Number of invalid origin certificates still increasing

29 April 2010

ITS wrote in September about the increasing number of invalid origin certificates and how businesses could be affected by them. However, it seems that the issue is still a significant problem and HMRC has issued an update to the annex of its previous notice.

Background

All claims for 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.

(The example of the green guilloche pattern required can be seen here).

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).

Preference Certificates identified to date which do not comply with the legal requirements

Country/Territory

Certificate

Irregularity

Acceptance of Certificates

Jamaica

EUR1

The certificates do not comply with the technical requirements as laid down in Annex 3 to Protocol 1 of the EPA between the CARIFORUM States and the EC, in that the background is not a green guilloche but has a green wavy background.

HMRC will continue to accept irregular certificates which have been issued in Jamaica up to and including 31.12.09. Irregular certificates issued after that date are not acceptable.Note: The period ofgrace has been extended until 30.04.2010

Kosovo

EUR1

The certificates do not comply with the technical requirements as regards to there being no guilloche pattern and colour.

HMRC will continue to accept irregular certificates which have been issued in Kosovo up to and including 31.05.10.

Irregular certificates issued after that date are not acceptable

Mexico

EUR 1

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 that have been issued in Mexico until further notice.

Egypt

Form A

The certificates do not comply to the technical requirements.

HMRC will continue to accept irregular certificates that have been issued in Egypt up to and including 31.12.09.

Irregular certificates issued after that date are not acceptable.

India

Form A

The background is not a guilloche pattern

HMRC will continue to accept irregular certificates that have been issued in India up to and including 31.12.2010.

Iran

Form A

The background is not a guilloche pattern, lines do not interweave

HMRC will continue to accept irregular certificates that have been issued in Iran up to and including 31.12.2010.

Irregular certificates issued after that date are not acceptable.

Malawi

Form A

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

HMRC will continue to accept irregular certificates that have been issued in Malawi up to and including 30.04.2010.

Irregular certificates issued after that date are not acceptable.

Senegal

Form A

The background is not a guilloche pattern

HMRC will continue to accept irregular certificates that have been issued in Senegal up to and including 30.04.2008.

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

HMRC will continue to accept irregular certificates that have been issued in Sri Lanka up to and including 30.06.08.Note: the period of grace has continually been extended and has now been extended until 30.06.2011.

This is due to the Department of Government Printing in Sri Lanka not having the necessary security software. Irregular certificates issued after that date are not acceptable.

The following countries had “irregular” certificates but the “Period of Grace” for their replacement with forms that meet the legal requirements has now passed. You should not be receiving any “irregular” certificates from the countries below. If you do, you should obtain a retrospective document from your supplier:

Country/Territory

Certificate

Irregularity

Last date of acceptance of “Irregular” certificates

Dominican Republic

EUR 1

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

HMRC will continue to accept irregular certificates that have been issued in the Dominican Republic up to and including 31.05.2009.

Irregular certificates issued after that date will be rejected by the customs authorities.

Brazil

Form A

Certificate does not have a guilloche pattern.

HMRC will continue to accept irregular certificates that have been issued in Brazil up to and including 31.12.2006.

Irregular certificates issued after that date will be rejected by the customs authorities.

NB the Commission has informed Brazil that 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 Community must be used.

Colombia

Form A

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

HMRC will continue to accept irregular certificates that have been issued in Colombia up to and including 31.03.2009.

Irregular certificates issued after that date will be rejected by the customs authorities.

Next Steps

The rules of origin in International Trade are one of the most difficult and problematic of the four pillars of EC Customs Law. Not only are the rules difficult but the ECJ has on a number of occasions ruled that the emphasis on compliance rests completely with the importer even in cases where customs authorities of non-EC states have initially accepted certificates of origin but have later found them to be invalid (See ITS article concerning the ECJ judgement in the case of DSV Road.)

International Trade Solutions has a wealth of experience in issues that have arisen concerning the rules of origin. For a free first consultation please contact us on (01905) 619229 or alternatively email us at mail@internationaltradesolutions.co.uk.

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