Declarations in writing must generally be made on the Single Administrative Document (SAD). With the signing of the declaration, the declarant becomes responsible for the accuracy of the information given in the declaration, the authenticity of the documents attached, and the compliance with all the obligations relating to the entry of the goods for the procedure concerned. Declarations can also be made electronically.

The documents to accompany the declaration will depend on the procedure requested (see below). In the declaration for release for free circulation, the following documents will be needed:

• the invoice,
• the value declaration, where the customs value is to be established,
• a certificate of origin or invoice declaration where the application of a preferential tariff treatment is requested,
• an authorisation or certificate of authenticity where a favourable tariff treatment by reason of the nature or the end-use of the goods is requested,
• an import authorisation or licence where this is stipulated in Community or national law.

Special rules apply to the simplified and incomplete procedures. For instance, special rules allow the submission of incomplete customs declarations whereby not all the particulars required in a declaration are submitted, or some of the required documents are not enclosed. The use of the simplified declaration allows the use of a commercial or administrative document as a customs declaration. Special rules apply also to the local clearance procedure under which the goods are entered for the customs procedure at the premises of the declarant or any other place designated or approved by the customs authorities.

2.6.2 Customs Declaration

The customs declaration is the act whereby a person indicates in the prescribed form and manner a wish to place the goods under a given customs procedure.

The customs declaration may be made by any person who is able to present the goods in question to customs, or to have them presented to the customs authority, together with the necessary documents. However, direct or indirect representation is also possible. Indirect representation means that the representative acts in his own name on behalf of another person. Direct representation is where the representative acts in the name and on behalf of another person.

The lodging of a customs declaration signed by the declarant or his representative makes the declarant responsible for the accuracy of the information in the declaration, the authenticity of any documents attached to it, and compliance with all the obligations relating to entry of the goods in respect of the procedure in question. Furthermore, the declarant is one of the persons that may be liable for the customs debt. However, the declarant can only be the person making the customs declaration in his own name or the person in whose name a customs declaration is made. The representative is therefore the declarant in the case of indirect representation. In the case of indirect representation, the declarant becomes the debtor of any customs debt incurred, either together with the person he represents or alone if he is not empowered to act on behalf of that person.

As a general rule, the declarant must be established in the Community, with some exceptions such as the declaration for the transit or temporary importation procedure.

Also as a general rule, the declaration is to be lodged at the customs office where the goods were presented; lodging is permitted as soon as presentation has taken place. Declarations which satisfy the requirements governing their form, and which are accompanied by the prescribed documents, must be accepted immediately by the customs authorities provided that the goods to which they refer are presented to customs.

In general, customs authorities must release the goods as soon as the declarations in respect of them have been verified or as soon as the declaration has been accepted without verification.

Instead of providing information on paper, the declarant may, under the conditions determined by the customs authorities, provide the declaration and the necessary accompanying documents in electronic format. The accompanying documents are not presented together with the declaration but kept at the customs authority's disposal.

2.6.3 The Clearance Procedure

a) Customs Procedures

There are eight customs procedures, which are outlined below. Placing goods under a customs procedure generally requires the lodging of a customs declaration to that effect indicating the wish to place the goods under a given customs procedure. The necessary documents required under the relevant customs procedure must be submitted and the goods presented to customs.

The use of customs warehousing, inward processing, processing under customs control, temporary importation and outward processing, known as customs procedures with economic impact, are subject to the issuance of an authorisation by the customs authorities. The applicant must be established in the EU or, in the case of temporary importation, established outside the EU subject to some exceptions. The applicant must also offer the necessary guarantee for the proper conduct of the operations.

The customs authorities can monitor the use of this procedure through administrative arrangements disproportionate to the economic needs involved.

A requested security should be provided when duties or taxes are suspended.

The customs authorities will also need to examine the economic consequences of the intended operation, depending on the type of procedure requested (for instance, whether there is an economic need for warehousing, or whether the use of outward processing does not seriously harm the essential interests of the Community). The authorisation will lay down the conditions for the use of the procedure.

i. Release for Free Circulation

The declaration for free circulation confers on non-Community goods the status of Community goods. It does not require customs supervision after release, except for goods subject to control on their end-use. In particular, release for free circulation entails the collection of import duties where goods are liable to them according to the Community Customs Tariff and no duty relief is applicable. It also requires the application of the relevant commercial policy measures (such as the presentation of an import authorisation for goods subject to quotas) and any other fulfillment of formalities laid down in respect of the importation of such goods (such as the presentation of a health certificate for certain animals).

