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HMRC internal manual

Customs Authorisation and Approval

Overview of customs regimes and procedures requiring prior authorisation or approval: Processing

Economic operators may be authorised to operate a processing procedure.  Processing allows:

·        Union goods to be exported for process or repair  (Outward Processing) or

·        Non-Union goods to be used in the Union in one or more processing operations without the goods being subject to import duties and other charges (Inward Processing).

Processing, as defined in article 210 of the Code, comprises inward or outward processing.

The following benefits are available to economic operators authorised for processing procedures:

·        Non-Union goods may be used in processing operations within the Union without being subject to import duties and other charges

·        Commercial policy measures will not apply to goods under the processing procedures providing these do not prohibit the introduction or removal of the goods from the territory of the Union

·        Customs duties and other charges may be applied to the processed product following its declaration to a free circulation procedure, providing the opportunity to manage cash flow and to benefit from any lower duty rates applicable to the processed product rather than the raw products originally imported under processing

·        Goods may be moved between different locations under the processing arrangements, including movements to the office of exit

·        Equivalence may be authorised for processed goods. Equivalent goods consist of Union goods which are used, stored or processed instead of the goods originally placed under a customs procedure.  The amount of equivalent goods used, processed or stored must not exceed the amount originally entered to the procedure. Equivalence cannot be authorised for goods subject to Anti-Dumping Duty.

·        Union goods may be temporarily exported to undergo processing operations. The products resulting from the processing operations may be released to free circulation with total or  partial relief from import duty upon application by the holder of the authorisation or any other person established in the Union provided that person has the consent of the authorisation holder.

The introduction of the Code has resulted in the following changes for processing:

·        Inward processing no longer requires the intention to export the goods at the time the goods are originally imported

·        Changes to the economic test for processing arrangements.  Under the Code any economic tests will be undertaken at Union level, not by the member state of application

·        All goods subject to Anti-Dumping Duty (ADD) will require an economic test.  If ADD is introduced on one of the commodities covered by the authorisation after it has been granted, the authorisation holder will be required to apply for an economic test to continue using that authorisation.

·        Processing under Customs Control is no longer a customs procedure.  This has been combined with inward processing following the removal of the requirement to export processed goods under Article 85 of the UCC (valuation of the processed goods).

·        Economic operators authorised for Processing under Customs Control (PCC) at the time the Code enters into force will be allowed to continue to process goods previously imported to PCC and discharge those goods.  No new imports may take place to PCC after 30 April 2016.  Transition arrangements will apply for these authorisations which are detailed in section CAA04120

·        Inward Processing Drawback (IP (D) will cease on 30 April 2016.  No new goods may be entered to IP (D) after this date.  Current IP (D) authorisations will have a period of six months from the end of the throughput period to reclaim duties paid on import to IP (D) i.e. claims to be made no later than 31 October 2016 

·        Prior authorisation for inward processing is dependent upon the provision of a guarantee 

·        No guarantee is required for outward processing apart from SES and prior import of replacement products (OP IM/EX) and IP EX/IM PEE (prior export equivalence)

·        Where IP EX/IM (prior export equivalence) is authorised, it is not allowable for products attracting Anti-Dumping Duty (ADD) to be approved as the ‘replacement products’ for the equivalent EU goods previously exported.

PCC authorisations may be used, to import goods to IP during the transition period until the date of the PCC authorisations expiry or 30 April 2019, whichever is earliest.  PCC authorisation holders will be issued with an IP authorisation number which must be used after 30 April 2016 for any new importations.  The customs debt rules in article 85 of the Code must be used for the new importations.