Federation of East African Freight

Forwarders Associations (FEAFFA)

THE EAST AFRICA CUSTOMS AND FREIGHT

FORWARDING PRACTICING CERTIFICATE (EACFFPC)

CUSTOMS
• LAWS AND PROCEDURES
• VALUATION AND TARIFF
CLASSIFICATION

FEAFFA in collaboration with East Africa Revenue Authorities

 Federation of East African Freight
Forwarders Associations (FEAFFA)

THE EAST AFRICA CUSTOMS AND FREIGHT

FORWARDING PRACTICING CERTIFICATE (EACFFPC)

Federation of East African Freight

Forwarders Associations (FEAFFA)
CUSTOMS
The Federation of East African Freight Forwarders Associations (FEAFFA) is a regional private sector apex body of the
Customs Clearing and Freight Forwarding (CFA) industry in East Africa. It aims at promoting a professional freight
• LAWS AND PROCEDURES
• VALUATION AND TARIFF
logistics industry for trade facilitation and regional economic growth. FEAFFA strives to address the challenges
experienced by its members through training, provision of information and other aspects of capacity building.
It advocates for the full implementation of the East African Community (EAC) Customs Union. The East Africa

CLASSIFICATION
Customs and Freight Forwarding Practicing Certificate (EACFFPC) is the Federation’s and the industry’s premier
training program in East Africa since 2007.

Copyright © 2013 Federation of East African Freight Forwarders Associations (FEAFFA)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted
in any form or by any means without the prior written permission of the copyright holder. Material published
in this manual may not be used for any form of advertising, sales or publicity without prior written permission.

Federation of East African Freight Forwarders Associations liability, trademark and document use rules apply
for the original and the translation.

Copies may be obtained through the following address:

C/O. Federation of East African Freight Forwarders Associations FEAFFA in collaboration with East Africa Revenue Authorities
P.O. Box 22694-00400, Tom Mboya, Nairobi.
The crescent,(Off Parklands Road) Westlands, Nairobi, Kenya
Tel: +254 202-684802 | Cel: +254 738 150 673
Email: [email protected]
Website: www.feaffa.com
BOOK 1

CUSTOMS LAWS
AND PROCEDURES
 CUSTOMS LAWS AND PROCEDURES

Table of Contents
FOREWORD.....................................................................................................................................................2
ACKNOWLEDGEMENT......................................................................................................................................3
LIST OF ABBREVIATION...................................................................................................................................4

UNIT I: CUSTOMS LAWS..................................................................................................................................6

Overview on Customs laws of the East African Community......................................................................................................... 6
Over view of the East African Community Customs Union Protocol.......................................................................................... 6
Customs Laws of the Community (provisions of Art. 39).............................................................................................................. 6
Other Laws and regulations impacting clearing and forwarding environment........................................................................... 6
Customs Law (EACCMA)................................................................................................................................................................... 6
Structure of the EACCMA.................................................................................................................................................................. 7
Compliance Related Provisions Inclearance of Goods from Customs.......................................................................................... 8
Refunds and Draw Backs................................................................................................................................................................... 12
Customs Agent.................................................................................................................................................................................... 13
Task....................................................................................................................................................................................................... 14
Conventions Governing Prohibitions and Restrictions................................................................................................................ 17
Overview of the EAC Customs Regulations (EACCMR)............................................................................................................. 18

UNIT 2: CUSTOMS CLEARANCE PROCEDURES................................................................................................28

Import Procedures............................................................................................................................................................................. 38
Report of Vessels, Aircrafts and Vehicles........................................................................................................................................ 28
Landing Permit................................................................................................................................................................................... 29
Goods in Transit Shed....................................................................................................................................................................... 29
Duties/Taxes Under the Importation............................................................................................................................................... 33
Legal Provisions for Customs Declaration...................................................................................................................................... 39
Verification and Release of Imported Goods.................................................................................................................................. 41
Verification and Release of Goods for Export................................................................................................................................ 44
Inward / Outward Processing........................................................................................................................................................... 48
Customs Bond Securities................................................................................................................................................................... 50
Enforcement ff Bond Security.......................................................................................................................................................... 56
Transit and Transhipment Procedures............................................................................................................................................ 57

REFERENCES.................................................................................................................................................60

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Foreword Acknowledgement
Clearing agents in the East African Community (EAC) region play a vital role in facilitation of trade particularly The Curriculum Implementation Committee (CIC) is grateful to the National Revenue Authorities and the
in regard to tax assessment and collection; this in turn facilitates cargo movement and clearance from all ports. National Freight Forwarders Associations for accepting to release their staff and members to carry out the
development of the training materials. CIC acknowledges the FEAFFA secretariat for excellent co-ordination
It is important to note that clearing agents who also double up as customs agents in the region work very closely of the process of materials development and the eventual compilation of the manuals.
with customs authorities to ensure that trade in the region is facilitated.
The tremendous support provided by TradeMark East Africa (TMEA) who provided financial support to revise
Whereas customs officers have continued to be trained and refreshed, developing experts from their work force, and publish the 2013 edition of the EACFFPC training materials cannot go unnoticed. We remain indebted to
the same has not been the case with their work counterparts; the customs agents. you.

The need to train and build the capacity of customs agents has never been more necessary particularly after it A big THANK YOU to the following individual subject experts below who took their valuable time and wide
has become imminent that the knowledge gap continues to widen. experience in developing this CUSTOMS MODULE that have gone down the history lane. We also appreciate
all EACFFPC trainers and students for the constant feedback that has been incorporated in this edition of the
The customs agents who also double up as freight logisticians have a wider scope compared to customs officers training materials.
creating need for more attention on their ability to deliver professionally.
CUSTOMS LAWS AND PROCEDURES
Most development partners have been focusing more on training customs officers who apart from having better
resources have better entry points. On the other hand the clearing agents do not have a defined academic entry 1. Ahmed Mohamed
point or defined resources for training. 2. Erizaphan Siringi
3. Felicite Nibigira
This has resulted to a struggling clearing agent trying to catch up with the knowledgeable counter parts in 4. Joy Basabe
Customs, yet both MUST work together. 5. Lilian Baguma
6. Wambura Waryuba
Customs agents originate documents that facilitate movement and clearance of cargo culminating into errors 7. Jean-Marie Vianney Bakanibona
that slow down the flow of business. 8. Lillian Umuhire Rugambwa

Movement of cargo depends on how fast and correctly documentation is done by Customs Agents for verification VALUATION AND TARIFF CLASSIFICATION
by the respective Customs Authorities. A delay in customs clearance increases the cost of doing business.
1. George Munyetafu
The intervention by Trade Mark East Africa (TMEA) came at the right time to facilitate initial revision of 2. Isaac Barya Winyi
EACFFPC training materials in 2013 to enhance training and capacity build the private sector with emphasis 3. Marie Goreth Bizindavyi
on the practicing customs agents in the EAC region. 4. Providence Mukamurenzi
5. Shehe Mzungu
The support did not only focus on revision of the materials but also brought together the private sector and the 6. Theophile Ngabonziza
regional revenue authorities’ experts who have worked together to come up with EACFFPC training materials 7. Emma Marie Ndoricimpa
acceptable to both parties. 8. Francis Otyama
9. Kisa Kejo
With these revised materials, the road to enhancing training for clearing agents continues in earnest. 10. Winfred Jillani
11. Lillian Umuhire Rugambwa

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

List of Abbreviation
EACCMA East African Community Customs Management Act
ASYCUDA Automated Systems for Customs Data
AWB AirWay Bill
BIF Bond in Force
COMESA Common Market for Eastern and Southern Africa
CPC Customs Procedure Codes
EAC East African Community
EACCMR East African Community Customs Management Regulations
EACCMRR East African Community Customs Management (Duty Remission) Regulations
EPZ Export Processing Zones
GATT
ICD
General Agreement on Tariffs and Trade
Inland Container depot
UNIT 1:
ICT Information and communication Technology
MUB Manufacturing Under Bond
SAD Single Administrative Document
SADC South African Development corporation
TREO Tax Remission Office
VAT Value Added Tax

CUSTOMS LAWS

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Unit 1: CUSTOMS LAWS (d) Applicable decisions made by the Court; iii. Apply provisions related to valuations of goods PART V: Exportation
(e) Acts of the Community enacted by the and assessment of taxes
This course is intended to enable the participants to Legislative Assembly; and iv. Demonstrate understanding of Customs • Prohibited and restricted exports
correctly apply provisions of the customs law in the (f) Relevant principles of international law. offences and offence procedures and • Exemption of goods in transit
process of clearing and forwarding goods. consequences of non-compliance. • Entry of cargo for export
The Customs law of the Community shall apply v. Explain legal proceedings • Vehicles departing overland
Overview on Customs laws of the East African uniformly in the Customs Union except as otherwise vi. Exercise right to appeal • Treatment of goods under transit and
Community provided for in the Protocol. The Partner States shall vii. Apply provisions related to exemption, transshipment
conclude such annexes to this Protocol as shall be remission, refunds and drawbacks.
Sub-topic deemed necessary. viii. Comply with legal requirements for PART VI: Departure and clearance of aircraft
operationalization of Customs Agents. and vessels
Customs Laws under article 39 of the protocol Other Laws and regulations impacting clearing
establishing EAC Customs Union and forwarding environment Structure of the EACCMA • Clearance required for departure to foreign
port
Introduction The clearing and forwarding environment is The EAC CMA is comprised of twenty one parts, two • Deficiency or surplus in cargo or stores
governed by various laws apart from the Customs hundred and fifty three sections, and six schedules
Over view of the East African Community laws of the Community. That being the case, a as follows: PART VII: Importation and exportation by post
Customs Union Protocol Customs agent within the community is supposed
to be aware of the laws and regulations prior to PART I: Preliminary provisions to include • Application of Act to postal articles
The three Partner States of East Africa signed a engagement within the industry. The regulations • Time of entry of postal articles
treaty for the establishment of the East African cater for the establishment of a company to practice Short title, application and commencement • Registered couriers companies to land, stores,
community. This treaty came into force on 7th July, within the clearing industry. Interpretation etc
2000. These Partner States undertook to establish
among themselves a Customs Union as an integral Whereas the EACCMA and its Regulations PART II: Administration PART VIII: Carriage coastwise and transfer of
part of the community. harmonizes the licensing and Customs Agents’ goods
practices across the EAC, it is important to note • The Directorate of Customs and its functions
A Customs union is an agreement between two or that there are other National laws and regulations • Provisions relating to staff, Customs seal and • Meaning of carriage coastwise and transfer
more countries to remove trade barriers with each impacting on establishment and registration of flag • Loading, etc. of coastwise and transfer cargo
other and establish a common tariff and non-tariff Companies such as : • Officers to have powers of Police and hours of • Transire to be delivered on arrival
policies with respect to imports from countries a) Provision of Company’s Ordinance/Act with attendance • Examination of coasting vessels and goods
outside of the agreement. regards to establishing of a company. This • Offences by, or offences in relation to officers
differs in each Partner State • Exchange of information and common border PART IX: Provisions relating to securities
A Protocol for the establishment of the East African b) Registration requirements from the registrar of controls
Community Customs Union was signed by three companies. • General provisions relating to giving of security
East Africa Heads of State for Uganda, Kenya and c) Business Licensing requirements from the PART III: Importation • Enforcement of bonds
Tanzania on 2nd March, 2004 in Arusha, Tanzania. specific government organs.
Later on, both Rwanda and Burundi joined the East d) Any other Laws or regulations necessary to be • Prohibited and restricted imports PART X: Liability to duty
African Community in the year 2007. completed prior to starting a business. • Power to prohibit, etc, imports
• Exemptions of goods in transit. • Rates, etc, of duty
Customs Laws of the Community (provisions of A Customs agent is supposed to know all the • Procedures on arrival • Preferential tariff treatment under COMESA
Art. 39) stakeholders of the respective Partner States and the • Reports and SADC
relevant laws and Regulations as well as the respective • Arrival overland • Exemption regime
This unit will enable trainees to correctly apply Authorities granting them powers to operate. It is • Entry, examination and delivery of cargo • Goods imported duty free liable to duty
provisions of the Customs law in the process of the duty of the agent to know the various relevant • Time of entry determines rate of duty
clearing and forwarding goods. laws and to fulfill regulatory obligations. PART IV: Warehousing of goods • Value of goods for export
• Allowance for tare
According to article 39 of the protocol, the Customs CUSTOMS LAW (EACCMA) • Dutiable goods may be warehoused • Agency notices
law of the Community shall consist of: • Entry and removal of warehoused goods • Anti-dumping and countervailing duties
Specific Objectives: • Operations in the warehouse • Drawback, remission, rebate and refund
(a) Relevant provisions of the Treaty; • Penalty for unlawfully taking, etc., warehoused
(b) The Protocol for the establishment of EAC and At the end of this topic, trainees should be able to: goods PART XI: Customs agency
its annexes; i. Describe the structure of the EACCMA • Bonded warehouses
(c) Regulations and directives made by the ii. Comply with the provisions related to clearance • Licensing of agency
Council; of goods.

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

• Liability of duly authorized agent PART XIX: Legal proceedings by an agent before starting the clearance process Accordingly, goods entered but not removed from
• Liability of owner for acts of agents include the following: the first place of entry within fourteen days will
• Actions by or against the Commissioner i. Submission of Reports to the proper authority attract Customs warehouse rent.
PART XII: Prevention of smuggling • Protection of witnesses such as Port Authorities and Revenue
• Power of officer to prosecute Authorities Customs controls of goods
• Power to require vessels, etc, to bring to or to ii. Legality of the places where the goods are to be
depart PART XX: Appeals loaded/unloaded A Customs agent has to understand his role in
• Power to stop vehicles iii. Having in place the necessary documents facilitating the clearance of goods under Customs
• Power to search persons PART XXI: Miscellaneous provisions iv. Time limit for the entrance of goods and the control as well as the purpose of Customs control of
• Power to require production books, etc. SCHEDULES: implications of the time of entry imported goods. Customs emphasis on controls is to
v. The implications of the regimes for which the ensure that:-
PART XIII: Manufacturing Under Bond • First schedule: Declaration of Officer goods will be entered • the revenue due on imported goods is charged
• Second schedule: Prohibited and Restricted vi. The Customs controls in force for the goods. and collected;
• Licensing of bonded factories Imports Generally • prohibited goods are not imported;
• Manufacturer to provide facilities • Third schedule: Prohibited and Restricted Submission of reports • allowed goods are imported in accordance with
• Goods from bonded factory may be entered Exports Generally all the conditions governing their importation;
for home consumption • Fourth schedule: Determination of Value of The major role of Customs agent is to clear goods and
Imported Goods Liable to Ad Valorem Import from Customs area and deliver them to the owner. • goods whose duty free importation is
PART XIV: Export Processing Zones and Duty Before a Customs agent starts the clearance process, conditional upon the status of the importer
Freeports • Fifth schedule: Exemption Regime he/she is supposed to know whether goods have and/or their end use are imported and used in
• Sixth schedule: Warrant of Distress already been unloaded from the importing vessel accordance with such conditions.
• Goods entering Export Processing Zones or and a report submitted to the Proper Officer.
Freeports COMPLIANCE RELATED PROVISIONS IN Depending on the means of conveyance, the task to It is the role of a competent agent to inform the
• Designated areas in Export Processing Zones CLEARANCE OF GOODS FROM CUSTOMS (I.E. report is vested to different persons but there should importer that goods under customs control are
or Freeports CLEARANCE AT PORT, AIRPORTS, BORDER be a report before Customs authorize goods to be subject to the following:
POST AND POST OFFICE, TRANSIT, ICD AND delivered. Hence it is the role of a Customs agent to • any officer may at any time examine such
PART XV: Inward and Outward Processing WAREHOUSES) be aware on whether the report is already within the goods; and
Customs department. • no person may interfere in any way with
• Procedure of Inward operations Introduction such goods except in a manner authorized or
• Compensating products and rate of yield Places of loading and unloading prescribed under the EACCM Act.
• Authorization for Outward Processing The term compliance means adherence to the
• Relief from payment of duty provisions or guidelines in relation to something. For These are places appointed for loading and unloading Offences
the case of Customs, compliance to the laws is thus goods subject to Customs control.
PART XVI: Application of information adherence to the provisions of Customs laws in each Customs offences
technology and every aspect. The compliance provisions range The entry and exit to these Customs areas is
from adherence to controls of goods, movement of restricted. This unit will enable trainees to understand how
• Customs formalities may be carried out by ICT passengers as well as means of conveyance. offences committed during the process of clearing
• Unauthorized access to or improper use of The discharge of goods in the proper place of loading and forwarding of goods under Customs control are
Customs computerised system Compliance during Clearance of goods is thus facilitated by a competent Customs agent dealt with.
who should know all the places for discharge at a
PART XVII: Offences, penalties, forfeitures and According to the EACCMA, Customs operations Customs area and how goods must be so discharged. A Customs offence is any breach or attempted breach
seizures are conducted within the specified places identified The master who fails to discharge the goods commits of the statutory or regulatory provisions which are
as Customs areas. Those Customs areas are an offence and will be held liable. provided in the East African Community Customs
• Offence with violence clearly mentioned in the Act (section 12). Other Management Act (EACCMA) .
• Offences related to prohibited, restricted and than Customs areas, the Act also provides for Time within which clearance must be effected
uncustomed goods appointment of ports, airports and places of loading Customs offences may be dealt with by the Customs
• General penalty and unloading. The need to have all these is to Imported goods must be cleared by the owner within authorities, in accordance with procedures laid
• Restoration of seizures ensure control of goods, means of conveyance as 21 days from the date of discharge from the means down in the EACCMA, 2004.
well as passengers. of transport on which they were imported. An Agent
PART XVIII: Settlement of cases by the should inform the owner that goods which remain Customs offences are committed when any person
Commissioner The role of agents is to comply with all procedures un-entered after this period shall be removed to the contravenes any of the provisions Act. Offences
for the clearance of goods depending on where Customs warehouse. are generally covered by part XVII of the EACCM
goods are located. The necessary considerations Act. The sections under this part spell out how a

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particular offence should be dealt with. Some of the Legal Proceedings Appeals The complete list with the conditions for exemption
offences covered in the Act include the following: is found in the fifth schedule and the agent is urged
Authority Various provisions of the EACCMA 2004, including to understand those conditions before clearance
i. Section 200- offences related to prohibited, sections 193 to 208 lists areas where offence can be with Customs. It is also essential for the agent to have
restricted and unaccustomed goods Sections 220 and 221of the EACCMA 2004, legal raised and legal proceedings be instituted, by the all documents to justify qualification for specific
ii. Section 202-offences related to import or proceedings can be instituted in the court of law Commissioner of Customs, in a court of law. On exemptions.
export of concealed goods and suing done in the name of the Commissioner. the other hand, the Commissioner is empowered by
iii. Section 203-offences to make or use false However, some Acts establishing some East African the EACCMA 2004 to make a decision, assessment Remission of duty
documentation. Revenue Authorities carry provision(s) stating of tax or to determine the value of imports/exports
that the suing should be done in the name of the within the framework of the Customs laws. In Section 140 of the EACCMA 2004, empowers the
It is important to note that most of the offences are Commissioner General of the Revenue Authority. the process, the assessment made can aggrieve a EAC Council to grant remission of duty on goods
covered in sections 193-208 of the Act. taxpayer, who may be an importer or exporter. The imported for manufacture of goods for export or
Court proceedings may be instituted where the aggrieved person may decide to apply for review for home use in case of an urgent national need.
Offences commonly committed Commissioner is satisfied that an offence has been or appeal against the decision. An application for The procedure for approval of goods, for which
committed. review or an appeal can be effected by an importer/ remission may be granted, is provided for in the
1. Misdeclarations in the following areas: exporter, Customs Agent. Where an appellant is not East African Community Customs Management
• Tariff- example refrigerated container Violations leading to Legal proceedings satisfied with the Commissioner’s verdict, he/she (Duty Remission) Regulations (EACCMRR) 2008.
declared as cooling unit may appeal to the Tax Tribunal. In case one is not
• Quantity- declare less weight or pieces Generally the violation of the requirement(s) of the satisfied with the Tribunal’s decision may appeal EACCMRR 2008 regulation 6 provides that the
• Wrong item e.g. mineral water yet its wine provisions of Customs law(s) is an offence for which to a judicial Court. The appeals mechanisms are remission of duty granted shall be valid for a period
• Year of manufacture/registration legal proceedings can be instituted in the court of provided for under section 229 of the Act. of twelve months from the date of the publication of
especially on motor vehicles. law. Penalties, fines and/or imprisonment upon the grant in the Gazette.
2. Smuggling /diversion conviction are prescribed in various provisions of Exemption under 5th Schedule
3. Concealment the EACCMA 2004. Application for remission
4. Under-valuation The 5th schedule to the Act provides for general and
5. Abuse of temporary importation procedures Particularly sections 193 to section 208 of the Act specific exemptions. An application for remission of duty shall be
6. Counterfeit/prohibited goods state some of the offences and how they are dealt made to the Council through the Commissioner
7. Abuse of transit/warehousing procedures. with. Such offences include: Specific exemptions cater for the following:- in a specified form (Form R 1) in the Schedule to
i. Conspiring to contravene the provisions of the a) The presidents, Remission Regulations.
Legal Proceedings and Appeals EACCMA. b) Partner States Armed forces
Introduction ii. Maliciously shooting at an aircraft, vessel, c) Commonwealth and other governments Upon receipt of an application for remission, the
vehicle in the service of Customs. d) Diplomatic and first time arrivals Commissioner shall forward the application to
The East Africa Community Customs Management iii. Being armed while committing offense under e) Donor Agencies with bilateral or multilateral the Committee established to oversee remission
Act (EACCMA) 2004 provides various measures this Act. agreement with Partner States applications for its comments.
for enforcing the compliance with the provisions iv. Rescuing person arrested for any offense under f) International and regional organizations.
of the Act and /or procedures related thereto. The the Customs Law. g) The war graves commission The Commissioner shall after receiving the
non-compliance with the provisions of the Customs v. Removing or defacing a Customs seal h) Disabled, blind and physically handicapped comments forward the application together with his
laws is an offence for which measures for enforcing vi. Inducing another person to commit offence. persons or her comments to the Council.
compliance can be instituted. The measures include vii. Warning an offender with the intent to obstruct i) Rally drivers
Tax recovery measures and/or measures for non- the proper officer in the execution of his/her j) Goods and equipment for use in Aid funded The Council may for reasons to be communicated
compliance with any other provisions of the duty. projects to the applicant reject or approve an application for
Customs laws. viii. Assuming character of a proper officer. remission under the Regulations.
ix. Importing or carrying coastwise prohibited Likewise general exemptions provide narrative
The provisions of the Act empowers the goods. explanations for the importation of the following: Maintenance of records
Commissioner of Customs to apply measures, x. Importing or carrying coastwise restricted a) Aircrafts operations
such as compounding offence(s), recovery of tax goods contrary to the conditions governing b) Container and Pellets One of the mandatory tasks for a manufacturer is to
by distress warrant, Agency notice etc; to recover their importation or carriage coastwise. c) Deceased person’s effect maintain records for the goods produced. When it
unpaid tax and/or enforce compliance with any xi. Making or using false document(s) d) Fish, crustaceans and molluscs comes to the issue of duty remission, a manufacturer
provision(s) of the Act; whether for tax recovery xii. Refusing to produce document(s). e) Passengers Baggage and personal effects is expected to maintain separate books and records
or mere compliance with the provision(s) of the f) Samples and Miscellaneous Articles relating to the following;
Customs Law. On the other hand, the compliance g) Ships and Other vessels
can also be enforced by instituting legal proceedings h) Preparation for cleaning diary apparatus (a) locally sourced goods;
in the Court of law. (b) goods imported by the manufacturer;

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(c) goods received by a manufacturer by way of v. Payment under protest used in the manufacture of such goods. involving international shipping process
transfer under regulation 11 of the Remission vi. Undelivered cargo vi.The claim for drawback is presented within iii. Provide bond guarantees for goods under
Regulations. vii. Goods imported are not in accordance with the twelve months from the date of exportation of clearance where necessary
contract of sale and if returned to the seller the goods or performance of the conditions for iv. Facilitate refund claims such as duty draw back
All these records have to be availed for audit by viii. Goods are damaged or destroyed while under which a drawback is allowed. claims
the Commissioner as per section 236 of EACCMA Customs control CUSTOMS AGENTS v. Prepare and facilitate goods for examination
2004. It is therefore the duty of the manufacturer ix. Goods are damaged or pillage during voyage CUSTOMS AGENT vi. Facilitates and avails warehousing facilities
to maintain those records for the period specified vii. Provides import/export consultancy services
under the Customs laws. Duty Drawbacks A Customs Agent is a person who is licensed by the viii. Acts as a freight forwarder on behalf of his
AND Commissioner for transacting business relating to clients
REFUNDS AND DRAW BACKS Duty drawback is a refund of all or part of any the declaration or clearance of goods or baggage ix. Provide related transport/shipping and
Refund of duty import duty paid in respect of goods exported. This (other than accompanied un-manifested baggage)
logistical services
is a facility adopted within revenue administration subject to Customs control of a person travelling by
x. Provides network with related government
Refund of duty is the payment of import duty or to facilitate trade and encourage production of air, land, or sea; on behalf of the owner.
officials and agencies
part of it, previously paid on imported goods which goods for export using imported inputs. During
has been damaged or pillaged during the voyage importation the manufacturer will pay duties for Section 145 of the EACCMA 2004 empowers the
or damaged or destroyed while subject to Customs the imported inputs and will claim a refund when Commissioner of Customs to license or to decline. Licensing procedures:
control. The refund also refers to the payment of the final goods are exported or used in a manner or The Commissioner may refuse to issue a license,
import duty or export duty paid in error. for a purpose prescribed as a condition for granting suspend, revoke any license or decline to renew A person intending to be a Customs agent has
a duty drawback. The goods under duty drawback such license if the agent has failed to meet certain to apply for a license in a prescribed form to
Conditions for refund of duty are subject to Customs control as per section 16 of conditions for licensing or contravened the law. Commissioner. The application shall be accompanied
EACCMA. with an application fee as may be prescribed by the
A refund claim may be effected where the A Customs Agent performs his/her duties under the Commissioner.
commissioner is satisfied that:- Conditions for granting duty drawback authority of the owner of the goods. In accordance
with section 146 of the EACCMA 2004, the agent Where the application is approved, the applicant
i. The description, quality, state and condition of Sections 138 to 139 of the EACCMA 2004 provides has to be authorized in writing by the importer/ shall pay the license fee and execute a security bond
the goods; for which a refund is claimed, was for conditions under which duty drawback can be exporter. of such amount as the Commissioner may require.
not in accordance with the contract or that the allowed:
goods were damaged before delivery out of The importance of a Customs Agent Conditions for licensing
Customs control or the goods with consent of i. The goods should be entered in a prescribed form
the seller are returned unused or destroyed and manner; and produced for examination by Declaration and /or clearance of goods through The applicant must have the following:
ii. The goods for which a refund is claimed, proper office prior to exportation. Customs, requires professional knowledge and
were damaged or pillaged during the voyage ii. A person claiming drawback should Complete competences without which the clearance of goods • He or She must have established office with
or damaged or destroyed while under and subscribe a declaration on a prescribed can be delayed or fail. A Customs Agent with office equipment including computers capable
Customs control. A refund in this case will form. professional knowledge and Competences in the of being connected to customs computer
be proportional to what has been damaged, iii. For goods exported or put on board any vessel/ clearance of goods through Customs and subsequent network
pillaged or destroyed aircraft for use as stores the conditions include forwarding them to the importer minimizes delays • Employees with minimal acceptable
iii. Import or export duty was paid in error that: associated with clearance and forwarding of goods
qualifications according to customs regulations.
iv. A claim for refund must be presented to the • The goods have been exported or put on to final destination(s). He uses his/her professional
• Documentary evidence regarding
Commissioner within twelve months from the board as stores. knowledge for easy compliance with various laws
establishment of the customs agency.
date of payment of duty. • The owner, at the time of declaration of and procedures related to clearing and forwarding
the goods for drawback was and continues of goods; thus minimizing delays, costs and penalties
Circumstances under which refund may arise to be entitled to drawback associated with non-compliance of the provisions Liability of a duly-authorized Agent:
include: iv. The goods, after having been put on board of the laws governing clearance and forwarding of
any vessel/aircraft for exportation or use as goods. Importance of customs agents is reflected The Customs agent shall be deemed to be the owner
i. Double lodgments where two entries are stores have been destroyed by accident and/or from the roles of customs agents which are; of the goods and hence:
lodged and paid for to clear the same cargo abandoned to Customs.
ii. Valuation dispute where a higher value led to v. For goods imported for use in the manufacture i. Acts as an intermediary between an importer/ • Be liable to pay all Customs duties and taxes.
over payment of goods which are exported, transferred to a exporter and other parties in clearance of • Be able to answer all questions asked by
iii. Tariff dispute where an issue under dispute led free port or transferred to Export Processing goods and border protection. the proper officer in relation to a particular
to overpayment Zone(EPZ) ,the drawback is allowed if the ii. Customs clearance of goods by capturing transaction.
iv. Short landing whereby less quantities are goods exported, transferred to a free port or declarations and performing related activities
received EPZ are a direct result of the imported goods involving paper work in trade facilitation

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

Role and Liability of owner TASK CONVENTIONS GOVERNING PROHIBITIONS About 105 psychotropic substances are controlled,
AND RESTRICTIONS most of them in pharmaceutical products acting on
The owner of goods who authorizes an agent to What restrictions have been imposed to the use of the central nervous system.
perform any business transaction under Customs the motor vehicle as far as temporary importation There are various international conventions
control on his/her behalf, shall be liable to the is concerned? regulating production, possession and movement The Convention on psychotropic substances has
declaration made by the agent and be prosecuted for of certain goods. Countries signatories to these judged some of these substances to be particularly
any offence committed by such agent, unless such RESTRICTIONS AND PROHIBITIONS conventions must adhere to them and fulfill all
dangerous, such as LSD, and made calls to place
offence is committed by the agent due to his/her requirements. There are conventions relating to
them under even stricter control than narcotic
negligence. Specific Objectives narcotic drugs, psychotropic substances, intellectual
property etc drugs. Furthermore, the convention calls for
For clearance purposes, the owner-the importer or At the end of this topic, the trainee will be able to: substances with very wide legitimate medical use to
exporter- will have to submit documents related to i. Differentiate between prohibitions from International conventions on narcotic drugs be controlled in a less stringent way not to hamper
the imported goods or goods under export to his/ restrictions Shanghai Convention 1909 their availability for medical purposes but on the
her Customs Agent. ii. Identify specific provisions on prohibited and other hand to avoid their diversion and abuse.
restricted imports/exports The control of narcotic drugs has been of global
Sample Question iii. Identify prohibited and restricted imports and concern ever since the first international conference The United Nations Convention against illicit
exports under the Customs law on the subject, held in Shanghai in 1909. Traffic in Narcotic Drugs and Psychotropic
Exercise I iv. Identify various regulatory authorities Substances, 1988.
administering restrictions The international control system has been built
The students from Masai Mara Girls School were on a v. Identify legal requirements for complying with up step by step, continuing from 1920 under the This convention urges the member countries to;
study tour in Dar es Salaam being hosted by Institute restrictions on specific imports/exports. auspices of the League of Nations, and since 1946 by
of Tax Administration (ITA) in collaboration with the United Nations
i. Prevent the laundering of money obtained
Tanzania Freight Forwarders Association (TAFFA). INTRODUCTION
The students had planned to visit Dar es Salaam Port A series of treaties adopted under the auspices of the from illicit trafficking.
and other customs areas to gain expertise in various Movement across the border involves goods which UN require that: ii. Provide concrete instruments for international
customs issues. On the part of TAFFA, you had been are of different categories. These goods may be law enforcement cooperation.
appointed to head the delegates. Miss Kidunducy, acceptable either as they are or under certain • Governments exercise control over production iii. Provide legislation covering the tracing,
one of the talkative students asked, specification in one region but banned in the other. and distribution of narcotic drugs and freezing and confiscation of proceeds and
Prohibited goods are goods that are not allowed to psychotropic substances. property derived from drug trafficking.
a) “You said most of the goods in customs area be imported, exported or transferred into or outside • Governments combat drug abuse and illicit
are there for the purpose of control. What types any of the Partner States. i.e These are goods that are traffic. OTHER INTERNATIONAL CONVENTIONS/
of goods specifically should we expect to find banned to be traded and cleared through Customs. • Governments maintain the necessary AGREEMENTS
in those customs areas?” administrative machinery and report to
b) “What can we understand by the term goods Restricted goods are goods whose importation international organs on their actions.
i. CITES- Convention on International Trade for
being under Customs control?” or exportation is subject to meeting specific
Endangered Species
c) “What is the reporting procedure for a ship conditions before they are allowed to be cleared The Single Convention on Narcotic Drugs, 1961
coming from Mombasa to the Port of Dar es through Customs. The importation or exportation ii. Basel (1992)-hazardous wastes /disposal
Salaam?” of such goods is controlled by specific government This convention replaced the treaties concluded iii. Stockholm (2004)-Persistent Organic
agencies depending on their nature. According to before the Second World War on opiates, cannabis Pollutants (POPs)
TASK the EACCMA 2004, restricted goods are any goods and cocaine. iv. Rotterdam-prior informed consent on
the importation, exportation, transfer or carriage chemicals
Respond to her properly basing on the EACCMA coastwise must abide with any set conditions At present, control is exercised over more than 116 v. Montreal (1987)-Ozone depleting substances
2004. regulated by or under the Customs laws”. narcotic drugs, including opium and its derivatives vi. Chemical weapons conventions-weapons
as well as synthetic narcotics such as methadone and vii. Lusaka task force
Exercise II It means therefore, that the importation of the pethidine.
identified goods will only be granted against import Prohibitions and Restrictions on Specific Imports/
Mr. Nkosi arrives for the first time in Tanzania permits, certificates or any other authority issued by The Convention on Psychotropic Substances, Exports Under EAC Customs Laws
through Tunduma Border accompanied by his wife, a relevant agency before importation or exportation. 1971
Nadhipa and Two Children using his Toyota Hiace
Prohibition and restrictions of goods is governed by
with Zambia registration. The family expects to pay This Convention controls drugs not covered by
a visit in various national parks before going back to previous treaties. Substances under control include; the provision of section 18, 19 and 20 of EACCMA
Zambia. hallucinogens, amphetamines, barbiturates, non- 2004 for imports and section 70, 71, 72 for exports.
barbiturate sedatives and tranquilizers.

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

Prohibited and Restricted Imports Legal that date they were required to be re-exported. ix. All soaps and cosmetic products containing 5. Arms and ammunition specified under
Compliance mercury. Chapter 93 of the Customs Nomenclature.
Prohibited and Restricted Exports x. Used tyres for light Commercial vehicles and 6. Ossein and bones treated with acid.
Goods specified in Part A of the Second Schedule passenger cars. 7. Other bones and horn - cores, unworked
are prohibited goods and the importation thereof is According to the EACCMA, goods specified in xi. The following Agricultural and Industrial defatted, simply prepared (but not cut to
prohibited (Sec 18 (1)). The list of prohibited items Part A of the Third Schedule are prohibited goods Chemicals: shape) degelatinized, powder and waste of
is however not exhaustive. Other prohibited items and the exportation of the goods is prohibited and (a) Agricultural Chemicals these products.
are found in the national laws in respective Partner goods specified in Part B of the Third Schedule are 1. 2.4 - T 8. Ivory, elephant unworked or simply prepared
States. restricted goods and the exportation of the goods, 2. Aldrin but not cut to shape.
save in accordance with any conditions regulating 3. Caplafol 9. Teeth, hippopotamus, unworked or simply
Goods specified in Part B of the Second Schedule their exportation, is prohibited (Sect 70 –Exports). 4. Chlordirneform prepared but not cut to shape.
are restricted goods and the importation thereof, 5. Chlorobenxilate DDT 10. Horn, rhinoceros, unworked or simply
save in accordance with any conditions regulating Restricted and Prohibited Imports and Exports 6. Dieldrin prepared but not cut to shape
their importation, is prohibited (Sec 18 (2))..This Under the EAC Customs Management Act. 7. Dibroacethanel (EDB) 11. Other ivory unworked or simply prepared but
subsection provides a stepping stone for goods which 8. Flouroacelamide cut to shape.
are restricted within the Partner States. The goods Part A and Part B of the Second Schedule to the 9. HCH 12. Ivory powder and waste.
can be imported or exported upon complying with EAC Customs Management Act 2004 list prohibited 10. Hiplanchlor 13. Tortoise shell, whalebone and whalebone hair,
conditions governing their importation/exportation. and restricted goods. 11. Hoscachlorobenzene horns, antlers, hoovers, nail, Claws and beaks,
Apart from restrictions at EAC regional level, each 12. Lindone unworked or simply prepared but not cut to
Partner State has laws governing restricted import/ Part A - Prohibited Goods 13. Mercury compounds shape, powder and Waste of these products.
exports. 14. Monocrolophs (certain formulations) 14. Coral and similar materials, unworked or
i. All goods the importation of which is for the 15. Methamidophos simply prepared but not otherwise Worked
Prohibitions and restrictions are monitored by time being prohibited under this Act, or by any 16. Phospharrmion shells of molasses, crustaceans or echinoderms
the council through publication in gazette. The written law for the time being in force in the 17. Methyl - parathion and cattle-bone, Unworked or simply prepared
council is mandated to publish a list of goods which Partner State. 18. Parathion but not cut to shape powder and waste thereof.
are prohibited or restricted either generally or in ii. False money and counterfeit currency notes 15. Natural sponges of animal origin.
relation to any Partner States. The order, in respect and coins and any money not being of the (b) Industrial Chemicals 16. Spent (irradiated) fuel elements (cartridges) of
prohibited or restricted goods, made by the Council established standard in weight or fineness. 1. Crocidolite nuclear reactors.
will provide goods or class of goods, importation iii. Pornographic materials in all kinds of media, 2. Polychlorominatel biphenyls (PBB) 17. Worked ivory and articles of ivory.
of which is prohibited or restricted in the Partner indecent or obscene printed paintings, books, 3. Polyuchorinted Biphenyls (PCB) 18. Bone, tortoise shell, horn, antlers, coral, mother-
State or any of its area. The Council may also limit, cards, lithographs or other engravings, and any 4. Polychlororinated Terphyenyls (PCT of pearl and other animal carving Material and
in respect of any Partner State, the application of the other indecent or obscene articles. 5. Tris (2.3 dibromopropyl) phosphate articles of these materials (including articles
provisions of the Second Schedule in respect of all iv. Matches in the manufacture of which white 6. Methylbromide (to be phased out in obtained by moulding).
or any of the goods specified in the order. phosphorous has been employed. accordance with the Montreal Protocol 19. Ozone Depleting Substances under the
v. Any article made without proper authority by 2007). Montreal Protocol (1987) and the Vienna
Prohibitions and restrictions do not apply to goods with the Armorial Ensigns or Court of Arms of Convention (1985).
imported in transit, or for transshipment, or as stores a partner state or having such Ensigns or Arms (c) Counterfeit goods of all kinds 20. Genetically modified products.
of any aircraft or vessel, unless: so closely resembling them as to be calculated 21. Non-indigenous species of fish or egg of
to deceive. Part B- Restricted Goods progeny.
• The goods are within paragraph 2 of Part A of vi. Distilled beverages containing essential oils 22. Endangered Species of World Flora and Fauna
the Second Schedule of EACCMA, 2004 (that or chemical products, which are injurious to 1. All goods the importation of which is for the and their products in accordance with CITES
is: false money, counterfeit currency notes health, including thijone, star arise, benzoic time being regulated under this Act by any March 1973 and amendments thereof.
and coins and any money with no established aldehyde, salicyclic esters, hyssop and absinthe. written law for the time being in force in the 23. Commercial casings (Second hand tyres).
standard in weight or fineness) or Provided that nothing in this paragraph Partner State. 24. All psychotropic drugs under international
• The goods are expressly prohibited or restricted contained shall apply to “Anise and Anisette” 2. Postal franking machines except and in control.
in any order made under the Act prohibiting or liquers containing not more than 0.1 per accordance with the terms of a written permit 25. Historical artefacts.
restricting the importation of goods. centum of oil of anise and distillates from granted by a competent authority of the Partner 26. Goods specified under Chapter 36 of the
either pimpinella anisum or the star arise State. Customs Nomenclature (for example,
However, such goods shall be re-exported within allicium verum. 3. Traps capable of killing or capturing any percuassion caps, detonators, signalling flares).
such time and subject to such conditions as the vii. Narcotic drugs under international control. game animal except and in accordance with 27. Parts of guns and ammunition, of base metal
Commissioner may specify otherwise they will be viii. Hazardous wastes and their disposal as the terms of a written permit granted by the (Section XV of the Harmonised Commodity
deemed to be prohibited goods, or restricted goods, provided for under the base conventions. Partner State. Description and Coding System), or similar
as the case may be, and to have been imported on 4. Unwrought precious metals and precious goods of plastics under Chapter 39 of the
stones. Customs Nomenclature.