In certain cases the customs tariff allows goods to benefit from favourable treatment on account of their end-use, such as processing of fish into conserves (e.g. CN code 0303 45 11) or fitting bumpers onto motor vehicles during their manufacture (e.g. CN code 8708 10 10). The end-use provisions provide for a procedure allowing the immediate release for free circulation of goods destined for a certain type of treatment or use. However, the goods are subject to customs supervision of their end-use.

The aforementioned procedure requires a written authorisation. The applicant must be established in the Community. However, he does not need to be the owner of the goods; the applicant must offer every guarantee necessary for the proper conduct of the operations. The customs authorities must be in a position to monitor the arrangements without disproportionate administrative burdens. Finally, a security covering the difference between the favourable tariff treatment and the normal duty may be requested, and adequate records must be kept by the importer.

ii. Transit

Customs transit is a customs procedure used to facilitate the movement of goods between two points of a customs territory, via another customs territory, or between two or more different customs territories. It allows for the temporary suspension of duties, taxes and commercial policy measures that are applicable at import, thereby allowing customs clearance formalities to take place at the destination rather than at the point of entry into the customs territory.

The Common transit procedure is used for the movement of goods between the 27 EU Member States and the EFTA countries (Iceland, Norway, Liechtenstein and Switzerland). It is based on the Convention of 20 May 1987 on a common transit procedure.

The Community Transit procedure is used for movements of non-Community goods between two points in the EU (including transit through another country), avoiding import or export duties and the application of commercial policy measures. This is the external Community transit carried out under the T1 certificate. It covers goods for which duties have not been paid or for which a repayment or remission of import duties is claimed in view of their re-exportation, or - in the case of common transit - which benefit from export refunds.

The internal Community transit allows the movement of Community goods between two points in the EU for the purposes of maintaining Community status. Movement can take place through an EFTA country or through another country under a single transport document. The internal Community transit also allows movement within the EU customs territory for the purposes of tax supervision. It applies where in one or both territories the EU VAT provisions do not apply. Since it covers Community goods, no import duties are at stake. However, its Community status must be proved through the T2 certificate because the goods move through a non-EC country. If they move to or from a territory outside the scope of the EU VAT provisions, importers should rely on the T2F certificate, whereby the letter F means "fiscal".

There are other internal transit conventions which allow movements between and through the territories of the contracting parties without applying import duties, other taxes or commercial policy measures.

This is the case of TIR (Transports Internationaux Routiers) currently regulated by the Customs Convention on the International Transport of Goods Under Cover of TIR Carnets in 1975 (TIR Convention 1975). The TIR Convention 1975 was approved by Council Regulation (EEC) No 2112/78 of 25 July 1978¹ and entered into force in the European Community on 20 June 1983. The TIR system is an international customs transit system. In common with other customs transit procedures, the TIR procedure enables goods to move under customs control across international borders without the payment of the duties and taxes that would normally be due at importation (or exportation). A condition of the TIR procedure is that the movement of the goods must include transport by road. Goods move from a customs office of departure in one country to a customs office of destination in another country under cover of an internationally accepted customs transit document, the TIR carnet, which also provides a financial guarantee for the payment of the suspended duties and taxes. The guarantee system is managed by an international organisation, which is currently the International Road Transport Union.

Other conventions are the Rhine Manifest to facilitate the movement of goods on the Rhine and its associated tributaries across national frontiers, based on the Mannheim Convention of 17 October 1868 and the Protocol adopted by the Central Rhine Navigation Commission on 22 November 1963. The Community legislation which provides for the Rhine manifest to be used as a Community transit document is Articles 91(2) and 163(2) Community Customs Code. The Mannheim Convention concerns the following countries bordering the Rhine: the Netherlands, Belgium, Germany, France and Switzerland, which for the purposes of the Convention are considered as forming a single territory.

iii. Customs Warehousing

Customs warehousing allows the owner to hold imported non-Community goods in the Community and choose when he pays the duties or other commercial policy measures or re-exports the goods.

The warehouse procedure is intended primarily for storage purposes. The customs authorities may authorise that the goods undergo treatment to keep them preserved, improve their appearance or marketable quality or prepare them for distribution or resale. However, it is possible to process goods under inward processing or processing under customs control on the premises of a customs warehouse.

Importers can rely on warehousing for the following purposes:

• to suspend the payment of customs duties (and VAT and excise duties) for imported goods until they are released for free circulation or undergo further processing (e.g. under the inward processing procedure);
• to suspend the application of commercial policy measures (such as an import licence) for imported goods until they are released for free circulation (and the missing import licence has been granted); or the goods are assigned to another customs-approved treatment or use;
• to store imported goods in transit until they are re-exported (thus avoiding the payment and subsequent refund of import duties as well as the application of commercial policy measures);
• to store and prepare the goods for the subsequent marketing stage (e.g. repackaging, affixing of labels); or
• to benefit from measures requiring the export of goods, and treat them as if they have already left the EU Customs territory (e.g. goods placed under the inward processing procedure).

