Businesses warned about increasing number of invalid certificates of origin

30 September 2009

 

International Trade Solutions reported in May that the ECJ was looking at a number of cases of invalid certificates of origin and then reported the ECJ case of DSV Road v European Commission where a customs authority successfully challenged an importers use of preferential certificates of origin (see Customs Successfully Challenge Incorrect Preference Documentation (GSP Form A) Again!)

However, it seems that Customs Authorities are becoming increasingly aware of proof of origin certificates that do not meet the legal standards and requirements. For example, from 1 January 2008 to the end of August this year, HM Revenue & Customs rejected 1070 proofs of origin totalling £4.45 million in duty reclaims and have initiated cases on 3445 proofs of origin.

More recently though, HM Revenue and Customs has issued a public Notice regarding an increase in the use of invalid certificates of origin (see HMRC website www.hmrc.gov.uk). This paper will briefly summarise what the notice is about.

Background

All imports that are being claimed under preferential treatment must be supported by an appropriate proof of origin:

  • A GSP Form A
  • An EUR 1 Movement Certificate
  • Where provided for- a declaration on an invoice or other commercial document

The origin rules in all of the EC’s preferential trade arrangements stipulate that GSP Forms A and EUR1 Movement certificates must meet certain requirements as regards the:

  • Size (210 × 297 mm with a tolerance of 5mm or +8mm in length)
  • Weight of paper (not less than 25g/square metre (not less than 60g/square metre in the case of Forms EUR1 issued in the African, Caribbean and Pacific (ACP) States),
  • Layout (white, sized for writing, not containing mechanical pulp) and;
  • Background which must consist of a green (shade not specified) guilloche pattern.

What happens if a certificate has been identified as irregular?

The European Commission has written to the preference receiving countries where irregularities have been identified reminding them of their legal requirements and their obligations to receive preferential tariff treatment. However, the Commission has allowed these countries a range of deadlines to phase out the irregular certificates (as many countries still have large stocks of the irregular certificates). During this period customs authorities of Member States can continue to accept, subject to the satisfaction of all normal conditions, claims to preferential treatment which are supported by “irregular” Forms A or EUR 1 movement certificates.

Acceptance of irregular certificates

The table below, taken from the HMRC Notice, highlights details of the irregularities identified to date and the action to be taken by Member States Customs Authorities. It is highly advisable that if you are importing goods under preferential arrangements that you check the validity of your certificates of origin. If you do not check the certificates and later it is found after the cut off date that you possess an “irregular” certificate you will be required to obtain a retrospective certificate on the new, technically correct form from your supplier on the grounds that the original cannot be accepted for technical reasons. If you fail to obtain the correct certificates then you are not only leaving yourself exposed to a post-clearance duty demand but also to penalties and a poor compliance record (especially significant if your company qualifies for the Senior Accounting Officer provisions of the Finance Act 2009 (see Customs Obligations for Senior Accounting Officers under the Finance Act 2009) and/or if your company is registered as an Authorised Economic Operator (see AEO – A Customs World of Haves and Have Not’s).

Country

Certificate

Irregularity

Final Date of Acceptance of Certificates

Dominican Republic

EUR1

The certificates do not comply with the technical requirements as regards their length, as laid down in the Market Access Regulation (MAR)

31.05.09. Irregular certificates issued after that date will be rejected.

Mexico

EUR1

The certificates do not comply with the technical requirements as laid down in Decision 2/2000 of the EC-Mexico Joint Council in as much as the background colour was too pale and the guilloche pattern incorrect

HMRC will continue to accept irregular certificates which have been issued in Mexico until further notice.

Columbia

Form A

Certificate does not have a guilloche pattern but a triangle pattern as its background.

31.03.09. Certificates issued after that date will be rejected.

Egypt

Form A

The certificates do not comply with the technical requirements.

31.12.09

Iran

Form A

The background is not a guilloche pattern with lines that do not interweave.

31.12.10

Malawi

Form A

The background is not a guilloche pattern, lines do not interweave. Also the size of the certificates does not comply with the technical requirements.

30.04.10

Senegal

Form A

The background is not a guilloche pattern.

30.04.08. This date was extended until 31.10.08 but the Commission omitted to inform anyone. This is ongoing and further instruction is awaited. Irregular certificates issued after that date are not acceptable.

Sri Lanka

Form A

Certificate does not have a guilloche pattern.

30.06.08
Note: the period of grace had been extended firstly to 31.12.08 then to 30.06.09 and now until 30.06.2010. Irregular certificates issued after that date are not acceptable.

The following table is of countries whose grace period has expired. If you continue to receive “irregular” certificates these will be rejected and you will need to obtain a retrospective document from your supplier.


