Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm.

Modernised Customs Code Implementing Provisions (MCCIP), Version January 2010

Annual EU, UK and US Customs, Export Controls and Sanctions Conference

London, June 10 2010

Jasper Helder

Customs & Int. Trade, Amsterdam

C +31 6 46 17 94 82

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Agenda

– MCCIP

– Drafting process

– Timeline

– Structure

– AEO

– Binding Tariff & Origin Information

– Customs value

– Customs procedures

– Customs decisions

– Penalties

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MCCIP

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MCCIP - drafting proces

– MCCIP (latest draft January 6, 2010)

– Customs Code Committee (“CCC”), 27 national reps, chaired by EU Commission (DG TAXUD)

– CCC General Customs Legislation section– CCC Customs Valuation section

– First Sale ad-hoc working group

– Simple majority vote in CCC and sections

– Draft MCCIP as agreed by CCC will be lodged as legislative proposal by EU Commission

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MCCIP - timeline– EU Commission (DG TAXUD) at 9 December 2009 Trade Contact Group Meeting

– Drafting: October 2010

– Translation: December 2010

– Examination of final draft in CCC General Customs Legislation section: January & February 2011

– Vote CCC General Customs Legislation section: March 2011

– Scrutiny by European Parlaiment/regulatory procedure: April, May & June 2011

– Adoption: July 2011

– Entry into force: ?

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MCCIP - structure

– Provisional Structure is based on MCC

Article 123-01: is the first Article of Section 3 of Chapter 2 of Title I. If there is no Section within a chapter of the MCC, the third digit is ‘0’.

Subsections that do not exist in MCC, but are introduced in MCCIP are mentioned in some parts between hyphens after the first three “key number” and before the Article Number:

Article 523-3-07 is the 7th Article of Subsection 3 of Section 3 of Chapter 2 of Title V

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Authorised

Economic

Operator

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AEO

– AEO-Certificates are renamed (Art 123-01 MCCIP)

– AEOC-Certificate: Customs simplifications

– Conditions in Articles 123-08 through 11

– AEOS-Certificate: Security and Safety, facilitations of customs controls relating to security and safety for goods – Conditions: Articles 123-08, 123-09 and 123-12

– AEOF-Certificate: AEOC + AEOS Certificate

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AEO

– Specific AEO benefits (Art 123-02 MCCIP)

1) No re-examination of previously examined conditions for further applications for simplified procedures

2) Provide customs representation in other EU Member State where holder AEOC or AEOF is established

3) Comprehensive guarantee waiver or reduced guarantee (Art 322-04 (1) MCCIP)

4) Deemed to fulfil conditions centralised clearance (Art 106 MCC)

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AEO

– Specific AEO benefits AEO (Art 123-02 MCCIP)

5) Deemed to fulfil conditions of self-assessment (Art 116 (2) d MCC)

6) Deemed to fulfil conditions for granting the authorisation for entry in the records (107 MCC)

7) Notification a priori when consignment is selected for physical control (goods entering EU)

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AEO

– Specific AEO benefits AEO (Art 123-02 MCCIP)

8) No need to lodge or reduced data requirements for exit summary declaration. If export declaration is lodged by representative, representative needs AEOS or AEOF

9) Subject to fewer physical and document based control (or priority)

10) Priority for consignments of holders AEO/AEOF if there are incidents requiring closing or re-opening customs office of entry or exit

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AEO

– AEO Criteria are similar:– customs/ tax compliance, satisfactory system of managing commercial and transport record, solvency, security and safety standards

– New criteria:–standards of competence and professional qualifications (Art 14 d MCC, Art 123-22 MCCIP)

–With respect to security/safety: contact person competent for safety and security related questions

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AEO

– Examination of AEO criteria:

Similar, but MCCIP specifically provides that examination shall be suspended during criminal proceedings if the authorities have reasons to believe that an act which gives rises to criminal court proceedings related to customs or tax infringements is perpetrated by applicant

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AEO

– AEO Transitional measures:

– Criteria Article 14 MCC applicable to all economic operators applying for AEO

– AEO- certificates issued prior to MCCIP continue to be valid unless there is evidence of non-compliance

– Customs can examine this situation within a transitional period of 24 months (Art 920-01 MCCIP)

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Binding Tariff/Origin Information

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BTI/ BOI

- Article 20 MCC:- Combining grounds for refusing BTI/ BOI:

- Parallel application with same or other customs office (prevention of “BTI/BOI shopping”)

- No intended use

- BTI/BOI not only binds customs, but also the holder

- Validity BTI/BOI: 3 years

- Commission decision requesting EU Member States to amend, revoke BTI/BOI

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– Application– in principle electronically. Information to be provided in listed in

Annex. Customs also notifies BOI or BTI in principle electronically

– Additional information to be provided for BOI – indication by the applicant whether to his knowledge the goods are

subject to any legal or administrative proceeding concerning origin or a court ruling on origin

– indication whether application relates to import or export

BTI/ BOI

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– Exchange of information EU Member States and Commission (new)

– changes in the application

– notification and details where BTI is annulled, revoked or ceases to be valid

– notification if period of extended use of BTI is granted indicating the end date and the quantities to be covered

