Prohibitions and Limitations Compliance Control
The commodity classification code and country of origin, in addition to corresponding tax rates, significantly influences the practice of prohibition and limitations and customs value appraisal.
We would like to outline some factors, related to this area (requirements and terms in regulatory documents), that are not crucially new, but are of interest at this time and that require increased attention, also because these may influence the timeliness and environment of custom processing of goods.
The commodities range in the area of Samara Customs activity area is largely defined by the following facts:
- predominant import articles are vegetable origin products (including fats and oils), mineral products, chemical and related products, plastics (all this is usually raw materials for internal production), machinery and equipment, vehicles, monitoring instruments and spare parts;
- predominant export articles are food products, chemical and related products and non-precious metals.
There exists a number of FTS orders, that describe the ways the Foreign economic activity participants receive provisional decisions on classification – these documents are drawn up before the commodity is supplied, and the cargo State Customs Entry (GTD) is submitted and, provided that the commodity is identified, is obligatory for all the custom authorities. This order simplifies and allows to forecast the customs processing.
The term of documentation approval by the authority is 30 days.
The order of Russian GTK (Tax Code) ¹920 as of 22.08.2003 provides the possibility for the Foreign economic activity participants (FEAP) to receive provisional decisions on classification of goods (currently they are being drawn up by the Department of Product Range of Russian FTS). Acquisition of this decision is feasible when custom-clearing new, complex, multi-component goods, that are equivocal to classify.
Another item, that allows to significantly simplify documents execution and decrease costs is the Regulation on import and export of equipment, that is transported in form of separate components and classified by unified RF TN VED code, providing that there exists exist a corresponding provisional decision by RF FTS.
When exporting goods – the RF FTS order ¹22 as of 12.01.2007 (commodity groups 84, 85, 90, 93 RF TN VED – non-household purpose goods), when importing goods – the GTK RF order ¹388 as of 23.04.2001 (commodity groups 84, 85, 90, RF TN VED – non-household purpose goods – are currently being drawn up by UTN FTS of Russia). The advantages of this form of documents execution for Foreign economic activity participants are obvious – standard procedure of documents execution, separate execution of separate components (units) of processing lines (equipment), this makes impossible to present for execution the whole line (the whole equipment set) – each unit is drawn up as a separate commodity item of RF TN VED – which usually leads higher payment rates, additional technical documentation and possible additional permissive documents on non-tariff regulatory activities.
There were cases when column 31 was not filled fully, in terms of one-valued classification of goods according to TN VED RF. The FTS RF Order as of 04.09.2007 ¹1057, with the aim to classify the name (commercial or other contemporary name), provides for the specifying in column 31 of commodity name along with information on manufacturer company, on all the trademarks, models, numbers, standards and other such technical and commercial characteristics, and information on the quantities and quality of the entered goods (when entering spare parts, it’s necessary to specify not only information on this type of goods – but similar information on equipment, the commodity is part of).
In addition, the Russian Ministry of Economic Development Order ¹1302 as of December 12, 2006 describes additional requirements on description of individual commodities in column 31.
One should ensure that information in column 31 is both full and reliable (true), which means that the GTS document set should contain technical documentation of the manufacturer company – that confirms the specified information. If some of this documents are not available, of they are not presented in full or inadequately (for example, in case if they are presented not on behalf of manufacturer, but on behalf of the seller of recipient), in acc. with article 153 of Russian Customs Code this results in notification to the applicant, saying that the applicant should present additional documentation and calculation of payments, based on different classification of goods.
All the abovementioned is fully applicable to the documents review procedure in the Product Range Section and the goods/documents origin review procedure, when moving goods to VZTK and drawing up the warrant when supplying goods (if technical documents are not available, then they only consider the option of commodity classification, that corresponds to the maximum amount of payment rates).
One of the options, if technical documentation is not available, the commodities may be examined before the GTD document is submitted, in a duly accredited expert company. According to article 383 of RF Customs Code, provided that written permission is presented, the samples of goods, that are under commodity control may be taken by applicants, persons, that are authorized to work with the commodities, their representatives (along with expert decision document one should present accreditation certificate, if samples are taken – a customs identifier should be applied to such samples.
The lawfulness of manufacturer company customs entry and presentation of relative tariff preferences
The GTK Order made it possible for the foreign economic activity participants to be provided with provisional decision on the country of origin (currently being processed by the Main Department of Federal Customs Income of Russian FTS). The circumstances of documents execution are similar to the classification decisions. But it should be outlined that in the last years new types of commodities originate from CIS countries (not typical for this region) that are put forward for execution within the preferential treatment – these goods are not produced (or, in case with vegetable production – do not grow) on the territory of CIS countries, but are sufficiently processed (treated) there.
To avoid mistakes in term “sufficient processing” (if these are certain technological operations or certain balance of raw materials, produced by countries that are not aligned to agreement on customs union – that is, are of “miscellaneous origin”) and avoid mistakes in estimation of end product cost – including mistakes by authorities when issuing ST-1 certificates – it is feasible to get this Decision for the mentioned goods.
Another issue worth mentioning is that the customs authority has the right to demand a certificate on origin as per established form (ST-1 or the “A” form) not only in case when tariff preferences are granted (and in according with ST-1 – compliance with the list of commodities as per GTK RF Order ¹1587 as of 31.12.2003), but also when reasonable doubts arise on the lawfulness of specified country of origin (discrepancies in transportation documents, revealed after examination of goods and in case if the custom authorities have other feasible information).
Large attention is paid to checking of direct shipment regulations and direct purchase – that is checking if there are no third-party countries )that are not included into preferential mode) in the performance of obligations paragraph and to control over transport conditions (when moving the commodity over the territory of third-party countries – it’s necessary to present a confirmation that these commodities were under customs control in these countries.
Another feature of goods get-up by Origin Certificates ST-1 – is the requirement, that the origin of goods should be in accordance with TN VED RF code (number), stated in GTD (if stated in ST-1 column “criteria of origin” – D**** - adequately processed). In this situation it’s obviously necessary to include full amount of information into set of documents, attached to GTD, to confirm onevalued classification of goods. It is feasible to submit to customs authority the Act by TPP (or other authority) along with ST-1 certificate – that was the basis for the drawing up of certificate – this document gives the information, stating that the set origin criteria were observed.
The origin certificate is not required when transporting goods in international post exchange (IPE), customs transit, temporary import, when the lot cost is less than 20000 RUB, import by individuals for personal needs.
One should outline that if there are no obligatory requirements to present the certificate of origin along with GTD – the country of origin should be confirmed by declaration of origin, that can be replaced with manufacturer documents or exporter documents (including directive in transportation documents).
If the country of origin is unknown (not confirmed) – then the RNB stakes are used – if it’s not possible to prove otherwise. In case if the country is not part of RNB – double RNB stakes are used. If no certificate of origin is available (if it is mandatory submit it) – no preferences are granted, but tax regulations may be re-established within one year period if the certificate is submitted.
Account must be taken, that not more than 5% of excessive quantity (kilograms) is allowed over that, stated in certificate of origin, and incompliance with other data (package quantity) is not allowed.
These issues should be addressed when preparing foreign trade contract, not on the stage of customs clearing. This will allow to significantly simplify customs clearance and decrease related costs.