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

28. Armoured fighting vehicles under heading No v. Uganda PART IV PART XIII
8710 of the Customs Nomenclature. a. Uganda National Bureau of Standards • Internal Container Depot • MANUFACTURING UNDER BOND
29. Telescope sights or other optical devices (UNBS)
suitable for use with arms, unless mounted b. Wildlife Authority PART V PART XIV
on a firearm or presented with the firearm on c. National Drugs Authority • Warehousing of Goods • EXPORT PROCESSING ZONES
which they are designed to be mounted under d. Ministry of Internal Affairs -Narcotics • Bonded Warehouses
Chapter 90 of the Customs Nomenclature. Squads division • Government Warehouses PART XV
30. Bows, arrows, fencing foils or toys under e. National Environmental Management • FREE PORTS
Chapter 95 of the Customs Nomenclature. Authority (NEMA) PART VI
31. Collector’s pieces or antiques of guns and • Exportation PART XVI
ammunition under heading No 9705 or 9706 OVERVIEW OF THE EAC CUSTOMS REGULATIONS • Entry Outward and Loading of Aircraft and • INWARD AND OUTWARD PROCESSING
of the Customs Nomenclature. (EACCMR) Vessels • Inward processing
• Departure Overland • Outward processing
Agencies That Enforce Prohibitions and Specific Objectives • Goods in transit or for transshipment
Restrictions • Goods in transit PART XVII
At the end of this topic, trainees should demonstrate • Transhipment • SETTLEMENT OF CASES BY THE
Apart from the regional prohibitions and restrictions, the ability to; COMMISSIONER
Partner States have the power to prohibit/ restricts i. Describe the structure of the EACCMR PART VII
some goods entering or leaving the country. ii. Identify and appropriately use prescribed • Clearance and general declaration for aircraft PART XVIII
However, this should be known to others for the forms under the EACCMR • Departure and Clearance of Aircraft and • MISCELLANEOUS PROVISIONS
sake of harmony. Apart from Customs authority iii. Identify fees and penalties applicable under Vessels
there are other government organs administering specific provisions SCHEDULES
the prohibitions and restrictions. The respective iv. Comply with other regulations applicable in PART VIII • FIRST SCHEDULE Consists of various
organs from each Partner States are as hereunder clearing and forwarding process • Importation and Exportation by Post customs forms used in the process of clearing
(the list is not exhaustive): goods
STRUCTURE OF THE EACCMR PART IX • SECOND SCHEDULE is the East African
i. Tanzania • Importation and Exportation by Registered Community Customs Union Flag that
a. Tanzania foods and Drugs Authority The EAC Customs Management Regulations were Couriers symbolizes the unity among the Partner States
b. Tanzania Bureau of standards made by the Council of Ministers under section
c. Fair Competition Commission 251 of the EAC CMA to give effect to the Act. The PART X CUSTOMS FORMS
d. Ministry of Home Affairs- Police force commencement date of the EACCM Regulation • CARRIAGE COASTWISE AND TRANSFER
e. National Environmental Management 2006 was on 01/01/2007. Currently, the regulations OF GOODS Under EACCMA 2004 read with EAC Customs
Council ( NEMC) applicable is East African Community Customs Management Regulations 2010, there are various
Management Regulations 2010 which revokes the PART XI forms that a Customs Agent should be well
ii. Kenya EACCMR, 2006.The structure of the East African • DUTIES conversant with in the process of clearing goods.
a. Kenya Bureau of Standards Community Customs Regulations is composed of • Goods imported for temporary use or purpose There are C-forms and CB-forms which are
b. Public Health eighteen parts namely; • Duty Drawback harmonized within the regions and serves as
c. National Environmental Management • Remission or refund documentary evidence when used within Customs
Authority (NEMA) PART I: Preliminary Provisions • Rebate department. The forms may be used either as it is
d. National Radiation Management Board. • Citation and commencement • Refund or as an attachment to another Customs forms
• Interpretation. or documents. Below is the current list of the
iii. Rwanda PART XII harmonized Customs forms together with the
a. Rwanda Bureau of Standards PART II: Administration • CUSTOMS AGENTS applicable regulations.
b. Rwanda Environmental Management • Delegation of powers of Commissioner
Authority (REMA) • Working days and hours.
c. Ministry of Internal Affairs – Police Force • Overtime fees
department • Fees to Customs revenue.
• Customs Union Seal and Flag.
iv. Burundi
a. Burundi Bureau of Standards PART III: Importation
b. Ministry of security • Arrival and Report of Aircraft and Vessel
c. Ministry of Health • Arrival Overland
• Entry, Examination and Delivery

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

Table: the list of Customs forms No. FORM FULL TITLE OF THE FORM APPLICABLE REGULATION
No.
No. FORM FULL TITLE OF THE FORM APPLICABLE REGULATION 39 C 38 Application for Payment of Proceeds of Sale of Goods Regulation 208
No. 40 C 39 Application for Licensing Vessel/Vehicle for Conveyance of Regulation 210 (1)
1 C1 Overtime Request Regulation 5 (1) Goods Under Customs Control
2 C2 Report Inward/Outward of Vessel/Aircraft/Vehicle Regulations 11 (1), 12 (2), 20 (1), 88, 41 C 40 Vehicle/Vessel Licence for Conveying Goods under Customs Regulation 210 (2)
110, 112 (2) Control
3 C3 Parcels List Regulation 11 (2) 42 CB 1 Bond for Delivery of Perishable or Other Goods Prior to Payment Regulations 49 (1), 171 (2)
4 C4 General Declaration – Aircraft Regulation 12 (1) (2), 109 (1) (2) (3) (4) of Duties/Taxes
5 C5 Cargo Manifest – Aircraft Regulation 12(2), 20(1), 21,109(3) 43 CB 2 Bond for Removal of Goods from One Port/Place to be Examined Regulation 179 (2)
(4)110,111(2 and Entered at Another Port/Place
6 C6 Passenger List/Manifest Regulation 15 (1), 93 (1), 111 (1) (2) (3) 44 CB 3 Bond for the Warehousing of Goods or Removal of Warehoused Regulation 68 (1)
7 C7 Declaration of Consumable Stores on Board Vessels Regulation 15 (1) (b) Goods
8 C8 Application to Break-bulk Prior to Making Report and Unloading Regulation 22 45 CB 4 Bond for Exportation Regulation 94 (2)
Goods Prior to Entry 46 CB 5 Bond for Shipment of Stores Regulation 68 (1), (99)
9 C9 Application to Amend Inward/Outward Manifest Regulation 110 47 CB 6 General Bond for Security of Warehoused Goods Regulation 76, 155
10 C 10 Application to Proceed to Sufferance Wharf or other Unapproved Regulation 30, 90 48 CB 7 Bond for Goods to be Shipped Prior to Entry Regulation 94 (2)
Place 49 CB 8 Bond for Transit Regulation 104 (3)
11 C 11 Landing Certificate Regulation 38 50 CB 9 Bond for Transhipment of Goods Regulation 55 (2), 105 (1)
12 C 12 Application for Release of Perishables or Other Goods Prior to Regulation 49 (1) 51 CB 10 Bond for Re-Exportation of Imported Goods Delivered without Regulation 173 (3)
Payment of Duty Payment of Duty
13 C 13 Application for Inward/Outward Processing Regulation 185 (1), 186 (2), 192 (1), 56 CB 11 Bond for Customs Agents Regulation
193 (2) 57 CB 12 Bond for the Conveyance of Goods Subject to Customs Control Regulation 104 (9), 211 (1)
14 C 14 Certificate of Clearance Regulation 107 58 CB 13 General Bond for Ensuring Compliance with Customs Laws and Regulation 57 (5)
15 C 15 Request to Repack Warehoused Goods Regulation 70 (1) (2) Securing Duties on Goods Deposited into an Inland Container
16 C 16 Request to Transfer Ownership of Warehoused Goods Regulation 71 Depot
17 C 17A Single Administrative Document (SAD) – ASYCUDA Regulation 39, 89, 104, 105 59 CB 14 Bond for Removal of Goods from/to Export Processing Zone Regulation 169(2), 172(2), 174
18 C 17B Single Administrative Document (SAD) – SIMBA Regulation 39, 89, 104, 105
19 C 18 Application for License of Premises to be used as a Bonded Regulation 57 (1), 74 (1) Apart from the above mentioned forms there are ii. Departing from the authorized place of
Warehouse/Factory/Internal Container Depot (ICD) other forms which are recognized in individual unloading without clearence from the proper
20 C 19 Licence for Private/ General Bonded Warehouse/Factory/ Regulation 57 (3), 74 (4), 153 (4) Partner States for administrative purposes and officer
Internal Container Depot may differ from one Partner State to another
21 C 20 Application for Customs Agents’ License Regulation 149 (1) though serving the same purposes. For examples iii. The return of a vessel, aircraft or motor vehicle
22 C 21 Customs Agents’ License Regulation 151 (3) while Tanzania is using F88 to assess accompanied into Partner State after depature to foreign
23 C 22 Application to Ship Goods Prior to Entry Regulation 94 (1) passenger’s baggage, Uganda is using Passenger without authority of the Proper Officer while
24 C 23 Application to Reload Goods Unloaded in Error Regulation 95 (1)
Baggage Assessment forms (PB-forms). on any voyage to a foreign port, bring the vessel
25 C 24 Application to Ship Stores Regulation 96
or aircraft into within the Partner States except
26 C 25 Application to Transfer Stores of Aircraft/Vessel Regulation 98
FEES AND PENALTIES in accordance with the Act.
27 C 26 Application for Refund of Deposit/Cancellation of Bond Regulations 104 (15), 148 (2)
28 C 27 Transire Regulation 123
29 C 28 Vehicle/Vessel License for Conveying Transit Goods Regulation 104 (5) (a) (b)
To ensure compliance to the Customs laws and iv. A person should consult a Proper Officer
30 C 29 Certificate of Approval for Licensed Motor Vehicles/Vessels from Regulation 104 (10) regulations, the Act provide for penalties in case before boarding a vessel. If he/she does it
COMESA/SADC of non- compliance. These are charges imposed commits an offence and shall be liable to a fine
31 C 30 Duty Drawback Rate of Yield Notification Form Regulation 139 (2) for either doing what is not supposed to be done not exceeding $25O (Sec 23).
32 C 31 Duty Drawback/Debenture Form Regulation 139 (3) or abstain from doing the rightful act within the
33 C 32 Temporary Importation of Road Vehicles from COMESA, SADC Regulation 136 (2) premises of the laws and regulations. It is an offence to remove goods from a Customs
and Countries with Bilateral Arrangements with the Partner area without payment of duty. Once removed, these
States - Declaration of Importation There are penalties applied in respect to Customs goods shall be liable to forfeiture (Sec 39).
34 C 33 Application for Remission /Refund of Import Duty on Regulation 143 (2), 145, 147 offences for example;
Abandoned/Damaged/Pillaged/Destroyed Goods It is an offence for people to disembark from an
35 C 34 Application for Remission /Refund of Import Duty on Re- Regulation 146 (2) (a) Offence on arrival (Sec 21) aircraft or vessel. In any other place other than
exported Goods appointed in accordance with section 11 of the Act
36 C 35 Request for Settlement of a Case Regulation 196 i. Landing a vessel, aircraft or vehicle at place (Sec 44).
37 C 36 Declaration of Particulars Relating to Customs Value Regulation 197 (1) (2) other than authorized port or are within the
38 C 37 Notice of Seizure Regulation 200 Partner States

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

Warehoused goods can be delivered as stores the value of the goods, whichever is higher. ( Sec 168) liable on conviction to imprisonment for a term not Offences related to prohibited, restricted, and
provided they shall not be used as stores for a vessel Any individual person who accesses Customs exceeding ten years. uncustomed goods? (Sec 200)
of less than 250 tons. Contravention of this provision computerized system without prior authorization
is an offence (Sec 55). commits an offence and is liable to an imprisonmet And, any person who commits an offence under A person who;
for a term not exceeding two years or a fine not this Act while disguised in any way shall be liable
Taking warehoused goods unlawfully is an exceeding five US thousand dollars. on conviction to imprisonment for a term not 1. Imports or carries coastwise any prohibited
offence, once committed, there is a penalty of an exceeding three years. or restricted goods contrary to any condition
imprisonment term not exceeding two years or a In the case of a corporate body , a fine not exceeding regulating the importationof such goods.
fine equal to 25% of the dutiable value of goods (Sec twenty five thousand US dollars. A person who willfully removes any Customs seal
61). from any ship, aircraft, vehicle, train or package 2. Unloads after importation or carriage coastwise
Any person who conspires with others to act without the proper authority commits an offence any prohibited goods; or any restricted goods
Failure to enter cargo for exportation in the contrary to the CMA commits an offence punishable and shall be liable on conviction to imprisonment which have been imported or carried coastwise
prescribed manner and lack of documentary by 5 years imprisonment if convicted. for a term not exceeding three years or to a fine not contrary to any condition regulating such
evidence of the goods referred to in the entry is an exceeding USD 250 or to both. (Sec 195) importation;
offence (Sec 73). A person who for no reason shoots at any aircraft ,
vessel or vehicle belonging to Customs, wounds an A person convicted of inducing another to commit 3. Exports, carries coastwise, or puts on board
Deficiency in cargo is when the goods are reported officer on duty in the process or commits any form an offence shall be liable to imprisonment for a term any aircraft, vehicle or vessel, or brings to any
on arrival as remaining on board and yet upon of violent acts commits an offence punishable by not exceeding one year. (Sec 196) Customs airport, Customs area, or place, to
inspection, the goods are actually not on board.This improsonment for a period not exceeding 20 years. be put on board, for exportation or for use as
is also an offence (Sec 91). A person who warns an offender shall be liable stores or for carriage coastwise any prohibited
A person who commits an offence with any firearm on conviction to imprisonment for a term not or restricted goods contrary to any condition
Surplus in cargo is when goods which are not or other weapons and is found with goods that exceeding two years or to a fine not exceeding two regulating that process.
contained in the manifest are found on an aircraft or should be detained commits an offence punishable thousand five hundred dollars or to both. (Sec 196)
vessel. Any goods in respect of which such offence by imprisonment for a period not exceeding 10 years Assuming character of an officer 4. Acquires,has in his or her possession, keeps or
has been committed shall be lable to forteiture. A person who commits a crime in disguise and conceals, or procures to be kept or concealed,
poses illegal goods while doing so commits an It is an offence under the law for a person, who is not any goods which he or she knows, or ought
The transire should be delivered to the proper officer offence punishable by imprisonment for a period an officer, to take or assume the name, designation, reasonably to have known, to be prohibited
immediately, but in the case of a vessel of 250 tons not exceeding 3 years character or appearance of an officer. (Sec 198) goods; or restricted goods which have been
register, such transire may be delivered within 24 hrs imported or carried coastwise contrary to
of arrival. ( Sec 101) A person who breaks, destroys or throws seized The impersonation will on conviction lead to an any condition regulating such importation or
goods off an air craft, vessel or vehicle, rescues any imprisonment for a term not exceeding three years. carriage coastwise; or uncustomed goods.
Goods on transit should be conveyed on routes person arrested for any offence or obstructs any
approved by the Commissioner. A person who does officer commits an offence. Smuggling using (Sec 199) On conviction for offences related to prohibited,
not follow the specified route commits an offence. restricted, and uncustomed goods, a person shall be
(Sec104) Any person other than the proper officer found When a vessel/aircraft is used for smuggling, A liable to imprisonment for a term not exceeding five
interfering with any lock,seal, mark or other master of that aircraft or vessel, and any person in years or to a fine equal to fifity percent of the the
The owner of goods shall be prosecuted for any fastening placed by an officer on any building, charge of a vehicle, commits an offence. A vessel is dutiable goods involved or both. ( Sec 200)
offence committed by his authorized agent as if the room or place commits an offence whose penalty is said to be used for smuggling if it has any secret or
owner has himself committed the offence. (Sec 160) imprisonment for maximum period of 3 years or a disguised place adapted for concealing goods. One conviction for an offence, a person is liable
It is an offence for any person to use his premises fine of less than $2,500. to pay a fine, and unless the goods are prohibited
for manufacture under bond without a license and In the case of the master of a vessel of less than two goods or are ordered to be forfeited under this Act,
on conviction will be liable to a fine not exceeding If goods in a sealed building are a miss, the owner hundred and fifty tons register, he shall be liable to payment of duty shall be made in addition to the
$5000 or imprisonment for a term not exceeding of the building or the occupant commits an offence a fine not exceeding seven thousand dollars and in fine. ( Sec 201)
three years or both. (Sec 160) whose penalties imprisonment for a maximum the case of the master of any aircraft or vessel of two
period of 5 years or a fine equal to 25% of the value hundred and fifty tons register or more, to a fine not A person who imports or exports any goods that are
It is possible for a licensee to alter the premises of the goods. exceeding ten thousand dollars. concealed in any way commits an offence and shall
of a bonded factory as long as he/she has prior be liable on conviction to emprisonment for a term
permission from the commissioner. (Sec 161) The penalty for committing an offence with violence A person in charge of a vehicle, used for smuggling not exceeding five years or to a fine equal to fifty
is the imprisonment for a term not exceeding twenty shall be liable to a fine not exceeding five thousand percent of the value of the goods involved. ( Sec 202)
It is an offence to remove goods from an export years. Sec 194) dollars.
processing zone or freeport for home consumption A person who, in any matter relating to the Customs,
without prior authority from the Commissioner. The A person who commits an offence while armed makes use of false documents commits an offence.
offender shall be liable to a fine of $5000 or 50% of with fire arm or other offensive weapon shall be (Sec 203)

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

On conviction, a person making or using false A person who, on finding any uncustomed goods 76 Contravening conditions to load goods without entry etc. X X
documents shall be liable to imprisonment for and fails to report such discovery to the nearest 77 Offloading of exports within the country etc. X X
a term not exceeding three years or to a fine not officer commits an offence and shall be liable to 78 Contravention of conditions for bonded goods entered for export X X
exceeding ten thousand dollars. a fine not exceeding two thousand five hundred 79 Failure to export goods entered as stores X X
dollars. (Sec 206) 80 Short-shipped goods not reported within forty-eight hours X X
A person who interferes with any aircraft, vessel, 88 Departure of an aircraft or vessel without clearance - X
vehicle, buoy, anchor, chain, rope, mark, or other A person who commits an offence under this Act for 89 Failure by master or agent of vessel to fulfil undertaking or return cancelled - X
thing used for the purposes of the Customs commits which no specific penalty is provided shall be liable certificate or clearance
an offence. (Sec 205) to a fine not exceeding five thousand dollars. 90 Failure of master or agent of aircraft or vessel to produce clearance certificate X
91 Possession in an aircraft or vessel of goods not declared in the manifest or X
On conviction, a person who interfers with Customs On conviction, the court may impose a fine not found short
gear shall be liable to a fine not exceeding two exceeding three times the value of any goods in 92 Failure to bring aircraft or vessel to a boarding station when required to do so - X
83 Failure to answer questions put up by a proper officer to a person about to X X
thousand five hundred dollars. ( Sec 205) respect of which the offence was committed or the
depart to foreign
specified amount, whichever is the greater. (Sec 209)
99 Loading or unloading coastwise goods onto or from aircraft or vessel at X X
unapproved place etc.
The table below gives a summary of penalties as emanated from the offences.
100 Giving incorrect or false information on Transire - X
101 Failure by master or agent or aircraft or vessel to produce Transire on arrival X
PENALTY GUIDELINES 102 Contravening conditions for loading or unloading of coasting vessel X X
104 Coasting aircraft deviating from its voyage or failing to report wreck etc. X X
Section of the Summary of the offence Forfeiture Penalty 105 Refusal by master of aircraft or vessel to answer questions or making incorrect X
EAC CMA reply.
9 Bribery and Corruption of Officers - X 160 Use of unlicensed premises to manufacture under bond or contravention of X X
15 Failure to enter or leave or bring goods into or out of appointed entrance or to X X licence conditions
enter or leave Customs area when required to do so 162 Failure to enter goods, equipment etc. on expiry of licence X
16 Interfering in any way with goods subject to Customs control X X 163 Failure of Manufacturer to provide facilities, records etc. - X
21 Failure by Master of aircraft or vessel to come to an approved port and report - X 164 Failure to enter and properly store materials in the raw material stockroom X
23 A person who other than health officer boards a vessel before the proper officer - X 166 Goods from bonded factory entered for home consumption X X
24 A master or agent of aircraft or vessel who makes a false or incorrect report X 164 Imported machinery and raw materials not delivered from bonded factory X
25 Failure by Master or agent of aircraft or vessel to answer questions or produce - X
documents
26 Failure by owner or agent of aircraft or vessel to account for any goods within - X The Act however provides for general penalties in 5. Application for remission of duty.
the period allowed case of any act that no specific charges/penalty has 6. Publication of goods and
28 Failure by master or agent to report vessel or aircraft lost or wrecked, etc. X been imposed. This is according to section 209 of manufacturers.
29 Failure by owner of vehicle arriving overland to report to Customs, etc. X X EACCMA 2004. 7. Conditions attached to remission of
33 Unloading of goods in an unapproved place X X duty.
36 Failure to furnish entry within forty-eight hours, in case of provisional entry of - X Other Regulation 8. Entry and bond for goods imported.
goods 9. Cancellation of bond.
39 Delivery from Customs area in special circumstances not returned X X Duty Remissions
10. By-products scrap or waste from
48 Removing goods to the warehouse and in packages in which they were X X process of manufacture
imported or re-packed In 2008 the EAC Council ratified the remissions 11. Transfer, etc. of goods.
51 Contravening a condition imposed in the operation in bonded warehouse X X regulations to cater for the matters pertaining to the
12. Commissioner may authorise re-
53 Failure to return goods temporarily removed from warehouse X X remission of duties. The regulation is cited as East exportation.
55 Warehoused goods entered as ship stores not delivered as such X X African Community Customs Management (Duty
59 Gaining access to a bonded warehouse without the presence of a proper officer - X 13. Maintenance of books and records.
Remission) Regulations 2008. The purpose was
61 Removing or destroying goods in a warehouse - X 14. Powers of a proper officer.
to put in place a harmonized mechanism for duty
62 Using premises as a bonded warehouse without authority or contrary to X remission in all the Partner States. 15. Revocation of grant.
conditions of license
64 Failing to provide facilities in a Customs bonded warehouse - X Enforcement and Compliance Regulation
REGULATION TITLE
65 Interfering with warehoused goods X X
67 Failing to produce warehoused goods when required to by a proper officer - X 1. Citation and commencement.
As at time of publication of this material, the
74 Master or agent of aircraft or vessel who fails to enter outwards vessel or aircraft - X 2. Interpretation. enforcement and compliance regulation has not
and goods 3. Goods on which remission may be been ratified. Once ratified, the regulation will be
73 Owner who fails to enter goods for export by aircraft or vessel X X granted.
enforceable and will become part of the training
75 Goods loaded on board aircraft or vessel without entry etc. X X 4. Duty Remission Committee. material.

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

SAMPLE QUESTIONS 5. An applicant for Customs Agent license is

required to meet certain conditions in order
1. The East Africa Community Management to be issued with a license. Briefly identify and
Act (EACCMA, 2004) the Regulation thereto explain conditions governing Customs Agent
provides control measures and procedures for licensing.
unloading and removal of cargo imported in a
vessel from Customs area. 6. What do you understand by the term
compliance? Give six examples where
Briefly explain the procedure applied and control compliance is required.
measures in the unloading and removal of imported
goods from a Customs area. 7. List the commonly committed Customs
offences.
2. With specific examples, briefly explain what
you understand by; 8. Explain how a Customs offence of
a) Prohibited goods misdeclaration can be settled by the
b) Restricted goods Commissioner under section 219 of the Act.

3. Identify International Conventions on 9. In certain cases, a Customs Agent is required to

Prohibited and Restricted goods and give their defend the rights of an importer against certain UNIT 2:
role in controlling prohibited and restricted decision of the Commissioner of Customs.
goods. Briefly explain legal measures and processes
the Agent can take to ensure that his/her client
4. Discuss reasons for imposing restrictions and
prohibitions
is not affected by the wrongful decision or
omission of the Commissioner of customs. CUSTOMS
CLEARANCE
PROCEDURES

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

UNIT 2: CUSTOMS CLEARANCE PROCEDURES there is no bill of lading, to the proper officer on the to the Partner States in case of Aircraft. Every i. Where goods reported for discharge are not
prescribed form and in the prescribed manner. report must show goods to be unloaded, in transit; dully unloaded and deposited in a transit
This course unit will impart skills and knowledge on transshipment and those remaining in the aircraft shed or Customs area the master/agent must
how to clear goods through Customs in compliance Outwards report of vessels, aircrafts, and or vessel. Goods in transit, for transshipment, and pay the duty thereof unless he explains to the
with Customs laws and regulations vehicles goods remaining on board for other ports must be satisfaction of the proper officer. (Section 26)
shown separately. ii. The owner of the vessel or aircraft or his agent,
Sub-Units This is a Customs procedure where the master or or the transit shed owner who fails to count for
agent of every aircraft or vessel in which any goods Amendment of report S.24 (5) the goods in ones custody commits an offence.
IMPORT PROCEDURES are to be exported make a report of such aircraft or iii. The owner of a vessel or aircraft or the owner of
vessel to the proper officer on the prescribed form In case of obvious error or any omission which a transit shed is liable to pay for the reshipment
Specific Objectives: and in the prescribed manner. result from accident or inadvertence, the agent or for destruction of the goods condemned.
may be allowed to amend the report or submit iv. The owner or agent of an aircraft or vessel
At the end of this course, trainees shall demonstrate All Aircrafts, Vessels and Vehicles etc, from Foreign supplementary report. or owner of a transit shed who fails to meet
the ability to: ports must report at appointed ports. When the costs of reshipment or destruction of any
i. Explain reporting procedures for means of reporting at appointed ports they must go straight The Master or Agent may ask for the amendment of condemned goods commits an offence.
conveyance to mooring areas and or landing or boarding areas. the report – (Manifest) using a prescribed form. He
ii. Use various regimes for Customs clearance for must satisfy the officer that: Goods Reported to be unloaded but not
imported goods Once the vessel reports, it is not allowed to depart to unloaded:
iii. Prepare Customs declarations using relevant another port within the country unless the proper i. Goods were not shipped
supporting documents and attach those officer has granted permission to the Master. ii. Landed at a previous port or When goods which are supposed to be unloaded
supporting documents. iii. Over carried and landed at a subsequent Port and the goods are not in effect not unloaded in a
iv. Assess duty and taxes Once the Master departs to foreign ports, he is not and transit shed the masters or agent of the aircraft or the
v. Facilitate activities involved during verification allowed to call at any place within the country unless iv. If over carried, have been returned to a Port in vessel shall pay duty on the goods unless acceptable
and release of declared goods the proper officer according to the law has granted the Territory explanation is given to the proper officer.
him the permission. (Section 21 (1) and (2)) v. Lost at sea
Reporting procedures for means of conveyance vi. Stolen or destroyed before arrival Shipwrecked or Damaged in an accident in
The proper officer may direct the vessels or aircraft transit
There are various Customs formalities to be to a place of mooring (Section 22) All correspondences on short landed goods must be
accomplished when goods are brought into a filed in the manifest file. The master of an aircraft or vessel accidentally forced
Customs territory in order to ensure compliance with Restriction on Boarding Vessel before Proper to land in the East African Community States must
Customs law. These are the operations that must be Officer Each page of the report must be signed initialed, report immediately on the cargo and stores to the
carried out by both the persons concerned with the numbered and sealed together by the master or nearest Customs officer or Administrative Officer.
goods and by Customs in order to comply with the Once arriving at the place of mooring it is the duty his agent, if required, signed in the presence of the The cargo and stores of an abandoned vessel or
statutory or regulatory provisions which Customs of proper officer to board the vessels/aircraft. The proper officer. aircraft will be subjected to seizure unless the master
has responsibility to enforce. However as the agent should know that it is only Proper Officer o agent gives satisfactory explanation to the proper
goods arrives from the foreign destination it is first who is responsible to board vessels/ aircraft and the LANDING PERMIT officer.
essential to identify the means of conveyance used agent should facilitate such role in a manner allowed
to bring those goods and the reporting procedure of within Customs laws. In some occasion, port pilot, Landing permit is required for goods declared In case of loss or wreck of ships or air craft master or
such means which entails the control purposes from the health officer or any other public officer in the as parcel using parcel list. The agent should know agent of aircraft or vessels shall, with all reasonable
the Customs perspective as the control of goods and course of performing his duties and duly authorized, the time limit for the landing permit at the time of speed make report of such aircraft or vessel
vessel under Customs control is very important for may board before the proper officer (S 23). The submitting it. and its cargo and stores to the nearest officer or
the sake of combating revenue loss. Act provides such exclusion, Provided that prior administrative officer. (Section 28)
permission from the proper officer has been granted. The information about the value, classification and
REPORT OF VESSELS, AIRCRAFTS, AND taxes with respect of the goods are entered on the Manifest, Bill of Lading and Airway Bill
VEHICLES Making formal reports (S 24 of EAC Customs reverse of Landing Permit.
Management Act, 2004, Manifest
Inward report of vessels, aircrafts, and GOODS IN TRANSIT SHED
vehicles The Master of the vessel, Aircrafts or vehicle when A manifest is a list of goods by consignments to be
arriving from foreign must furnish a formal report Due to some working environment some goods may landed at one particular port within the country. If
This is a Customs procedure where a master of every to the proper officer on arrival using the prescribed be unloaded in a transit shed. However, Goods in vessel or aircraft is going to land or call at more than
aircraft or vessel arriving from a foreign port at any Customs forms. The report should be within 24 hours a transit shed are deemed to be in the importing one port a separate manifest should be prepared.
port, make report of such aircraft or vessel, and of before arrivals in case of vessels and immediately vessel/aircraft until they are delivered and the owner
its cargo and stores, and of any package for which after taking off from the last point of departure or agent shall continue to be responsible.