Country

Certificate

Irregularity

Last date for acceptance of “irregular” certificates

Antigua & Barbuda

EUR 1

Certificate does not have a guilloche pattern that complies with the set requirements.

04.06.07

Croatia

EUR 1

The background is not a guilloche pattern.

21.01.07

Lesotho

EUR 1

Green guilloche pattern does not match the technical requirement specifications laid down in the Market Access Regulation MAR

31.12.08

Malawi

EUR 1

The background is not a guilloche pattern.

31.11.06

Mauritius

EUR 1

Certificate was reprinted but had a typographical error, therefore another period in which the use of non-compliant forms was granted.

28.02.06
Note: The period of grace was extended to 31.07.06.

Papua New Guinea

EUR 1

Certificate does not have a guilloche pattern that matches the specifications. Also, there is a typographical error and was printed as EUR1. Instead of EUR. 1

01.05.08

Syria

EUR 1

Certificate does not meet some of the basic requirements i.e. size and weight.

31.12.08

Uganda

EUR 1

The green guilloche pattern is missing.

31.12.08

Zimbabwe

EUR 1

The background is not a guilloche pattern.

31.08.06

Bahrain

Form A

Non-compliant forms.

31.12.07

Bolivia

Form A

The background is not green and is not a guilloche pattern. Instead, the background consists of continuous repetition of the name of the issuing body (Cam,ara de Exportadores de Bolivia).

28.02.06
Note: the period of grace was extended to 31.03.06.

Brazil

Form A

Certificate does not have a guilloche pattern.

31.12.06
Note: the Commission has informed Brazil that the Member States will accept the large guilloche pattern until exhaustion of stocks but in the future a model more closely resembling that of forms printed in the EC must be used.

Cambodia

Form A

Certificate has a triangle pattern rather than a guilloche background.

31.05.06
Note: the period of grace was extended until 31.08.06

Dominican Republic

Form A

The background is not a guilloche pattern.

31.07.08

Kazakhstan

Form A

The background is not a guilloche pattern.

31.07.08

Maldives

Form A

Non-compliant forms.

31.12.07

Mauritania

Form A

Certificate does not have a guilloche pattern.

29.02.08

Mongolia

Form A

The Certificates do not have a visible/clear guilloche pattern.

31.12.08

Nepal

Form A

Certificate does not have a guilloche pattern.

31.12.06
Note: the period of grace was extended until 31.03.07

Nigeria

Form A

The background is not a guilloche pattern and the form is too short.

30.04.08

Pakistan

Form A

Certificate does not have a guilloche pattern.

31.05.06
Note: The period of grace was extended until 31.07.06

Paraguay

Form A

The background is not a guilloche pattern.

31.07.08
Note: the period of grace was extended until 31.12.08

The Phillipines

Form A

Certificate has a triangle pattern rather than a guilloche background.

31.05.06
Note: the period of grace was extended until 31.08.06

Saudi Arabia

Form A

Certificate does not have a guilloche pattern.

30.06.06

Senegal

Form A

The background is not a guilloche pattern.

30.04.08
Note: This date was extended until 31.10.08 but the Commission omitted to inform anyone. This is ongoing and further instruction is awaited. Irregular certificates issued after that date are not acceptable.

Solomon Islands

Form A

The background is not a guilloche pattern.

30.06.08
Note: the period of grace was extended to 30.09.08.

Thailand

Form A

Certificates produced using EDI do not respect the size requirements.

31.07.08

United Arab Emirates

Form A

Certificate does not comply with the technical requirements laid down by EU law.

31.12.06
Note: the grace period was extended until 31.08.08.

Venezuela

Form A

Certificate does not have a guilloche pattern background.

31.12.08

Vietnam

Form A

Certificate is yellow in colour and not green.

31.07.07

Zimbabwe

Form A

Certificate does not have a guilloche pattern and the colour is blue.

31.08.06

What could this mean for my business?

One of the biggest risks of importing goods under a preferential arrangement is the risk of proving the authenticity and validity of any documentary proof of origin. The Courts in particular have been interpreting legal provisions and laws very narrowly so that the onus on proving the authenticity of such documents very much lies with the importer even when the national authorities of the exporting state has accepted the certificates (see once again the ruling in DSV v Commission (2009)). If you are thinking about importing goods under preferential arrangements it is highly advisable that you mitigate your risk to the fullest extent (by negotiating clauses in contracts etc).

International Trade Solutions has extensive experience not only in the sphere of origin but also in the commercial aspects of business transactions. For a free first consultation meeting call us on (01905) 619229 or email us at: mail@internationaltradesolutions.co.uk.

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