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HMRC internal manual

Customs Special Procedures Manual

Specific rules and processes relating to Outward Processing: scope of the Outward Processing (OP) procedure

The purpose of OP

OP provides duty relief on imports of goods from third countries which have been produced from previously exported EU goods. It allows businesses to take advantage of cheaper labour costs outside the EU, while encouraging the use of EU produced raw materials to manufacture the finished products.

The procedure allows for:

  • goods to be temporarily exported to undergo processes not available within the Union
  • faulty goods to be returned to a third country for repair, or
  • replacement with equivalent goods under the Standard Exchange System (SES).

Examples of usage of OP:

  • goods may be exported to undergo technical processes not available in the EU
  • faulty goods may be exported for repair (or replacement under SES (Standard Exchange System)) (UCC Article 261)
  • repaired goods may be re-imported with total or partial relief from duty
  • SES may be used to import replacement goods before the goods they are replacing have been exported (‘prior import of replacement products’) (UCC Article 262)
  • Inward Processing (IP) goods may be temporarily exported under OP (any duty due on the process or repair is added to the amount suspended when the goods are re imported to IP) (UCC Article 258).

Outward Processing is not allowed for the following: (UCC Article 259(2))

  • Union goods where their export leads to a claim for a repayment or remission of import duties (UCC Article 259(2)(a))
  • Union goods which, prior to export, were released to free circulation under a duty exemption or at a reduced rate of duty by virtue of their ‘End-use’ arrangements, for as long as the purposes of such end use have not been fulfilled (unless those goods have to undergo repair operations) (UCC Article 259(2)(b))
  • Union goods where their export gives rise to an export refund (UCC Article 259(2)(c))
  • Union goods for which a financial advantage (other than in the bullet above) is granted under the Common Agricultural Policy (CAP) because of their export  (UCC Article 259(2)(d)) 146(1)).

Additionally, SES cannot be used for CAP goods see SPE14030.