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

A manifest is a report presented to Customs ii. Sign a declarations as to the truth of all v. Any person who contravenes these provisions During importation it is thus necessary for them to
Department pertaining to goods being conveyed by particulars filled in the form as per section 30 of the EACCMA of 2004 may understand various regimes under which goods are
vessel aircraft or vehicle arriving from or departing iii. Fully and immediately answer any relevant tender the goods subject into seizure. imported
to a foreign port/airport. questions put to him/her by the proper of
about the vehicle and cargo. Arrivals overland by other means The entry when delivered to the proper officer by
The Customs Agents’ Role in Manifest Section iv. Produce all consignment notes or other the owner must have particulars, which are fully
relevant documents demanded by the proper If a person arrives by land into a Partner State with supported by documentary evidence.
I. To submit reports of all aircrafts, vessels and officer. any goods in his possession shall before disposing of
vehicles arriving from or leaving for a foreign v. Unless provided otherwise in the Customs laws the goods must follow the following procedure; From the above, the imports has been divided into
port make due entry of the vehicle and any such four
II. To apply and recheck the rotation/Manifest goods conveyed. Section 29 of the EACCMA i. Report to the proper officer at the nearest point
numbers allocated by Proper Officers in respect of 2004 provides that the goods and the vehicle of entry into the Partner State. 1. Direct imports
of all vessels, aircrafts and vehicles arriving which are dutiable will not be removed from ii. Furnish information about the goods in his/ 2. Temporary imports
from or departing to foreign ports the Customs area until after due entry and her possession in a prescribed form 3. Re-imports
III. To liase with the officers in case of amending permission to remove the vehicle and the iii. Declare and sign that all the particulars given 4. transfer
the manifests as applied for by shipping cargo from the Customs area. A person who in the form are true.
agents/ Customs agents and submit the contravenes the above procedure commits an iv. Answer fully and immediately all questions Import process
reasons advanced in respect of the applications offence and may render the goods and vehicle asked by the proper officer about the goods.
in satisfaction of the Customs Laws and liable to forfeiture. v. Produce all consignment notes and other Under the EAC Customs Management Act, 2004, no
regulations documents demanded by the proper officer. goods may be removed from the port area, unless
IV. To advise the client on the Customs Warehouse Arrivals by International trains vi. Make entry of such goods unless the Customs they have been duly reported, entered and the
Date laws state otherwise. proper officer has given authority for their removal
V. To ensure that all documents necessary to With arrival by international trains the Customs vii. Removal of goods received in a Customs area or delivery. (Section 34). This entails us to the first
facilitate compilation of the ships files have area is the border railway station. The stationmaster at any place of entry into Partner States is process of importation which is unloading of goods.
been submitted to Customs or other person in-charge of the railway station acts prohibited except with the permission of the Unloading is authenticated by the report presented
VI. To compile ships files on behalf of the Railway Company or corporation. proper officer. to the Customs which is the manifest.
viii. The commissioner however subject to
Manifest information (the minimal) The procedure then is as follows; conditions may specify may exempt any person After the Manifest has been received, the Importer
or a class of persons from the provisions in or his authorized agent may enter goods on Single
• Ships details (Ship’s name, ship’s tonnage) i. The station master or any other person in- section 31 of the EACCMA of 2004. However Administrative Document.
• Voyage details( departure/destination date, charge of the railway station on the arrival contravening these provisions may render the
departure/ destination port) of the train at the port submits to the proper goods in question liable to forfeiture. Entries must be supported by documents showing
• Owner – supplier names officer copies of invoices, consignment notes, the value of goods at the place at which they were
• Consignee’s name, address way bills or other documents relating to the Clearance by pipeline: purchased together with the freight, insurance and
• Description of goods (types, Weight of goods in wagons, which are subject to Customs other charges.
packages etc) control received by her/him at the station or Pipelines are means of conveying goods such as
• Marks/numbers of packages, supposed to be entered at the station. petroleum or gas. The owners of the pipelines are The owners or their authorized agents shall enter the
ii. The station master or other officer in-charge of like vessels and aircraft’s. The procedure for arrivals whole of the cargo of any aircraft or vessel, which is
ARRIVAL OF GOODS BY OVERLAND ROUTE the railway station must not allow any goods to of such goods is a follows; unloaded, or to be unloaded either for:
leave the Customs area without the permission
Arrivals by vehicles of the proper office because removal of such i. The nature and quantities of goods imported or i. Home consumption
goods without permission constitutes an exported through a pipe line shall be recovered ii. Warehousing
A person in-charge of a vehicle whether carrying offence. and reported by the operator of the pipeline in iii. Transshipment,
any dutiable or un-dutiable goods which arrives iii. A station master or other person in-charge of a manner the commissioner may direct. iv. Transit
overland at a frontier of a partner state from outside the railway station shall not, without written ii. For the purpose of recording and reporting the v. Export Processing Zone
the East African Community must adhere to the permission of the proper officer deliver to the commissioner may specify the apparatus and
following procedures before unloading or depositing consignee or other person’s goods require to be appliances to be used by the operators of the Importation documents
the vehicle or goods at the frontier port. Report his/ entered at any other station. pipeline at their expense.
her arrival to the Customs officer stationed at the iv. An owner or user of a private railway siding shall The owner of the goods is required to produce
relevant frontier port he/she enters the Partner State. not receive wagons containing goods subject to Categories of imports documentary evidence as a proof of the declaration
Customs control into a private railway siding made to the Customs. This is according to section
i. Fill in information in prescribed form about unless he/she is granted permission from the The role of Customs agents in the process of 34 (2) of EACCMA. Most of these documents may
the vehicle and the cargo. commissioner of Customs and excise. clearance is to act on behalf the owner of goods. be used by other organs with the same merit as

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

Customs as as the frontline officers, Customs has The Kyoto convention specifies that National Where, in the course of determining the Customs In practice most tariff are ad valorem. Advalorem
the mandate to require the owner/agent to them to legislation shall specify the point in time used for value of imported goods, it becomes necessary for rates are more transparent, and are indexed. They
evidence the transactions in hand. As the Customs determining the rates chargeable, for example, be the Customs to delay the final determination of such maintain an automatic link between the domestic
agent, you should appreciate this role of Customs the time when the goods arrive, the time when the Customs value, the delivery of the goods shall, at and foreign prices; ensure that the most efficient
and facilitate the production of those documents. Goods declaration is lodged, the time when the the request of the importer be made: Provided that supplier will continue to save the market, ensure
declaration is accepted by Customs, the time when before granting such permission the proper officer that there is no discrimination, reduce lobbing.
Documents produced will depend on the nature of the duties and taxes are paid, or the time when the may require the importer to provide sufficient Under the ad valorem an increase in value of the
goods imported, thus an agents is supposed to have a goods are released. Most administrations choose the guarantee in the form of a surety, a deposit or some goods the tariff revenue will keep pace with price
prior knowledge of the documents required for each time when the declaration is accepted by Customs. other appropriate security as the proper officer increase. Specific tariff have the advantage of not
type of goods imported. Some of the documents are Whichever time is chosen, Customs must ensure may determine, to secure the ultimate payment of requiring Customs Authority to determine the value
as follows; that it is specified in national legislation Customs duties for which the goods may be liable. of imports when entering the country and are not
sensitive to changes in the value of the goods
I. Supplier’s invoice Determination of value of imported goods liable to The proper officer must satisfy him/herself as to
II. Bill of lading ad valorem import duty the truth or accuracy of any statement, document ii. Value Added Tax (VAT),
III. Certificate of origin or declaration presented for Customs valuation
IV. Customs declaration of value For most commodities, the duty is expressed as an purposes and nothing in the Fourth Schedule shall VAT is the amount of tax on output tax over input
V. Freight invoice ad valorem rate (i.e. a percentage of the value), while be construed as restricting or calling into question tax. It is the last consumer of goods or services who
VI. Taxpayer/personal identification number for others, the rate is specific, e.g. so much money the rights of proper officer to do so. bears the burden.
VII. Health certificate per litre. Occasionally, the rate is expressed as some
VIII. Parking list combination of ad valorem and specific rates. The In the course of applying or interpreting this iii. Excise duties
IX. Permits, etc duties are generally found in the Customs tariff and, section and the provisions of the Fourth Schedule
in other legislation also. Various rates of duty may be due regard shall be taken of the decisions, rulings, It is tax levied on imports and certain locally
Assessment of duties and taxes indicated for each item. opinions, guidelines, and interpretations given by produced goods. The excise duty is used as an
the Directorate, the World Trade Organization or instrument to influence consumer behavior. In case
The clearance of goods usually involves the lodgment Once the appropriate rate of duty is established, the the Customs Cooperation Council. Decisions and of Tanzania, excise duty on imports is paid on alcohol,
of a Goods declaration with/without supporting basis on which the duty is calculated (value for duty) Rulings made by the Custom should be published wines, spirits and beers. Each of these specific taxes
documents (e.g. import/export permit, certificates of must be determined. and should be easily accessible by clients in the is charged per unit of measure (e.g. per pint, per
origin, etc.) and the payment of applicable duties and form of directive memoranda, electronic database gallon, per liter, etc) and it is not entirely clear who
taxes. General release is granted as long as payment Usually this is the price paid or payable. The publications, Internet web sites, etc. carries the tax burden. The seller of the products
has been entered into the books of the importer. Agreement on the Implementation of Article VII will usually strive to pass on the tax incidence to the
Most Customs administrations allow payment to be of the General Agreement on Tariffs and Trade Duties/taxes under the importation purchaser by raising the price accordingly.
deferred and made on a transaction-by-transaction (GATT), generally known as the Customs Valuation
or periodic (usually monthly) basis, provided the Code (the Code), is the basis used for most domestic Import duty Tax rates /bands on import and its reasons
importer/owner meets certain conditions. Security Customs valuation systems. Article VII of the GATT
may be required to guarantee payment. deals with the issue of valuation for Customs It is Customs duties and other charges of equivalent Customs administrations have an obligation to
purposes by providing basic Guidelines for national effect levied on goods by reason of their importations. raise government revenue, provide protection to
Under the Kyoto convention it is stated that the legislation. The Code is based on the application of Import duty is paid at the rate in force at the time domestic producers, provide supply chain security,
National legislation shall define the circumstances the transaction value method for determining the when the goods liable to such duty are entered for prevent the importation of prohibited or restricted
when liability to duties and taxes is incurred or the Customs value for imports which is the price the home consumption goods, and combat the trade of narcotics through
point in time to be taken into consideration for the importer and exporter agree to pay for the particular the implementation of laws and regulations that
purpose of determining the rates of duties and taxes. import, subject to specified adjustments. Customs tariff may be are in line with the World Trade Organization
commitments Simplification of procedures are
Such circumstances arise when goods are cleared for Under the EACCMA, Where imported goods are a. Ad-valorem. The duty levied at an ad-valorem required in order to facilitate international trade.
home use after their arrival in the Customs territory liable to import duty ad valorem, then the value of rate on the CIF value of goods imported into The Harmonised System (HS) of tariff nomenclature
or when they are cleared for home use from a free such goods shall be determined in accordance with the country. It is a percentage of the value of is used as a facilitating tool for the collection of
zone or a warehouse. Similarly other circumstances the Fourth Schedule and import duty shall be paid the imported products. In this context, the duty Customs duties and international trade statistics by
may also arise in administrations that have export on that value. is levied on the transaction value. WTO member state.
duties and taxes when the goods are exported from b. Specific. This is the tax levied on the certain
the Customs territory. In addition, goods under Upon written request, the importer shall be entitled properties or goods. For example, the length of In East Africa there are three tax bands on imports
a temporary admission procedure that are not to an explanation in writing from the proper officer a film or a given amount of money per physical (Zero, ten, and twenty five percent).
exported within the stipulated time period may also as to how the Customs value of the importer’s goods unit like a litter of wine,
be subjected to duties and taxes. was determined. c. Combination of the two: This is ad-valorem
plus unit of currency per litter.

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i. Zero-rated STEPS DO DETERMINE TAX LIABILITY should be a published list of the rates for exchanging • is equivalent to1.5 dollars or less, no duty
Some imports are zero rated so as to encourage foreign currencies to the domestic currency on shall be collected;
investments, agriculture and mining. These STEP1: Determination of Customs value: that particular day in question for each import • exceeds the equivalent of 1.5 dollars and
includes agricultural tractors, fertilizers, pure The Customs value can either be in foreign or transaction. Customs should not be arbitrary in includes a fraction of a dollar the fraction
breeding animals, motor vehicles in complete local currency. It the duty of the Customs agent to preparing these lists and they should be market shall be treated as a complete dollar and
knocked down (CKD) form, raw materials, establish the correct Customs value for computing based, i.e., rates could be sought from the central duty shall be collected
capital goods, computers, and supplies the correct amount of taxes and duties. Failure of bank of the nation.
imported by mining companies or their sub- which it amount to false declaration. b) Computation of Duty on gross weight of
contractors up to the first year of production. Under Sec 122 of the EACCMA 2004, the rate of package.
Inputs for horticulture and agriculture, solar STEP 2 exchange to be used for determining the equivalent
equipment and accessories of a Partner State currency of any foreign currency Consider a situation where goods liable to
Apply the current exchange rate to convert the shall be the selling rate last notified by the Central duty according to weight are imported in any
ii. Ten percent rate Customs value to local currency, if it is in foreign Bank of the respective Partner State when an entry package, and the goods are intended for sale, or
Fully processed inputs for industries and semi- currency. is presented to and accepted by the proper officer. are normally sold retail, in the package then, if
produced inputs are imported at the rate of ten the package-
percent to encourage industrial development. For example: If US$ 100 is the Customs value and Useful consideration in determination of duty/
These goods are like motor vehicle spare parts UGX 1747.64 is the current exchange rate. Then the tax liability • is not marked or labelled with the net
pen nibs, lubricating greases, etc Customs value is $US100 x UGX 1747.64 = UGX weight of the contents; or
174,764. If exchange rate is quoted in ASK- BID a) Adjustment for fractions of a dollar. • is not commonly sold as containing, or as
iii . Twenty five percent rate form then buying rate is used for export and while reputed to contain, a specific quantity or
Final consumer goods are imported at the rate selling rate is for import The Kyoto convention states that National weight, and in either such case,
of twenty five percent. The reason behind is legislation shall specify a minimum value • the owner of the goods is unable to satisfy
to discourage importation of final consumer STEP 3 and/or a minimum amount of duties and the proper officer of the correct net weight
goods so as to promote local production as well taxes below which no duties and taxes will be thereof,
as investment. Compute the duties and taxes appropriate for the collected. Then the goods shall be liable to duty according to
consignment. In most cases, The following are the the gross weight of such package and its contents
Note that some goods are charged at the higher taxes applicable on imported goods. With the advent of the next millennium the
rate than twenty five percent with the intention of number of transactions that will occur over the c) Computation of Duty on reputed quantity.
protecting environment as well as industries. These (a) Import duty Internet will increase tremendously in the next
goods include all types of sacks, plastic bags and (b) Excise duty few years. Electronic commerce (E-commerce) Consider another situation where goods liable
worn clothes (c) VAT has become a very convenient shopping choice to a specific duty are imported in any package
for consumers. Normal duty and taxes systems and the goods are intended for sale or are
Computation of Duty Given the correct Customs value (CIF) and HS Code will still be effective in the collection of the normally sold retail, in the package, then, if the
the taxes are calculated as followed: relevant duties and taxes on these transactions package-
According to section 120 of the EACCMA, 2004 (d) import duty (ID) = ID rate x Customs value(CIF) as these purchases will still entail the physical
time of entry determines rates of duty. Import duty (e) Excise duty (ED) = ED value (Customs Value + delivery of these goods at the border. Of • is marked or labelled as containing a
therefore is paid at the rate in force at the time when Import duty) x ED rate course, the number of low value shipments and specific quantity of such goods; or
the goods liable to such duty are entered for home (f) VAT =VAT Value (CIF+ID+ ED) x VAT rate deliveries by couriers will increase along with • is commonly sold as containing, or as
consumption. (g) The total tax liability is the sum of all taxes/ the number of these electronic transactions. reputed to contain a specific quantity of
Where goods are entered before arrival of the aircraft duties above. i.e Import duty, excise duty and Customs must ensure that they are ready to the goods,
or vessel, import duty is paid at the rate in force at VAT respond to this flourishing trend. Then the package shall be deemed to contain not
the time of arrival of such aircraft or vessel. Where the product in question does not attract excise However, the collection and payment of less than such specific quantity.
duty then: duties and taxes should not be required for
Goods are supposed to be entered within 21 days VAT = (ID+ CIF) x VAT rate i.e. (ID+ 0 + CIF) x VAT negligible amounts of revenue that incur d) Allowance for tare
after commencement of discharge and in the case rate. costly paperwork, both for the Customs
of vehicle on arrival or such further period as may Incase ID is nil then VAT = CIF x VAT rate i.e. (CIF+0 administration and the importer/exporter. The Commissioner may fix the allowance for
be allowed by the proper officer (section 34 of the +0) x VAT rate Customs administrations must establish and tare that may be granted and the conditions
EACCMA, 2004). Once goods have been entered specify in national legislation amounts below under which any such allowance may be
they should be removed from the first point of entry NB: This is VAT on imported goods. which duties and taxes need not be collected granted, for the purpose of the computation
within 14 days or paid. Under the EACCMA 2004, where the of the duty. Depreciation of motor vehicles is a
Under the Kyoto convention, In order for total amount of duty computed with reference good example of allowance of tare allowed by
importers and brokers to be able to establish what to any one Customs document- the commissioner for Customs under section
the actual rate is on the determined date, there 128

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e) Duty on package Goods under Customs control which belong to • payment of the expenses or other charges for Consequences for non-collection and
any person from whom duty is due, and any goods levying of distress and for the sale. remittance of duty
Goods may be imported or exported in any afterwards imported or entered for export by that
package which, in certain cases in the opinion person, shall be subject to a lien for such debt and The balance of the proceeds shall be paid to the Where an agent fails to remit any amount of duty
of the Commissioner- may be detained by the Partner State until such owner, on application to the Commissioner within specified in the notice addressed to him or her
duty is paid and the claim of the relevant Partner twelve months from the date of the sale of the item. within thirty days of the date of service of the notice
• is not the normal or proper package of the State shall have priority over the claims of whatever on him or her, or, of the date on which any moneys
goods; or nature of any other person upon the goods and the b) Recovery of duty by Agency notices. came into his or her hands or become due by him or
• is designed for use, subsequently to such goods may be sold to meet the duty due if the duty her to his or her principal, whichever is the earlier
importation or exportation, other than as is not paid within two months after the goods are The Commissioner may, by written notice addressed and he or she has not complied with the provisions
a package for any goods of the same or a detained. to any person (in this section called the agent) of the Act relating to the collection and recovery of
similar nature, appoint that person to be the agent of another duty shall apply as if it were duty due and payable
Unpaid duty person (in this section called the principal) for the by him or her from the date when such duty should
The package shall be liable to duty as if it were a purposes of collecting duty due under this Act from have been paid to the Commissioner.
separate article and shall, for all the purposes of the Where any duty payable to a Partner State as penalty the principal where the Commissioner is satisfied
Customs laws be deemed to be a separate article. under this Act by a person is not paid one month that the agent— An agent who has made payment of duty under
(Sec 129). after the due date of payment, the Commissioner this section shall for all purposes be deemed to
may authorise distress to be levied upon the • owes or is about to pay money to the principal; have acted therein with the authority of his or her
Recovery of duty following items- • holds money for or on account of the principal; principal and of all other persons concerned, and
• holds money on account or some other person shall be indemnified in respect of that payment
Under the Kyoto convention the National legislation • goods, chattels and effects; for payment to the principal; against any proceedings civil or criminal and all
shall specify the period within which the Customs • material for manufacturing or plant of a • has authority from some other person to pay process, judicial or extra judicial, notwithstanding
may take legal action to collect duties and taxes not factory; money to the principal; any provisions to the contrary in any written law,
paid by the due date • premises, vehicles or other property; • holds goods belonging to the principal which contract or agreement.
• animals, are liable to duty and on which duty has not
When duties and taxes are not paid by the due date, been paid, and the Offence and fine for false statement
it may be necessary for Customs administrations The above will be withheld if they are in the
to take legal action to collect the duties and taxes. possession or custody of- Commissioner shall in the notice specify the amount A person who, in giving a notification, wilfully
The period within which they may do so must be of duty to be collected by the agent, which amount makes any false or misleading statement, or
indicated in national legislation. The period may • that person; shall not exceed the amount, or value of the goods, wilfully conceals any material fact, commits an
vary, depending on the reasons for the late payment. • his or her agent; or held or owing by the agent for or to the principal. offence and shall be liable on conviction to a fine
For example, there could be harsher time limits if a • any other person on his or her behalf. not exceeding two thousand five hundred dollars
false declaration has been submitted The Commissioner may, by notice in writing, require or to imprisonment for a term of not more than
A person authorised to distrain may, if necessary any person to furnish the Commissioner within three years or to both. Sec 131 of the East African
a) Recovery of duty by distress 130. break open any building or place during the daytime thirty days from the date of service of the notice, Community Customs Management Act, 2004
with the assistance of a police officer or other person with return showing details of any moneys or goods
The Kyoto convention states that it is necessary that who can lawfully give assistance. which may be held by that person from whom duty c) Security on property for unpaid duty
national legislation specify the person(s) responsible is due under this Act.
for the payment of duties and taxes. It should A person authorized to distrain shall keep the item If the owner of land or buildings situated in any
stipulate whether it is the importer, agent, broker, distrained at the expense of the owner for fourteen This section shall apply to an agent appointed as Partner State, fails to pay any duty or other sum
or transporter who is accountable, to provide clarity days from the date of distress or until the amount though he or she were a duly authorized agent acting of money due and payable under this Act, the
for Customs and the trading community. In some due together with the costs and any other charges on behalf of the owner. Commissioner may by notice in writing inform
instances two or more persons can be held jointly are paid in full before the end of the fourteen days that person of his or her intention to apply to the
responsible. and if payment is not effected after that period the Notification to the Commissioner for non Registrar of Lands for the land or buildings to be the
person authorized to distrain may sell the item. compliance subject of security for the duty or other sum of an
Under the EACCMA 2004 where any goods are amount specified in the notice.
liable to duty, then such duty shall constitute a Where an item is sold the proceeds of the sale shall An agent who is appointed under and who claims
civil debt due to a Partner State and be charged on be applied as follows- to be, or to have become unable to comply with the If a person on whom a notice has been served under
the goods in respect of which the duty is payable; notice for any reason shall notify the Commissioner this section fails to pay the whole of the amount
and such duty shall be payable by the owner of • payment of the tax due to the relevant Partner accordingly in writing stating the reasons for his or specified in the notice within thirty days of the date
the goods and may, without prejudice to any other State ; her inability, and the Commissioner may accept, of service thereof, the Commissioner may by notice
means of recovery, be recovered summarily by legal • payment of any fine imposed for non-payment amend or reject the notification as the Commissioner in writing direct the Registrar of Lands that the land
proceedings brought by the Partner State. of the tax, if any; may deem fit. or buildings, to the extent of the interest of that

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person therein, be the subject of security for duty or duties and taxes less than that legally chargeable, as the Commissioner may allow, a further duty of a Goods deemed to be entered
other sum of a specified amount, and the Registrar they shall correct the errors and collect the amount sum equal to five percent of the amount demanded
shall, without fee, register the direction as if it were underpaid. However, if the amount involved is less shall be due and payable by that person by way of a It is essential for the person acting as an agent to
a mortgage over or charge on the land or buildings than the minimum amount specified in national penalty and a subsequent penalty of two percent for understand the provision of laws under which duty
and thereupon the registration shall, subject to any legislation, the Customs shall not collect or recover each month in which he or she defaults. liability is determined. Duty becomes liable when
prior mortgage or charge, operate while it subsists in that amount. goods arrive within the boundary of the Partner
all respects as a legal mortgage or charge to secure The proper officer shall not make any demand after States but first the goods need to be entered. Under
the amount payable. Under the EACCMA 2004, where any duty has five years from the date of the short levy or erroneous the EACCMA, 2004 goods shall be deemed to be
been short levied or erroneously refunded, then refund, as the case may be, unless the short levy or entered when the entry in the prescribed manner is
The Commissioner shall, upon the payment of the the person who should have paid the amount short erroneous refund had been caused by fraud on the made and lodged by the owner and any duty due or
whole of the amount by notice in writing to the levied or to whom the refund has erroneously part of the person who should have paid the amount deposit required under the EACCM Act in respect
Registrar of Lands, cancel the direction made under been made shall, on demand by the proper officer, short levied or to whom the refund was erroneously of the goods has been paid, or security has been
that subsection and the Registrar shall, without fee, pay the amount short levied or repay the amount made, as the case may be. Sec135 Of The East African paid, or security has been given for compliance with
record the cancellation. (sec 132) erroneously refunded, as the case may be; and any Community Customs Management Act, 2004 the EACCM Act. When this condition is satisfied
such amount may be recovered as if it were duty to and goods are declared for use in the Partner States,
Effects of obligation to pay duty. which the goods in relation to which the amount Samples may be taken without immediate then the goods are deemed to be entered for home
was short levied or erroneously refunded, as the case payment of duty. consumption.
Where any obligation has been incurred, whether by may be, were liable.
bond or otherwise, for the payment of any duty, then The proper officer may, subject to such conditions Time of importation
such obligation shall be deemed to be an obligation Under the Kyoto convention the National legislation as he or she may impose, permit the owner of any
to pay all duties which are or may become payable or shall determine the rate of interest chargeable on goods subject to Customs control to take samples Time of importation shall be deemed to be time at
recoverable under the provisions of the Act. amounts of duties and taxes that have not been paid of the goods without payment of the duty thereon which the goods come within the boundaries of the
by the due date and the conditions of application of at the times the samples are taken.( Sec 136) of the partner state.
Where the Commissioner is satisfied that the whole such interest. EACCMA 2004
or any part of duty or tax due under this Act from Time of entry determines rate of duty
any person cannot be effectively recovered by reason Also, late accounting penalties may be levied in Customs Declaration
of impossibility, or undue difficulty or excessive cost certain circumstances. The penalties should be Duties must be paid at the rate in force at the time
of recovery, he or she shall notify the Council in applied for each transaction not accounted for in Meaning and Purpose of Customs declaration when the goods liable to such duty are entered for
writing, who shall consider the matter, and with the the time specified. The application of these penalties home consumption. That is the rate applicable at the
approval of the East African Legislative Assembly, could vary depending upon the value of the Customs declaration means the entry of cargo in time the entry is passed, and taxes paid. Section 120
remit or write off in whole or in part the duty. (sec shipment, e.g. higher penalties or shorter time limits Customs prescribed forms furnishing full particulars of the EACCMA 2004
133) for high value shipments. Importers and brokers of the goods. It is the process of filling the Customs
should be made aware of any overdue releases by documents as stipulated by the Customs laws/ Importation by post
Effect of alteration in classification of goods. means of a daily report issued by Customs, such as regulation and any other practicing guidelines
an Outstanding Transaction Status Client Report. In case of importation by post, time of entry is
Where any practice or method of procedure of the The purposes of cargo declaration are as follows:- deemed to be the time, when the duty thereon is
Customs approved by the Commissioner or arising Importers and brokers, who, notwithstanding the a. Tax assessment assessed by the proper officer, except in the case
from a ruling by the Directorate or the Customs Co- levying of the initial penalty, still delay accounting b. Tax payments or arrange for payments of any where actual entry is required.
operation Council relating to the classification or for the payment of duties and taxes, may be issued relevant taxes and dues
enumeration of any goods for the purposes of the with a notice as a final reminder to comply within c. Determination of bond in force (BIF) Importation overland
liability to duty is altered with the result that less duty a specified time. Failure to do so may subject the d. To process the documents across the various
is thereafter charged on goods of the same class or importer or broker to an additional penalty. Also, in institutions timely, In case of Importation overland time of entry of
description, no person shall become entitled to any the case of deferred payment regimes, a client who e. Obtain genuine and authentic clearance from such goods for home consumption shall be deemed
refund of any duty paid before such alteration took continues to delay in accounting for the payment of various institution involved in clearing process to be time when import duty thereon is paid.
effect. (sec134) Of The East African Community duties and taxes may loose future deferred payment
Customs Management Act, 2004 . privileges. LEGAL PROVISIONS FOR CUSTOMS OBLIGATION OF DECLARANTS
DECLARATION
Short levy or erroneous refund. Under the EACCMA 2004, Where a demand is a. Capturing of Customs entries electronically
made for any amount the amount shall be deemed In accordance with section 34 of EACCMA, goods b. Avail proper accompanying documents to
Under the Kyoto convention If the Customs to be due from the person liable to pay it on the date are to be entered within 21 days from the date of Customs
find that errors in the Goods declaration or in the on which the demand note is served upon him or of discharge. However, the commissioner may allow c. Respond to queries from customs related to
assessment of the duties and taxes will cause or have her, and if payment is not made within thirty days goods to be entered prior to arrivals of the importing declarations
caused the collection or recovery of an amount of of the date of such service, or such further period aircrafts or vessels. d. Assessment of proper taxes

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e. Pay appropriate taxes in time • Ex-EPZ export petroleum products removal of goods for delivery from Customs area to
f. Facilitating Customs examinations of goods • Re-exports after temporary importation • Ex-warehouse removal the importer.
g. Delivery of goods to the owner for repair • Entry into an MUB from foreign
• Re-exports after temporary importation • Entry into an EPZ from foreign This is usually done upon payment of duties or
IDENTIFY VARIOUS CUSTOMS REGIMES • Re-exports under drawback • Entry into an MUB of home produced execution of sufficient security bond to secure the
goods taxes payable.
Customs regimes are given numerical codes that iv) Imports for home use with the underlisted • Entry into EPZ of home produced goods
identify the type of Customs Transactions for which Customs transactions:- • Transfer from one MUB to another Once the goods have been released in the respective
declarations are made. However, the codes have • Imports for home use duty paid • Transfer from one EPZ to another Customs system, the cargo is delivered to the owner
alphabetical character prefixes which may differ • Provisional Import Declaration by the clearing agent and this may then be followed
from one Partner State to another. • Release of perishables or other goods viii) Transit for the underlisted Customs with the process of bond cancellation for bonded
• Imports for home use tax free by tariff transactions:- cargo.
The following are the different types of Customs • Ex-warehouse home use duty paid • Transit inward
Regimes:- • Ex-warehouse home use duty paid for • Transit outward Direct Release of the goods after payment of
1. Exports 1 regional market • Road Customs transit manifest taxes
2. Temporary Exports 2 • Ex-warehouse home use tax free
3. Re-Exports 3 • Ex-warehouse home use duty exempt ix) Other Customs procedures for the underlisted Goods declared shall be released as soon as the
4. Imports for home use 4 under 3rd schedule of the EACCMA, 2004 transactions:- Customs have examined them or decided not to
5. Temporary Imports 5 • Home use after temporary importation in • Accompanied baggage examine them, provided that:
6. Re-imports for home use 4 unaltered state • Unaccompanied baggage
7. Warehousing 7 • Home use after temporary importation • Transshipment i. No offence has been found;
8. Transit 8 for repair • Post parcels ii. The import or export licence or any other
9. Other procedures 9 • EX-EPZ home use • Courier AWB documents required have been acquired;
• Ex-MUB home use iii. All permits relating to the procedure concerned
Customs Procedure codes • Imports for home use duty exempt under VERIFICATION AND RELEASE OF IMPORTED have been acquired; and
3rd schedule to the EACCMA, 2004 GOODS iv. Any duties and taxes have been paid or that
These are the extended digit codes however; the appropriate action has been taken to ensure
additional codes will be dealt with under the v) Temporary imports for the underlisted This is the physical examination of goods entered in their collection.
different electronic data processing systems of the Customs transactions:- accordance with section 34 of the EACCMA, 2004.
Partner States. • Temporary importation for return in The verification is to ascertain that the declaration Once Customs is satisfied that the physical goods
unaltered state made is correct for purposes of tax collection as are in compliance with the basic requirements of
i) Domestic Exports with CPC for the under • Temporary importation for repair provided for under section 41 of the EACCMA, the procedure to be applied, the goods should be
listed Customs transactions:- 2004. released to the declarant as soon as possible.
• Direct Exports of home produced goods vi) Re-imports for home use for the underlisted
• Direct Exports of home produced goods Customs transactions:- The verification should target to confirm among Release of Goods Under bond
incorporating imported materials • Re-importation of goods after temporary others the following:-
• Direct Exports of home produced goods export for renovation or repair, where Goods may be released to the owner before payment
under the Export promotion program repair charge has been raised • Description of the goods vis-à-vis the of taxes by execution of bond security. Normally, the
• Direct exports of shipstores • Re-importation of goods after temporary declaration made bond security will cover the total revenue liability of
export for renovation or repair, where no • Declaration of value the goods.
ii) Temporary exports for the underlisted repair charge has been raised • Declaration on quantity
Customs transactions: • Re-importation of goods after • Declaration on type Case study:
• Temporary exports for return in an temporary export , where the goods have • Declaration on tariff code etc.
unaltered state substantially changed their character on 1. Mr. Banjumni arrives in Tanzania by road
• Temporary exports for repairs tariff classification The verification findings commonly referred to at Tunuma Border accompanied by his wife
• Temporary exports for outward • Re-importation of rejected or returned “Examination Account” should be captured online Saadie and two children using a Toyota Hiace
processing exports by the Customs examination officers to facilitate with Zambia registration. What Customs
clearance and release of goods. procedure will Mr.Banjumnin and family
iii) Re-exports with the underlisted Customs vii) Warehousing for underlisted Customs adhere to arrival, if they do not expect to return
transactions:- transactions:- Release of goods to Zambia
• Ex-warehouse export • Warehousing of goods
• Ex-warehouse export for shipstores • Warehousing of goods for regional market Release of goods means system authorization of 2. Mr. Akber is the owner of Maski Drink Ltd. He
• Ex-MUB export • Warehousing of goods for crude final clearance of goods and the subsequent physical engages more with the distribution of various

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

drinks. Recently he scored a deal and become REQUIRED procedure code whereby the re-importation c. Name and address of Customs agent /
the country distributor of STOUT beerfrom certificate is issued as confirmation that the goods declarant.
UK. Being unfamiliar with Customs procedure, Determine the Import duty, Excise Duty (if any), have left the country and may be re-imported. d. Country of destination.
Mr. Akber appoints you as his Customs Agent. VAT and total tax payable for each vehicle given the e. Commodity code and description of
On your part you know very well that, as far following information; Re–exportation goods.
as VAT is concerned the product is a taxable i. Import Duty rate is 25% f. Value of goods and total amount of duty
supply at a standard rate of 18%, 25% Import ii. Excise Duty Charged for motor vehicle Re–exportation is the Customs procedure whereby payable.
Duty and 6% exercise duty of 60%. The first manufactured more than 10 years is 20% goods that were imported for temporary use g. Marks and numbers of transporting
consignment was 20 containers each having iii. Excise duty is charged for motor vehicle of or purpose are to be exported after the end of vessel, aircraft, or vehicle.
3200 cartons of beer. The parking list shows more than 1500 C.C. is 5% the intended activities, examples are goods for h. Total number of packages
that one (1) carton has 16 cans of 270ml each. iv. The cost charged for container is distributed exhibition or entertainment. Such goods have to i. All other information as appears in SAD
The contract price charged to Mr. Akber is equally to the vehicle be entered properly and be secured with a Customs
$ 1.65/ lit (C & F). Freight charge is $1,500 v. The current exchange rate is applicable. security bond. (v) The goods to be exported are grouped into
while insurance paid for the consignment was three categories of which are to be entered
$2,000. EXPORT PROCEDURES Re-exportation is normally checked against the separately according to Customs procedure
preceding entry to ensure that the particulars on codes:- (CPC) as shown below:
Required Objectives: the re-export entry match/tally with the previously • Exports of domestic goods free of duty.
temporary importation entry. • Exports of domestic goods liable to export
a) Establish the total quantity in litres imported By the end of this topic, trainees shall be able to: duty.
by Mr. Akber i. Demonstrate understanding of categories of Export process • Re-exportation of goods not under
b) Compute the customs value in local currency export and the export process drawback.
c) Compute import duty, exercise duty and VAT ii. Apply the procedures for outward clearance of For goods to be exported they need to be entered for
to be paid by Mr. Akber if the exchange rate on means of conveyance export. Once the Customs agent makes an entry then Other trade related documents are also important
the date of entry was shs .1,210 per one USD. iii. Comply with conditions for exports and export goods are to be physically examined before being as they may be required when goods arrives at the
documentation loaded for export. The export process is terminated intended destination. These include certificate of
3. Miss Amina of Bujumbura imports two motor iv. Apply procedures under Export Promotion i.e comes to an end, when vessel carrying goods origin, health certificate, certificate from Standard
vehicles on June 11, 2009. Schemes for export leave the boundary of Partner States to Bureau etc
foreign destination.
The detail of each motor vehicle is as depicted in the CATEGORIES OF EXPORTS CONDITIONS FOR EXPORTS
following table: Export documentation and declaration
Exportation means the movement of goods from Loading of goods on any aircraft or vessel or vehicle
Toyota CALDINA Toyota CARINA one country to another. In accordance with the Before goods are exported, the owner of the goods is departing to a foreign state should be done subject
1 Purchasing Price $ 1800 $ 2400 EACCMA, 2004 S.2 (1), the term export means expected to formalize all the procedure for exports. to the permission of the proper officer or conditions
2 Year of 2000 2001 to take or cause to be taken out of a Partner State. These include the following; as he/she may impose.
Manufacturer
There are three types of exportations, namely
3 Engine Capacity 1950 1648
outright exportation, temporary exportation and (i) Has to obtain an export license upon meeting The following conditions must be fulfilled before
4 Transmission Auto Manual
re-exportation. Transit and Transshipment are also the business requirements. loading any aircraft or vessel:-
5 Inspection Fees $200 $200
considered as exports.
6 Other charges in $100 $ 100
Japan (ii) All goods to be exported should be loaded onto (a) Goods shall only be put on board any aircraft
Outright exportation any aircraft or vessel departing to a foreign port or vessel when they are dully entered.
The two motor vehicles were imported in a 1X within the boundaries of the port. (b) Goods shall only be put on board any air craft
20’ PCIU 967511-4. The transport charges for the This covers goods which are exported out of or vessel within the time prescribed by the
container were as follows: the country with the intention to remain there (iii) The goods to be loaded for export should Commissioner.
permanently or to be consumed in those foreign be entered on the export entry (SAD) in (c) Goods shall only be put on board any aircraft
Amount countries e.g manufactured goods like sugar, coffee, quadruplicate copies and the owner shall be or vessel from an approved place of loading or
1 From Yard to Port (Japan) $250 tea, nuts etc. required to furnish full particulars, supported from a sufferance wharf.
2 From Port to Dar es Salaam $3200 by documentary evidence. i.e. Commercial (d) Goods shall only be put on board any aircraft
3 Dar es Salaam to Bujumbura Shs 1,000,000 Temporary exportation invoices, permits, receipts etc that relate to the or vessel after an entry outward of such vessel
4 Insurance cover $ 300 goods for export. has been made.
5 Port Charges at Japan $ 150 This covers goods which are exported out of the (e) Goods shall be put on board any vessel to be
country for special purposes and will be brought (iv) The entry must show the following details: loaded on to any aircraft or other vessel only
back e.g. goods exported for renovation, exhibition a. Name and address of exporter. when such goods may be directly put on board
or entertainment and declared on the respective b. Name and address of importer. such aircraft or other vessel.

