H.M.Paperwork - Filling out the Forms!

Most of the information in this section has been taken from "The International Freight Guide" with the kind permission of the British International Freight Association.

Bill of Lading
Airway Bill
CMR Note
Standard Shipping Note
Certificates of Origin
ATA Carnet
Movement Certificates
The Role of Customs and International Trade
Customs Entry and Customs Procedure Codes
Community Transit & the Single Market Effect
EDI - Customs, Trade & the Future

THE ROLE OF CUSTOMS AND INTERNATIONAL TRADE

Planning for any international movement must take into account, at the very earliest moment, the arrangements for dealing with customs activities, whether in the UK, or overseas.

The Customs' role embodies that of statistician, policeman and tax collector all in the one function, and therefore plans must be made in advance to ensure that the correct information is available on the documents, the correct laws are complied with, and, finally, that funds are available to pay any taxes due.

CUSTOMS WORLDWIDE

Most customs' activities are based around a customs tariff of some kind, with the vast majority of countries using a customs tariff which is based on the Harmonised System (HS) of classification for goods. This provides a standard numerical numbering system for most products.

The HS numbering system is controlled via the World Customs Organisation. This, prior to 1994, was known as the Customs Co-operation Council (CCC), and was established by Convention in Brussels on 15 December 1950.

The main functions of the WCO are to deal with questions relating to customs matters and to examine technical and economic factors in relation to customs systems. Drafting of Conventions and recommendations on the interpretation and application of the Conventions also feature in their work. Classification and valuation of goods and the various methods which may be used for same are a primary consideration. Inter-government disputes on customs Conventions, and circulation of information, together with recommendations to signatory governments to the Conventions, complete the many roles which it performs. Standardisation of customs tariffs around the world means that many shippers would benefit from quoting the HS classification against each product on the invoice. This could eliminate the delay caused while checks are made to ascertain the proper HS number for the product at destination.

THE EUROPEAN UNION AND CUSTOMS

Looking at the European Union, all EU customs authorities operate under the Community Customs Code which has been agreed by Member States' customs authorities. The result is that there should be a common method by which customs' activities are controlled and measured, resulting in the same basic procedures being undertaken in all Member States.

An example of this standardisation across the EU can be seen in the "Binding Tariff Information" (BTI) rulings. Where a shipper wants to be sure that the same HS number is allocated to its products around the EU, a request can be made to Customs in one Member State for a ruling, and that ruling is then quoted should a dispute arise.

Negotiations with other major trading nations worldwide are now undertaken at EU level, thereby allowing all Member States a "standard voice" worldwide. The resulting customs agreements are then incorporated into the "Official Journal of the European Communities", and passed to Member States to enact the various agreements and regulations.

All preferential agreements, quotas and tariff duty suspensions are therefore agreed at EU level, allowing common access arrangements for goods to the EU as a whole.

The European Economic Area, encompassing all the major European countries, looks set to make extension to the European Union almost certain. While some countries may prefer to keep at arm's length, they are still able to trade without tax disadvantage.

LEGALLY SPEAKING

Customs legislation in the UK requires that the importer or exporter has the primary responsibility for the provision of customs declarations and documents, to the specification which the law demands at the time of shipment. This pattern is followed by most customs authorities around the world. We saw earlier the relationship of UK Customs with that of the EU as a whole and how the legislation was passed from Brussels to the UK to allow a standard procedure by all EU customs officials.

However, Customs also recognise that many importers and exporters do not have the knowledge or expertise to undertake the declarations themselves, and therefore it uses the services of a freight forwarder to make the declaration for them. Under these conditions, Customs takes the view that the importer or exporter has employed the services of an "expert". Therefore, the forwarder shares some responsibility for the accuracy and correctness of declarations and documentation.

It is not uncommon for Customs to levy a fine on both shipper and forwarder when an error occurs based on the above. The level of any fine imposed will vary depending on the degree of the offence involved.

The UK Customs Tariff

In the UK, we use a standard tariff based on that adopted by the European Union (EU) in Brussels. The tariff comprises three volumes, which are:

General information - Volume 1

This includes information on the European Union, import and export prohibitions and restrictions, the Common Agricultural Policy (CAP), duties and preferences, quotas and valuation methods for goods.

Schedule of duty and trade statistical descriptions, codes and rates - Volume 2

This is used for ascertaining the correct classification of goods and their rates of duty, statistics required and so on. The classification numbers more accurately called a Commodity Code, comprises a possible ten-digit number for imports, while only the first eight digits are used for exports.

Looking at the Commodity Code in more detail, we find that the first six digits are the HS number referred to earlier in this section. The next two digits convert the HS number into a EU classification, while the last two digits break the information into a more detailed number if required - often they will be two zero's.

For example, the classification of a printed book would be found in Chapter 49, subsection 01; hence books are usually referred to as being in Chapter 49. 01. However, we now need to look at what type of book it is, for example a dictionary or normal printed book. A dictionary would be classified as 490191, the 4901 indicating it is a book, while the 91 indicates it is a "dictionary or encyclopaedia". This covers the HS number. We now need to look at the EU requirements. Here we find that no further breakdown is needed, hence the EU number for a dictionary is 490191 00. As no further detailed breakdown is needed, the final two digits are also 00, hence the full classification for a dictionary in the EU is 490191 00 00.

Having classified the goods, we are now able to discover what statistical information is required; in this case only the net weight in kilos. Now we can also see the rate of duty, in this case "duty free", and finally the rate of value added tax (VAT) - also zero.

Although the classifications within Volume 2 are very detailed, they will often not be sufficient to allow precise allocation to a commodity code. In this case, a further set of information is available from the World Customs Organisation to assist with more complex materials. This is the "Harmonised Commodity Description and Coding System - Explanatory Notes", usually referred to as the "Brussels Notes". This gives more precise information about the constituent materials in products and thereby allows a more accurate classification to be made.

Customs freight procedures - Volume 3

Here we find information about how to complete the single administrative document (SAD), customs entry, information on export and import procedures, as well as community transit.

All the above gives a very abbreviated version of the customs tariff and the procedures used to assist with the movement of goods internationally. Reference to the actual tariff itself is essential for full understanding.

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