A customs warehouse can be either a public or a private warehouse. A public warehouse is authorised for use by warehouse keepers whose main business is the storage of goods deposited by other traders (depositors). A private warehouse is for the storage of goods deposited by an individual trader authorised as the warehouse keeper. The warehouse keeper in the latter case need not necessarily own the goods but must be the depositor.

The following six types of warehouses can be distinguished:

• Type A: a public warehouse which is under the responsibility of the warehouse keeper who has to ensure that the goods are not removed from customs supervision, and to fulfil the obligations arising from the procedure and authorisation.
• Type B: a public warehouse which is under the responsibility of each depositor who has to ensure that the goods are not removed from customs supervision and to fulfil the obligations arising from the procedure.
• Type C: a private warehouse where the warehouse keeper is the same person as the depositor but is not necessarily the owner of the goods, and where neither of the special situations provided for Type D or E warehouses applies.
• Type D: where the warehouse keeper is the same person as the depositor but not necessarily the owner of the goods, and where the release for free circulation is made by way of the local clearance procedure and may be granted on the basis of the nature, the customs value and the quantity of the goods to be taken into account at the time of their placing under the procedure.
• Type E: where the warehouse keeper is the same person as the depositor but not necessarily the owner of the goods, where the goods placed under the procedure need not be stored in a place approved as a customs warehouse but in storage facilities belonging to the holder of the authorisation, such as means of transport.
• Type F: a public warehouse which is operated by the customs authorities for which therefore no authorisation is necessary.

An authorisation is necessary except in the case of warehouses operated by the customs authorities themselves. The application must be submitted in writing according to the form in Annex 67 of the Implementing Provisions, or - where the customs authorities have provided for this - in an electronic form. The application will be submitted to the competent customs authorities of the Member State where the customs warehouse is situated or the warehouse keeper's main accounts are kept. The warehouse keeper is obliged to keep stock records of all the goods placed under the procedure.

iv. Inward Processing

Inward processing allows imported raw materials or semi-manufactured goods to be processed for re-export within the Community by Community manufacturers without a requirement that the manufacturers have to pay customs duty and VAT on the goods being used. There are two variants:

• The suspension system: Non-Community goods can be imported without payment of import duties. Restrictive commercial policy measures such as import licensing are not applied either.
• The drawback system: The imported goods are released for free circulation, and the import duties are repaid or remitted when the processed products, so called "compensating products", are exported subsequently. Products subject to quantitative import restrictions or export refunds cannot be placed under this procedure.

v. Processing under Customs Control

This allows alteration of the nature or state of non-Community goods without subjecting them to import duties or commercial policy measures, and release of the processed products for free circulation at the rate of import duty appropriate to them.

Processing under customs control is therefore used for instance when the ad-valorem rate of duty is higher for the imported goods than for the processed products. Processing under customs control means that goods may be processed into products which are subject to a lower duty rate before they are put into free circulation. The import duty advantage obtained should contribute to creating or maintaining processing activities in the Community.

vi. Temporary Admission/Importation

Temporary importation means that goods may be used in the Community without payment of duty or VAT under certain conditions and re-exported afterwards in the same state as they were in at import. Therefore, the temporary importation procedure grants duty relief in two different forms and excludes certain goods from the procedure:

• where no competition with domestic merchandise is to be expected or where an international agreement stipulates duty exemption, total duty relief is granted. The Implementing Provisions to the Community Customs Code contain the cases for total duty relief.
• in the other cases, only partial duty relief is granted. 3% of the normal import duty is charged for every month.
• No duty relief is granted for consumable goods, except where they fulfil certain requirements for total relief.

Oral, rather than paper, declarations can be made for certain types of goods. However, the customs authorities may require a written inventory or list to support the oral declaration.

vii. Outward Processing

Outward processing permits the export of raw materials or semi-finished Community goods so that they can be processed outside the EU customs territory and subsequently be re-imported with partial or total duty relief.

Without such a system, duty would have to be paid on the goods as produced in the Community as well as on the value added abroad.

Total duty relief is granted where: the goods are repaired free of charge or the import duty calculated for the temporary exported goods is at least as high as the duty to which the processed products are liable at release for free circulation.