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(f) Goods put on board any vessel to be loaded on • the cost of the goods; Certificate of Exports The designated Officer should ensure that requests
to any aircraft or other vessel within the limits • transport and all other charges up to the time for assistance under the terms of a trade agreement
of the port. of delivery of the goods on board the exporting A Certificate of export is issued upon confirmation are expedited and that officers of sufficient seniority
aircraft or vessel, or at the place of exit from the of exportation by the exporter/Clearing agent and experience are appointed to undertake the
The agent should be aware that, no goods that have Partner State. presenting endorsed copy of the original bill of investigations. The Investigation findings are to
been put on board any aircraft or vessel for export • If the cost of the goods cannot be determined lading from the shipping line confirming that the be conveyed to the foreign Customs Authorities
should be discharged at any place within the Partner under the above, the cost of similar or identical goods were exported. through the office of the Commissioner of Customs
States without a written permission of the proper goods exported from a Partner State at about as a matter of acceptable operational protocol i.e
officer. This is an offence as per the provision of or the same time shall apply. The proper Officer has to confirm both the (exchange or information.
EACCM Act. information on the Bill of Lading and the Customs
After payment of export duty if any, export entries entry. PROCEDURES FOR OUTWARD CLEARANCE OF
VERIFICATION AND RELEASE OF GOODS FOR shall be referred to the officer in-charge of the If the information matches/tallies then the Officer MEANS OF CONVEYANCE
EXPORT export station for the purpose of allocating officers issues a certificate of export to allow the clearing
to witness loading and sealing of containers at the agent cancel his security bond incase of bonded The master or agent of every aircraft/vessel or vehicle
The Document Processing unit may, before exporters premises. goods. in which any goods are to be exported, should make
processing of export entries refer them to the entry outwards to the proper officer on the Customs
Customs port of loading or entry for any necessary After the verification process, all packages in Certificates of Origin prescribed form. Such entry outwards should only
clarifications. The Unit shall ensure that the the consignment are to be sealed with Customs be made after the whole of the cargo reported for
declarations in the registered entry conform to the tamperproof seals before leaving the manufacturer’s Certificates of Origin are issued to facilitate discharge has been discharged.
verification reports. premises. privileged Customs treatment of goods exported
from a Partner State to countries with which the Goods which have been put on board any aircraft
In case of restricted exports, they must be covered Exportation of Bonded Goods:- Community has preferential trading agreements. or vessel for export, or for use as stores, or as
by the appropriate export permits while for goods passengers’ baggage, should not be discharged at any
on which drawback is to be claimed, the particulars At the Customs port of exportation, the Customs These Certificates of Origin are issued in respect of place within the Partner States, except by written
on the entry shall be compared with the particulars Officer has to confirm exportation by endorsing qualifying goods upon payment of the appropriate permission of the proper officer and in accordance
of the respective import entry for conformity. the hard copies of the export entry with export fees. with such conditions as he or she may impose.
certification. Similar certification of shipment
There should be proper manning of entry gates account is to be posted against the respective The certification of Certificate of Origin is done by For the case of a vehicle, A person in charge of a
by Customs enforcement Officers, to confirm the customs entry. Officers specially appointed for that purpose and vehicle departing from a partner state, whether or
correct verification report and container details whose stamps and signatures are registered and not such vehicle is conveying goods, should depart
before allowing export containers into the port. This account together with the Certificate of Export circulated to the respective trading partners/blocs. through the appointed port under Section 11 and
will be used by Security Bonds Management office before departing he/she should do the following:-
All exports are subject to Customs control, hence for bond cancellation, or at the border, in the case of Where the provisions of the trade agreement allow
a Customs Officer has the power to examine such automatic acquittal of the bond. retrospective issuance of Certificates of Origin in (a) Report his/her intended departure to Customs
goods, but any other person has to seek for authority respect of goods exported without such a certificate, officer.
from the Commissioner of Customs to intervene in The customs agent has to make sure that goods then the certificate may be issued provided all the (b) Furnish on the prescribed forms all information
any way on such goods. Goods shall be examined at loaded for export are loaded in presence of customs documentation is in order. related to the vehicle and goods for exports.
the risk and expense of the owner, thus the owner is officer as no export cargo shall be received at Export A Certificate of Origin can only be issued by the (c) Fully and immediately answer all relevant
required to unpack, sort, pile, or otherwise prepare Stations without evidence that it was loaded under Officer authorised to sign it after confirmation of exit questions put to him/her by the proper officer.
the goods for examination. Exports are referred for Customs supervision. At export stations, releasing of goods and It cannot be substituted by any other (d) Produce any consignment notes or any relevant
physical examination or scanning before they are Officers have to check and satisfy themselves that document, except where the export destination or documents demanded by the proper officer.
exported. Examining Officers must ensure that the seals have not been tampered with. Consignee has changed and this should be done (e) Make due entry of the vehicle and goods for
supporting documents have correct information in before the goods are exported and approval is exports.
respect to quantity, weight and value. If seals are interfered with, 100% physical verification granted by the Officer in-charge of administering
must be done before release for export. the rules of origin. Export Promotion Schemes
Upon satisfaction that the declaration is correct in
every aspect, an examination account is to be put At all times the releasing Officers have to endorse Trade agreements provide for co-operation between Export promotion schemes are schemes designed
in the Customs system (ASYCUDA/SIMBA) for the their findings in form of an examination account. trading partners in the investigation of fraudulent to promote production of goods for export.
export entry to be passed and if liable to any export claims on certificates of origin. Accordingly, requests Partner States have agreed in the Protocol for
duty its then collected. If duty is advalorem then The Once satisfied that the cargo is correctly entered as made for assistance should be fast tracked with the establishment of customs union to engage in
value of goods for export shall include- per inspection results its released with an online thorough investigations. some of the export promotion schemes with a
Release Order and issued with a certificate of export. motive to promote trade. Some of the schemes are
Manufacturing Under bond, Export processing

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zones or special economic zones, Inward/Outward iii. Keep record of all types of plant, machinery iv. To benefit from technology transfer and in the Gazette.
Processing. and equipment, raw materials and goods v. To process more local materials for export.
manufactured in the factory and keep that Section 141 of the same Act provides that where
MANUFACTURING UNDER BOND record at all times available for examination by Obligations of EPZ investors any goods are lost or destroyed by accident
the proper officer;
Manufacturing under Bond is a facility extended iv. Provide all necessary labour and materials i. To produce for Export markets. Either on board any aircraft or vessel; or in
to manufacturers to import plant, machinery, for the storing, examining, packing, marking, ii. To provide details of all raw materials received removing, loading, unloading, or receiving them
equipment and raw materials tax free, for exclusive coopering, weighing and taking stock of the at the site of manufacturing during the previous into, or delivering them from, any Customs area or
use in the manufacture of goods for export goods in the factory whenever the proper quarter of the year. warehouse; or in any Customs area or warehouse,
The EACCMA empowers the Commissioner of officer so requires. iii. To produce semi-finished or finished products before the goods are delivered out of Customs
Customs to license any person who wishes to v. Non compliance with set conditions may result including by products exported or off-loaded control to the owner, then, if the Commissioner is
manufacture goods under bond subject to condition into suspension, revocation or refusal to issue in the Customs territory. satisfied that such goods have not been and will not
he/she may impose. a license by the Commissioner iv. To provide details of waste-products and how be consumed in a Partner State, the Commissioner
they are disposed. may remit the duty payable in respect of the goods.
Conditions for licensing EXPORT PROCESSING ZONES v. To provide accurate records of losses through
evaporation, spillage, leakage or other causes. DUTY DRAW BACK
i. Application for a licence to be made in a EPZs are specialized areas in the EAC Customs vi. To produce balances of law materials and
prescribed form specifying the purpose for Union where imported goods are offered duty semi finished products including stocks of by Most administrations have in place procedures
which each building, room, place or item of free treatment for purposes of processing or products at the premises of manufacture and which help promote export trade and are in the
plant is to be used. manufacturing for export under given conditions. transit. interest of the national economy. Drawback is one
ii. Security to be furnished as the Commissioner vii. To facilitate inspections and examination by such procedure. This procedure grants repayment of
may think appropriate. According to the EACCMA an Export Processing the Customs. import duties and taxes paid on:
iii. Suitable office accommodation to be provided Zone is a designated part of the Customs territory viii. To take all measures to reduce the fears of task
to Customs officer. where any goods introduced are generally regarded cheating in a way that Tanzania Investment • Goods used in the processing or manufacture
iv. Premises for manufacturing process must be for the purpose of import duties and taxes as being Centre cannot provide. of exported products,
approved by commissioner as to suitability outside the Customs territory but are restricted by • Materials contained in the goods or consumed
and safety. The Customs officer can inspect the controlled access and to which benefits provided Treatment of Goods Deposited in EPZ in the manufacture of the exported products,
premises to that effect. under the Regulations made under Article 29 of the or
v. A prescribed annual license fee to be paid. East African Community Customs Union Protocol. Section 191(2) required all goods imported for EPZ • Imported goods re-exported in the same state.
vi. No alterations to be made on the premises to be entered in SBE together with cargo receipt
without prior permission of the commissioner Application, Licensing and approval of EPZ and lending account book and a bond in the form The repayment may be partial or total. Drawback
vii. violation of any of the terms or conditions for of EPZRI shall be executed. The goods must be is one of the several procedures which provides
licensing is an offence and one who commits Applications for investment in any EPZ, must be destined in sealed containers, boxes or vehicles relief from duties and taxes for the manufacture
such offence shall be liable on conviction to a made in the first instant to the relevant Authority. except in case of exceptionally bulky loads. Goods of exported goods and is extensively used. Some
fine not exceeding five thousand dollars or to imported to EPZ from the custom territory must be administrations may allow it in combination with
imprisonment for a term not exceeding three For operational purposes, Export Processing Zones treated in the same manner as if such goods were other procedures like inward processing, temporary
years or to both; and any goods in respect to are considered to be foreign territories for the imports. admission or Customs warehouses.
which an offence has been committed shall be purposes of the application of the Customs and
liable to forfeiture. Excise Act. However, the removal of goods from DUTY REMISSION “Drawback procedure” means the Customs
port to an EPZ enterprise must be covered by a bond. procedure which, when goods are exported, provides
Responsibility of a bonded factory Licensee Any goods leaving the Zone into the Partner State Section 140. (1) Of the East African Community for a repayment (total or partial) to be made in
must be considered as imports and are subject to the Customs Management Act 2004 provides that The respect of the import duties and taxes charged on
i. Make an entry, prior to commencement of importation rules and duty. Local goods supplied to Council may grant remission of duty on goods the goods, or on materials contained in them or
manufacturing under bond, in the prescribed EPZ enterprises are considered as exports and must imported for the manufacture of goods in a Partner consumed in their production.
form specifying the purpose for which each comply with all conditions governing such exports. State.
building, room, place or item of plant is to be Economic benefits
used. The Objectives of the EPZ The Council may prescribe regulations on the
ii. Provide office accommodation and scales, general administration of the duty remission under The imported goods are used to process or
measures and other facilities materials or just i. To attract export led industrialization this section. manufacture goods for export by the domestic
weights, for examining and taking account for diversification and enhancement of industries. The use of domestic labour and
of goods and for securing them as the proper competitiveness. The manufacturer, and the approved quantity, of the processing or manufacturing of goods add value
officer may reasonably require; ii. To earn more foreign currencies. goods with respect to which remission is granted to the finished goods for export. The repayment of
iii. To increase employment and develop the under this section shall be published by the Council duties and taxes paid on the imported goods enables
capacity of skilled labour.

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domestic industries to offer the goods at competitive benefits to national administrations and interested Conditions for granting an authorization (d) Placing the goods in free zones.
prices on international markets. persons in that it: (e) Entered for home consumption
i. The applicant offers the necessary guarantee
Some administrations restrict the categories of · Generates domestic economic activities, for the proper conduct of the operation However, the commissioner may prescribe specific
goods qualifying for drawback. This is usually · Provides for revenue protection on imported ii. The administrative arrangements and time limit for in-ward processing.
an economic consideration and is designed to goods released into the Customs territory, and supervision of the process are not
encourage the use of equivalents of imported goods · Offers options to interested persons when disproportionate to the economic needs of the Exportation of compensating products:
which are produced within the country by domestic other procedures such as temporary admission applicant.
industry. cannot be applied to the goods. iii. The applicant is established in the community The goods may be exported through a Customs
except where imports of non commercial office other than the office through which the goods
Where it may be difficult to identify certain When Customs administers the drawback procedure nature are involved under in-ward processing were imported, either in
exported goods as being those that were originally by implementing modern control techniques of iv. The imported goods can be identified in the full or in parts under separate entries
imported or those resulting from the processing of selective verifications, risk assessment of users, post- processed products
imported goods, administrations should allow the audits of users’ records and electronic data exchange v. The applicant has provided Customs security. Compensating products entered for home
exportation of equivalent goods (e.g. compensating and transfer of payments, drawback can be well consumption:
goods equivalent in all respects to the goods which managed and offers the full array of economic Entry and examination of goods
should normally have been re-exported) and apply incentives to national economies. (See Chapter 6 of When goods placed under in-ward processing are
the drawback procedure to repay import duties the General Annex and its Guidelines.) Goods imported for inward processing shall be entered for home consumption either compensatory
and taxes where goods or materials are replaced entered in Customs prescribed form on production products or goods in an unaltered state, the import
by equivalent goods or materials. This is a practice Interested persons have import options regarding of: duty shall be computed on the basis of the nature,
which is recommended in this Chapter. whether to make the financial commitment to pay quantity, Customs value and duty rate applicable to
the duties and taxes and wait for repayment to be (a) Original inward processing authorization the goods at the time they were entered for in-ward
Countries wishing to encourage trade through free completed under drawback after the goods are (b) Original invoices and other supporting processing
zones in their territory may also apply the drawback exported, and whether this affects the competitive documents.
procedure to goods that are re-exported into these pricing of exported goods. Outward processing
zones. The proper officer shall examine such goods at
INWARD / OUTWARD PROCESSING the port of entry or at the owners premises before Outward processing means the Customs procedures
Usually goods imported with the intention to re- release for inward processing. under which goods which are in free circulation
export them, other than those used for processing The Commissioner of Customs is given power in a partner state may be temporarily exported for
or manufacture, are not permitted to be used during by the law to allow temporally importation or The person authorized shall keep all records of the manufacturing, processing or repair outside the
their stay in the Customs territory. If such use is exportation of goods for processing operations free inward processing activities and the records shall partner state and then re-imported.
allowed, administrations usually have provisions from tax provided that the ownership of such goods indicate:
under which the amount of drawback granted is shall remain to the exporter, and importer shall only The Commissioner shall only authorize goods to be
reduced according to the extent of the resulting process them under contract. The Commissioner i. The description of quantity of goods entered exported temporarily from the partner state when:
depreciation. may also allow the importation of equivalent goods for the procedure. a) The exporter confirms that the compensating
to replace the temporarily exported goods for ii. Date of importation. product shall result from the processing
Some administrations use the term drawback for outward processing. iii. Details of processing. operation
refund of taxes on imported goods that are not iv. Correct amount of duty and taxes payable. b) The outward processing procedure does not
according to specification and are returned to the Inward processing means the Customs procedure v. Disposal of goods and waste or scrap or by- affect the interest of the partner state
seller, or goods used in manufacture for home under which certain goods can be brought in a products. c) The compensating products shall be re-
consumption, or imported goods that are obsolete, partner state conditionally exempted from duty vi. Compensating products obtained. imported within a period of one year from the
etc. The procedure covered by this Chapter does on the basis that such goods are intended for date of export
not relate to such goods. This issue is covered in manufacturing, processing or repair and subsequent Time limit for inward processing:
Standard 4.19 of the General Annex. exportation. During re-importation, the compensating products
Inward processing procedure shall be terminated may be re-imported through a Customs office
The drawback procedure will not apply to repayment Procedure of operation: upon: other than the Customs office through which the
of or relief from other taxes (e.g. sales tax, value goods were exported either in full or in partial
added tax) or to items which may be aids to the The operator shall apply for authorization to the (a) Re-exportation of the compensating product consignment under separate entries. Goods may
manufacturing process that are granted relief or commissioner in a prescribed form to carry out in one or more consignments within a period also be re-imported in an un-altered state.
repayment under other provisions. the inward processing operations. The application of one year.
detailing the intended inward processing shall be (b) Re-exportation of the goods in the same state The imported compensating products or unaltered
Other economic benefit of the Duty Drawback made in advance prior to importation of the goods as imported immediately. goods may be granted total or partial relief from
System of drawback procedure offers distinct subject to the process. (c) Release of processed products to circulation payment of duty when they are cleared for home
under duty relief. consumption in the name of

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(a) An authorized person Classes of bonds viii) Be executed under relevant regulations as to payment of the security as though it were duty
(b) Any person with the consent of the authorized bond types under the EACCMR, 2010 due and unpaid (Section 109 of the EACCMA,
person They are two classes of bonds namely; ix) The forms be signed by authorized signatories 2004)
(c) Where the re-imported goods were repaired · Particular Bonds who should be either, Directors or Company · When the importer fails to meet the conditions
and such repair could not have been undertaken · General Bonds Secretaries and for officers of ranks below that, of the bond or defaults, he/she commits an
in the Partner States authority of the Board be obtained and Power offence for which legal action shall be taken
(d) Equipment or other goods were added to the Particular bonds of Attorney given. in accordance with the Customs offence
exported goods that could not be added within x) To affix revenue stamp on original bond compounding procedures (Section 219 of the
the partner state. These are bonds that cover only single specified xi) Signatories to appear physically before EACCMA, 2004)
transactions and are valid for a period ranging a Customs Officer at specified times for · Seize the goods and have them forfeited to the
Processing or manufacturing was done on the re- from 48 hrs to twelve months. They are executed confirmation and updating of the specimen state (Section 210 of the EACCMA, 2004)
imported goods and the goods exported were the in accordance with the provisions of Section 117 of signatures · Recover the amount of the Bond In Force
product of, and originated within the Partner States. EACCMA, 2004 and have no provisions for further xii) Bonds should not be; transferred to other from the surety, which is referred to as bond
extensions. They are retired/discharged upon parties, punctured, perforated, erased or liquidation or penalty to bond.
CUSTOMS BOND SECURITIES completion of the Customs transaction. altered.
Processes/transactions that require Customs
Objectives: General bonds The executed bond upon approval is captured in security bonds
the system for use by the importer/clearing agent in
By the end of this topic, trainee shall be able to: These are bonds that cover many transactions readiness for registration of entry(ies). Bond securities are used for different Customs
and are valid for duration of three years. They are transactions/regimes where duty is not paid upfront
i. Demonstrate an understanding of the concept executed in accordance with Section 107 (3) of Bond cancellation for imported cargo such as:
of Customs securities EACCMA, 2004 and are replenishable.
ii. Comply with conditions of Customs processes This is the process of bond termination upon i) Goods in Transit and transshipment
requiring security guarantees Bond Execution, cancellation and enforcement completion of the specified Customs transaction(s) ii) Goods to be warehoused
within the stipulated time limits. Cancellation of iii) Goods for projects
This is a contract executed under seal whereby the Bond execution is the processing of the security Customs security bonds is provided for under iv) Perishable goods
party or parties entering into it bind themselves to bond through the filling of the bond form; signing; Section 108 of EACCMA, 2004. To facilitate bond v) Shipstores
pay to some other person or body a specified sum of sealing; witnessing; approval and capture in the cancellation/discharge, the importer or clearing vi) Temporary imports
money, referred to as the penalty to bond, if any of system for use in Customs transactions. agent is expected to make an application by filling vii) TREO, EPZ and MUB goods etc.
the conditions of the bond are not performed. It is a bond cancellation form (C29) for processing
required either to protect revenue or to ensure due Customs security bonds can be executed in and acquittal. The application has to be supported Benefits of Security bonds
compliance. accordance with Sections 106-109 of the EACCMA, by documentary evidence that the secured goods
2004. have been treated as stipulated in the Customs law. The following are the benefits accruing from the
Penalty to bond Withdrawal will be complete when the letter of usage of Customs security bonds:-
In the process of bond execution, the following have discharge is given by Customs to the Guarantor with
This is the amount of money specified in the bond to be observed:- original copy of the bond so that the Principal is i) It is sort of credit given to importers as their
as payable if the conditions of the bond are not met discharged from the obligations of paying premiums. cash is not tied up in upfront tax payments,
or are contravened. It is the Bond In Force (BIF) that i) Bond forms should be fully completed , signed thus boosting their cashflow
is enforceable in case the conditions of the bond are and sealed Bond security enforcement ii) It facilitates international trade, thus
contravened (Sec.109 of the EACCMA, 2004). ii) Be white in colour and size A4 conforming to the tenets of the WTO Revised
iii) Be submitted in four copies, each clearly Bond enforcement is the process of recovery of Kyoto Convention
The Principal marked; revenue on the bond in force once the principal iii) It is convenient to manufacturers who import
· Original, flouts any of the conditions of the bond. raw materials to manufacture goods for
This is the person or party that undertakes to fulfill · Duplicate, both local consumption and for export, thus
the conditions of the bond and also to pay the · Triplicate and Bond enforcement can be effected in the following boosting the growth of local industries leading
penalty to the bond. This is either an importers or · Quadruplicate. manner:- to the creation of job opportunities
his/her appointed clearing agent. iv) Show full address of the principal; guarantor · Where the conditions of any bond have not iv) The secured revenue is easier to recover in case
and their identification numbers been complied with, the Commissioner may by of fraud or tax evasion
The Guarantor v) Show total bond amounts in both words and notice in writing require the person who has v) Cargo clearance time is minimized, which is
figures given security under it to pay to him or her the cost saving.
This is the person or party that undertakes to pay vi) The declared Bond In Force amount be amount of the security within fourteen days
penalty to bond if the principal fails to fulfill the supported by attachments of the notice; and on failure to comply with
conditions of the bond. This is either an insurance vii) The signatories to show their full names and the notice, the Commissioner may enforce
company or banking institution. ranks

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Challenges in the management of Customs sub-divided into public and private warehouses. Customs warehouses (v) prospective licensees should be instructed to
security bonds Section 62-69 of the Act provides for warehousing arrange that only one door is locked from the
of goods and regulation 64-87 gives the procedure A Customs Warehouse is “any place approved by outside and that all the other doors are locked
Challenges are many given the dynamics of the ever for warehousing. the Commissioner for the deposit of un-entered, from inside the premises. When the premises
changing business trends and amongst them are the unexamined, detained or seized goods for the are fitted with sliding doors, the Inspecting
following: Government warehouses security thereof or of the duties and taxes due Officer must see that suitable stopping
thereon.” Any place or premises may be deemed to arrangements are provided on the rails to
i) Tax payment is delayed for a long time, thus A Government Warehouse is any building or place be a Customs warehouse by a proper officer where prevent the doors from being slid off when
denying the Government revenue provided by the Government in a partner state, the situation so warrants. locked.
ii) Guarantors giving unilateral notifications to and approved by the Commissioner Customs for (vi) have suitable office for Customs which is
Customs to their decision to withdraw from the deposit of dutiable goods on which duty has Types of goods deposited in a Customs Warehouse. furnished with the necessary equipment
guaranteed security bonds to some principals not been paid and which have been entered to be including but not limited to a connection to
and expecting Customs to exonerate/exempt warehoused. (a) Seized goods. the Customs computerized business system.
them from liabilities already incurred (b) Unclaimed goods. (vii) have weights, scales, measures and other
iii) Use of forged/fake security bonds leading to Customs bonded warehouses (c) Un-entered goods. facilities necessary for examining and taking
loss of revenue (d) Goods for which the Proper Officer for any account of goods and for securing them.
iv) Difficulties in recovery of revenue from A bonded warehouse is any building or place licensed reason has withheld release.
outstanding security bonds from Principals by the Commissioner Customs for the deposit of (e) Goods removed from licensed bonded Provision of separate Compartment:
and Guarantors who have prematurely wound dutiable goods on which duty has not been paid, and warehouses in accordance with sections 56 and
up which have been entered for warehousing (S62-69 of 69 of the Act, Where necessary, the applicant or prospective
v) Some guarantors and principals failing to the CMA). (f) Abandoned and derelict goods. licensee should provide a compartment for the
honour their obligations (g) Any goods dealt in contrary to the Customs storage of sensitive goods within the warehouse;
vi) Tendency of most Guarantors to engage There are two types of Customs bonded warehouses law. such as spirituous liquors and tobacco and must be
Customs in prolonged correspondences when as described here below separately walled off ’ from the rest of the bonded
called upon to honour demand notes on Conditions for licensing bonded warehouses warehouse space and provided with a door capable
outstanding security bonds a) General Bonded Warehouse are licensed of being locked with a Customs lock. The Inspecting
vii) It increases Customs administrative costs in premises used for warehousing goods for the Application for the approval and licensing of any Officer must state in his recommendation whether
the control of the uncustomed cargo under general public; premises, as a bonded warehouse must be submitted or not a special compartment is provided.
bond. b) Private Bonded Warehouses are licensed to the Commissioner Customs in the Form C18,
premises used for warehousing goods of the which must be accompanied by a plan of the If a separate compartment is not provided, it is
Warehousing procedure licensee. proposed building and its situation in relation to the policy of the Department to limit the type of
other buildings and thoroughfares. goods, which may be stored in the proposed bonded
Specific Objectives General or private bonded warehouses include warehouse by excluding sensitive goods such as
A security Bond to secure the duty on the goods spirituous liquors and tobacco. Intending licensees
i) Identify various types of warehouses Vehicle Bonded warehouses deposited in the bonded warehouse, when licensed, should be informed of this limitation and given an
ii) Comply with conditions for licensing bonded is to be given by the applicant in accordance with opportunity to make necessary structural alterations
warehouse, bonded factory and Inland These are designed to store only imported vehicles. the Form C B.6. The applicant is to comply with if they so desire.
Container Depot. Specialized Bonded warehouses the bond security amount and additional request
iii) Describe procedures for declaration and for collateral security fixed or requested for by the Marking of Warehouse:
documentation of warehoused goods These are specially designed to store goods such Commissioner Customs.
iv) Apply the correct procedures in the treatment as bonded oil installations and those that store Numbering and marking must distinguish a
of goods entered for warehousing explosives such as the armory. The prospective licensee should prepare for an Bonded Warehouse. When a Bonded warehouse is
inspection to be undertaken by a Customs officer to licensed, the words “Customs Bonded Warehouse”
Types of Warehouses Factory Bonds satisfy him/herself that the premises are:- and the number allocated to the warehouse must
be clearly marked on the principal entrance to
A warehouse is a building where goods are stored These are used store raw materials in factory (i) safe, secure, waterproof and pest-proof the warehouse, or elsewhere as Customs may
pending clearance through Customs. There are establishments to be used in the manufacturing (ii) suitable for use as a bonded warehouse as far as approve. These markings must be removed when a
various types of warehouses depending on the process construction and situation in regard to other Warehouse ceases to be licensed under the Customs
purpose for which they are licensed or approved buildings and accommodation are concerned: Laws, and prior to the cancellation of the security,
by the commissioner, with due considerations of Duty Free Shops: (iii) fitted with adequate lights and suitable an officer will inspect the building and ensure that
ownership. Under Customs procedure, Warehouses ventilators, and the markings have been removed.
are broadly categorized as Government warehouses, For storage and sell of dutiable goods, duty free to (iv) fitted with doors capable of being secured by
Customs bonded warehouses and Customs entitled persons and organizations. Customs locks in addition to the licensee’s
warehouses. The three broad categories are further locks.

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License Fees: Structural Alterations Declaration and documentation of warehoused Bill of lading/airway bill/railway consignment note,
goods Customs Transit documents (T1 or RCTD). The
In the event of a change of name of a licensed No structural alterations to a bonded warehouse may entry is assessed to ascertain the Bond in Force. The
company, a fresh application for a license is to be be made without permission from Customs. Care Warehoused goods may be delivered from a entry is then released for the goods to be moved
made as provided for under the EACCMA. Such should be taken to see that all structural alterations warehouse for 4 main reasons: to the destination Bonded warehouse. The proper
a license when granted is to be treated as a new are made under official supervision, and do not officer should not pass an IM7 entry unless it is
license, for which the appropriate fee is to be charged interfere with the suitability of the warehouse. · Home use supported by a formal acceptance in accordance
whether or not the annual license fee has been paid · Exportation with Regulation 69 of the EAC-CMR 2006 (Form C)
by the previous company. Customs Locks Opening of Bonded Warehouses · Removal/Transfer by the bonded warehouse keeper to have the goods
· Used as stores in aircraft or ship. warehoused in his bonded warehouse.
Under Sect. 62 of the Act it is clear that it is the All Bonded Warehouses must be secured with locks
building which is licensed and that any such provided by a licensee and approved by Customs and Home consumption Goods not entered for direct warehousing at the
building must be the subject of a newly granted no warehouse may be opened except in the presence entry point will be consigned to an Inland station or
license specific to that building. It follows therefore and/or with the authority of the proper officer. This is when goods are entered first into their bonded warehouse on a C17 under IM 8 procedure.
that when a building ceases to be licensed, the respective entries by owners before delivery from a The physical entry will be submitted to the Customs
license must be revoked and there is no provision Duties of Licensees of Bonded Warehouse bonded warehouse. These goods are intended for a Business Center supported by preceding documents
whereby the unexpired part of any such license may delivery into home use and duty due on them must such as the Bill of lading/airway bill/railway
be applied to any other building. Every warehouse licensee must : - be paid before delivery. consignment note, Customs Transit documents
a) provide such office accommodation and ( RCTD). On processing of the IM8, taxes are
Closing Down of a Bonded Warehouse weights, scales, measures and other facilities After making the correct ex-warehouse entry and has assessed to ascertain the Bond In Force and a T1
for examining and taking account of goods, been passed, the owner of goods goes and presents to accompany the goods is generated. The T1 is
If a bonded warehouse is to be closed down, either and for securing them as the proper officer his/her goods to the proper officer for examination then released for onward transit to the destination
by voluntary action on the part of the licensee or may require. before delivery. Customs station/bonded warehouse from where a
because of the cancellation of the warehouse license b) keep a record of all goods warehoused therein warehousing entry will be made.
by the Commissioner Customs, the provisions of and shall keep such record at all times available Re-exports: Numbering of warehoused export
Sect. 62 of the Act are to be applied. The Customs for examination by the proper officer, entries is done in registers for record purposes and g Provisional declaration to Warehousing Entry
locks are not to be removed off the doors of the c) stack and arrange the goods in the bonded
warehouse and the bond security is not to be warehouse so that reasonable access to and Removal/Transfer The Proper Officer may permit under Section 37 and
cancelled until all the goods in the warehouse examination of every package may be possible 38 of the Act, that the goods with no or insufficient
have been accounted for to the satisfaction of the at all times, and that the package marks are Removal of bonded goods from one warehouse documents/information may be entered on the usual
Customs Regional Manager, and the markings on clearly visible at all times; Provide all necessary to another is done with the submission of ex- form of Warehousing Entry (SAD/C17.A Regime
the building have been removed. No License Fee or labor and tools for the examination, packing, warehousing SBL. IM.7), the value being declared approximate, and
part thereof is refundable. marking, coopering, weighing and taking that such entries shall be submitted and dealt with
stock of the warehoused goods whenever the Cargo receipts are to be prepared for removal of in accordance with the above sub-paragraphs.
Warehouse-keeper to Notify Owner Bond officer so requires, warehoused goods.
d) maintain the packages in which warehoused Goods declared on approximate value to
Where a warehouse licensee does not wish to renew goods are contained in a proper state of repair; Aircraft/Ship stores Warehousing Entries must be examined to the same
his license, he is required under Section 63 of the e) pay the Import Duties and any other taxes scale and in the same manner as goods entered for
Act to notify the owners of the goods warehoused on all warehoused goods removed from his • Aircraft/ship stores delivery register is to be Home Consumption. Such estimated duty shall be
therein. In addition, where a license for a bonded warehouse except by authority and on all kept; allowed and a bond equivalent to such estimated
warehouse has been revoked or has expired, then, warehoused goods not produced to the officer • The kids are delivered to ship or aircraft duty furnished. The taxpayer (importer) may make
within such time as the Commissioner Customs on demand unless such goods are accounted representative; an undertaking to produce the required information.
may direct, all goods therein must be entered and for to the satisfaction of the Customs. • The ship representative gives receipt for the
delivered for home consumption, exportation, f) Bond Officer must report particulars of any registered goods; Amendment of Warehousing Entries
removed to another licensed bonded warehouse or dereliction of the above duties to the Customs • Consolidated entry will be prepared on weekly
use as ship/aircraft stores. If goods are not entered Regional Manager at once. basis. Where the required supporting documents in
and delivered accordingly, then the Customs may regard to provisional entries are furnished the
arrange for their removal to the Customs Warehouse. Procedure for warehousing provisional entry shall be appropriately amended.
On receipt into the Customs Warehouse, such goods Where a warehousing entry has been amended,
are to be dealt with in accordance with Section 42 of Goods may be entered for warehousing upon arrival the warehousing registers are to be appropriately
the Act. at the frontier port (IM 7). The physical entry will amended to reflect the correct Bond in Force (BIF).
be submitted to the Customs Business Center
supported by proceeding documents such as the

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

Security e.g. Form F.7: Certificate of receipt of goods of discharge of imported goods, this is referred to Section: 57 of the Act, within six months from the
into Bonded warehouse. as Customs warehousing dates, which is the 21st day date on which they were warehoused may with the
The importer of goods entered for warehousing (excluding Sunday and public holidays). written permission of the Commissioner be re–
must give security for the removal of goods from Report : of return of shipment of Bonded warehoused for a further period of three months.
the landing station (Frontier station/ICD) to the goods. Reg. 66 Also for transit goods expected to be entered into Thereafter, they shall be sold by public auction after
bonded warehouse and storage in the bonded a warehouse, for goods to be re-warehoused at the one month’s notice of such sale.
warehouse. A particular bond may be given for each Report: of Short landed goods - (Goods expiry of the warehousing period, beyond which
transaction or a general bond to cover the amount entered for warehousing). goods released from the warehouse must be delivered Types of Goods, which May be warehoused in a
likely to be outstanding at any one time in respect of once they have been entered for ex warehousing Bonded Warehouse
the transactions of a particular agent/importer Form F. 119: Cargo Receipts.
Want of Entry Lists All goods may be warehoused in a Bonded
(ii) Where goods are entered for warehousing/ All such forms/reports are to be numbered in annual Warehouse with the exception of-
removal to another warehouse as provided in Sect. series commencing with number 1, date and stamped, Upon receipt of the advice mentioned in paragraph
54 and Regulation 68, the delivery of goods should serial number and number of packages on the form 12, the Handling Agents will prepare a want of i. acids for trade and business;
not exceed 24 hours in the case where the Warehouse relevant to a particular entry are to be endorsed in entry list, in quadruplicate, which will be sent to ii. Ammunition for trade and business;
is at the station of entry and for removal to other the right hand side of the Register on the same line Supervisor Station to be checked against the relative iii. Arms for trade and business;
Warehouses the period should not exceed 48hours. as that used when the allocation was brought into inward report iv. Chalk;
force. v. Explosives;
Bond in Force Goods may be entered at the entry point for vi. Fireworks;
Electronic accounts or book balances in the warehousing inland or they may be consigned and vii. Dried fish;
The amount of Bond required in the case of manual format are to be adjusted by posting delivered on transit documents at the destination viii. Perishable goods;
particular bonds or allocations in the case of a entries or deductions as specified by corresponding warehouse after which the process of entering the ix. Combustible or inflammable nature, but not
general bond will be determined from the genuine warehousing entries or ex warehousing entries to or goods will start. including petroleum products for storage in
documents accompanying the SAD as declared from the total BIF. approved places;
to Customs by the clearing and forwarding agent Reporting procedure at the Bonded warehouse x. Matches other than safety matches
during the declaration process. In cases where ENFORCEMENT OF BOND SECURITY should be observed and the clearing and forwarding xi. Goods the Commissioner gazettes as not to be
documentation may be found inadequate, a detailed agent must facilitate the loading/off loading, warehoused
examination account of the goods must be done to Where an allocation remains outstanding for more depositing, stacking of goods and taking of account
enable determination of value using other methods. than the prescribed period (2 days in case of transit of warehoused goods on arrival at warehouse in TRANSIT AND TRANSHIPMENT PROCEDURES
When there is adequate bond security available on or 6 months in case of warehoused goods), from the accordance to section 64 of the Act.
the electronic bond security account of the bonded date when the entry was passed, the Importer/Agent Objectives:
warehouse to which the goods are destined, the is to be called upon, in writing, to pay the duty. Receipt of goods into any bonded warehouse must
warehousing entry is passed and the bond guarantee be authorized in writing in form of a “Licensee’s At the end of this topic, the trainee should
reference number is reflected on the entry. In case Evidence of payment must be produced by owner/ Certificate of Agreement” accepting goods into the demonstrate the ability to:
of a manual process, the Proper officer establishes agent to allow cancellation of BIF. bonded warehouse by the warehouse keeper.
that there is adequate bond before the warehousing i) Describe the concept of transit and
entry is passed, the particulars of the entry and the Warehousing Procedure Examination Account transshipment
amount of bond executed are to be recorded in the ii) Apply the declaration process under Transit
Bond Allocation Register, and all copies of the entry Warehousing is a Customs procedure whereby An examination account must always be prepared and transshipment
are to be stamped; goods liable to Customs duty on first importation (section 47 CMA) for all goods entered for iii) Apply the procedures for handling goods in
are entered for custody without payment of duty, for warehousing after they are examined. The account Transit
DISCHARGE OF SECURITY - (Allocation Register) the purposes of protecting government revenue and shall be recorded on the SAD, in the warehousing
other security reasons. register and where applicable captured in the system. Transit
(a) The discharge of security given can only be The proper officer in-charge of the warehouse will
permitted when a full and proper account has Warehousing of goods must be done in compliance prepare for each warehousing entry an examination Transit means the movement of goods imported
been made by the clearing and forwarding with specific provisions of the EACCMA in account reflecting the entered particulars and from a foreign place through the territory of one or
agent of all the goods covered by the bond particular Section 34 and Regulation governing there after forward the entry and accompanying more of the Partner States, to a foreign destination
security. goods transiting to the warehouse and warehousing documents for further processing at the processing (Section 2(1) of the EACCMA, 2004).
(b) Notification of the account of goods will be requirements applicable to warehoused goods. centre.
recorded on the right hand side of the Bond Transit shed or Transit godown
Allocation Register and these accounts will A Customs clearing and forwarding agents must Warehousing Period
stem from the receipt of documents relevant to observe the period; within which goods must be Transit shed means any building appointed by the
the particular cargo. entered for warehousing after the commencement All warehousing goods, which have not been Commissioner in writing for the deposit of goods
removed from the warehouse in accordance with subject to Customs control (Section 2(1) of the

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CUSTOMS LAWS AND PROCEDURES CUSTOMS LAWS AND PROCEDURES

EACCMA, 2004).It’s important to note that similar The entry should be supported with attached The entry should be supported with attached Challenges in the Control of Transit fraud
premises located outside the port licensed by the documents to ascertain the taxes payable, such as:- documents to ascertain the taxes payable, such
Commissioner for the deposit of transit cargo · Invoice as:- The challenges in the control of transit fraud and tax
awaiting transportation to the final destinations are · Bill of lading · Invoice evasion are many. Some of them are as follows:-
known as transit godowns. · Packing list · Bill of lading
· Manufacturer’s literature etc. · Packing list i) Use of forged stamps by agents/importers to
Types of Transit · Manufacturer’s literature etc. fraudulently certify false transit exportations
The appropriate Customs security bonds as per the iii) Transit goods either inward or outward should leading to tax evasion
There are two transit types namely; Transit Inwards East African Community Regulations 2010, should be covered by a Customs security bond which ii) Cases of falsified certification of transit
and Transit Outwards be executed to cover the transit and transshipment must be equivalent to taxes payable (BIF) if exportations through collusion with Customs
transactions. those goods were to be consumed locally Officers and other players
Transit Inwards iv) Transit cargo is to be transported in covered iii) Undervaluation and misdeclaration by agents/
In the case of direct transshipment, involving the body trucks or in containers. The body importers with intent to dumb transit cargo
Transit Inwards means the movement of imported direct transfer of goods from the incoming aircraft trucks should have both sides boldly printed into the local market
transit goods from a foreign place into a Partner or vessel to the departing ones, then security bond “TRANSIT GOODS” iv) Substitution of high value imported transit
State (s) to a foreign country may not be necessary as the goods have to be v) Transit goods be occasionally loaded under goods by agents/importers
transshipped under Customs supervision. Customs supervision and be sealed with v) Poor record keeping and risk profiling of
Transit Outwards means the movement of transit Customs seals, which are affixed to the agents, importers, suppliers etc by Customs
goods from a foreign country through Partner It is important to note that even duty free transit containers or vehicles carrying the goods. authorities
State(s) destined for export, for example Diamond goods have to be bonded albeit, with nominal bond. vi) Transit cargo can be subjected to Customs and vi) Use of forged Customs security bonds and fake
in transit from DR Congo into Tanzania destined for police escorts or Electronic Cargo Tracking truck registration numbers
a third country The Customs security bonds for both transit and System (ECTS) vii) Lack of serious attention by Customs Officers
transshipment goods shall be cancelled/acquitted, vi) Transit cargo must be transported on the to check on declared values.
Transshipment upon confirmation that the goods have left partner transit routes gazetted by the commissioner of viii) Conealment of transit cargo to evade tax
State(s) in the same state as declared (Sec. 87 of the Customs and any deviation of the transit truck ix) Prolonged storage of transit goods in transit
Transshipment means the transfer, either directly EACCM Act, 2004) from the gazetted route is a punishable offence godowns and transit sheds with motives to
or indirectly of any goods from an aircraft, vehicle vii) Transit goods are selectively scanned to monitor divert them into local market.
or vessel arriving in a partner State from a foreign Customs Control of Transit and Transshipment any cases of; concealment, misdeclaration etc. x) Political interference from within and outside
place, to an aircraft, vehicle or vessel departing to viii) Both containerized and loose transit units dictating clearance of certain transit cargo
a foreign destination (Sec.2(1) of EACCMA, 2004). The control of Transit and Transshipment goods moving along the gazetted transit routes must xi) Low staffing levels in the Customs
is anchored in Sections 85, 86 & 87 of the East stop at all transit check points on the route administrations
Types of Transshipment African Community Customs Management Act, and be rotated as one of the Customs control xii) Lack of enforcement tools for Customs Officers
2004 and Regulations 104 to 106 of the East African measures xiii) Unupgraded systems leading to cargo clearance
They are two namely; Direct Transshipment and Community Customs Management Regulations, ix) Transit cargo should be exported within 30 delays
Indirect Transshipment 2010 days from the date of passing of the entry or
Direct Transshipment means the transfer of goods within a further period as the Commissioner
directly from the incoming aircraft or vessel into the The following are some of the measures that have may allow
outgoing aircraft or vessel been put in place by Customs administrations to x) Once Transit goods have been exported,
control transit and transshipment goods to minimize the clearing agent should apply for bond
Indirect Transshipment means the removal of goods cases of fraud:- cancellation not later than 30 days from the
from the incoming aircraft or vessel and transfer of date of exportation (Reg.104 (17)).
the same later into another aircraft or vessel. i) The requirement that transit goods should xi) Where quantity of transit goods is found to
be shown separately in the Inward Report be less at the port of exit, the importer shall
Declaration of Transit and Transshipment cargo (Manifest) of the importing vessel or aircraft to pay penalty to bond proportionate to the
Transit and transshipment are goods under Customs enable Customs to identify transit goods from discrepancy (Reg. 104(14))
control (Sec. 16 of the EACCMA, 2004) local ones before they are entered so that they xi) Where there’s attempted diversion of Transit
are monitored at manifest level goods, but the goods are recovered, the agent/
It’s a legal requirement that all transit and ii) Legal requirement that all transit goods on importer shall pay fine of 50% of the value of
transshipment goods on importation into the importation into the country be entered in a the goods and the subject goods shall be liable
country be entered in a prescribed Customs form prescribed Customs form (C17B) within 21 to forfeiture. These deterrent control measures.
(C17B) within 21 days from date of commencement days from date commencement of discharge
discharge (Sec. 34 of EACCMA, 2004) (Sec. 34 of EACCMA, 2004).

