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HMRC internal manual

Oils Technical Manual

Operations in Warehouse: Oil used in a chargeable process - customs duty

When oil which is liable to customs duty is used in a process which is not permitted to be performed in a warehouse, and that process does not in itself give entitlement to customs duty relief, that duty becomes payable at the time the oil is taken into process. However, arrangements may be made (as explained inNotice 171 (HMRC website) for claiming suspension of customs duty when the products of the process are intended for exportation.

You must ensure that suitable procedures (as explained in paragraph 19 of Notice 171) are complied with, and that the trader adopts a reasonable method of estimating home use and export allocations.

If a product of the process is an oil, it is to be re-warehoused, the quantity derived from the export allocation being entered in the records as “for export only”. Any diversion of this oil to home use would attract EU customs duty charge, at the rate and on the value applicable to the oil from which it was derived, at the time that the oil was put into process.