date on which the re-exportation was commenced, but the competent customs authorities may permit this period to be exceeded in duly justified cases. The application of the repayment shall be submitted to the competent customs offices of the member state whereby the free circulation is commenced and, if multiple member states are involved, the application shall be submitted to the competent customs office within one of the member states whereby the free circulation is commenced after the agreement with the European Committee.
Ⅲ. Outward Processing
1. Meaning of Outward Processing
Outward processing means the procedures to export the Community goods temporarily to third countries and then import the goods after the manufacturing and processing. With this processing, that re-imported compensating goods are granted the remission wholly or partially is the key part.
The scope of the outward processing operations covers from a simplified assembly process to complicated manufacturing process. Even the goods temporarily exported for the outward processing are applied the export duties, general policies and legal exportation procedures to export the goods from the customs territory of the Community.
2. Applicable Targets on Outward Processing
Applicable targets on the outward processing are the Community goods temporarily exported to third countries under the condition of re-importation to the customs territory of the Community.
The scope of the outward processing operations covers, as same as those of the inward processing, from the phases of assembly, combination or attachment of the goods to other goods and to packing, processing, recovery and repair of the goods and etc.
3. Authorization of Outward Processing
If an applicant should be granted the benefit of the remission of duties via the outward processing, the authorization of outward processing must be given by the competent customs authorities of each member state, requiring to fulfill the following requirements:
① Those who registered within the territory of the Community,
② Compensating goods are proven that these are produced after the processing of temporary exportation,
③ The authorization of outward processing procedures must not gravely violate the essential interests of the Community producers.
4. Use of Outward Processing Procedures
Key points for use of the outward processing procedures are the followings:
1) The period of which the compensating goods must be re-imported to the customs territory of the Community is prescribed by the competent customs authorities of each member state, and this period may be granted the extension if the submission of duly justified application by a person who acquired the authorization is implemented. Additionally, the rae of yield or the method of determining on such operations is prescribed by the competent customs authorities.
2) The compensating goods imported to the customs territory of the Community after the outward processing can be granted the remission of duties once the declarant of the import clearance is one of the following personnel:
① Those who acquired the authorization of the outward processing,
② Others recognized their position within the EU territory whereby they implemented the requirements for the authorization with the consent by those who acquired the authorization,
③ Agents for those who are abovementioned.
3) Import duties on the compensating goods for the re-importation are the balance deducted the import duties for the raw materials exported to third countries from the total amount of duties.
4) Import duties shall be remitted if the processing operation is for free repair in a third country. However, in case of a paid repair, the amount paid for the repair is supposed as a taxable amount, resulting the partial remission of import duties.
5) In case that the Community goods are temporarily exported besides the specific goods under the common agricultural policy, the system to import goods that is referred to an equivalent product category, as the replacement products, is called the standard exchange system, and other additional procedures for the outward processing are operated under this system.
6) Regulations on the EU outward processing procedures are also applied to the implementation of the non-tariff common commercial policy.
7) The valid period of the authorization of outward processing is determined with consideration of the economic condition and requirements of an applicant. However, if this period is exceeded the period of 2 years, the said economic condition that is the basis of the authorization must be taken re-evaluations regularly.
Ⅳ. Processing under Customs Control
Processing under customs control means the system where those who acquired the authorization by the competent customs authorities are allowed for the free circulation of their non-Community goods exported from third countries, which are termed as processed products, within the EU territory.
The authorization of processing under the customs control, which is requested by a producer, shall be complied with the procedures proposed by the tariff commission, and only those who relevant to the following requirements are allowed:
① Those who are registered in EU
② Non-Community goods are processed by raw materials
③ Goods considered not to be maintained economically, after the processing, as the characteristic or status equivalent to those before the processing
④ Use of the same procedures is applied to relevant regulations on the origin and quantitative restriction that is applied to imported goods
⑤ Goods of same type are not adversely affected the essential interests of the Community producers and fulfilled necessary requirements related to the procedures that lets or maintains the inward processing operations
2) Valid Period
The valid period of the authorization on the processing under customs control is determined with consideration of the requirements of an applicant by the competent customs authorities. However, if this period is exceed the period of 2 years, the requirements for the authorization must be taken re-evaluations regularly.
3) Processing Procedures under Customs Control
Processing procedures under customs control is mostly implemented in compliance with the inward processing procedures, and the period of exportation or re-exportation, rate of yield and others are also similar to those of the inward processing abovementioned.