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CUSTOMS LAWS AND PROCEDURES

References:
Baker.T. (2002), Dealing with Customs and Excise; Administration, Appeals, Disputes and Investigation, Tolley
Publishing
International Convention on CITES
Lawrence J. Bogard, (1983) Customs Laws and Administration, Oceana Publication
Montreal Protocol (1987) on Ozone Depleting Substances
Partner States Legislation relevant to Customs Operations
Protocol on the establishment of the EAC Customs Union
The EAC Customs Management Act, 2004
The EAC Customs Management Regulations, 2010
The EAC Customs Procedures Manual
The EAC Customs Training Material, 2011
The EAC Duty Remission Regulation, 2008
The EAC Rules of Origin
The EAC website: www.eac.int
Uganda Revenue Authority Customs Departmental Instructions Revised, 2009
Uganda Revenue Authority Customs Procedure Manual, 2010 BOOK 2
United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988
WCO Revised Kyoto Convention

CUSTOMS
WCO SAFE Framework of Standards
WCO website
Wulf, & Jose’ B. Sokol (2004) Edited Customs Modernization Hand book

VALUATION
www.click.wcoomd.org
http://www.clearedanddelivered.com

AND TARIFF
CLASSIFICATION

60 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

UNIT 1:

CUSTOMS
VALUATION
 VALUATION AND TARIFF CLASSIFICATION

Table of Contents
UNIT 1: CUSTOMS VALUATION.......................................................................................................................66
Unit Objective..................................................................................................................................................................................... 66
Preamble: General Introductory Commentary.............................................................................................................................. 69
Annexes............................................................................................................................................................................................... 72
Transaction Value Method................................................................................................................................................................ 73
Case Study 1........................................................................................................................................................................................ 74
Case Study 2........................................................................................................................................................................................ 77
Case Study 3........................................................................................................................................................................................ 79
Case Study 4........................................................................................................................................................................................ 80
Case Study 5........................................................................................................................................................................................ 81
Case Study 6........................................................................................................................................................................................ 82
Case Study 7........................................................................................................................................................................................ 83
Case Study 8........................................................................................................................................................................................ 84
Customs Documentation.................................................................................................................................................................. 85
Incoterms............................................................................................................................................................................................. 93
References........................................................................................................................................................................ 96

UNIT 2: CUSTOMS TARIFF CLASSIFICATION....................................................................................................98

Specific Objective............................................................................................................................................................................... 98
Historical Background....................................................................................................................................................................... 98
Moves Toward International Harmonization of Tariff Classification Prior to World War II................................................... 98
Brussels Tariff Nomenclature (BTN) and Customs Cooperation Council (CCC).................................................................... 98
Harmonized Commodity Description and Coding System (Harmonized System)................................................................. 99
The Tariff structure of the EAC-CU............................................................................................................................................... 100
Structure of Harmonized System................................................................................................................................................... 101
Arrangement of Harmonized System into Sections.................................................................................................................... 101
Arrangement of Sections in the Harmonized System................................................................................................................. 106
Arrangement of Headings and Subheadings................................................................................................................................ 107
General Interpretative Rule 1.......................................................................................................................................................... 111
General Interpretative Rule 2.......................................................................................................................................................... 112
General Interpretative Rule 3.......................................................................................................................................................... 113
General Interpretative Rule 4.......................................................................................................................................................... 116
General Interpretative Rule 5.......................................................................................................................................................... 116
General Interpretative Rule 6.......................................................................................................................................................... 117
Case Study Illustrations................................................................................................................................................................... 118

ANNEX........................................................................................................................................................ 120
REFERENCES............................................................................................................................................... 122

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

UNIT 1: CUSTOMS VALUATION such as tariff policy objective which may include as trade; it was widely done through barter trade The essential elements of this definition are price,
and not limited to; system which was applied at local and foreign trade. time, place, quantity and commercial level.
UNIT DESCRIPTION
(a) Raise revenue The existence of different and unstable valuation The BDV, a product of the trading environment
The Customs valuation unit briefly describes the (b) Facilitate trade systems was a major obstacle to the growth of of the1950’s was seen to be subject to arbitrary
provisions of the WTO Agreement on Customs (c) Protect domestic industry international trade; it enabled the incidence of the administration, lacking transparency and
Valuation. (d) Encourage importation of certain products agreed duties to be manipulated unilaterally by unresponsive to the prevailing international
(e) Collect trade statistics. altering the valuation criteria. trading environment. The system gives too much
The unit will explore the key requirements of discretion to the Customs administration. The value
the WTO Agreement in addressing application Advalorem duties Desperate and unstable systems of valuation led adjustment depended much on the assessment of
of its provisions to modernisation and reform of to studies in search of a neutral valuation system, the assessor, which allows arbitrary uplifts that are
members’ Customs procedures. Are taxes, duties or fees that vary depending on the which would promote international trade. not quantifiable and uncertain which is detrimental
value of products, services or property on which to trade.
The unit will also bring out vividly the objective of they are levied. They are expressed as a percentage After several unsuccessful attempts made under
the Agreement which requires countries to adopt a of the value and most of the countries apply this the auspices of the League of Nations, agreement Between 1973 and 1979, the GATT multilateral trade
valuation system that is fair, neutral, uniform, and system e.g. 25% of CIF. on the general principles of Customs valuation was negotiations known as the Tokyo Round took place
transparent and it prevents the use of arbitrary and reached for the first time during the United Nations in Geneva, representing one of the most significant
fictitious values by requiring countries to base the Advalorem duty rate is not a recent invention but Conference on Trade and Employment, held in trade policy events of our time.
value of the imported goods to the greatest extent dates back to the middle ages and what seems to Geneva in 1947 and was signed by 23 nations.
possible on the transaction value. have been lacking at that time was the application of The objective of these negotiations was to achieve
precise, standard methods of valuation. The conclusions of this Conference were embodied the expansion of greater liberalization of the World
UNIT OBJECTIVES in Article VII of the General Agreement on Tariffs trade, inter alia, through the progressive dismantling
The preference for advalorem duties re - emerged and Trade (GATT) 1947. The principle provided for of obstacles to trade. One means of achieving this
By the end of this unit, trainees should be able to: during the industrial era, when it was realized that Customs valuation to be based on the transaction goal was the adoption of a common international
• Interpret and apply as accurately as possible the system offered greater protection, as it was value to the greatest extent possible. Nevertheless, valuation system, more widely accepted than the
the provisions of the WTO Agreement on more adaptable in the face of price fluctuations and that text merely laid down the general principles existing system.
Customs Valuation differences in the quality of goods. and provided little guidance as to their practical
• Outline the methods of valuation sequentially application. One of the results of these negotiations was the
• Determine the customs value of imported Specific duties adoption of the Agreement on the Implementation
goods in accordance with the valuation Another progress towards international co- of Article VII of the GATT in 1981 also known as
methods outlined in the Agreement These are duties, taxes or fees levied based on specific operation in the field of Customs valuation was Agreement on Customs Valuation (ACV). ACV is
• Outline the different documents required for measures of goods such as number, weight, volume, taken by the European Customs Union Study a positive concept rather than the notional concept
Customs valuation area, capacity etc. Here, a specific sum is imposed Group set up in Brussels in 1947. The Group’s tasks under BDV. A Protocol to the 1979 Agreement
• Interpret different incoterms used in on each article regardless of its individual value e.g. included the drafting of a definition of value for use deemed to form the integral part thereof, contain
international trade when determining the price per litre of fuel. in the framework of a Customs Union, and a study provisions concerning special problems and trading
Customs value of imported goods. of the methods and procedures of application of needs of developing countries, permitting them
Importance of Customs Valuation such definition. some flexibility in applying the Agreement. This has
INTRODUCTION become Annex III of the WTO Valuation Agreement
Customs valuation is important because it; The text of this definition was completed by mid- (GATT 1994).
Definition of Customs Valuation • Enhances International Trade 1949 and it was based on the principles of Article
• Protects domestic industry VII of the GATT 1947. It was incorporated in the The Agreement on Customs valuation is based on
According to Oxford dictionary, value is defined as • Encourages the importation of certain products Convention on the valuation of goods for Customs transaction value that is the price actually paid or
the worth, desirability, purchasing power, equivalent • Facilitates the collection of revenue purposes, which was signed in Brussels on 15th payable for the imported goods when sold for export
of a thing... which may be substituted or exchanged • Forms the taxable base for customs revenue December 1950 and entered into force in 28thJuly to the country of importation.
for a thing. • Facilitates the compilation of trade statistics 1953. This resulted into a new valuation method
• Facilitate the implementation of Tariff termed as Brussels Definition of Value (BDV). This system is intended to provide a fair, uniform,
Customs valuation therefore is the procedure preferences and neutral way for the valuation of goods for
applied to determine the value of imported goods • Helps in Origin determination The Brussels Definition of value is based on a Customs purposes, conform to commercial realities
for the purpose of levying advalorem customs notional concept, which treats the Customs value and precludes the use of arbitrary and fictitious
duties. Customs duties are instruments of fiscal and Evolution of Valuation systems as the price at which in assumed conditions, the values. Through its precise methodology, it assists
trade policy. These duties may be based on specific merchandise to be valued would fetch in the open the trading community and Customs authorities to
rates, advalorem rates, or a combination of the two. Historical Background of Customs Valuation and free market on interaction of the forces of determine the Customs values and the amount of
The choice of the rate depends on various factors, Valuation of goods for exchange purposes is as old supply and demand when sold to unrelated parties. duties payable with more certainty, and therefore,

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

contributes to the facilitation of trade. Objectives of the WTO Agreement on Customs receive the same treatment to avoid distortion of procedure is to consider application of the anti-
Valuation competition. Article VII of GATT before 1994 was dumping laws (Article VI of GATT 1994).
The Agreement recognizes that Customs valuation rather general and left each country with the widest The Structure of the WTO Valuation Agreement
should as far as possible, be based on the actual The objectives of the WTO Valuation Agreement are discretion in its valuation system.
price of the goods being valued, subject to certain set out in the preamble of the Agreement as follows: The full title of the WTO Agreement on Customs
adjustments of elements which form part of the A fair, uniform and neutral system that precludes Valuation is “Agreement on Implementation of
value but have not been included. To further objectives of GATT 1994 and secure the use of arbitrary or fictitious customs values Article VII of the General Agreement on Tariffs and
additional benefits for developing Countries Trade 1994 referred to as “the Agreement”.
Uruguay Round Arbitrary or fictitious Customs values refers to
The Agreement is an important step towards national systems in which Customs values have The structure of the Agreement is as follows:
The Uruguay Round of GATT negotiation which a uniform application of valuation procedures been assigned to goods without regard to the factors
started in 1986 was finalized in December 1994. This thus promoting international trade. It is also which govern the transaction between buyer and Preamble General Introductory Commentary
resulted in the Agreement on Implementation of for developing countries when they become seller. Many countries have tendencies to protect PART I Rules on Customs Valuation (Article1–17)
Article VII of the General Agreement on Tariffs and members, for example, they may delay application domestic industry by uplifting the value of imported
PART II Administration, Consultations & Dispute
Trade 1994, popularly known as, “the Agreement”. It of its provisions for up to 5 years and may defer goods unfairly. The intention of precluding the use settlements (Article18-19)
made several changes to the existing Agreement on application of some specific rules for an additional of arbitrary or fictitious customs values is to ensure
PART III Special and differential treatment (Article
implementation of Article VII: three-year period. that the valuation of goods is based on the actual
20)
circumstances relating to each transaction.
PART IV Final provisions (Articles 21-24)
(a) Creation of World Trade Organization (WTO), It was also agreed that developed countries shall
which came into force 1995. furnish technical assistance which may include The basis for valuation should, to the greatest Annex I Interpretative Notes
(b) Requirement that all signatories to the WTO training personnel, assistance in implementation, extent possible be the Transaction value of the Annex II Technical Committee on Customs
accept all GATT instruments, including the access to sources of information and advice on goods Valuation.
Agreement on implementation of Article VII. application of the provisions of the Agreement. Annex III Provisions for Developing Countries
(c) Some slight amendments to the text of the Transaction value in its simplest form refers to, the
GATT Agreement on Customs Valuation. To provide greater uniformity and certainty price actually paid or payable with any necessary PREAMBLE: GENERAL INTRODUCTORY
(d) Review of Annex III to the Agreement adjustments, agreed upon by the buyer and seller. COMMENTARY
(e) Adoption of decisions regarding, Burden of Another important objective of the Agreement The Agreement makes clear that the transaction
proof, Minimum Values and sole agents, sole was to establish a precise set of rules which will value method should be considered first whenever The Preamble gives the general introductory
distributors and sole concessionaires be applied in the same way by all the members. possible. commentary of the Agreement and introduces
This increases importers confidence that they will valuation methods in their hierarchical order of
Customs value should be based on simple and application. It also points out that the primary basis
equitable criteria consistent with commercial of the customs value is the Transaction value, which
Brief History of Developments of
practices means the price actually paid or payable for the
International Standards for Customs goods when sold for export, to take in to account
The customs value should be determined on the certain additional costs incurred by the buyer, that
basis of the examination of accurate commercial are not included in the basic price paid or payable.
documentation in line with generally accepted
Article VII of the GATT 1947 Set principles but little
guidance regarding their
commercial practices in the specific industry. Article 8 provides, inter alia, for adjustments to the
practical application price actually paid or payable of specific elements
Valuation criteria should be of general application that pass from the buyer to the seller that may not
without distinction between sources of supply necessarily be in the form of money.
1950 / 1953 JPN 1972 1979 / 1981 JPN 1981
Members are required to apply the provisions of The commentary informs us that such elements
Convention on the valuation of Goods Agreement on Implementation of the Agreement uniformly to importations from all form part of the value for customs purposes if
for Customs Purposes Article VII of the GATT countries without distinction between the goods indeed they are incurred by the buyer but are not
Protocal
and exporters. included in the price actually paid or payable for the
GATT Customs Valuation Agreement
Brussels Defination of Value (BDV) imported goods.
Valuation procedures should not be used to
1994 / 1995 JPN 1995 combat dumping The second paragraph states that if it is not possible
to determine the Transaction value of the goods,
National Positive Agreement on Implementation ofArticle VII of If dumping is taking place, the Agreement should the Customs administration and the importer must
Concept Concept the GATT 1991
not be used as a counter measure by increasing the consult with a view to establishing the basis of value
WIO Customs Valuation Agreement (CVA)
customs value of the goods in question. The correct under Articles 2 and 3 (the transaction value of

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identical and similar goods respectively). This is Article 2-Transaction value of identical goods Article 6- Computed Value Method giving effect to this Agreement shall be published
because one party may have information about the in conformity with Article X of GATT 1994 by
customs value of identical or similar goods that may Where the customs value cannot be determined Under this article, the Customs value is determined the country of importation which requires that
not be available to the other party. under Article 1 (Transaction value method), the on the basis of the costs of the production of the a member should inform other members of the
Customs value shall be the transaction value of goods being valued, plus an amount for profit and amendments made.
The third paragraph introduces Article 5 and 6 the identical goods sold for export to the country general expenses usually reflected in sales from the
which describe the methods to be used if the value of importation and exported at or about the same country of exportation to the country of importation Article 13- Obligation to provide for a guarantee
cannot be determined under the first three Articles. time as goods being valued and have been valued of goods of the same class or kind. system
The method described in Article 5 (the Deductive and captured in Customs database. These goods
value method) is derived from the price of imported are the same in all respects including physical Article 7- Fallback Method The importer may be allowed to withdraw the
goods (identical or similar) which are sold after characteristics, quality and reputation. goods from customs if it is necessary to delay the
importation to unrelated buyers in the country of Provides for determination of the Customs value; final determination of customs value provided that
importation. Minor differences in appearance shall not preclude using reasonable means consistent with principles sufficient guarantee is provided.
goods otherwise conforming to the definition from and general provisions of the Agreement and on the
Method 5 is the “Computed value method” where being regarded as identical. The minor differences basis of data available in the country of importation. Article 14- Interpretative Notes to the articles
the customs value is built up from the value of in appearance would include: color, size, label and
separate elements incorporated in the production pattern. These notes are set out under annex 1 and the articles
or manufacture of the goods being valued such as Article 8- Adjustments to the transaction Value of the Agreement are to be read and applied in line
parts, materials, profits, overheads etc. Article 3-Transaction value of similar goods with these notes. Annex 1, as well as annex II and
This article provides for consideration of costs which III form an integral part of the Agreement.
However, the use of this method may present Where the customs value cannot be determined have been incurred by the buyer but have not been
difficulties and that is why Article 4 gives the under Article 1 and 2 the Customs value shall be the included in the price actually paid or payable. They Article 15-Definitions
importer the option of reversing the order of transaction value of similar goods sold for export to include compulsory and optional Adjustment
application of Article 5 and 6 in consultation with the country of importation and exported at or about This article provides definitions and interpretation
the Customs administration. the same time as goods being valued. Article 9-Currency conversion of various technical words used in the Agreement.

The Fourth paragraph introduces the fallback Similar goods are goods which, although not alike in If conversion of currency is necessary for the Article 16- Rights of importers to a written
method of Article 7 for use in determining the all respect have like characteristics and component determination of customs value, the rate of exchange explanation
value in the event that customs value cannot be materials which enable them to perform the same to be used shall be that duly published by the
determined under the previous methods. functions and to be commercially interchangeable. competent authorities of the country of importation This article explains the right of the importer to an
The quality of the goods, their reputation and the concerned. explanation in writing as to how customs value was
The Commentary as a preamble to the Agreement existence of a trade mark are among the factors to determined.
makes a statement on behalf of members recognizing be considered in determining whether goods are Article 10- Confidentiality
a series of fundamental objectives that under pin the similar and note that the goods must be produced in Article 17- Rights of Customs Administrations
Agreement itself. the same country as the goods being valued. All information which is provided on a confidential
basis shall be treated as strictly confidential by the This article explains the right of Customs
PART 1 – Rules on Customs Valuation Article 4- Application of Article 5& 6 authorities concerned and shall not be disclosed administrations to satisfy themselves regarding the
without specific permission of the person issued truth or accuracy of any documents or declarations
Part 1 consists of 17articles which explain the criteria Provides for the rights of the importer to alter the except to the extent that it may be required to be presented to Customs for valuation purposes.
for determining the Customs value, adjustments, sequence of application of articles 5 and 6. disclosed in the context of judicial proceedings.
definitions, rights of importers and Customs PART II –Administration, Consultations and
Administrations. Article 5- Deductive Value Method Article 11-Importer’s right to appeal without Dispute Settlement
penalty
Article 1-Transaction Value Method It provides for determination of the Customs Value This part has two Articles.
basing on the unit price at which the imported The legislation of each member shall provide for the
The basis of Customs Value of imported goods shall goods or identical or similar goods are sold in the right of appeal without penalty within the customs Articles 18-Institutions
be the “Transaction Value”. It is the price actually greatest aggregate quantity, at or about the time of administration or independent body up to the
paid or payable for the goods when sold for export to importation of goods being valued, to persons who judicial authority. This Article established the basic institutions of
the country of importation adjusted in accordance are not related to the person from whom they buy the implementation of the Agreement; these are
to Article 8. such goods. Article 12- Obligation to publish laws WTO Committee on Customs Valuation and WCO
Technical Committee on Customs Valuation.
Laws, regulations, judicial decisions and
administrative rulings of general application

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Article 19-Consultations and Dispute Settlement Annex I: Interpretative Notes Case Studies: These are based on a set of facts relating to or for the benefit of the seller for the imported
to a particular commercial transaction. They can goods.
This article describes the procedure to be followed This annex provides the interpretative notes which be used to demonstrate a practical application of the
for consultations and dispute settlement. supplement provisions of Article 1 until Article 15. Agreement. (c) Country of importation
In particular, they explain in more detail how the
PART III -Special and Differential Treatment valuation methods are to be applied. The notes Studies: These set out the results of detailed studies According to Article 15, country of importation
emphasize the use of the methods in hierarchical of questions related to the Agreement. means country or customs territory of importation
This part has only one Article: order. where goods are being valued.
Annex III-Provisions for Developing countries
Article 20: Special and Differential Treatment Annex II–Technical Committee on Customs (d) Adjustments
Valuation (TCCV) This annex provides for:
The Article provides for special provisions available Implies any cost elements incurred by the buyer but
to developing countries. For example, developing This annex establishes the Technical Committee (a) Five (5) years delay in the application of the not included in the price actually paid or payable for
countries were given a period of 5 years to delay on Customs Valuation under the auspices of WCO provisions of the Agreement paragraph 1 of the imported goods being valued.
implementation of provisions of the Agreement. and describes the role and the responsibility of Article 20. Elements of Transaction Value Method
technical committee with a view to ensuring (b) Retention of minimum value on limited and
PART IV–Final Provisions that at the technical level, there is uniformity in transitional basis. The concept of sale
interpretation and application of the Agreement. (c) Reservation and reversal of the sequential
This part has 4 Articles. The Agreement has two committees, the Committee order at the request of importer provided In order to establish transaction value, there must be
on Customs Valuation based in Geneva and the under Article 4 of the Agreement. a sale of goods before importation. If the imported
Article 21- Reservations Technical Committee on Customs Valuation based (d) Reservation with respect to paragraph 2 of goods are not the subject of a sale, there can be
in Brussels. The former is concerned with the trade Article 5 of the Agreement (it allows use no transaction value under Article 1 of the “WTO
This article states that the reservations may not be policy aspects of the Agreement while the latter of goods that have gone further process in Agreement on Customs valuation”
termed in respect of any of the provisions of the deals with the Customs aspects of it. The main role determination of unit price at which the
Agreement without the consent of other members. of the TCCV is the examination of specific technical greatest aggregate units are sold). Definition of sale
problems arising in the day to day administration (e) Provision that those developing countries that
Article 22- National legislation of the Customs Valuation system of Members and may have problems in the implementation of “The Agreement” contains no definition of “sale”. It
to give advisory opinions on appropriate solutions Article 1 of the Agreement insofar as it relates to merely indicates that a sale is a specific commercial
This article requires each member to domesticate based upon the facts presented. importations into their countries by sole agents, operation satisfying certain requirements and
the Agreement and inform the committee of any sole distributors and sole concessionaires, shall conditions. It implies a transfer of ownership of the
changes in its laws. The EAC domesticated the law Technical Committee on request for a study of this problem with a view goods for some form of consideration.
in 2005 vide section 122 read together with fourth Customs Valuation to finding appropriate solutions.
schedule to the East African Community Customs INSTRUMENTS Hence a sale necessarily requires an agreement
Management Act, 2004. TRANSACTION VALUE METHOD between a seller, who agrees to transfer the
COMMENTARIES STUDIES ownership of the goods in exchange for a specified
Article 23- Review Introduction price, and a buyer, who agrees to purchase those
goods for a specified price.
ADVISORY
This article provides for Review of implementation OPINIONS Definitions
and operation of the Agreement by WTO Committee Concept of sale for export
on Customs Valuation annually. EXPLANATORY CASE (a) Transaction Value
NOTES STUDIES The transaction value of the imported goods is based
Article 24-Secretariat It is the price actually paid or payable for the goods on the price for those goods when sold for export.
when sold for export to the country of importation Therefore, in order to establish a transaction value,
Advisory opinions: These answer questions raised
This Article mandates WTO and WCO Secretariats adjusted in accordance to Article 8. there must be a sale for export of goods being valued
on the application of the Agreement to a particular
to service this Agreement. before importation. If the imported goods are not
set of facts.
(b) Price actually paid or payable (PAPP) subject of a sale, transaction value cannot be applied
Annexes under Article 1.
Commentaries: These provide comments on parts
Price actually paid means the price that has already
of the Agreement and intended to supplement the
The purpose of the annexes is to explain further been paid at the time of valuation or importation.
text with additional guidance.
issues covered by the Articles and mainly the Price payable means the price that has not been Furthermore, the sale in question must be one for
interpretative notes to the Articles, the functions of paid by the time of valuation or importation but has export to the country of importation. If the goods
Explanatory Notes: These provide the Technical
the Technical Committee on Customs Valuation and already been agreed to be paid. Therefore, PAPP is have been sold for the domestic market in the country
Committee’s views on questions of a general nature
the special provisions to the developing countries. the total payment made or to be made by the buyer of export or for export to a third country, those sales
arising from the application of the Agreement.

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cannot be used to establish the transaction value. (f) Goods imported for destruction Required; Cash discounts
Transaction Value may not be applied on goods that
do not constitute a sale. Costs are usually incurred in connection with the Determine whether the goods in the above scenarios These discounts are granted to buyers for payment
importation of waste or scrap for destruction where can be considered as having been sold for export, in in cash or payment made within a specified period
Examples of cases where there is no sale the exporter pays the importer an amount for his/ accordance with Article 1 of the Agreement? e.g., 5% for a payment made within 10 days of
her services. As the importer does not pay for receipt of the invoice and, for Customs purposes,
(a) Free of Charge Shipments the imported goods but rather, on the contrary, is Concept of Price Actually Paid or Payable (PAPP) the discounts must be freely available to all buyers.
paid for accepting and destroying them, such an There should be a schedule to support the discount
Where a transfer of goods is made free of charge, importation is not considered as a sale. In such a The 4th schedule of EACCMA 2004 provides levels.
it cannot be regarded as a sale. This is the case, for case, an alternative method of valuation will be that the price actually paid or payable is the total
example, with certain gifts, samples, prototypes and applied. payment made, or to be made, by the buyer to or for When the transaction involves a cash discount, the
promotional items. the benefit of the seller for the imported goods. price payable may be determined in various ways.
(g) Goods which are the subject of barter Thus, the invoice may include a statement specifying
(b) Consignment sales It further clarifies this term by indicating that the the conditions for granting a cash discount, or the
Barter trade transactions, constitute a specific case in PAPP includes all payments actually made or to be importer will inform Customs, on request, that
Goods dispatched to the country of importation not as much as they are totally or partially expressed in made as a condition of sale for the imported goods, he/she has accepted the conditions entitling him/
as a result of a sale, but with the intention that they non-monetary terms. They may involve an exchange by the buyer to the seller or by the buyer to a third her to the discount and that the price payable is
would be sold on the account of the supplier. The of goods of approximately equal value or, expressed party to satisfy an obligation of the seller. the discounted price. The documents submitted by
goods remain the property of the foreign supplier in monetary terms but not settled (or only partially the importer should be based on quantifiable and
until after they are sold through a selling agent in settled) in monetary terms (e.g., merchandise barter The term “paid” or “payable” means that if the goods verifiable data.
the domestic market. For example: goods imported which includes a payment to make up the balance). are paid for before valuation, the price paid will be
on consignment for sale by auction. Hence it is necessary to examine, on a case by case used as a basis for valuation. If not paid, then the Quantity discounts
basis, whether the arrangements can be considered price to be paid will be used. The payment needs
(c) Goods imported by intermediaries a sale. not necessarily take the form of a transfer of money. Quantity discounts are deductions from the price,
Payment may also be made by letter of credit or allowed according to the quantities purchased at
This relates to imported goods which, at the time Case study 1. negotiable instruments. The following are some of once or over a period of time. Sellers often encourage
of Customs clearance, have not yet been sold but the examples in relation to payments; buyers to purchase in bulk as their costs are
are delivered by the foreign supplier to his/her 1. A consignment of televisions is imported proportionately reduced. For valuation purposes, it
agent generally to be held in stock and then sold and presented for customs clearance. From Direct and Indirect Payments is the quantity which has determined the unit price
after importation for the account and the risk of examination of commercial documentation, of the goods being valued when they were sold for
the foreign supplier. Since there is no transfer of you establish that both the buyer and seller are (a) Direct Payments export to the country of importation that is relevant.
ownership, there is no transaction value for these based in the country of importation. In order to be accepted by Customs, discounts must
goods at the time of importation. These are payments already made at the time of be freely available to all buyers. Quantity discounts
2. Goods are imported by intermediaries who customs valuation of the imported goods. can be established prior or subsequent to the
(d) Goods imported by branches do not own the goods. They find buyers importation of the goods.
after importation and arrange for payment (b) Indirect Payments
This involves a transaction between two separate to be effected to the seller in the country of Conditions for use of Transaction Value
persons, the delivery of goods to a branch office exportation. These are payments made by buyer whether in
which does not have a separate legal status, is merely whole or in part in the settlement of a debt owed by The transaction value will, however, only be
a transfer of goods from one office to another. 3. The contract for goods being sold to an the seller. acceptable as the Customs value of the imported
Whether a transaction leading to the importation importer in your country states that payment goods, if the four conditions set out in paragraph 1
of goods by the branch office qualifies as a sale for can be made any time up to two months after Discounts and Credits to Article 1 are fulfilled. These four conditions are
export depends on the role of the branch in the importation. You verify that at the time of as follows:
transaction. customs clearance, no payment has yet been Discounts are general reductions of the PAPP when
made. certain conditions put by the seller are met. Such (a) That there are no restrictions as to the
(e) Goods supplied on loan conditions may include prompt payment, quantity disposition or use of the goods by the buyer
4. A consignment of sports bags, caps and key bought etc. other than restrictions which:
If the goods are loaned by the exporter to an rings are imported as promotional material for (i) are imposed or required by law or by
importer, this does not constitute a sale and an a large sports events to be held in your country. The PAPP is established after deducting any the public authorities in the country of
alternative method will have to be considered. The pro-forma invoice states these items are legitimate (meaning supported by quantifiable and importation;
supplied free of charge. You also find a price verifiable data) cash or quantity discounts. The (ii) limit the geographical area in which the
list giving the prices for the same items in case most common discounts include cash discount and goods may be resold
the importer wishes to purchase more of the quantity discount. (iii) do not substantially affect the value of the
same. goods;

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(b) that the sale or price is not subject to some Article 8 and costs incurred by the seller in sales in Examples of exceptions Where the seller requires that; the imported product
condition or consideration for which a value which the seller and the buyer are not related. i) requirement to obtain a license or permit be sold to consumers exclusively through individual
cannot be determined with respect to the prior to any resale or use; sales representatives who use a house-by-house sales
goods being valued; The tests set forth in Article 1 paragraph 2 (b) are ii) requirement for certain types of labelling technique. This would not be a restriction as it does
(c) that no part of the proceeds of any subsequent to be used at the initiative of the importer and only or packaging; not substantially affect the price.
resale, disposal or use of the goods by the buyer for comparison purposes. Substitute values may iii) requirement for testing or inspection
will accrue directly or indirectly to the seller, not be established under the provisions of Article 1 before release; Second Condition
unless an appropriate adjustment can be made paragraph 2 (b).
in accordance with the provisions of Article 8; Where the sale or price is subject to some condition
(d) that the buyer and seller are not related, or Practical examples in each condition or consideration for which a value cannot be
where the buyer and seller are related, that the determined with respect to the imported goods.
transaction value is acceptable for customs In order to have a clear understanding of the
purposes under the provisions of paragraph 2 situation, we will now examine each of these The above situation is further explained in
of Article 1. conditions. paragraph 1(b) of the Interpretative Notes through
the following three situations:
In determining whether the transaction value is First Condition
acceptable the fact that the buyer and the seller are A condition of the sale is i) The seller establishes the price of the imported
related within the meaning of Article 15 shall not in The transaction value does not permit restrictions as that the buyer in country x
cannot sell or dispose of the
goods on condition that the buyer will also buy
itself be grounds for regarding the transaction value to the disposition or use of the goods by the buyer. As imported goods in any
neighbouring country
other goods in specified quantities.
as unacceptable. In such a case, the circumstances a practical matter, where the purchaser is restricted
surrounding the sale shall be examined and the as to the disposition or use of the goods, the price of
transaction value shall be accepted provided that the those goods may well reflect the restriction. Where limits the geographical area in which the goods can be sold
2

relationship did not influence the price. such a restriction does exist, it would require the
rejection of transaction value. b) Limitation of the geographical area in which
If, in the light of information provided by the the goods may be resold.
importer or otherwise, the Customs administration Example
50 Fax machines for $100 each + 10 Photocopiers for $1000 each
has grounds for considering that the relationship Example
influenced the price, it shall communicate its Where the buyer is precluded from reselling the Where the seller imposes a territorial •Sale of Fax machines subject to a condition.
grounds to the importer and the importer shall be goods, that would be a restriction causing the restriction, such as regional distributorships,
given a reasonable opportunity to respond. If the rejection of transaction value. •Not possible to establish how the condition has effected
requiring resale only in a given area (e.g., the value of the fax machines.
importer so requests, the communication of the country, region, province, county, etc.)
grounds shall be in writing (Article 1 (2) a).
Third Condition
2

c) Do not substantially affect the value of the

In a sale between related persons, the transaction goods
value shall be accepted and the goods valued in The buyer and seller are not related, or where the
accordance with the provisions of Article 1 whenever buyer and seller are related, that the transaction
In regards to this situation, there is no
the importer demonstrates that such value closely value is acceptable for Customs purposes under the
precise definition or amount for the term
approximates to one of the following occurring at or provisions of paragraph 2 of Article 1. In this case,
“substantially.” It must be decided on a case
about the same time: the circumstances of sale are considered.
by case basis. In that regard, you may wish to
consider the following:
(i) the transaction value in sales to unrelated Case study 2:
i) The nature of the restriction.
buyers of identical or similar goods for export ii) The nature of the goods.
to the same country of importation; 1. Importer /buyer A in country Y purchased an
iii) The nature of the industry and its
(ii) the customs value of identical or similar goods industrial machine which is highly specialized
2 practices.
as determined under the provisions of Article Where a machine is sold at a nominal price on the and incorporated advanced technology from
iv) Whether the monetary effect is
5; condition that the importer must use it only for exporter/seller B in country X and imported it
commercially significant.
(iii) the customs value of identical or similar goods charitable purposes, this would be a restriction into Y.
Example
as determined under the provisions of Article causing the rejection of transaction value. 2. The industrial machine was imported into
Where the seller requires the buyer of
6; country Y on 25 April 2009.
automobiles not to sell or exhibit the
There are, however, three exceptions to this rule. It 3. The commercial invoice shows the following
automobiles prior to a fixed date which
In applying the foregoing tests, due account shall be would permit those restrictions which: information:
represents the beginning of a model year.
taken of demonstrated differences in commercial ➢ Industrial machine CIF US $ 30,000
This would not be a restriction as it does not
levels, quantity levels, the elements enumerated in a) Are imposed or required by law or by the public ➢ Advance payment US $ 5,000
substantially affect the price.
authorities in the country of importation. ➢ Discount US $ 500