BTI/ BOI

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BTI/ BOI

– Procedures inconsistencies BTI/BOI (new)

- EU Member States endeavour to bilaterally agree on correct classification or origin of the goods. Time period for bilateral consultation is 3 months

- If not bilaterally solved, EU Member States to submit matter to the European Commission

- EU Member States may not make any decision until the Committee has reached agreement

- Commission may instruct the EU Member States to revoke BTI decision and to indicate correct tariff clarification

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BTI/ BOI

– Legal Effect of BTI/BOI (new)– Holder has to inform customs authorities that he is in possession of

BTI/BOI: Box 44 SAD

– New circumstance for revocation: published guidance on the interpretation of the customs nomenclature established by the Customs Code Committee

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Customs Value

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Customs Value: first sale

– Article 230-02 MCCIP

“1 (...) the customs value is determined under the transaction value method if the goods have been the subject of a sale for export to the customs territory of the Union at the time of acceptance of the declaration for free circulation.:

[As a general rule, the last sale in the commercial chain, before introduction of the goods into the customs territory, meets this requirement : to be completed].

2. In the case of resale in the customs territory before release for free circulation, either the sale applicable under paragraph 1, or the last sale before the release of the goods for free circulation shall apply.”

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Customs Value - first sale

– January 2010 draft appears not to exclude First Sale

– But: will depend on requirements, which are yet to be adopted

– Future remains uncertain

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Customs value - royalties

Added to customs value if

– Payment is Condition of Sale (“CoS”)– Payment is required by seller/related company

– Payment is made to fulfil obligation of seller

– Goods may not be sold/produced without royalty-payment

– Related to imported goods– If rights for which royalties are paid are embodied in goods

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Customs value – related parties and transaction value

– Current: Customs may reject if “they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable”, Article 181a ICCC

– MCCIP: Customs may reject if “they have reasons to doubt the truth or accuracy of the declared customs value”, Article 230-16 MCCIP

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Customs procedures

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Customs procedures

– Title VI Release for free circulation and relief from import duties

– Title VII Special procedures– Common rules special procedures (Art 135-143 MCC)

(authorisation, administration, discharge of procedure, equivalent goods)

– Transit (external and internal transit)– Storage (temporary storage, customs warehousing and free

zones)– Specific use (temporary admission, end-use)– Processing (inward and outward processing, usual forms of

handling)

– Title VIII Departure of goods from customs territory EC

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Customs procedures

– Conditions authorisation special procedures:– Established in customs territory EC

– Necessary assurance of proper conduct, in cases where custom debt is incurred, must provide guarantee

– Temporary admission or inward-processing: the person who uses the goods or arranges for their use or who carries out processing operations on the goods or arranges them to be carried out (not for persons outside EU for imports of non-commercial nature)

– Customs are able to exercise customs supervision without having to introduce administrative arrangements disproportionate to economic needs

– Economic Conditions (Art 710-07 MCCIP)

– Amended rules for retroactive authorisation (conditions, and period 3 years)

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Customs procedures

– Processing (Art 168-169 MCC, Art 752-01- 752-05 MCCIP)– Inward processing suspension combined with processing under

customs control

– Inward processing draw-back is not included

– Common valuation principles for output products under processing and usual forms of handling (under bonded warehousing)

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Customs procedures

– Customs Warehouse (Art 153-154 MCC, Art 733-01 & 733-02 MCCIP)

– 4 types of warehouses:

– Public customs warehouse type I: responsibility holder of authorisation

– Public customs warehouse type II: responsibility holder of procedure

– Public customs warehouse type III: operated by customs authorities

– Private customs warehouse

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Customs decisions

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Right to be heard

– MCC introduces the right for a person to express his point of view before decision is taken (Article 16 sub 4)

– MCCIP sets the criteria (Articles 124-1-01 and 124-03 MCCIP)– ‘Customs Communication’ must include reasons and refer to all documents

and information related to the intended decision– ‘Point of view’ must be expressed within 15 days, after which considered

waived– Verification customs declaration : ‘Customs Communication’ and ‘Point of

view’ may be made orally, right to request a written ‘Customs Communication’ remains open (15 days)

– If time limit applies to Customs decision: suspended as from communication of intent for 15 days

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Right to be heard - exceptions

– Right to be heard does not apply in the following cases– Where a request for a decision may not be accepted

– Where the decision at stake is a BTI/BOI (Article 20 of MCC)

– In case of refusal of the benefit of a tariff quota (Article 33 sub 4 of MCC)

– Where the nature or the level of the threat to the security of the Community and its residents, to human, animal or plant health, to the environment or to consumers so requires

– Where the decision relates to enforcement measures

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Penalties

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Penalties

– Article 21 MCC

- EU Member States have to enact penalties that are effective, proportionate and dissuasive

- Administrative penalties

- pecuniary charge including a settlement in place of criminal penalty

- revocation, suspension or amendment of authorisation

- National provision have to be notified to Commission

Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm.

Modernised Customs Code Implementing Provisions (MCCIP), Version January 2010

Annual EU, UK and US Customs, Export Controls and Sanctions Conference

London, June 10 2010

Jasper Helder

Customs & Int. Trade, Amsterdam

C +31 6 46 17 94 82