Guide Notes: goods exported for processing and subsequently returned
It is becoming increasing common for fabric to be sent to countries such as Morocco to be made up into garments and returned to the EU, very often without any change in ownership of the materials. An EUR1 / EUR-MED is obtained for the exported fabric and the overseas authority issues an EUR1 / EUR-MED for the garments on the basis that the fabric was of EU origin. Clearly if the EUR1 / EUR-MED for the fabric is invalid then the EUR1 / EUR-MED for the garments is also likely to be invalid and duty will almost certainly be due.
Audit officers may come across situations where UK issued EUR1 / EUR-MEDs are either not supported by evidence or are clearly invalid because the fabric has been imported from a non-qualifying third country. They should issue duty demands where there is positive evidence that the fabric does not qualify and the import entries for the garments are more than two years old (and less than the three year time limit laid down in the Community Customs Code for the notification of customs debts). In other circumstances they should not issue duty demands at this stage. In all cases the officer should take copies or details of all the EUR1s at issue and send them to the Tariff Preference UoE with a brief covering report. The UoE will write to the overseas authority explaining that we are withdrawing the specified EUR1 / EUR-MEDs issued by us and asking whether this will invalidate EUR1 / EUR-MEDs issued by them. The withdrawal of specified EUR1s by the overseas authority will provide a sound basis for duty demands.
Legal advice is that we are likely to have some difficulty at Tribunal where the overseas authority has not withdrawn certificates issued by them. The difficulty would be somewhat reduced where we had positive proof that the fabric did not qualify (rather than just lack of evidence to support EU origin) but we should still always approach the overseas authority.