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➢ Early shipment bonus US $ 600 have been incurred by the buyer and have not been Royalties and License fees Optional Adjustments
➢ TOTAL US$ 25,100 included. Compulsory adjustments are provided for
4. Accounting record of A and the document under Article 8.1(a) as follows; Article 8.1(c) of the Agreement requires that, when Unlike other adjustments required under Article
issued by a bank show that A made the advance determining the customs value under the provisions 8.1(a) of the Agreement, the inclusion of the
payment of US$ 5,000 to B on 20 March 2009. Commissions and packing of Article 1, there shall be added to the PAPP for the elements listed in Article 8.2 is optional. In framing
5. The contract of sale was concluded on 20 imported good: its national legislation, each Member state shall
January 2009. The contract included the Article 8.1 (a) provides for addition of the following provide for the inclusion in or exclusion from the
following information (1) to (4) , and importer elements; “Royalties and license fees related to the goods being customs value, in whole or in part, of the following:
/buyer A provided additional information (5) I. Commissions and brokerage, except buying valued that the buyer must pay, either directly or
and (6): commissions. indirectly, as a condition of sale of the goods being (a) The cost of transport of the imported goods to
• The contract price of the industrial II. Cost of containers. valued to the extent that such royalties and license the port or place of importation;
machine is US$ 30,000(CIF), which has to III. Cost of packing whether for labour or materials. fees are not included in the price actually paid or (b) loading, unloading and handling charges
be paid within 30 days after the shipment. payable”. associated with the transport of the imported
• If an advance payment of 10% of the Assists goods to the port or place of importation; and
contract price or more is made before Valuation of Royalty or License fees (c) The cost of insurance.
the end of March 2009, the price of the Assists may be defined as the goods and services
machine is discounted by 10% of the supplied directly or indirectly by the buyer, for The Agreement imposes certain requirements on Case study 3.
amount of such advance payment. free of charge or at reduced cost to the seller or a whether a royalty will form part of the customs
• The industrial machine is to be shipped to producer for use in connection with the production value. Article 8.1(c) requires that the royalty covers Importer I in Country X imported 10,000 pcs of
A before the end of June 2009. and sale for export of the imported goods (Article payments made for the right to use, produce or sell men’s trousers from Supplier S in Country Y. He
• In addition to the payment of the contract 8.1(b) a given product. declared to Customs a CIF value of 10,000 c.u , and
price, A will pay B the amount equivalent attached the following documents to support his
to 2% of the contract price, if the industrial Categories of Assists are as follows; These charges are added to PAPP if they are; declaration;
machine is shipped to A before the end of
April 2009. a) Materials, components, parts and similar items i) Related to the goods being valued. 1. Commercial invoice No H 0250 dated 21.1.2010
• A indicated at the time of customs incorporated in the imported goods e.g. raw ii) A condition of sale showing 10,000 pcs of trousers and total CIF of
clearance that A has paid the cost materials, finished components; iii) Not already included in the PAPP 10,000 c.u. It also shows the terms of payments
according to the invoice. b) Tools, dies, moulds and similar items used as 90 days after issue of Bill of lading.
• There is no relationship within the in the production of the imported goods e.g. Rights associated with royalties and licence 2. The packing list No HP0250 dated 21.1.2010
meaning of Article 15.4 of the Agreement hand held drill, fees showing 1,000 packages each of 10 pcs.
between A and B. c) Materials consumed in the production of the 3. Bill of lading No BOL 45645645 issued on
imported goods e.g. fuel, chemicals; Categories of Royalty or License fees 23.1.2010 showing 1,000 packages of men’s
Adjustments under article 8 of agreement on d) Engineering, development, artwork, design trousers; freight as arranged; Shipping Bill No.
customs valuation work & plans and sketches undertaken i) Patents 13210 of 21.1.2010 and Commercial Invoice
elsewhere other than in the country of ii) Trademarks No. HO250 dated 21.1.2010.
Definition of Adjustments importation and necessary for the production iii) Copyrights.
of the imported goods. The consignment was cleared under transaction
These are costs incurred by the buyer but not Proceeds value method and on 20.2.2010 the Post Clearance
included in the price actually paid or payable for the Valuation of Assists Audit team visited the importer and found additional
goods. The adjustment must be based on objective Article 8.1(d) provides that in determining the information on file for this particular importation.
and quantifiable data. There are compulsory and The cost of Assists should only be added to the value customs value under the provisions of Article 1,
optional adjustments. if; there shall be added to the PAPP for the imported • Shipping bill number IND 546 of 21.1.2010
i) not already included in the PAPP, goods, the value of any part of the proceeds of any showing total export value at 10,000 c.u FOB
Compulsory inclusions/adjustments ii) supplied by the Buyer either free of charge or at subsequent resale, disposal or use of the imported • Freight debit note No. FR45 dated 20.1.2010 of
reduced cost, goods that accrues directly or indirectly to the seller. 3,000 c.u
Article 8.1 provides that in determining the customs iii) supplied directly or indirectly by the Buyer to Proceeds must not be confused with transfers of • An insurance receipt dated 20.1.2010 worth
value under the provisions of Article 1, they shall the Seller, dividends or other such payments made by the 130 c.u
be added to the price actually paid or payable for iv) For use in the production and sale for export of buyer to the seller. Neither must they be confused • A Telegraphic Transfer remittance to supplier S
the imported goods, where they are incurred by the imported goods. with royalties and licence fees which are payable on dated 07.1.2010
buyer but are not included in the price actually paid the re-sale price of the imported goods. Payments
or payable ‘’. Therefore, Compulsory adjustments falling within the definition of royalties and licence Required;
are those costs which must be added to the price fees must be examined solely within the context of
actually paid or payable to the extent that they Article 8.1 (c). 1. Establish the anomalies in the importer’s
declaration

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2. Derive the correct customs value Transaction Value of Identical Goods Method Adjustments under transaction value of no such sales are found, a sale of similar goods that
identical goods method takes place under any one of the following three
Case study 4. Where the customs value cannot be determined conditions may be used.
under Transaction value method, there should In applying Method 2, Customs administration shall
Importer/Buyer A in country I purchased 10 metric normally be a process of consultation between then wherever possible, use a sale of identical goods at (i) A sale at the same commercial level but in
tons of chemical fertilizers from Manufacturer/ customs administration and the importer with the same commercial level and in substantially the different quantities
Seller B in country X and imported them into I. the view to arriving at the basis of value under the same quantities as the goods being valued. Where (ii) A sale at a different commercial level but in
provision of Article 2. The value of the identical no such sales are found, a sale of identical goods substantially the same quantities;
1. Both the commercial invoice and the contract goods must be previously accepted customs value that takes place under anyone of the following three (iii) A sale at a different commercial level and in
of sale show that the price of the imported for goods imported at or about the same time. conditions may be used. different quantities is exported at or about the
goods (10 metric ton of chemical fertilizers) is same time as the goods being valued.
USD 3,000 (ex-factory). In regard to identical goods, Article 15.2(c to e) also (i) A sale at the same commercial level but in
2. The Letters of Credit (L/C) also shows that A provides further criteria in the selection of identical different quantities Case study 5.
paid B USD 3,000 for 10 metric ton of chemical goods: (ii) A sale at a different commercial level but
fertilizers. insubstantially the same quantities; An importer in your country has previously
3. There is no relationship within the meaning of i. Goods will not be considered as identical (iii) A sale at a different commercial level and in purchased a shipment of metal bowls from an
Article 15.4 of the CVA between A and B. if they incorporate or reflect engineering, different quantities is exported at or about the overseas exporter and the customs value was
4. A negotiated and contracted with B through an development, artwork, design work, and plans same time as the goods being valued. determined at the time under Article 1.
agent G. On behalf of A, G also arranged two and sketches which were undertaken in the
shipping contract of the goods; one is from B’s country of importation and thus no adjustment The Transaction Value of Similar Goods Method The following week, the importer receives another
factory to the port of country X and the other was made under Article 8.1(b) (iv); shipment of different bowls from the same exporter
is from the port of country X to country I. G ii. In order to be identical, the goods must also Where the customs value cannot be determined free of charge for demonstration purposes.
paid a transportation company USD 110 for be produced in the same country as the goods under Article 1 and 2, there should normally be
the former shipping contract. A paid directly being valued; a process of consultation between the customs This shipment which looks like the previous
another transportation company USD 500 for iii. Identical goods produced by a different person administration and the importer with the view to shipment contains:
the latter shipping contract. shall be taken into account only where there arriving at the basis of value under the provision
5. The buying agency agreement between A and are no identical goods produced by the same of Article 3. The value of the similar goods must 1. Bowls made from a slightly different alloy,
G states that G acts for the account of A, G person as the goods being valued. be a previously accepted customs value for goods 2. Bowls, red,
finds suppliers at the request of A, G negotiates imported at or about the same time. 3. Bowls, metallic paint,
purchase contracts for A, G arranges shipments Requirements for transaction value of identical 4. Bowls, green plastic,
of the goods purchased by A, and A pays G 3 % goods method. Requirements for transaction value of similar 5. Bowls, red, but manufactured in another
of the contract price of the goods for services goods method. overseas country.
performed by G. (I) Goods were sold for export to the country of
6. With regard to the above importation of importation and exported at or about the same a. Goods were sold for export to the country of Required
chemical fertilizers, A paid G USD 200 by time as the goods being valued. importation and exported at or about the same
telegraphic transfer (T/T). (ii) Goods are generally at the same commercial time as the goods being valued. Determine the articles that would be used to arrive
level and substantially same quantity. b. Goods are generally at the same commercial at the value of above goods
Required (iii) Where costs and charges under Article 8 (2), level and substantially same quantity.
that is cost of transport, insurance, loading, c. Where costs and charges under Article 8 (2) Deductive Value Method
Determine the customs value of the 10 metric ton of unloading and handling charges are included, that is cost of transport, insurance and loading,
chemical fertilizer? appropriate adjustments should be made. unloading, handling charges are included, If the customs value of the imported goods cannot
(iv) Where in comparison with existing database appropriate adjustments should be made. be established under identical goods or similar
Other Methods Of Valuation more than two values are found, the lowest of d. The existence of a trademark. goods method, then the deductive value method
such values should be considered. e. Where in comparison with existing database should be considered. However, Article 4 provides
If the Customs Value cannot be determined under more than two values are found, the lowest of that the importer may request the trial of use of
the Transaction Value Method, then it shall be such values should be considered. computed value method before deductive value
determined under the Transaction value of identical method. Should this fail then the basis of valuation
goods method, Transaction value of similar goods Adjustments under transaction value of similar will revert to deductive value method.
method, Deductive value method, Computed value goods method
method or Fallback method. Under this method, the customs value shall be based
In applying Method 3, Customs administration on the unit price at which the imported goods or
shall wherever possible, use a sale of similar goods identical or similar imported goods are so sold in
at the same commercial level and substantially the the greatest aggregate quantity, at or about the time
same quantities as the goods being valued. Where of the importation of the goods being valued, to

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persons who are not related to persons from whom the imported goods or identical or similar goods are increasingly larger quantities. computed value method is considered as alternative
they buy such goods, subject to certain deductions. sold to an unrelated buyer in the greatest aggregate method of valuation.
quantity in the country of importation. Quantity Range Unit Price Sales Number
Terms relating to deductive value method The use of the computed value method will
1-10 100 10 sales of 5
To determine the greatest aggregate quantity all sales generally be limited to those cases where the buyer
(a) At or about the time of sale/ importation at a given price are taken together and the sum of all 5 sales of 3 and the seller are related, and the producer is
Any period but not exceeding 90 days from the the units of goods sold at that price is compared to 11-25 95 5 sales of 11 prepared to supply to the authorities of the country
date of importation of the goods being valued the sum of all the units of goods sold at any other Over 25 90 1 sale of 30 of importation the necessary costing and to provide
or identical/ similar goods. price. The greatest number of units sold at one price 1 sale of 50 facilities for any subsequent verification which may
represents the greatest aggregate quantity. be necessary.
(b) ‘’Unit price at which goods are sold in greatest The unit prices show the following aggregate totals:
aggregate quantity’’ Selling points Unit Price Units Sold 100 c.u. - 65 units sold Computed value method is a rarely used method in
Means the price at which the greatest number 95 c.u. - 55 units sold determining the customs value. Under Computed
A 100 60
of units is sold in sales to persons who are not 90 c.u. - 80 units sold Value Method, the basis of Customs Value is the
related to person to whom they buy such goods B 95 70 cost of production of the goods being valued, plus
at the first commercial level after importation C 90 80 an amount for profit and general expenses usually
Required
at which such sales take place. D 95 50 reflected in the sales from the country of exportation
E 85 90 Determine the starting point for the valuation of the to the country of importation of goods of the same
(c) General expenses above consignment class or kind.
Include the direct and indirect cost of In the above illustration the greatest units sold 70
marketing the goods compared with the goods +50 = 120, therefore unit price at which the greatest Case study 7. General expenses
being valued. aggregate quantity was sold is 95.
You have sales records for product X, which show These include the direct and indirect costs of
Requirements for deductive value method Deductions made under the deductive value varying prices for varying quantities purchased. marketing the goods compared with the goods
method. being valued.
(a) Condition as imported (Article 5. 1.(a)) Your records show the following sales:
The goods selected for consideration should be Since the starting point in calculating deductive Generally Accepted Accounting Principles
Sales Quantity Unit Price (In USD)
sold in their condition as imported. However, value is the sales price in the country of importation, (GAAP)
40 units 100
repacking to remove the overseas export various deductions are necessary to reduce that
packing materials or simple repacking for the 30 units 90 Refers to the recognized consensus or substantial
price to the relevant customs value:
domestic market would still leave the goods 15 units 100 authoritative support, within a country at a
in condition as imported. Natural changes a) Commissions usually paid or agreed to be 50 units 95 particular time as to which economic resources
such as evaporation, shrinking, normal paid, the sum of profits and general expenses 25 units 105 and obligations should be recorded as assets and
weathering, etc., would also be considered as added in connection with sales must also be 35 units 90 liabilities.
same condition. Any type of manufacturing or deducted; 5 units 100
further processing, including assembly, would b) Where appropriate, the costs and charges “Goods of the same class or kind” in this context
no longer render the goods as being in the Totals: means goods which fall within the group or range
referred to in Article 8.2 (Optional
same condition as imported. Adjustments) of goods produced by a particular industry or sector
Unit Price Quantity Sold Total Quantity Sold and include the identical or similar goods.
c) The transport costs and corresponding
(b) At or about the time of sale/importation insurance are to be deducted from the price of 90 30+35 65
If no sale took place at or about the time of the goods when these costs are usually incurred 95 50 50 Requirements for computed value method
importation, it is permitted to use sales up to within the country of importation; 100 40+15+5 60
90 days of identical/similar goods to the goods d) The customs duties and other national taxes (a) Examination of the costs of producing the
105 25 25
being valued. payable in the country of importation by goods being valued and other information
reason of the importation or sale of the goods. which has to be obtained from outside the
Required
(c) The sales should not be to related persons. e) Value added by assembly or further processing, country of importation. However, in most
The buyer and the seller in the importing when applicable. cases the producer of the goods will be outside
Determine the starting point for the valuation of the
country should not be related. the jurisdiction of the authorities of the country
above consignment.
of importation hence difficulty in verification.
Application of Deductive Value Method Case study 6 (b) The computed value method will generally
The Computed Value Method
be limited to those cases where the buyer
The Customs value under deductive value method Goods are sold from a price list, which grants and the seller are related, and the producer
If customs value cannot be based on any of the
will be determined on basis of the unit price at which favourable unit prices for purchase made in is prepared to supply to the authorities of the
valuation methods under Article 1 to 5, then

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country of importation with the necessary the producer’s profit figure is low and his general Customs value be determined: with Article 8. The following would be such an
cost information to facilitate any subsequent expenses are high, taken together, they may example of a flexible interpretation of Article 1.
verification which may be necessary. nevertheless equal the amount for profit and general (a) Using reasonable means;
(c) Information supplied by the producer of the expenses usually reflected in the trade. (b) Consistent with the principles and general Prohibited means of determining value under
goods for the purposes of determining the provisions of the Agreement; the fallback method
Customs value under Computed value method Case study 8. (c) On the basis of data available in the country of
may be verified in another country by the importation. Customs value shall not be determined under the
authorities of the country of importation with A foreign manufacturer is introducing a new provision of Article 7 on the basis of;
the agreement of the producer and provided product in your country and in order to establish Rights of the importer under fallback method
they give sufficient advance notice to the a foothold in that market, he is willing to accept a (a) Selling prices in the country of importation of
government of the country in question and the low profit margin of 2%. Because the product is If the importer so requests, the importer shall goods produced in such country (i.e. prices of
latter does not object to the investigation. new, the producer’s general expenses are unusually be informed in writing of the Customs value goods manufactured in the importing country)
(d) Where information other than that supplied high for the trade, 30% of the cost of materials and determined under the provisions of this Article and (b) A system which provides for the acceptance
by or on behalf of the producer is used for the fabrication. The usual profit and general expenses the method used to determine such value. for customs purposes of the higher of two
purposes of determining a computed value, of the trade is 32% of the cost of materials and alternative values (i.e.; the lowest should be
the authorities of the importing country shall fabrication. Demonstration of flexible application under used);
inform the importer, if the latter so requests, each method (c) The price of goods on the domestic market of
of the source of such information, the data Required the country of exportation (i.e.; economies of
used and the calculations based upon such The methods of valuation to be employed under countries are different);
data, subject to the provisions of Article 10, Establish whether the producer’s profit and general Article 7, according to the Interpretative Notes to (d) The cost of production other than computed
which prescribes the treatment of confidential expenses can be used to determine the Customs that Article, should be those laid down in Article values which have been determined for
information. value of this consignment. 1 through 6, but a reasonable flexibility in the identical or similar goods in accordance with
(e) Under the computed value method, the application of those methods would be in conformity the provisions of Article 6 (i.e.; valuation must
producer’s general expenses and profit equal Fallback Method with the aims and provisions of Article 7. be arrived at on the basis of data available in
to that usually reflected in sales of goods the country of importation);
of the same class or kind as the goods being If the customs value of the imported goods cannot Some examples of reasonable flexibility are as (e) Price of the goods for export to a country other
valued which are made by the producers in be determined on the basis of Article 1 through 6 follows: than the country of importation;
the country of exportation for export to the inclusive (method1-5), the customs value can be (f) Minimum customs values;
country of importation. derived based on one of the five previous methods Identical or similar goods (g) Arbitrary or fictitious values (this is aimed
reasonably adjusted as necessary. The determined at systems which do not base values on what
Elements to be considered under computed value should be based to greatest extent possible (a) In the case of identical or similar goods, the happens in the market place, as reflected in
value method on previously determined values only on the data requirement that the goods must be exported actual prices or sales and in actual costs, reason
available in the country of importation. at or about the same time as the goods being of the importation or sale of the goods.
These elements are outlined in Article 6 as being the valued could be flexibly interpreted.
sum of the following: Terms related to the fallback method (b) In the case of identical or similar goods, the CUSTOMS DOCUMENTATION
requirement that the country of production
(a) The cost or value of materials and fabrication This is a procedure rather than a method per se used be the same as the country of the goods Introduction
or other processing employed in producing the to determine customs value where the sequential being valued could be waived. For instance,
imported goods; application of the previous methods has failed. identical or similar goods from Netherlands Documentation plays an important role in the
(b) An amount for profit and general expenses or Luxembourg could be used to determine smooth movement of goods in International trade.
equal to that usually reflected in sales of Flexible application the Customs value of the goods imported from Facilitation of legitimate trade largely depends on
goods of the same class or kind as the goods Belgium. proper documentation. It is therefore important for
being valued which are made by producers in These include flexibility of some of the previous Customs and other interested parties to be conversant
the country of exportation for export to the principles of the agreement and condition of the Deductive method with International Trade Documentation because
country of importation; previous methods especially where such conditions it imparts them with the skills to authenticate the
(c) The cost or value of all other expenses necessary have insignificant or no effect on the value. For a. The requirement that the goods must have been relevant documents used in clearance of goods in
to reflect the valuation option chosen by the example, the 90 days under method 4 may be sold in the condition as imported in Article 5.1 international trade.
Member under paragraph 2 of Article 8. extended for a longer reasonable period. (a) could be flexibly interpreted.
b. The 90-day rule in Article 5.1 (b) could be
Treatment of profits and general expenses Requirements of fallback method flexibly administered. Definitions and interpretation

The amount for profit and general expenses shall The Agreement does not provide for a specific In regard to the above examples, it would also be Document; refers to the presentation of data in
be taken as a whole. If, in any particular case, valuation method but rather requires that the possible to flexibly interpret Article 1 in conjunction digital or any other form for purposes of exchanging

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

information and communication. but also at valuation have special meaning and implication. (Note the national legislation of country of Importation.
• Unit price & Total price – A proper Meaning – FCL – full container load; LCL –
Document check; This is the systematic analysis of Commercial invoice / Pro forma Invoice low container load; RO/RO – Roll-on Roll-off) Categories of Customs Documents
all supporting documents to a customs declaration should show the price per unit and also work
in order to facilitate proper valuation of imported through sub-totals and grand totals Relationship between definition of transaction Customs documents used in the clearance of goods
goods. • Unit of Measure – The unit of measure value and documentation may be broadly categorized as commercial, transport,
upon which the price is based should also be financial and regulatory. All the four categories of
Importance of Documents indicated i.e. pieces, kilograms, liters, meters, It is important for clearing agents to fully appreciate documents are interlinked and interdependent
square meters etc. the definition and interpretation of Transaction and should be presented to Customs and analysed
Documents are useful for: • Terms of Delivery – Basically these are Value and how the term relates to international simultaneously.
• Clearance of goods incoterms which should also be very specific trade documentation. Definition of Transaction
• Identification of origin • Terms of Payment – these are the agreed upon Value embeds most of the documents involved in Analysis of Documents
• Provision of data for Statistics terms on how the importer will pay the supplier international trade.
• Post Clearance Audit (PCA) i.e. Telegraphic Transfer, cash, letters of Credit All documents in international trade have unique
• Intelligence analysis etc. As indicated in Article1, Transaction Value is the features which distinguish them from the other. The
• Serving as evidence in Commercial dispute • Time of shipment – This is usually indicated price actually paid or payable for the goods when information contained in each document should be
settlement on the Bill of lading and has a bearing on terms sold for export to the country of importation and well known, with particular reference to how the
• Collection of taxes and duties agreed upon in the Contract adjusted in accordance with the provisions of Article documents looks, the information it contains and
• Protection of community and the environment • Pre-carriage information – This is also 8. its relationship with other documents.
• Proof of ownership indicated on the Bill of lading and at times on
• Facilitation of legitimate trade the Commercial invoice / Pro forma Invoice – When broken down into parts and critically Below are different categories of documents used in
and is very important for pre-carriage expenses analysed, several Documents are implied in the key international trade emphasizing vital information.
Vital information Contained in Documents • Port of loading - This is indicated on the Bill of elements in this definition as follows:
lading and at times on the Commercial invoice Commercial documents
The following information runs through most of / Pro forma Invoice – and has a bearing on the Key elements of Reference documents
the documents involved in International Trade. It Freight payable Transaction Value (a) Purchase order
is important for Customs and other stakeholders to • Type of packaging – At a wider level we are Price actually Paid Commercial invoice,
be conversant with this information that plays an looking at either 20ft or 40 ft container (which Receipts, sales contract, This is a Commercial document used by the buyer/
important role in customs valuation; can be a risk management pointer to the telegraphic transfer, form E importer in placing an order with the supplier/
total taxes payable); but also at a micro level Price actually Payable Purchase order, pro forma seller. Important information on this document for
• Document name – A document must have it is important for the type of packing to be invoice, price lists, credit customs purposes include the date when the order
a name to help distinguish it from other specified as either cartons, bales, bags, drums agreement was placed, the company that ordered, the quantity
documents. e.g., a Commercial Invoice as etc. For the goods Sales contract, packing ordered, suggested price to be paid or payable,
opposed to a Pro forma Invoice • Marks & Numbers – These can be Container list, certificate of analysis, signature and stamp of the ordering importer,
• Date & serial Number – A proper Document Numbers, seal numbers or serial numbers specific permits preceding documents (e.g. Price quotation,
must have a date and must also be serialized to (in case of Machines) and they are useful in When sold Certificate of origin, catalogues, price list etc.).
help keep track while issuing these documents. identification. For export shipping bill or export entry
• Name of Supplier / Exporter – Clear and • Vessel or Freight Number – This information To the country of Purchase order, bill of However, it must be noted that different importers
detailed particulars of the Supplier or Exporter is usually found on the Bill of lading and is importation adjusted lading, inland transport use different means of placing their orders; some
must be there (such particulars include the important in identifying the carrier in accordance with documents have formal purchasing order forms, others order
name, physical location, postal address, • Country of Origin – This is important provisions of Article 8 by telephone while others order by email. Therefore,
telephone contacts & email) especially where preferential treatment is it is important for customs to establish the method
• Name of Importer – Likewise clear and concerned, also origin has a bearing on the Overview of International Documents of ordering that the importer used.
detailed particulars of the Importer must be reputation of goods.
indicated (name, physical location, postal • Harmonized System Code (HSC) – In some Documentation is an essential tool in conducting (b) Pro forma Invoice
address, telephone contacts & email) cases the supplier specifies the HS codes and international trade and several documents are
• Quantity & Description – The quantity it is usually important to compare it with what used in carrying out business transactions. These This is the document which the seller issues in
supplied should be clearly indicated and proper has been declared; this is at times indicated on documents follow a clear sequence right from the response to the purchase order. It stipulates the
description thereof the Bill of lading, Packing list and Commercial time an importer makes an order up to the time the terms and conditions upon which the seller will
• Gross & Net weight – This is vital information invoice. goods are cleared from the Customs territory. Most sell the goods to the buyer. Some of the important
which points to the weight of the packaging • Special remarks – Especially on the Bill of of these documents are mandatory for customs information contained in this document includes
and the actual products & this information is lading should never be taken for granted – clearance purposes while others are optional date of issue, preceding documents description of
very useful not only at physical examination remarks like FCL/FCL, LCL/LCL, and RO/RO depending on the nature of goods being cleared and goods, unit price and total consignment price, the

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terms of payment, terms of delivery, obligations of Transport Documents It is also contractual in nature meaning that it is letter cannot be amended or cancelled without
each party and signatures of contracting parties. a contract between the insurer and the insured. the consent of the issuing agency if any or the
(a) Shipping Bill/ Export entry Vital information on this document includes; serial beneficiary.
(c) Sales Contract number; date of issued; the insurer, the insured, the
This is a Customs document that is generated/ insured amount, the insurance policy, signature and Bank Guarantee:
This is a legal document that is enforceable by issued by Customs of the exporting country. Vital stamps.
parties demonstrating that the buyer and seller information contained in this document includes This refers to a formal security that lending
agree on a sale of a particular good. It obliges the the Customs reference number of the exporting (f) Insurance Debit Note institutions ensures that the liabilities of a debtor are
seller to supply goods to the buyer and ensure country, the exporter, the consignee, the country met when due on behalf of the applicant in case he/
that the buyer acquires proprietary rights over the of export, importing country, description of goods, This is the document issued by the insurance she fails to settle them.
goods. Important information on this document incoterms, carrier used, total export Customs Value, company in the event that insurance charges are
for customs purposes include date of contract, currency and preceding document (if any). due. It contains the following information, serial A Bank guarantee and a Letter of credit are similar
terms of sale, description of goods, unit price and number; date of issue, the insurer, the insured, the in many ways but they are two different things.
total contract price, terms of payments, seller’s bank (b) Bill of Lading / Airway Bill insured amount, the insurance policy, signature and Letters of credit ensure that a transaction proceeds
details, swift code and arbitration clause. Sometimes stamp. as planned, while Bank guarantees reduce the loss
pro forma invoice serves the same role as sales This is an official document prepared by the carrier/ if the transaction does not go as planned. A Bank
contract and the two may be used interchangeably. shipper duly accepting the goods for shipment and Financial Documents guarantee is used to insure a buyer or seller from
it contains the following information; the serial loss or damage due to non-performance by the other
(d) Commercial Invoice number, type of bill of lading / Airway Bill (master, a) Payment Documents party in the contract.
House, combined transport, non-negotiable),
This is a commercial document prepared by a seller date and place of issue, date shipped on board, These are documents that provide evidence that Bank overdraft:
as indication of the final agreement on the sale of name of the shipping line, name of the consignee, the goods in question have been paid for or will be
goods. It lists all items sold and presented to the buyer name of the vessel, the items shipped, the quantity paid for depending on the agreed terms of payment. Literally a Bank overdraft is when someone is able
for payment. It contains the following information; and weight of goods, port of loading, the point of These documents include Telegraphic Transfer to spend more than what is actually in their bank
date of issue, description of goods, quantity sold, destination, preceding documents (if any), pre- (TT), letters of credit (LC), Documentary credits, account; obviously the money does not belong to
the actual price paid or payable, terms of payment, carriage information, signatures and stamps. Bank draft / bill of exchange and credit agreement them and will have to be paid back automatically
terms of delivery, the serial number and the stamp etc. Vital information on these documents varies once money goes into their account.
of the issuing authority. This document is different (c) Freight Invoice depending on agreed terms of payment.
from a pro-forma invoice in that whereas on the It is a mutual agreement between the lending
pro-forma invoice there is still room for negotiations This is a document issued by the shipper / carrier Accordingly, there are several means of payment agencies to act on behalf of an applicant to settle
and is subject to change, the commercial invoice is as acknowledgement on the agreed freight terms. used in settlement of amount owed to the supplier/ his liabilities. It can be in form of a bond, cash or
the final agreement between the parties. It contains the following information; date of issue, exporter and this includes the following: loan usually on a maximum limit beyond which the
serial number, name of carrier/ shipper, name of the lending agency cannot exceed.
(e) Receipt importer, amount paid, balance due if any, signature Telegraphic transfer:
and stamp. Bank draft:
This is a document that is issued in cases of cash This refers to the payment of money by transferring
transactions certifying receipt of payment by the (d) Freight debit note funds from the senders account to the beneficiary This is a banker’s cheque used as a negotiable
seller. Vital information in this document include via an electric cable in form of an automated fund instrument instructing a foreign bank to pay on
date of issue, serial number, payee, amount paid, This is a document issued by the shipper/ carrier in transfer system which uses coded messages that are demand a fixed amount of money to a named
means of payment (i.e. cash or cheque), balance due the event that freight amount is due. It contains the safe and convenient. beneficiary. It is also known as “cashier’s cheque”
if any, signature and stamp of the seller. following information, date of issue, serial number, and it applies when you need to pay somebody with
name of carrier/shipper, name of the importer, Letter of Credit: guaranteed funds. Bank drafts are more secure for
(f) Packing list amount to be paid and date due, signature and sellers because the funds are guaranteed by the bank
stamp. This is a formal document issued by financial that issued the draft. If a personal cheque is used
This is a document that accompanies goods from institutions acting on behalf of the applicant by there are possibilities of bouncing, however banks
the exporting country and it gives a detailed (e) Insurance certificate settling payments for a transaction to the beneficiary. only issue bank Drafts after they have taken money
breakdown of the way goods have been packed in These letters of credit are of different types, the most from the applicant’s account – so the seller is assured
the consignment to facilitate both the importer and This is a legal document certifying that goods or commonly used are; of being paid.
customs authorities to easily verify the quantities and products are insured against certain risks before • Revocable letters of credit; this is a form of In International Trade, a Bank Draft is a negotiable
description of the consignment. Vital information to carriage. This can be marine insurance, marine and credit letter whose contents can be amended instrument issued by a local bank instructing a
consider in this document includes, date and serial road insurance, or all risks cover. This certificate without the consent of the beneficiary at the foreign bank to pay on demand, a fixed sum of
number, preceding document, goods description, is issued as evidence that a certain insurance request and on the instruction of the applicant. money to a named beneficiary.
weights, quantities and dimensions and signatures. policy has been undertaken to cover the goods. • Irrevocable letter of Credits; this form of credit

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Bill of exchange: s/n Major Point Specific Aspects Remarks

Vital information on this document includes; name 1 Values Exceptionally high Declaration of exceptionally high values can be an indicator of
This is an unconditional order issued by a person or of fumigator, name of the exporter, descriptions of or low values intention to evade Internal / domestic taxes. On the other hand
Business when directing the recipient to pay a fixed goods fumigated, date of fumigation, the methods exceptionally low values are an indicator of a direct evasion of
sum of money to a third party at a future date. The and chemical components used in fumigation, Customs taxes through under valuation
future date may be either fixed or negotiable. A bill stamp and signature of the authorized institute. High insurance costs If the terms of delivery is CIF (Kampala or Kigali) & the breakdown
of exchange must be in writing and signed. of inland insurance shows an exceptionally high figure – then there
(d) Sanitary and Phytosanitary Certificate is a likely-hood of under declaration of the CIF Mombasa
Regulatory Documents Disproportionate Likewise if the delivery terms is CIF (Kampala or Kigali) and the
This is a document that certifies that livestock and Transport cost breakdown of inland freight shows an exceptionally high figure –
(a) Certificate of Origin plants imported or exported have been tested/ then there is a likelihood of under-declaration of the CIF Mombasa
inspected and vaccinated to make them free of 2 Falsification on Erasers, rubbings, If such alterations are done on a document, then it has to be
This is a customs document that certifies the origin infectious diseases. Vital information on this documents and white-wash authenticated by counter signing and stamping. Anything not
of goods. It also gives the criteria for conferring document includes; name of vaccinating authority, counter-signed should be an indicator of a problem & should be
origin. This criterion may be wholly obtained, value name of the exporter, details of livestock or plants probed further
added, change in tariff heading. This certificate vaccinated, date of vaccination, the methods and Scanned documents Presentation of scanned documents should be followed by a
shows the preferential treatment of the goods being chemical components used in vaccination, stamp look at the original documents; otherwise it is possible to change
considered. and signature of the authorized institute information on a document while scanning.
Varying font Usually when a document is tampered with, there is a possibility of
The Certificate of origin is usually issued either Pointers to Authenticity in Documents the fonts inserted not matching with the original font and at times
by the national chamber of commerce or by the even the formation of the numbers might be different – a keen eye
export promotion boards and may be countersigned Submission of the above documents to support an is able to detect such
by Customs authority. Vital information on this import declaration in itself is not enough to clear the 3 Date & serial Date format There are two major date formats used in International Trade – the
document includes; date and serial numbers, goods under transaction value method, it is always number format British format which is day/month/year; and the American format
preceding documents (especially the commercial important to verify if the availed documents are which is year/month/date. And these formats were adopted by the
invoice Number), description of goods, name of the authentic and the table below gives us some of the colonies of these respective countries – so a forger who is not keen
enough will mix up these aspects
exporter, name of the importer, criteria of the goods, pointers that can be applied in this regard: -
issuing authority, signature and stamps of both the Serial numbers Serial numbers can be either manual or system generated, however
issuing authority and exporter. it is always important to keep track of serial numbers of major
suppliers by keeping copies of their invoices, since someone forging
might not be aware of the running serial number
(b) Permit/certificate of analysis
4 Samples of Invoice set-up, logo, Companies have brands that identify them from others and these
previous & colour are also reflected in their documentation. By keeping copies of
This is a document issued by the manufacturer or
documents from documents for major suppliers one is able to quickly recognize the
bureau of standards in various countries certifying same supplier logos, company colours, and document formats of such companies
that the goods exported have under gone inspection – so if someone presents a contrary document the difference is
and are certified to be consumed. This analysis is easily noticed
very crucial because apart from Customs collecting 5 Arithmetic Unit price versus Rarely do valuation officers work through the computations on the
revenues they also protect the environment accuracy sub totals versus presented invoices / packing lists, however it is not uncommon to
and human health. This certificate therefore grand totals find inaccuracy in the computations once one works through.
recommends that goods to be consumed are safe to 6 Consistency in Weight The weight quoted on the packing list, pro-forma invoice,
the environment or human health. Vital information information commercial invoice, and bill of lading – should always tally; any
on this document includes serial number, the name discrepancy is a pointer to an anomaly
and address of the certifying authority, name of Goods description The description of goods should be uniform on the packing list, pro
inspector, the material compound of the item, the - forma invoice, commercial invoice, and Sales contract
description of goods analysed, the recommended Value The quoted value should be uniform on the purchase order, pro
life span of the goods, date, signature and stamps of - forma invoice, commercial invoice, sales contract, and financial
issuing authority. documents
Ownership The ownership should be consistent on the bill of lading, transit
(c) Fumigation Certificate documents, shipping bill / export entry and the other supporting
documents
This is a document that certifies that goods imported
or exported have been tested/ inspected and treated
to make them free from pests or fungus and qualify
to be consumed or used.