Partial duty relief is granted by charging only the difference between the import duty on the processed product and the duty calculated for the temporary export of goods; or the duty on the value of the processing plus the cost of transport to the Community.

viii. Exportation

Export procedure concerns the exit of Community goods from the EU customs territory. As a consequence, such goods change their status to non-Community goods. This entails the application of all exit formalities, including, where applicable, the payment of export duties, or export refunds, and the presentation of export licences.

b) Customs-approved Treatments or Uses

Entry into any of the five types of customs-approved treatment or use normally requires only a physical act. The types of customs-approved treatment are:

• the placing of goods under a customs procedure: which are discussed above.
• the entry of goods into a free zone or warehouse: goods entering the free zone or free warehouse are treated as if they were outside the EU customs territory. Therefore, no import duties and commercial policy measures are applied to those non-Community goods, and Community goods can already benefit from measures attached to export, such as export refunds.
• the re-exportation of goods from the Community customs territory: When Community goods are intended to leave the EU customs territory they must - where no internal transit or outward processing procedure applies - be placed under the export procedure.
• the destruction of goods: non-Community goods can be destroyed under customs supervision in order to avoid a customs debt being incurred or to dispose of goods subject to an import prohibition.
• the abandonment of goods to the Exchequer: Instead of destroying the goods, the importer who cannot, or does not want to, sell them on the market can also abandon them to the Exchequer where national legislation makes provision to that effect.

2.6.4 Cargo Security

The Community has amended the Community Customs Code² introducing a number of measures to tighten security around goods crossing international borders. The Community has recently adopted the necessary implementing provisions³.

Regulation 648/2005 requires economic operators to provide customs authorities with a summary declaration of their goods before these enter the EU. The pre-arrival deadlines are set out in the Implementing Regulation 1875/2006 according to the means of transport crossing the border:

• maritime traffic for containerised cargo: 24 hours before the loading at the port of departure. Some specific rules apply in case of bulk/break bulk cargo and for movement within certain territories specified in the Implementing Regulation.
• air traffic: at least by the time of actual take off of the aircraft in case of short haul flights, or at least four hours prior to arrival at the first airport in the customs territory of the Community for long haul flights. A short haul flight means a flight the duration of which is less than four hours from the last airport of departure in a third country until arrival at the first Community airport.
• rail and inland waters traffic: at least two hours prior to arrival at the customs office of entry in the customs territory of the Community.
• road traffic: at least one hour prior to arrival at the customs office of entry in the customs territory of the Community.

The common data requirements and format of the summary declaration are described in Annex 30A of the Implementing Regulation 1875/2006. The Regulation requires that the summary declaration be made in an electronic format ("using a data processing technique"). Customs authorities may accept paper based summary declarations, but only in exceptional circumstances described in the Implementing Regulation (e.g., the customs authorities' computerised system is not functioning, or the electronic application of the person lodging the entry summary declaration is not functioning).

The summary declaration has to be lodged by or on behalf of either (i) the person who brings the goods into the EU customs territory, or (ii) the person who assumes responsibility for the carriage of the goods after the goods have entered.

The law also allows traders who have proven their reliability to benefit from reduced customs controls: the so-called "authorised economic operators" (AEO). Its definition is of an actor in the trade supply chain that is "authorised" by the customs authorities, because he has an appropriate record of compliance with customs requirements, a satisfactory system of managing his commercial records, proven financial solvency and appropriate physical security measures. As a result, the operator can benefit from more streamlined and less burdensome customs controls. Once designated as authorised, the economic operator will be given such privileged treatment in all the Member States. The procedure for requesting and issuing an AEO certificate is laid down in the Implementing Regulation 1875/2006.

Hong Kong's traders or persons acting on their behalf, who wish to export goods out of the EU territory, will be subject to rules similar to those mentioned above. Thus, they will have to make a summary declaration normally before such export, the electronic format requirement will apply, and so on.

In addition, the EU institutions have to ensure development of the information technology for electronic declarations and information exchange. The new law requires these electronic systems to be in place three years after the implementing regulations have come into force.

2.6.5 Tax Payment (Customs Tariff & VAT)

Once the duty amount has been determined and communicated to the debtor, it must be paid within the following time limits:

• where no payment facilities have been granted then within ten days, unless otherwise specified by the customs authorities;
• after 30 days granted for deferred payment;
• in accordance with other payment facilities granted.

The customs debt for imported goods is incurred either by entering the goods for free circulation or temporary importation with partial duty relief or by infringing the customs provisions.

In addition, according to Article 2 of the Sixth VAT Directive, the importation of goods is subject to VAT. "Importation" is defined as the entry of goods into the Community. However, the tax is not chargeable for goods that are or are intended to be:

• produced to customs and where applicable placed in temporary storage;
• placed in a free zone or in a free warehouse;
• placed under customs warehousing arrangements or inward processing arrangements;
• admitted into territorial waters: in order to be incorporated into drilling or production platforms, for purposes of the construction, repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or production platforms to the mainland; for the fuelling and provisioning of drilling or production platforms.
• placed under warehousing arrangements other than customs.