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7 Disproportionate FOB Where the terms of delivery are FOB it is always necessary to watch for review of the decision. If the importer is still not bearing risks and costs relating to the goods
Incoterms out for the quoted Freight & Insurance charges as they are usually satisfied with the decision of the Commissioner, he/ once they are placed/ loaded onto the means of
under declared. she shall appeal to the tribunal or to judiciary. transport at the place of export;
CIF Where the terms of delivery are CIF, it is always necessary to • Arranging all Customs formalities for
work back-wards by deducting approximate freight charges and However, the importer has the right to take delivery importing the goods
insurance. The remaining FOB should give an indicator on the of the goods provided sufficient bond security
authenticity of the declaration is executed as provided in Section 122(3) of the (b) CIF (Cost, Insurance and Freight)
Freight collect It is always necessary to cross-check the freight terms quoted on the EACCMA 2004 and Article 13 of the Agreement.
versus freight pre- bill of lading against those on the pro-forma invoice / commercial “Cost, Insurance and Freight” is used only for sea or
paid invoice , sometimes there is a discrepancy INCOTERMS inland waterway transport it means that the seller
8 Unrealistic terms Cash payments Most Importers who declare terms of payment as cash should be delivers the goods on board the vessel or procures
of payment put under further scrutiny as they are not usually giving the whole The common terms of sale used in international their delivery. The risk of loss or damage to the goods
truth & cash payments are the hardest to prove since there is no trade can be found in a reference book titled passes when the goods are on board the vessel. The
third party involved “INCOTERMS”, produced by the International seller must contract for and pay the costs and freight
Unguaranteed credit Payment terms such as ‘payment after 180 days or 360 days’ which Chamber of Commerce. The purpose of this book is necessary to bring the goods to the named port of
are not supported by guarantees should always be treated with to provide a set of guidelines for the interpretation destination. The seller also contracts for insurance
suspicion. Likewise ‘payment at sight of documents’ means that of the most commonly used terms in international cover against the buyer’s risks of loss or damage to
goods were dispatched before payment – so even in this case there trade. The aim is to avoid or reduce the uncertainties the goods during the carriage.
should be a guarantee.
of different interpretations of such terms in different
9 Vague Suppliers name & If someone is giving vague or incomplete information in terms countries. Seller’s obligations include:
information address, importers of addresses, weights, and description of goods it means they are • Contracting at his/her own expense for the
name & address, holding back some information and such declarations should be
Incoterms define the responsibilities of buyers and carriage of the goods to their destination and
description of scrutinized further.
goods, breakdown
sellers for the delivery of goods and sales contracts. pay all freight charges up to that point;
of packages on the They are the authoritative rules for determining • Obtaining at his/her own expense any required
packing list, how costs and risks are allocated to the parties. export licenses;
10 Incomplete At least all the mandatory documents as per the ‘check list’ must Incoterms rules are regularly incorporated into sales • Obtaining at his/ her own expense, freight
documentation be attached for a consignment to be comfortably passed under contracts worldwide and have become part of the insurance as agreed in the contract.
transaction value method; otherwise attaching only a commercial daily language of trade.
invoice is not enough to pass the entry under transaction value The buyer’s obligations include:
method Common INCOTERMS/ Terms of Delivery • Bearing the cost of unloading the goods at the
11 Signature & If a document has a provision for a signature & stamp then it place of importation, unless already included
stamp should be signed and stamped – otherwise such a document cannot (a) FOB (Free On Board) in the freight bill paid by the seller;
be accepted. • Obtaining at his/her own expense any
“Free On Board” is used only for sea or in land import licenses and carrying out all Customs
Grounds for doubting the truth or accuracy of documentation, or other evidences which waterway transport. It means that the seller delivers formalities (including payment of any Customs
the declared value supports his declaration, within the specified the goods on board the vessel nominated by the duties) for the import of the goods to the place
time frame. The Customs Administration buyer at the named port of shipment or procures of importation.
If Customs has reasons to doubt the truth or communicates in writing their final decision the goods already so delivered. The risk of loss or
accuracy of the particulars of documents produced to reject the transaction value, explaining the damage to the goods passes when the goods are on (c) CFR (Cost and Freight) Also known as “C + F”
by traders in support of the declared value, then grounds for the decision. Relevant sections board the vessel, and the buyer bears all costs from
Customs should communicate such doubt in line of the law should always be quoted to justify that moment onwards. “Cost and Freight” is used for sea and inland
with WTO Decision 6.1 which recommends the Customs rejection of a declared transaction waterway transport. It means that the seller delivers
following steps: value. Decision 6.1 should be read together The seller’s obligations include: the goods on board the vessel or procures their
with Article 17. • Delivering the goods on board the vessel delivery. The risk of loss or damage to the goods
- The Customs administration shall communicate named by the buyer at the place of export; passes when the goods are on board the vessel. The
in writing to the importer, through a specific Dispute settlement and rights of the importer obtaining any required export licenses; seller must contract for and pay the cost and freight
form, their grounds for doubting the truth • Bearing risks and costs relating to the goods necessary to bring the goods to the named port of
or accuracy of the particulars or documents If the importer is not satisfied with the decisions until they are placed/ loaded on to the means destination. The liabilities of the seller and buyer are
produced and asks for further explanation, of Customs administration, he/she shall appeal as of transport at the place of export. the same as under C.I.F. except that neither party
including documents or other evidences. A provided in Article 11 of the Agreement. According has an obligation to provide insurance. However,
reasonable time frame should be given for a to Section 229 of the EACCMA 2004, a person The buyer’s obligations include: the buyer may then choose whether he/she obtains
response. affected with the decision of the Commissioner or • Contracting at his/her own expense for the insurance cover.
- If the importer fails to provide adequate any other officer shall appeal to the Commissioner carriage of the goods from the place of export;

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(d) EXW (Ex-works) also known as “Ex-factory” handling charges may vary according to the practice (J) DAP (Delivered at Place); Required
of the port.
“Ex-works” may be used irrespective of the mode Title, risk and responsibility cost pass to seller Advise the importer on how to value the
of transport selected and may also be used where (g) CPT (Carriage Paid To); to place the goods at the buyer’s disposal on the consignment.
more than one mode of transport is employed. It is delivering carrier ready for unloading at the named
suitable for domestic trade. May be used irrespective of the mode of transport place of destination. The seller bears all risks
selected and may also be used where more than one involved in bringing the goods to the named place.
It means that the seller delivers when it places the mode of transport is employed. It means that the
goods at the disposal of the buyer at the seller’s seller delivers the goods to the carrier or any other (K) DDP (Delivered Duty Paid);
premises or at another named place (i.e. works, person nominated by the seller at an agreed place
factory, warehouse, etc.). The seller does not need (if any such place is agreed between the parties) and Is used irrespective of the mode of transport
to load the goods on any collecting vehicle, nor does that the seller must contract for and pay the costs of selected and is also used where more than one mode
it need to clear the goods for export where such carriage necessary to bring the goods to the named of transport is employed. It means that the seller
clearance is applicable. The seller’s obligations cease place of destination. The seller fulfils its obligation delivers the goods when the goods are placed at
when the goods leave the works/factory premises. to deliver when it hands the goods over to the the disposal of the buyer, cleared for import on the
Title and risk pass to the buyer including payment of carrier and not when the goods reach the place of arriving means of transport ready for unloading at
all transportation and insurance cost from the seller’s destination. the named place of destination. The seller bears all
door. It is used for any mode of transportation. the costs and the risks involved in bringing the goods
(h) CIP (Carriage and Insurance Paid To); to the place of destination and has an obligation to
(e) FCA (Free Carrier) clear goods not only for export but also for import,
Is used irrespective of the mode of transport selected to pay any duties for both export and import and
May be used irrespective of the mode of transport and may also be used where more than one mode carry out all customs formalities. DDP represents
selected and may also be used where more than of transport is employed. It means that the seller the maximum obligation for the seller.
one mode of transport is employed. It means delivers the goods to the carrier or another person
that the seller delivers the goods to the carrier or nominated by the seller at an agreed place (if any The parties are well advised to specify as clearly
another person nominated by the buyer at the such place is agreed between the two parties) and as possible the point within the agreed place of
seller’s premises or another place. The parties are that the seller must contract for and pay the cost of destination, as the costs and risks to that point are
well advised to specify as clear as possible the point carriage necessary to bring the goods to the named for the account of the seller.
within the named place of delivery, as the risk passes place of destination.
to the buyer at that point. Conclusion
The seller also contracts for insurance cover against
In this type of transaction, the seller is responsible the buyer’s risk of loss or damage to the goods during Proper analysis of international trade documents is
for arranging transportation, but he is acting at the the carriage. The seller fulfils its obligation to deliver an integral part of Customs clearance. If sufficient
risk and the expense of the buyer. Whereas in FOB when it hands the goods over to the carrier and not documents are availed in support of the declaration,
the freight forwarder or carrier is the choice of the when the goods reach the place of destination. proper taxes and duties coupled with trade
buyer, in FCA the seller chooses and works with facilitation will be realized.
the freight forwarder or the carrier. “Delivery” is (I) DAT (Delivered at Terminal);
accomplished at a predetermined port or destination However, if there are insufficient or inconsistent
point and the buyer is responsible for Insurance. Title, risk and responsibility cost pass to seller to place documents, this will cause delays, likewise wrong
the goods at the buyer’s disposal after unloading at taxes, duties and statistics will be collected.
(f) FAS (Free Alongside Ship); the named terminal at port or place of destination.
It is used for any mode of transportation. The seller Case study 9.
Means that the seller delivers when the goods are delivers when the goods, once unloaded from the
placed alongside the vessel (i.e. on a quarry or arriving means of transport, are placed at the buyer’s Importer Y is a cement dealer, who imports from
barge) nominated by the buyer at the named port disposal at a named terminal at the named port ABC Cement Suppliers in Country X to his stores
of shipment. The risk of loss or damage of the goods or place of destination. “Terminal” includes any in country Z. Y has already paid the supplier
passes when the goods are alongside the ship and place, whether covered or not, such as a warehouse, for the goods and is seeking advice from you on
the buyer bears all costs from that moment onwards. container yard or road, rail or air cargo terminal. what documents will be required in country Y for
The seller bears all risks involved in bringing the Customs declaration purposes.
The parties are well advised to specify as clear as goods to and unloading them at the terminal at the
possible the loading point at the named port of named port or place of destination.
shipment, as the costs and risks to that point are for
the account of the seller and this cost and associated

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References:
Agreement on Implementation of Article VII of GATT, 1994
Customs Valuation Compendium 2nd edition November, 2008.
Customs Valuation Handbook for Customs Administrations in the East African Region (JICA), 2012
(unpublished)
East African Community Customs Management Act (EACCMA) ,2004
East African Community Customs Management Act Regulations (EACCMA) ,2004
General Agreement on Tariffs and Trade (GATT), 1994
Guide to the Valuation Agreement, WCO 1986
Incoterms 2010
Legal Texts: Uruguay Round of Multilateral Trade Negotiations
World Customs Organization (WCO) Basic Training Module.

UNIT 2:

CUSTOMS
TARIFF
CLASSIFICATION

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UNIT 2: CUSTOMS TARIFF CLASSIFICATION at the two Conferences held in Brussels in 1910 and outcomes and other Customs related techniques. (partial application) for five years or more upon
1913, a unified International Schedule was drawn up CCC Convention entered into force in 1952. request.
INTRODUCTION for the first time in 1931 with five main calories and
185 items. This was exclusively for Trade statistics In 1955 BTN was revised. In 1959 BTN Convention In 1994, the Customs Cooperation Council (CCC)
This unit intends to equip trainees with ability and was not utilised towards the unification of tariff entered into force. BTN classified goods in 21 was renamed World Customs Organization (WCO).
to classify goods in the international trade in classification among individual countries. Sections, 99 Chapter, 1097 Headings. Creation
accordance with the Harmonized Commodity of the subheading was left to the discretion of Definition of terms used in classification
Description and Coding Systems (Harmonized In May 1927, progress to harmonise tariff the contracting party. A contracting party is not
System) classification was seen. The World Economic supposed to change the Notes stipulating the The following are some of the terminologies that are
Conference held by the League of Nations took up principles of classification. used in the Classification of goods in tariff.
Specific Objective the discussion on wide-ranging issues concerning
tariffs, treaties of commerce and other matters The inaugural contracting parties to the Nomenclature: A systematic naming, or
At the end of this Unit, trainees shall be able to; related to commerce. Among this topic was Nomenclature Convention were limited to the enumerating of all goods found in international trade
unification of a system of tariff nomenclature. The countries in Europe and Turkey. United States of along with international rules and interpretations.
i. Define basic terminologies in tariff classification Conference recommended to the Council of the America did not sign the BTN.
ii. Outline the evolution of Customs League of Nations the formulation of a systematic Customs Tariff: A systematic classification of
Nomenclature Customs nomenclature citing it as a means of Harmonized Commodity Description and goods entering the international trade for National
iii. Identify the structure of Harmonized System. ensuring equity in the application of tariffs, ease in Coding System (Harmonized System) interests together with rates of duties.
iv. Apply the six General Interpretative Rules collection of trade statistics, removal of a subject for
(GIR) of the Harmonized System disputes as its motives. In 1970, the Council Session established a study Classification: A process of arriving at a particular
group to deliberate on the development of a new heading or sub heading of a commodity entering the
HISTORICAL BACKGROUND On the basis of the above recommendation, the uniform Tariff Nomenclature aimed at including international trade.
League of Nations established a sub-committee the United States and Canada participation in
Harmonization of rules relating to tariff of experts for the unification of Customs Tariff the uniform Tariff nomenclature. In 1973, basing International Trade: An exchange of goods between
Nomenclature which in 1931 completed a draft on the report submitted by the Study Group, the two or more countries.
When imposing tariffs, the customs authorities of Customs Nomenclature (known as Geneva CCC mandated the Session Council to draw up a
a country determine the applicable tariff rate for a Nomenclature) comprising 21 Sections, arranged in Harmonized Commodity Description and Coding Internal Tariff: This is the rate of tax in respect of all
given product by first identifying the item in the tariff 86 Chapters and containing 991 four-digit Headings. System (Harmonized System). BTN four digit goods tradable within the Community.
schedule under which a product is classified (Tariff classifications were used as the foundation by
Classification), then determining the product value In 1937, the Geneva Nomenclature was revised upon refining this four digit code into five and six digit Common External Tariff: Rate of tax in respect of
as the basis of assessment for products to which ad consideration of the opinions of the government of code. all goods imported into the Community.
valorem tariff rates apply, and finally identifying the each Member State. A portion of it was adopted by
product’s country of origin (Rules of Origin). the European Member States. The movement to On June 14, 1983, the Harmonized System was Inter alia: Among other things.
expand its usage was stopped upon the outbreak of implemented after a decade’s work. The CCC adopted
Moves toward international harmonization of World War II. the International Convention on the Harmonized Prima facie: At first sight, on the face of it.
tariff classification prior to world war II. System and opened it for signature. On January 1,
Brussels Tariff Nomenclature (BTN) and 1988, the Harmonized System convention entered Mutatis mutandis: Appropriate changes having
In 1853, an International Congress held in Brussels Customs Cooperation Council (CCC) in to force and was accepted by numerous Countries been made.
debated the necessity of unifying Customs schedule including the United States. Harmonized System is
from the awareness that differences among countries In November 1947 after the end of World War II, in use in more than 200 countries and economic Importance of Harmonized System
tariff classification had led to inconsistencies in the European Customs Study group was created unions.
Trade statistics. to examine the possibility of other Member States All goods in the international trade should be
forming a Customs Union in Europe. In 1948, a Harmonized System comprises 6 digit numerical classified uniformly and consistently according to
In 1989, the International Trade and Industry Committee was set up with the participation of codes. all contracting parties must apply the General a common international nomenclature. This avoids
congress held in Paris adopted a resolution that experts from other Countries. This Committee Rules of Interpretation of the Harmonized System, reclassifying goods as they are moved from one
uniform nomenclature Tariff and Trade statistics formulated a new tariff schedule (BTN) based on the terms of heading and all Section, Chapter, or country to another. Customs terminology can be
should be employed. Geneva Nomenclature. Subheading Notes without modification to the scope standardized to make it easier for import and export
of the Section, Chapter, heading or subheading upto companies, manufacturers, shippers and Customs
In 1906, the second International Congress After the founding of CCC, the BTN was renamed the HS code. A Contracting party must publicly administrations. It also helps in trade negotiations.
of Chambers and Commercial and Industrial Customs Cooperation Council Nomenclature disclose its import and export trade statistics in For example East African Partner States always
Association held in Milan, issued a recommendation (CCCN). In 1950, the Convention establishing the accordance with the 6 digit codes of the Harmonized submit lists of raw materials for extension of Duty
calling for unification of goods classification in CCC was signed (CCC Convention) with a goal System. A Developing Country is permitted to delay remission.
customs tariffs. On the basis of resolutions adopted of harmonizing and unifying monitoring these the application of some or all of the subheadings

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Trade figures conform to a uniform standard and • As a basis for trade negotiations v) Sugar – 100% 1. Raw materials/natural goods
can be compared internationally. For example, It is easy for countries to have negotiations as all vi) Worn Clothing - 50% or USD 0.75/kg 2. Un-worked products
analysis of exportation and importation coffee can goods under international trade are classified vii) Rice -75% or USD 200/MT 3. Semi-finished products
be done by targeting the Harmonized System Code under the Harmonized System. viii) Portland Cement – 55% 4. Finished products
for coffee .This facilitates analysis and comparisons ix) Kanga, Kikoi and Kitenge – 50%
of international trade. • As a basis for Transport Tariffs and Statistics x) Table and bed lining of cotton ARRANGEMENT OF HARMONIZED SYSTEM
The rates for transportation of controlled xi) Jute Bags INTO SECTIONS
Users of Harmonized System chemicals are not the same as the ones for the xii) Primary cells
normal goods. The Harmonized System comprises of 21 Sections
If a Commodity description System is suitable The list of sensitive items may vary as the list is either which cover all the commodities of international
for many types of operation, it becomes useful. • As a basis for the monitoring of controlled reduced or increased according to the needs of the trade. The Section numbers are written in Roman
Harmonized Commodity Description and Coding goods member country. numerals such as I, II, III.
System (Harmonized System Nomenclature) is The monitoring of importation or exportation
designed as a multi-purpose tool and is therefore of narcotics, chemical weapons, ozone layer STRUCTURE OF HARMONIZED SYSTEM The following are rough groupings of Sections:
used by; depleting substances, and endangered species
can be done by targeting their Harmonized General objective Sections I to IV referred to as the Agricultural or
• Governments System Codes. food Sections
• International Organizations At the end of this unit, the participants will be able
• Importers and Exporters As a vital element of Customs control and to explain how the Nomenclature is arranged. Sections V to VII referred to as Chemical Sections
• Manufacturers procedures, including risk assessment,
• Traders information technology and compliance. Specific Objectives; Section VIII refer to raw hides and Skins, Fur skins
• Shipping agents and articles thereof
• Transporters The Tariff structure of the EAC-CU At the end of this topic trainees will be able to:
• Port Authorities Section IX to X refer to Articles of wood and wood
• Statisticians The EAC-CU tariff is composed of two regimes: i) Identify the structure of the Harmonized fibres
System Nomenclature;
Uses of Harmonized System • The Internal Tariffs ii) Identify the principles used in the arrangement Sections XI to XII as Textile Sections
• The Common External Tariff (CET) of Harmonised System;
Among the most important uses of the Harmonized iii) Explain the importance of Notes in the Section XIII refer to Articles of Stones, Cement,
System are the following: Internal Tariff: Harmonized System. Ceramic, Glass

• A basis for Customs Tariffs This is the rate of tax in respect of all goods Introduction Section XIV refer to precious metals and precious
Customs duties are levied at such rates as are originating and tradable within the Community. stones and articles thereof
specified in the Customs tariff laid down in the The structure of the Harmonized System (HS)
East African Community Common External Common External Tariff: Nomenclature is comprised of 21 Sections and 99 Section XV as the Metal Section
Tariff (EAC-CET). To apply the correct rate of Chapters. Chapter 77 is reserved for future use and
duty, it is necessary to determine the correct Rate of tax in respect of all goods imported into the Chapters 98 to 99 are reserved for special uses by Section XVI as Machinery Section
Subheading of the Harmonized System under Community. There are three bands: the contracting parties. For example, Kenya uses
which the goods fall. Chapter 99 for communication services, while Section XVII Transport Equipment
• 0% is the minimum rate - for raw materials and Canada uses one Chapter 98 for goods declared by
• As a basis for the collection of International capital goods. returning residents. There are 1,244 Headings and Section XVIII Instruments and apparatus
Trade Statistics. • 10% is the middle rate - for intermediate 5,212 Subheadings in the Harmonized System (HS
Harmonized System Convention stipulates products and spare parts. 2012). Section XIX Arms and Ammunitions
that contracting parties should declare • 25% is maximum rate - for finished products.
imported items using the Harmonized System The structure of the Harmonised System comprises Section XX Miscellaneous Articles
Codes (Subheading level) such that if analysis Sensitive list: of
is required, the Harmonized System Code is • 21 Sections Section XXI Work of Arts and Antiques
entered or used and data on a particular item Sensitive goods measures beyond CET apply on • 99 Chapters
of interest is displayed. some goods e.g. • 1244 Headings
• 5212 Sub-headings
• As a basis for Rules of Origin i) Milk – 60% • Notes
The Harmonized System code is used in one of ii) Wheat grain – 35% Goods in the Harmonized System are generally
the two criteria of Rules of Origin, Change in iii) Wheat flour – 60% arranged based on industrial sectors in their degree
Tariff Heading (CTH). iv) Maize – 50% of manufacturing processing stages as shown below:

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Classification examples: 5. Rice in the Husk (10.06) Mineral and chemical products Answers
6. Ground Ginger (09.10) 1. Cement for filling the teeth (3006.40)
Agricultural products 7. Crushed Vanilla (09.05) Section V (Chapters 25, 26 and 27) is devoted to 2. A complete first Aid kit (3006.50)
mineral products. 3. Medicated shampoo designed for the treatment
The first 24 Chapters deal with agricultural products Animal or vegetable fats and oils of dandruff (3305.10)
in the broadest sense (Sections I to IV). Section I Self-testing questions 4. Toothpaste (3306.10)
(Chapters 1 to 5) covers Live animals and animals’ Section III consists of a single Chapter (Chapter Classify the following articles at 4 Digit level
products (meat, fish, dairy produce, eggs, honey, 15) covering animal or vegetable fats and oils and 1. Pure sodium chloride Plastics and rubber articles thereof
other edible products, and inedible products); products derived thereof (prepared fats, waxes) 2. Tailors Chalk
excluding, however, certain oils and fats (Chapter 3. Quartzite’s pebbles for road metalling Section VII covers particularly two important
15) as well as hides, skins, fur skins and articles Self-testing questions 4. Is a table salt, slightly iodized, in order to groups of products, namely plastics and articles
thereof (Section VIII). Classify the following at 6 digit level remain dry classified in Chapter 25? thereof (Chapter 39) and rubber and articles thereof
1. Groundnut oil (virgin) (Chapter 40).
Self-testing questions. 2. Refined Sunflower oil Answers
Classify the following articles at 4 digits level 3. Palm kernel 1. Pure sodium chloride (28.27) Self – testing questions:
1. Animals of travelling circuses. 4. Margarine 2. Tailors Chalk (96.09) Classify the following up to 8-digit code.
2. Live Whale 3. Quartzite’s pebbles for road metalling (25.17) 1. Surgical gloves of rubber for referral hospital
3. Fresh Meat for Dolphin Answers 4. Is a table salt, slightly iodized, in order to 2. Pneumatic automobile tyres for lorry(rim size
4. Natural butter derived from milk 1. Groundnut oil (1508.90) remain dry classified in Chapter 25? (25.01) 20)
2. Refined Sunflower oil (1512.19) a) if new
Answers 3. Crude Palm kernel oil (1513.21) Chemical products b) If retreated or used
1. Animals of travelling circuses (95.08). 4. Margarine (1517.90)
2. Live Whale (01.06) Section VI covers chemical and chemical products; Answers
3. Fresh Meat for Dolphin (02.08) Beverages, Spirits, Vinegar and Tobbacco..... separate chemically defined compounds generally 1. Surgical gloves of rubber for referral hospital
4. Natural butter derived from milk (04.05) are dealt with in Chapters 28 (inorganic chemicals) (4015.11.00).
Section IV (Chapters 16 to 24) covers beverages, and 29 (organic chemicals) 2. Pneumatic automobile tyres for lorry (rim size
Vegetable products spirits, vinegar and tobacco, together with products 20)
of the food industries not covered by previous Self-testing questions a) If new (4011.20.20)
Section II (Chapters 6 to 14) covers vegetable Chapters. Classify the following at 4 Digit level: b) If retreated or used (4012.12.00)
products, whether or not edible (plants, seeds, 1. Sodium bromide
vegetables, fruit, cereals, flours, straw, plaiting Self-testing questions 2. Magnesium sulphate Animal products of Leather or Fur skin
materials,), but excludes certain oils and fats Classify the following at 6 digit level; 3. Sulphides
(Chapter 15) and wood (Chapter 44). With certain 1. Dried Goat meat 4. Carbonates Section VIII covers certain animal products: hides
exceptions, the products of the first two Sections 2. Chemical pure sugar and skins (Chapter 41) articles of leather or animal
cannot be processed beyond a certain stage. 3. Fresh mango juice (500ml) Answers gut (Chapter 42), and fur skins, together with
For example, prepared or preserved products 4. Tomato sauce in 200ml plastic packaging 1. Sodium bromide (28.27) artificial fur (Chapter 43). It should be noted that
(particularly foodstuffs) fall in Section IV. 5. Soya beans oilcake for animal feed 2. Magnesium sulphate (28.33) headings 42.01 and 42.02 also cover certain articles
3. Sulphides (28.30) other than of leather.
Self-testing questions Answers 4. Carbonates (28.36)
Classify the following articles at 4 digit level 1. Dried Goat meat (0210.99) Self – testing questions:
1. Fresh mushrooms 2. Chemical pure sugar (2940.00) Products of the chemical industries Classify the following up to 8-digit code.
2. Dried pears 3. Fresh mango juice (500ml) (2009.89) 1. Plastic sports bags
3. Cinnamon powder 4. Tomato sauce in 200ml plastic packaging Chapters 30 to 38 cover the other products of the 2. Wooden suitcase
4. Live Bamboo tree (2103.20) chemical industries (pharmaceutical products, 3. Canvas shopping bag
5. Rice in the Husk 5. Soya beans oil-cake for animal feed (2304.00) fertilizers, soap, cosmetics, paints, explosives,) 4. Pure leather briefcase
6. Ground Ginger
7. Crushed Vanilla Self – testing questions;
Classify the following up to 6-digit code. Answers
Answers 1. Cement for filling the teeth 1. Plastic sports bags (4202.92.00)
1. Fresh mushrooms (07.09) 2. A complete first Aid kit 2. Wooden case (4415.10.00)
2. Dried pears (08.08) 3. Medicated shampoo (500ml) designed for the 3. Textile shopping bag (4202.92.00)
3. Cinnamon powder (09.06) treatment of dandruff 4. Pure leather handbag (4202.21.00)
4. Live Bamboo tree (06.02) 4. Colgate Toothpaste 100g

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Wood and articles of wood, plaiting material 59) and knitted or crocheted fabrics (Chapter 60). Cultured pearls, precious stones and these Chapters cover machinery and mechanical
metals......... appliances, and electrical equipment. In particular
Section IX is devoted to an important group of Chapters 61 and 62 deal respectively with knitted the first 24 headings of Chapter 84, which covers
vegetable products, namely wood and articles of or crocheted articles of apparel and clothing Chapter 71, the only Chapter in Section XIV, covers machinery and mechanical appliances in general,
wood (Chapter 44) cork and articles of cork (Chapter accessories, and other articles of apparel and pearls and precious and semi stones, precious metals identify them with reference to their function
45), and manufactures of plaiting materials, together clothing accessories. Chapter 63 is set aside for other clad with precious and articles thereof; imitation (reactors, turbines, pumps) and, in principle, take
with basket-ware and wicker-work (Chapter 46). made up textile articles, together with certain sets jewellery. precedence over the remaining 61 headings, based
However, some manufactures are classified in other and worn textile articles and rags. primarily on the purpose for which the goods are
Chapters, for example furniture (Chapter 94). Self – testing questions: used (agriculture, paper).
Self – testing questions; Classify the following up to 8-digit code.
Wood pulp, paper and paper articles Classify the following up to 8-digit code. 1. Two tons of current bank coins imported by Chapter 85 covers electrical machinery and
1. Typewriter ribbon Bank of East Africa. equipment, other than that covered by Chapter 84
Another important group of products of essentially 2. Knitted brassier of cotton 2. Silver tie pin. or excluded from Section XVI. The machinery
vegetable origin is the subject of Section X, which 3. Woman sanitary pads of cotton and equipment of this Chapter is grouped with
covers pulp (Chapter 47), paper and paperboard Answers reference to its use, as machinery for the production,
and articles thereof (Chapter 48) and products of Answers 1. Two tons of current bank coins imported by transformation or storage of electricity; domestic
the printing industry (Chapter 49). 1. Typewriter ribbon (9612.10.00) Bank of East Africa. (7118.90.00) appliances; machines or appliances, which depend,
2. Knitted brassier of cotton (6212.10.00) 2. Silver tie pin(7113.11.00) for their operation on the properties or effects of
Self – testing questions; 3. Woman sanitary pads of cotton (9619.00.10) electricity;
Classify the following up to 8-digit code. Base metals and articles of base metals
1. Bamboo chair Footwear, headgear, umbrellas, walking It should be noted that recent technical advances,
2. Textile printed Calendar sticks..... Section XV (Chapters 72 to 76 and 78 to 83) particularly in the fields of information technology
3. Children’s picture books covers base metals and articles of base metals. In and communications technology, have had a
Section XII covers footwear (Chapter 64) headgear the case of ferrous metals (Chapter 72), a separate significant effect on Section XVI. These developments
Answers (Chapter 65), umbrellas, walking sticks, (Chapter Chapter (Chapter 73) has been set aside for articles do have a bearing on the Nomenclature, which must
1. Bamboo chair (9401.51.00) 66), together with certain articles made from thereof, whereas the other base metal Chapters i.e. therefore be adapted to keep pace with technological
2. Textile printed Calendar (4910.00.00) feathers or down, artificial flowers and articles of Chapter 74 (copper), Chapter 75 (nickel), Chapter progress in order to meet the users’ requirements.
3. Children’s picture books (4903.00.00) human hair (Chapter 67). 76 (aluminium), Chapter 78 (lead), Chapter 79
(zinc), Chapter 80 (tin) and Chapter 81(other base Self – testing questions:
Manufactured products Self – testing question; metals and cermet), cover articles of these metals Systematically and logically, classify the following
Classify the following up to 8-digit code. as the metals themselves, unwrought or semi- up to 8-digit code.
Section XI is reserved for textiles. This Section • False beard of textile manufactured. However, certain articles of base 1. Vacuum pumps
comprises several groups of Chapters, distributed as • Sun umbrella metal have been diverted to Chapters 82 and 83, 2. Line telephone sets with cordless handsets
follows: thus Chapter 82 has been set aside, in particular, for
Answers tools, implements, cutlery and spoons and forks. It Answers
Textiles in forms ranging from the raw material to • False beard of textile (6704.90.00) should be noted that Section XV does not cover 1. Vacuum pumps (8414.10.00)
the finished fabric are divided among Chapters 50 • Sun umbrella (6601.99.00) articles of base metal included in later Chapters of 2. Line telephone sets with cordless handsets
to 55, according to their nature; textile material of the harmonized system (Machinery and vehicles). (8517.11.00)
animal origin are the subject of Chapters 50 (silk), 51 Products obtained from mineral materials
(wool and animal hair), textile materials of vegetable Self – testing questions: Transport equipment
origin are covered by Chapters 52 (cotton), 53 (other Section XIII deals with products obtained from Classify the following up to 8-digit code.
vegetable fibres), and man-made textile materials mineral materials, such as articles of stone plaster, 1. Wire of refined Copper The four Chapters of Section XVII cover Vehicles,
are the subject of Chapters 54 (filaments) and 55 cement (Chapter 68), ceramic products (Chapter 2. Axes of iron Aircraft, Vessels, and associated transport
(staple fibres) 69) and glass (Chapter70). equipment, distributed as follows: Railway rolling-
Answers stock (Chapter 86), Motor Vehicles and other
Chapters 56 to 60 cover various calories of textile Self – testing questions: 1. Wire of refined Copper (7408.19.00) land vehicles (Chapter 87), Aircraft and spacecraft
articles or special textiles such as: Wadding, felt and Classify the following up to 8-digit code (tariff code). 2. Axes of iron (8201.40.00). (Chapter 88), and ships and floating structures
non-woven textile materials, special yarn, twine and 1. Cement building bricks (Chapter 89).
rope (Chapter 56), floor coverings (Chapter 57), 2. Coffee mugs of porcelain Machines
special woven fabrics, tufted textile fabrics, lace, Self – testing questions:
tapestries, trimmings and embroidery (Chapter 58) Answers Section XVI comprising Chapters 84 and 85, Classify the following up to 8-digit code.
impregnated, coated, covered or laminated textile 1. Cement building bricks (6810.11.00) is one of the most important Sections in terms 1. Aircraft seat
fabrics and textile articles for industrial use (Chapter 2. Coffee mugs of porcelain (6911.10.00) of the number of headings and subheadings; 2. Railway tank wagons

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Answers ARRANGEMENT OF SECTIONS IN THE III has only one Chapter. Between Chapters
1. Aircraft seat (9401.10.00) HARMONIZED SYSTEM Live trees 06.02 Raw material
2. Railway tank wagons (8606.10.00) The Chapter numbers are always written using
Logs of wood 44.01 Raw material
The arrangement of Sections in the Harmonized in Arabic numeral. They always have 2 digits for
Instruments, clocks .... musical instruments System is based on three major criteria. instance 01 (Chapter 1), 02 (Chapter 2), 15 (Chapter Pulp of wood 47.03 Semi – finished
15). (chemical)
Chapter 90 (Optical, Photographic, (1) Material content of the article Newsprint paper 48.01 Semi – finished
Cinematographic, Measuring, Checking, Precision, Like Sections, arrangement of Chapters in the Newspaper 49.02 Finished product
Medical or Surgical instruments and apparatus). Articles made of same material are grouped together, Harmonized System is based on three major criteria.
Chapter 91 (clocks and watches) and 92 (Musical for example, Section II covers Vegetable products Structure of the Heading and Subheading in
instruments) together constitute Section XVIII. and Section XV covers Base metal and articles of (1) Materials content of the article the Harmonized System
base metal.
Self – testing questions: Articles made of same material are grouped In the Harmonized System heading number is
Classify the following up to 8-digit code. (2) Usage or function of the article together, for example, Wood and articles of wood denoted by four digits codes. The first two digits
1. Spectacle lenses of glass are classified in Chapter 44. Plastic and articles show which Chapter a commodity belongs to and
2. Electric wall clock Goods that are used for the same need or same thereof are classified in Chapter 39 the last two digits indicate position of the heading in
function are put together. Examples are; Vehicles, the Chapter. A heading may further be sub-divided
Answers aircrafts, vessels and associated transport equipment (2) Usage or function of the article into two or more subheadings, where deemed
1. Spectacle lenses of glass (9001.40.00) are used for transportation and are classified in appropriate, individualizing narrower calories of
2. Electric wall clock (9105.21.00) Section XVII. Arms and ammunitions, parts and Articles that are used for the same function are commodities.
accessories thereof are used for defence purposes grouped together. Examples are; Vehicles used for
Arms and ammunition; parts and accessories and are classified in Section XIX. transportation are classified in Chapter 87 while Subheadings which are preceded with one or two
thereof Arms and ammunitions, parts and accessories dashes as the case may be are identified with an
(3) Degree of processing or of manufacture thereof are used for defence (Chapter 97). additional two digits numerical code. The one-dash
Chapter 93 covers arms and ammunition and is the of an article subheadings are shown as five digits numerical
only Chapter in Section XIX. (3) Degree of processing or manufacture of codes which are generated by adding one digit to
Sections are also arranged according to the degree of an article the heading.
Miscelleneous articles processing or of manufacturing, for example A live
cow is classified in Section I. When it is slaughtered, Articles at the same stage of processing or Degree of A one-dash subheading may be further subdivided
Section XX covers various articles such as furniture, hides are derived which are classified in Section manufacture are put together, for example to two-dash subheadings, which are presented as
lamps and lighting fittings, illuminated signs and VIII. When the hides are further processed, shoes six digits numerical codes (HS codes) created by
prefabricated buildings (Chapter 94), toys, games are derived (Section XII). Article Chapter Stage of processing adding one more digit after their parental one-dash
and sports requisites (Chapter 95) and miscellaneous Iron ore Chapter 26 Raw material
subheadings’ codes.
manufactured articles (Chapter 96). The above is illustrated as shown below.
Iron bars Chapter 27 Semi – finished
The one-dash subheadings and two-dash
Works of art, collectors’ pieces and Iron doors Chapter 73 Finished product subheadings are also identified by recognizing the
antiques..... Live Cow classified in Section I dashes “-” and “--” placed before their terms of
ARRANGEMENT OF HEADINGS AND subheading respectively. In the case that a heading is
Process (When slaughtered) SUBHEADINGS
The final Section, XXI has just one Chapter (Chapter not further subdivided, two zeros are added after the
97), covering works of art, collectors’ pieces and Hides from a Cow classified in Section VIII
fourdigits codes number and in case a subheading
antique. This include goods that are over 100 years. There are 1224 heading numbers (Harmonized is not further divided, a zero is added after the
System 2012 version). Headings are denoted by the 5th digit. The Six digit code is the international
When Processed
first four digits. Headings are arranged according Harmonized System code.
Shoes of leather from the Hides of Cow are to the Degree of manufacture or processing for
classed in Section XII example Example
01.06 Other live animals Heading
Within a Chapter
(-) 0106.1 Mammals one dash
ARRANGEMENT OF THE HARMONIZED SYSTEM Article Heading Stage of processing subheading
INTO CHAPTERS Logs 44.01 Raw Material (--) 0106.11 Primates two dash
Railway Sleepers 44.06 Finished product subheading
Chapters are the next level of sub-division after More digits codes are often used at national/regional
Wooden frames 44.18 Finished product
Sections in the Harmonized System. Sections in the level. For example, the EAC – CET uses eight digits
Harmonized System contain one or more Chapters. Statuettes of wood 44.20
codes at its regional level (Tariff code).
For example, Section I has 5 Chapters, while Section

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Sub chapters in the Harmonized System Importance of Notes in the Harmonized 3. Note 11 to Chapter 48 states that heading Examples
System 48.23 (Other papers) applies, inter alia, to the 1. Note 1 to Section VII establishes the
A Chapter may be subdivided into two or more sub- products mentioned in the Note. classification of certain goods put up in sets.
Chapters to clarify and underline the differences In Harmonized System, there are Sections, Chapters 4. Note 2 to Chapter 86 gives a list of goods, inter 2. Note 4 to Section XVII establishes the
between products in the same Chapter. Such classes and Subheadings Notes. They help to establish as alia, falling in heading 86.07 (Part of railway). classification of “amphibious motor vehicles”.
which are arranged, according to the characters, to precisely as possible the scope and limits of certain The list given is not exhaustive.
the level of processing, or to a combination thereof, Sections, Chapters, Headings or to define, or Limitation Notes
are provided for in Chapters 28, 29, 39, 63, 69, 71 give classification guidance as to certain terms or Exclusion Notes
and 72. expressions. The Notes give lists of classifiable goods or articles,
The Notes are designed in order to avoid stipulate requirements for classification, or clarify
Examples: Below are some of the Notes and their functions; misclassification arising when goods are classifiable the scopes of headings. The limitation Notes
Chapters 28 and 29 are divided into several sub- Illustrative Notes. under two or more headings by application of only basically include the expressions “… apply only to
Chapters based on the characters of commodities. the provisions of terms of headings. They therefore …” or “… cover only …” or “do not cover...” in those
These Notes demonstrate an exhaustive or non- exclude some articles from a particular heading, texts.
Chapter 71, which title is “Natural or cultured pearls, exhaustive list of goods falling in a heading of a chapter or section.
precious or semi-precious stones, precious metals, group of headings.Illustrative Notes can further be Example
metal clad with precious metal and articles thereof; divided into exhaustive and non-exhaustive Notes. Examples 1. Note 3 to Chapter 39 (This Chapter does not
imitation jewellery; coin”, is divided into three sub- 1. Note 1 to Section XI and Note 1 to Section cover …)
Chapters: (i) Exhaustive Notes XI and Note 1 to section XV provide the 2. Note 1 to Chapter 82 (This Chapter covers only
descriptions which list certain articles that …)
Sub-Chapter I Natural or cultured pearls and They exemplify an exhaustive list of goods falling in must be excluded from the Sections.
precious or semi-precious; a heading or a group of headings. 2. Note 1 to Chapter 15 excludes certain goods Preference Notes
like pig fat (heading 02.09), cocoa butter
Sub-Chapter II Precious metal and metals clad Examples: (heading 18.04) The Notes give priority to one or several headings
with precious metals; 1. Note 3 to Chapter 39 give the exhaustive 3. Note 2 to Chapter 10 exclude sweet corn from over one or several other headings.
list of goods falling in headings 39.01 to heading 10.05 (Fresh Maize corn).
Sub-Chapter III Jewellery, goldsmith Harmonized 39.11(synthetic polymers in primary forms). 4. Note 5 to Chapter 59 excludes certain fabrics Example
System’ and silversmith Harmonized System’ wares 2. Note 11 to Chapter 39 enumerate all articles from heading 59.07 1. Note 2 to Chapter 84 stipulates that headings
and other articles. which are to be classified in heading 39.25(e.g. 84.01 to 84.24 and 84.86 take preference over
builders’ ware of plastic which includes Definition Notes headings 84.25 to 84.80.
Regional Subdivision reservoirs, tanks, of a capacity exceeding 300 2. Note 5 to Chapter 90 gives preference to
litres, door, windowsand their frames). The These Notes ascertain the meaning of particular heading 90.31 over heading 90.13 for certain
The following example will help to illustrate the Chapter Note provides the definite scope of terms or expressions within a Chapter or a Section. measuring or checking optical instruments,
subheading for a heading, which is undivided. heading 39.25. It is important to note that the meaning might differ appliances or machines.
Heading 84.44 is not subdivided and its subheading, 3. Note 7 to Chapter 90 describe all the goods with a normal dictionary meaning. 3. Note 3 to Chapter 25 gives preference to
therefore, has two zeros after the first four digits, as; falling in heading 90.32 (Automatic regulating heading 25.17 over any other heading of
8444.00 (HS code). or controlling instruments and apparatus). Example that Chapter as to the products which could
1. Note 1 to Section II defines the term “pellets” potentially be classified in that heading.
The EAC- CET has eight digits codes. Where the ii) Non-Exhaustive Notes mentioned in that Section (Chapters 7,11 and 4. Note 2 to Section VI gives certain headings
Harmonized System subheading is undivided, two 12) preference over all other headings throughout
zeros are further added after the 6 digits as the 7th These are ChapterNotes which point out a non- 2. Note 5 to Section XVI gives the meaning of the Nomenclature, in respect of products put
and 8th digits, for example 8444.0000 (EAC Tariff exhaustive list of typical goods falling in a heading. the term “machine” used in Notes 1 to 4 of that up in measured dozes or for retail sale.
code). It should be noted that those non-exhaustive lists Section.
merely give examples of products to be covered by 3. Note 2 to Chapter 5 defines the meaning of the Constructive Notes
Illustration of the numbering system particular headings. expression “ivory” applicable throughout that
Nomenclature. These are the notes which have expressions like “…
Examples: to be regarded as …” or “applies only...” in those
1. Note 4 to Chapter 15 lists some examples of Classification Notes texts.
products falling in heading 15.22.
2. Note 4 to Chapter 25 gives a list of goods, These Notes establish the class of certain goods Example
inter alia, included in heading 25.30 (Mineral which are clearly classifiable under two or more Note 3 to Chapter 12 (the seeds listed in the Note are
substances and products). headings. They instruct users how to classify such to be regarded as “seeds of a kind used for sowing”).
commodities.

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Meaning of Note ‘otherwise require’ help users during classification.However, it should Example: Live Goat General Interpretative Rule 1
be noted that these publications have no legal force Live Goats are classified in the heading 01.04 Terms
Some of the Legal Notes have the expression (not legally binding). of heading of 01.04 reads Live Sheep and Goats The titles of Sections, Chapters and sub-Chapters
“otherwise require”. This means that if other Legal are provided for ease of reference only; for Legal
provisions provide different views to those notes, Process of Classification of goods Goats are mentioned in the terms of the heading purposes, Classification shall be determined
they are given preference. 01.04, therefore classed in the heading 01.04. according to the terms of the headings and any
Specific Objective; relative Section or Chapter Notes and, provided
Example At the end of this topic trainees shall be able to; Classification using notes such headings or Notes do not otherwise require,
Note 1 to Chapter 25 reads “Except where the context i. Follow the steps in classification of goods; according to the following provisions:
or Note 4 to this Chapter otherwise requires, the ii. Classify goods using General Interpretation Example:
headings of this Chapter cover only products which rules of the Harmonized System. Classify live Lions that are part of the travelling The Rule begins by establishing that the titles of
are in the crude state or washed with chemicals to menageries used for entertainment. Sections, Chapters and Sub Chapters are provided
eliminate impurities without changing the structure Steps involved in classification of goods “for ease of reference only”. They accordingly have
of the product, but not products which have been A commodity can be classified either by: Live animals are in Section 1 no legal bearing on classification.
roasted, calcined, obtained by mixing or subjected to • Terms of the heading.
processing beyond that mentioned in each heading.” • Notes to Section, Chapters or subheadings According to note 1(c) to Chapter 1 that states in The Harmonized System Nomenclature sets out,
• General Interpretative Rules 2,3 to 6 part in systematic form, goods handled in international
On the other hand, the text of heading 25.07 reads ‘This Chapter covers all live animals except, animals trade. It groups these goods in Sections, Chapters
“Kaolin and other kaolinic clays, whether or not The first step in classification is to identify the article of heading 95.08’ and Sub-Chapters whose titles indicate the categories
calcined.” by asking the following questions. or types of the goods as concisely as possible. In
• What is it? Live Lions that are part of a Circus are excluded in many cases, however, goods covered in a Section
In this case, the provision of the terms of heading • What material or substance is it made of? Chapter 1 to Chapter 95 or Chapter are so various that it is impossible to
25.07 is given preference to Note 1 to Chapter 25. • What is its function or use? specifically cover or cite all of them in their titles.
• What is its Degree of processing/ stage of Heading 95.08 terms of heading reads
Legal and Non Legal Texts manufacture? ‘Travelling circus……travelling menageries…….’ The second part of this Rule provides that
• In what form is it usually imported? Is it Lions that perform in the Circus are travelling
The Harmonized System contains Section Notes, complete, unassembled, disassembled? menageries. “For legal purposes classification shall be determined
Chapter Notes and Terms of the heading which • Locate the possible Sections, Chapters and according to the terms of the headings and any
are regarded as legal texts according to the General headings GENERAL INTERPRETATIVE RULES (GIR) FOR relative Sections or Chapter Notes”,
Interpretation Rule (GIR) 1 of the Harmonized • Classify the article after consulting the relevant CLASSIFICATION
System. Section and the Chapter Notes. Where appropriate, provided the headings or
General objective Notes do not otherwise require, according to the
The Subheading Notes and terms of the Subheadings These are very important questions to consider provisions of Rules 2, 3, 4, and 5. The terms of
are Legal texts at the subheading level according to for one to come up with the most appropriate By the end of this topic, the participants will be the headings and any relative Sections or Chapter
Rule 6 of the General Interpretative Rules of the classification. able to classify using the six General Rules of Notes are paramount and take first consideration in
Harmonized System. As parts of the structure of interpretation of the Harmonised System (GIRs). determining classification.
the Harmonized System, Section and Chapter Notes Example
are often located at the beginning of Sections or How to classify a fork made of wood. Specific Objective; Examples of application of G.I.R 1:
Chapters and they should be consulted for every • Identification of the article: article of wood. 1. A live Pig is classified in heading 01.03
classification. • Material content: wood At the end of this topic, trainees will be able to according to the terms of heading 01.03.
• It’s function: table use. apply the six General Rules for Interpretation of 2. Articles of wood are normally classified in
Non Legal Texts the Harmonised System in classifying goods in the Chapter 44, but wooden furniture is classified
Search for the possible Sections: IX international trade. in Chapter 94 according to exclusion Note 1
There are some publications that assist in the Identify the Possible Chapter: Chapters 44 (o) to Chapter 44 and Note 2 to Chapter 94.
classification of goods; they include Explanatory Heading 44.19 Introduction 3. Live Foal (young female of a horse) classified
Notes (EN) of the Harmonized System, the in heading 01.01 Terms of the heading of 01.01
Alphabetical Index and the Compendium of Classification using terms of heading Classification of goods requires correct interpretation is ‘Live horses, asses, mules and hinnies’. The
Classification Opinions. These should be referred and application of the General Interpretative Rules terms of the heading do not indicate the young
to during the classification process. The EN and A heading in the nomenclature is identified by of the Harmonized System. of a horse but Note 1 Section I states
the Index are the Harmonized System Committee’s 4-digits. There are some classifications that are
formal guidance on the Harmonized System; the according to the terms of the heading. Any reference in this Section to a particular genus
compendium is the Harmonized System Committee’s or species of an animal, except where the context
classification decisions of individual goods. They otherwise requires, includes a reference to the young
of that genus or species.

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The young of a horse is classified in the heading intermediate products having tubular shape, with What is the use or function? Transport In addition, there is the similar statement in
01.01 by authority of Note 1 to Section I which one closed end and one open end threaded to secure Explanatory Notes to GIR 2(b) (XIII) which reads
allows the classification of the young and adult of a screw type closure, the portion below the threaded What are the possible headings? 87.12; 87.14 “as a consequence of Rule 2(b), if prima facie
the same species in the same heading. end being intended to be expanded to a desired size classifiable under two or more headings, must be
and shape). How should it be classified and what is the basis? classified according to the principles of Rule 3.”
In summary, Classification according to GIR 1 can
be made not only where the item is mentioned in Semi-manufactures not yet having the essential Classification: A bicycle without handles is classified To illustrate the point, the terms of heading 45.03
the terms of heading but also in reference to Section shape of the finished articles (such as bars, discs, under 87.12 as a complete bicycle because it has the clearly stipulates that the heading covers “articles
and Chapter Notes. These Notes should be referred tubes) are not regarded as ‘‘blanks’’. essential character of a complete bicycle. of natural cork” only. A bottle top consisting of
to for every classification. Other rules G.I.R 2 to 6 two different materials (natural cork and metals) is
are to be applied when classification using G.I.R 1 The second part of rule 2(a) deals with unassembled Basis: By application of GIR 2(a) treated beyond the scope of heading 45.03.
fails. or disassembled goods. Articles presented
“unassembled or disassembled” means articles the General Interpretative Rule 2 (b) states: When GIR 2 (b) applies to the article in question, not
General Interpretative Rule 2 components of which are to be assembled either Any reference in a heading to a material or substance only heading 45.03 is taken but also heading 73.26
by means of fixing devices (screws, nuts and bolts) shall be taken to include a reference to mixtures (Other articles of iron or steel) are extended. That is,
This Rule is divided into two parts, 2(a) and 2(b). It or by riveting or welding provided only assembly or combinations of that material or substance there are two possible headings for the classification.
applies only when Rule 1 has failed. operations are involved. Presenting unassembled with other materials or substances. Any reference Although GIR 2 (b) widens the scopes of the
or disassembled goods may be for reasons such as to goods of a given material or substance shall be headings, it does not conclude the classification. The
General Interpretative Rule 2 (a) states: requirement or convenience of packing, handling or taken to include a reference to goods consisting classification must be considered according to the
transport. However, the following points should be wholly or partly of such materials or substance. principles of GIR 3.
“Any reference in a heading to an article shall be taken into consideration when applying Rule 2(a): The classification of goods consisting of more than
taken to include a reference to that article incomplete one material or substance shall be according to the General Interpretative Rule 3
or unfinished, provided that, as presented, the No account is to be taken in that regard of the principles of Rule 3.
incomplete or unfinished article has the essential complexity of assembly method. However, the When by application of Rule 2 (b) or for any other
character of the complete or finished article. It shall components shall not be subjected to any further GIR 2(b) concerns mixtures and combination of reason, goods are, prima facie, classifiable under two
also be taken to include a reference to that article working operation for completion into the finished materials or substances, and goods consisting of two or more headings, classification shall be according
complete or finished (or falling to be classified as state. or more materials or substances. The headings to to General Interpretative Rule 3.
complete or finished by virtue of this rule), presented which GIR 2 (b) refers are headings in which there
unassembled or disassembled.” Unassembled components of an article which are is a reference to a material or substance (e.g. heading This Rule provides three methods of classifying
in excess of the number required for that article 05.07 (ivory), and headings in which there is a goods which, prima facie, fall under two or more
GIR 2(a) focuses on the classification of “incomplete when complete are to be classified separately as an reference to goods of a given material or substance headings, either under the terms of Rule 2 (b) or
or unfinished articles” and “complete or finished independent article. (e.g. heading 45.03 (articles of natural cork). The for any other reason. These methods operate in the
articles but presented unassembled or disassembled”. Rule applies only if the headings or the Sections or order in which they are set out in the Rule. Thus Rule
An article that is incomplete or unfinished is still • Cases covered by this rule are cited in the the Chapter Notes do not otherwise require. For 3 (b) applies only if Rule 3 (a) fails in classification,
classified as if it were complete or finished, if it has General Explanatory Notes to Sections or example, since the terms of heading 39.20 reads and if both Rules 3 (a) and (b) fail, Rule 3 (c) will
the essential character of the complete or finished Chapters (e.g. Section XVI and Chapter 44, 86, “Other plates, sheets not reinforced, or similarly apply. The order of priority is therefore
article. 87 and 89). combined with other material”, the Rule does not
• Goods of Section I to VI are not covered under apply. (a) Specific description;
The first part of rule 2(a) extends the scope of this Rule. (b) Essential character;
any heading which refers to a particular article to The effect of the Rule is to extend any heading (c) Heading which occurs last in numerical order.
cover not only the complete article but also that A bicycle presented unassembled is classified in referring to a material or substance to include
article incomplete or unfinished, provided that, heading 87.12 as a complete bicycle since it has the mixtures or combinations of that material or The Rule can only take effect provided the terms
as presented, it has the essential character of the essential character of the complete bicycle. substance with other materials or substances. The of headings or Section or Chapter Notes do not
complete or finished article. effect of the Rule is also to extend any heading otherwise require. For instance, Note 4 (B) to
Classification Questions referring to goods of a given material or substance Chapter 97 requires that goods covered both by the
The provisions of this rule also apply to blanks. to include goods consisting partly of that material description in one of the headings 97.01 to 97.05 and
The term ‘‘blank’’ is contained in Explanatory In which heading (4-digit) would you classify a or substance. by the description in heading 97.06 shall be classified
Note to Rule 2(a) which stipulates that an article, bicycle without handles? in one of the former headings. Such goods are to be
not ready for direct use, having the approximate The last part of GIR 2(b) states that “the classification classified according to Note 4 (B) to Chapter 97 and
shape or outline of the finished article or part, and What is the item? It is a bicycle of goods consisting of more than one material not according to Rule 3 (a).
which can only be used, other than in exceptional or substance shall be classified according to the
cases, for completion into the finished article or In what form is it imported? Incomplete’ missing a principles of Rule 3.”
part (example, bottle performs of plastics being handle bar

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

RULE 3 (a): Classification by Specific However, when two or more headings each refer to Examples of the latter category of goods are: - a can of shrimps (heading 16.05), a can of
Description part only of the materials or substances contained pâté de foie (heading 16.02), a can of cheese
in mixed or composite goods or to part only of the (1) Ashtrays consisting of a stand incorporating a (heading 04.06), a can of sliced bacon (heading
This Rule states: items in a set put up for retail sale, those headings are removable ash bowl. 16.02), and a can of cocktail sausages (heading
to be regarded as equally specific in relation to those (2) Household spice racks consisting of a specially 16.01); or
The heading which provides the most specific goods, even if one of them gives a more complete designed frame (usually of wood) and an - a bottle of spirits of heading 22.08 and a bottle
description shall be preferred to headings providing or precise description than the others, in such cases, appropriate number of empty spice jars of of wine of heading 22.04.
a more general description. However, when two the classification of the goods shall be determined suitable shape and size.
or more headings each refer to part only of the by Rule 3 (b) or 3 (c). In the case of these two examples and similar
materials or substances contained in mixed or As a general rule, the components of these composite selections of products, each item is to be classified
composite goods or to part only of the items in a Rule 3 (b): Classification by essential goods are put up in a common packing. separately in its own appropriate heading.
set put up for retail sale, those headings are to be character
regarded as equally specific in relation to those For the purposes of this Rule, the term “goods put More examples
goods, even if one of them gives a more complete or The General Interpretative Rule3 (b) states: up in sets for retail sale” shall be taken to mean 1. Hairdressing sets consisting of a pair of electric
precise description of the goods. goods which: hair clippers (heading 85.10), a comb (heading
Mixtures, composite goods consisting of different 96.15), a pair of scissors (heading 82.13), a
The first method of classification is provided in materials or made up of different components, and (a) Consist of at least two different articles which brush (heading 96.03) and a towel of textile
Rule 3 (a), under which the heading which provides goods put up in sets for retail sale, which cannot be are, prima facie, classifiable in different material (heading 63.02), put up in a leather
the most specific description of the goods is to classified by reference to 3 (a), shall be classifiedas if headings. Therefore, for example, six fondue case (heading 42.02):
be preferred to a heading which provides a more they consisted of the material or component which forks cannot be regarded as a set within the Classification in heading 85.10.
general description. gives them their essential character, insofar as this meaning of this Rule;
criterion is applicable. (b) Consist of products or articles put up together 2. Drawing kits comprising a ruler (heading
It is not practicable to lay down hard and fast rules to meet a particular need or carry out a specific 90.17), a disc calculator (heading 90.17), a
by which to determine whether one heading more This second method of classification relates only to: activity; and drawing compass (heading 90.17), a pencil
specifically describes the goods than another, but in (i) Mixtures. (c) Are put up in a manner suitable for sale directly (heading 96.09) and a pencil-sharpener
general it may be said that: (ii) Composite goods consisting of different to users without repacking (e.g., in boxes or (heading 82.14), put up in a case of plastic
materials. cases or on boards). sheeting (heading 42.02):
(a) A description by name is more specific than (iii) Composite goods consisting of different Classification in heading 90.17.
a description by class. Shavers and hair components. The term therefore covers sets consisting, for
clippers, with self-contained electric motor, (iv) Goods put up in sets for retail sales. example, of different foodstuffs intended to be used For the sets mentioned above, the classification is
are classified in heading 85.10 as shavers and together in the preparation of a ready-to-eat dish or made according to the component, or components
not in heading 84.67 as tools for working in the It applies only if Rule 3 (a) fails. In all these cases meal. taken together, which can be regarded as conferring
hand with self-contained electric motor or in the goods are to be classified as if they consisted on the set as a whole its essential character.
heading 85.09 as electro-mechanical domestic of the material or component which gives them Examples of sets which can be classified by reference
appliances with self-contained electric motor. their essential character, insofar as this criterion is to Rule 3 (b) 5are: This Rule does not apply to goods consisting of
(b) If the goods answer to a description which applicable. separately packed constituents put up together,
more clearly identifies them, that description is (a) Sets consisting of a sandwich made of beef, whether or not in a common packing, in fixed
more specific than one where identification is The factor which determines essential character will with or without cheese, in a bun (heading proportions for the industrial manufacture of, for
less complete. vary between different kinds of goods. It may, for 16.02), packaged with potato chips (French example, beverages.
example, be determined by the nature of the material fries) (heading 20.04): Classification in heading
Examples of the latter category of goods are: or component, its bulk, quantity, weight or value, or 16.02. Classification using the General
by the role of a constituent material in relation to the (b) Sets, the components of which are intended Interpretative Rules
(1) Tufted textile carpets, identifiable for use in use of the goods. to be used together in the preparation of
motor cars, which are to be classified not as a spaghetti meal, consisting of a packet of Example
accessories of motor cars in heading 87.08 For the purposes of this Rule, composite goods made uncooked spaghetti (heading 19.02), a sachet In which heading (4-digit) would you classify tufted
but in heading 57.03, where they are more up of different components shall be taken to mean of grated cheese (heading 04.06) and a small textile carpets, for use in motor cars?
specifically described as carpets. not only those in which the components are attached tin of tomato sauce (heading 21.03), put up in
(2) Unframed safety glass consisting of toughened to each other to form a practically inseparable whole a carton: Classification in heading 19.02. Hierarchical application of GIRs
or laminated glass, shaped and identifiable for but also those with separable components, provided Possible headings: The Tufted car carpet may be
use in aeroplanes, which is to be classified not these components are adapted one to the other and The Rule does not, however, cover selections considered in two possible heading as;
in heading 88.03 as parts of goods of heading are mutually complementary and that together they of products put up together and consisting, for
88.01 or 88.02 but in heading 70.07, where it is form a whole which would not normally be offered example, of : 87.08: An accessory of motor vehicles
more specifically described as safety glass. for sale in separate parts.

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

57.03: Carpets and other textile floor coverings, GIR 2 (a) cannot apply because the rule does not contain a specific article or set of articles, suitable materials and packing containers presented with the
tufted apply to Sections I to VI. for long-term use and presented with the articles for goods therein shall be classified with the goods if
which they are intended, shall be classified with such they are of a kind normally used for packing such
GIR 1 cannot be applied because the article falls GIR 2 (b) can apply because the set consists of articles when of a kind normally sold therewith. This goods. However, this provision is not binding when
under two headings. articles that fall in more than one heading, and the Rule does not, however, apply to containers which such packing materials or packing containers are
rule directs us to GIR3. give the whole its essential character; clearly suitable for repetitive use.
GIR 2(a) cannot be applied because the articles are
not disassembled and are finished products. GIR 3(a) cannot apply because the description is This Rule shall be taken to cover only those This rule governs the classification of packing
not specific and each is referring to a composition of containers which: materials and packing containers of a kind normally
GIR 2(b) cannot be applied because it directs to GIR the article.The possible headings are regarded to be used for packing goods which they relate. Packing
3. equally specific in relation to the mixture. (1) Are specially shaped or fitted to contain a materials or containers presented with the articles
specific article or set of articles, they are shall be classified with the articles in accordance
Classification:Tufted textile carpets are classified in GIR 3(b) cannot apply because the essential character designed specifically to accommodate the with Rule 5(b) if they:
heading 57.03 cannot be determined. None of the items gives the article for which they are intended.
article its essential character and they equally merit Some containers are shaped in the form of the 1. Are not of a kind covered under Rule 5(a).
Basis: By application of GIR 3(a) because the consideration. article they contain; 2. Are of a kind normally used for packing such
most specific description is preferred to a general (2) Are suitable for long-term use, i.e., they are goods.
description. Classification: The article is classified in heading designed to have a durability comparable to
11.06 that of the articles for which they are intended. However, this rule is not binding to such packing
G.I.R RULE 3 (c): heading which occurs last in These containers also serve to protect the article materials and containers that are clearly suitable
numerical order Basis: By application of GIR 3(c) because the heading when not in use (for example during transport for repetitive use such as, certain metal drums
occurs last in numerical order. or storage,). These criteria enable them to be or containers of iron or steel for compressed or
This rule states: distinguished from simple packing; liquefied gas, crates of Beer.
General Interpretative Rule 4 (3) Are presented with the articles for which
When goods cannot be classified by reference to they are intended, whether or not the articles General Interpretative Rule 6
Rule 3 (a) or 3 (b), they shall be Classified under Goods which cannot be classified in accordance are packed separately for convenience of
the heading which occurs last in numerical order with the above Rules shall be classified under the transport. Presented separately the containers “For legal purposes, the classification of goods in
among those which equally merit consideration. heading appropriate to the goods to which they are are classified in their appropriate headings; the subheadings of a heading shall be determined
most akin. (4) Are of a kind normally sold with such articles; according to the terms of those subheadings and any
When goods cannot be classified by reference to Rule and related Subheading Notes and, mutatis mutandis,
3 (a) or 3 (b), they are to be Classified in the heading The rule relates to goods which cannot be classified (5) Do not give the whole its essential character. to the above Rules, on the understanding that only
which occurs last in numerical order among those in accordance with the Rules 1 to 3. It provides that subheadings at the same level are comparable.
which equally merit consideration in determining such goods shall be classified under the heading Examples of containers, presented with the articles For the purposes of this Rule the relative Section
their classification. appropriate to the goods to which they are most for which they are intended, which are to be and Chapter Notes also apply, unless the context
akin. When goods are classified in accordance with classified by reference to this Rule are: otherwise requires.”
Example this rule, it is necessary to compare the presented
Classify a mixture composed of 50% of cassava flour goods with similar goods in order to determine (1) Jewellery boxes and cases (heading 71.13); (1) Rules 1 to 5 govern, mutatis mutandis
and 50% of millet flour for preparation of a meal and the goods to which the presented goods are most (2) Electric shaver cases (heading 85.10); classification at subheading levels with the
justify stating the General Interpretative Rule of the akin. The presented goods are classified in the same (3) Binocular cases, telescope cases (heading same heading.
Harmonized System applied. heading as the similar goods to which they are most 90.05); (2) For the purposes of Rule 6, the following
akin. (4) Musical instrument cases, boxes and bags (e.g., expressions have the meanings hereby assigned
Classification question heading 92.02); to them:
What is the product? Mixture of cassava and millet Kinship in the context of this rule depends on many (5) Gun cases (e.g., heading 93.03). a) “Subheading at the same level”: one-
flour factors such as description, character, and purpose. dash subheadings (level 1) or two-dash
This rule is very rarely used and is mainly applicable Examples of containers not covered by this Rule are subheadings (level 2)
What is it used for? Preparing a meal for new articles in the market. containers such as a silver caddy Containing tea, or
an ornamental ceramic bowl containing sweets. Thus, when considering the relative merits
What are the possible headings? General Interpretative Rule 5 of two or more one-dash subheadings within
Rule 5(b) a single heading in the context of Rule 3 (a),
Cassava falls in heading 11.06 while millet falls in Rule 5 (a) their specificity or kinship in relation to a
heading 11.02 This rule states: given article is to be assessed solely on the
(a) Camera cases, musical instrument cases, gun basis of the texts of the competing one-dash
GIR 1 cannot be applied because there is no heading cases, drawing instrument cases, necklace cases Subject to the provisions of Rule 5 (a) above, packing subheadings. When the one-dash subheading
which describe the set. and similar containers, specially shaped or fitted to

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

that is most specific has been chosen and CASE STUDY ILLUSTRATIONS Section II Case IV
when that subheading is itself subdivided,
then, and only then, shall the texts of the two- Answers in the ANNEX VEGETABLE PRODUCTS XYZ company imported 1x20 container of woven
dash subheadings be taken into consideration fabrics of mixed material from India and declare
for determining which two-dash subheading Case I Section Notes the goods to the cotton heading, while his boss was
should be selected. insisting to declare the goods under artificial staple
Ms ‘Gurama Enterprises’ a dealer of Used Clothing. In this Section the term “pellets” means products fibre.The woven fabric consisted the following
b) “Unless the context otherwise requires”: ‘Gurama Enterprises’ is importing 1x40 HC which have been agglomerated either directly by materials :
except where Section or Chapter Notes containers, STC 350 bales each weighing 70 kg of compression or by the addition of a binder in a
are incompatible with subheading texts or used Men’s Leather Shoes from German. The client proportion not exceeding 3% by weight. • 60% by weight of cotton containing 90% of
Subheading Notes. used ‘Almas’ Forwarders to clear the goods from cotton by weight of cotton, weighing 250 g/m2.
port of Dar-es-salaam. The declaration officer of • 20% by weight of artificial staple fibre
Example Almas clearing company classified the goods under • 20% by weight of synthetic filament yarn
D
An example of inconsistency between a 6403.59.00 which was disputed by his boss.
Chapter Note and a Subheading Note occurs Chapter 6
Required: Classify the woven fabric to the correct
in Chapter 71 where the scope assigned to Required B heading up to the six digit level “6”
the term “platinum” in the Chapter Note 4 Advise on the correct classification of the used Men’s Live trees and other plants; bulbs, roots and the
like; cut flowers and ornamental foliage
(B) differs from that assigned to the term Leather Shoes quoting the General Interpretative Case V
“platinum” in Subheading Note 2. Rules of the Harmonized System applied. Chapter Notes.
A
The Harmonised commodity Description and
Note 4 (B) to Chapter 71 reads as follows: Case II coding system (HS) forms a framework that makes
Subject to the second part of heading 06.01, this
“The expression [platinum] means platinum, Chapter covers only live trees and goods (including
it possible to arrange 98% of all goods in the world
iridium, osmium, palladium, rhodium and ‘Alupe’ is a refaral hospital in Kenya that has invested seedling vegetables) of a kind commonly supplied by in a systematic way.
ruthenium.” in research of traditional medicine for many nursery gardeners or florists for planting or for orna-
mental use; nevertheless it does not include potatoes,
years. The client used Air connection company to 1. onions, shallots, garlic or other products of Chapter 7. Required
On the other hand, Subheading Note 2 of clear the goods from Jomo Kenyata international 1. State and explain three principles used in the
Chapter 71 stipulates as follows: Airport. The client imported four drums of 5 litres 2. Any reference in heading 06.03 or 06.04 to goods arrangement of Sections in the HS.
each Cinchona extract meant for therapeutic or of any kind shall be construed as including a 2. Using the Nomenclature give one example
“Notwithstanding the provisions of Chapter prophylactic dissolved in water. The declaration reference to bouquets, floral baskets, wreaths (heading level) of each of the stated principles.
Note 4 (B), for the purpose of subheading oficer cannot decide on heading 30.03 and 30.04 . and similar articles made wholly or partly of
7110.11 and 7110.19, the expression “platinum” goods of that kind, account not being taken of Case VI
does not include iridium, osmium, palladium, Required accessories of other materials. However, these
rhodium and ruthenium”. 1. Advise him on the correct tariff classification. headings do not include collages or similar Rule 5 in the General Rules of Interpretation in
2. Justify the Classification using the General decorative plaques of heading 97.01. the Harmonized system is special and governs the
For the purpose of interpreting subheadings Interpretatives Rules of the Harmonized classification of containers.
7110.11 and 7110.19, therefore, Subheading System.
Note 2 applies and Chapter Note 4 (B) is to be C Required:
disregarded. Case III (a) State the conditions that must be fulfilled for a
container to be classified according to Rule 5a
c) The scope of a two-dash subheading The systematic coding of the Harmonised System Heading H.S. Description Unit of (b) Give TWO (2) examples of containers to
shall not extend beyond that of the one- makes it easier to classify goods in international Quantity be classified under General Interpretation
dash subheading to which the two-dash trade. It is therefore imperative to identify parts of No. Code/ Rat Bulbs, tubers, tuberous roots, Y Rule 5a and two (2) examples under General

Rate
06.01 Tariff corms, crowns and rhizomes,
subheading belongs; and the scope of a the structure of the Harmonised System. No. dormant, in growth or in flower; Interpretation Rule 5b.
one-dash subheading shall not extend chicory plants and roots other
than roots of heading 12.12.
beyond that of the heading to which the Required
one-dash subheading belongs. Identify the names of the structure of the Harmonised
System indicated below.
E
0601.10.00 - Bulbs, tubers, tuberous roots, corms, crowns 0%
and rhizomes, dormantu
0601.20.00 - Bulbs, tubers, tuberous roots, corms, crowns 0%
and rhizomes, in growth or in flower; chicory
plants and roots

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VALUATION AND TARIFF CLASSIFICATION VALUATION AND TARIFF CLASSIFICATION

ANNEX: CASE STUDY ANSWERS - Containing two or more constituents Case V Case VI
1.State and explain three principles used in the (a) State the conditions that must be fulfilled for a
Case I The Cinchona extract does not qualify because arrangement of Sections in the HS. container to be classified according to Rule 5A
- It is not a mixture of two or more constituents
Process of classification but an extract of one vegetable (Cinchona • Material content 1. specially shaped or fitted to contain a
Identify the Chapter shoes are classified bark) • Usage or Function specific article or set of articles,
Read the Chapter Notes • Stage of processing or manufacture 2. suitable for long-term use and
Note 1 (c ) Chapter 64 is relevant. It excludes Worn According to Note 3 (a) (3) Chapter 30, simple 3. presented with the articles for which they
footwear of heading 63.09 vegetable extracts are classified in heading 13.02, 2. Using the Nomenclature give one example are intended
when merely standardised or dissolved in any (heading level) of each of the stated principles. 4. Of a kind normally sold therewith.
Go to Chapter 63 where the heading falls. Read the solvent. 5. Containers do not give the whole its
Chapter Notes and find if any is relevant a) Material content essential character
Therefore Cinchona extract meant for therapeutic or
Note 3 (b) Chapter 63 is relevant. It states in part prophylactic dissolved in water is correctly classified Article- Plastic plate (b) Give TWO (2) examples of containers to
that heading 6309 applies only to footwear that must in heading 1302.19.00 Classified in heading 39.24 be classified under Rule 5A and TWO (2)
comply with both the following requirements Tableware, Kitchenware, other household articles examples under Rule
1. They must show signs of appreciable wear, Case III and hygienic or toilet articles, of plastics.
2. They must be presented in bulk or in bales, 5A 5B
sacks or similar packings. Answers b) Usage
1 Binoculars with A dozen of 400g Ginger
A Restrictive Note 1 to Chapter 6
Binoculars cases biscuits in paper cartons
The Shoes are used and presented in 70kg bales B Title of the Chapter 06 Article- Helicopter.
qualifying them to be classified in heading 63.09 C Terms of heading of 06.01 2 Gun presented Bar soap packed in
D Descriptive Note 1 to Section II Classified in heading 88.02 with gun case plastic parking
Classification according to Terms of heading and E Heading number 06.01
relevant Chapter notes is provided in General Other Aircraft (for example, Helicopter,
Interpretative Rule number 1 of the Harmonized Case IV Aeroplane……)
System.
Process of classification C) Stage of processing
Case II Identify the correct Section number-Section XI
30.03 30.04 Tennis Shoes made from the hide of a Cow
Similarities Therapeutically or Therapeutically or Read the Section notes-Note 2 (A) to Section XI
prophylactic character prophylactic character which states:
Differences • Not put up in • Put up in measured
measured doses doses
• Mixed together • Mixed or unmixed
Goods classifiable in Chapters 50 to 55 or in heading
• Not packed for product 58.09 or 59.02 and of a mixture of two or more textile
retail sale • Packed for retail sale materials are to be classified as if consisting wholly
• Two or more HIDE OF A Tennis Shoes from
constituents of that one textile material which predominates by LIVE COW
COW 18 kg the hide of a cow
01.02
weight over any other single textile material. 41.01 64.03

Identify: Medicinal bark of cinchona trees; source of

quinine and quinidine When no one textile material predominates by
weight, the goods are to be classified as if consisting
Material: A vegetable extract wholly of that one textile material which is covered
by the heading which occurs last in numerical order
Function: Heal or Prevent among those which equally merit consideration.

Possible Chapter: 30 Identify the correct Chapter:

- 60% by weight of cotton containing 90% of
Possible Heading: 30.03 cotton by weight of cotton, weighing 250 g/
m2.- Chapter 52
The characteristic of medicines of heading 30.03, it - 20% by weight of artificial staple fibre –Chapter
should be 55
- Not put up in measured doses - 20% by weight of synthetic filament yarn –
- Mixed together Chapter 54
- Not packed for retail sale Identify Correct Heading – 52.09

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VALUATION AND TARIFF CLASSIFICATION NOTES

References:
East African Community Common External Tariff (EAC-CET) 2012
HS Brochures 2012
WCO Explanatory Notes 2012
WCO Harmonizer
WCO Website - www.wcoomd.org.

122 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 123
NOTES

124 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

 Federation of East African Freight
Forwarders Associations (FEAFFA)

Crescent Road, off Parklands Road, Westlands

P.O. Box 22694 00400 Tom Mboya, Nairobi, Kenya
+254 (0)738 150 673, (0)738 165 318
[email protected]
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Federation of East African Freight Forwarders Associations (FEAFFA)

@FEAFFA