customs transit procedures overview this unit covers...

Module 4: Customs Transit Procedures Participant

4-1

Customs Transit Procedures

Overview

This unit covers the following topics:

�� Movement of Goods and Transit Systems

�� The TIR System

�� TIR Carnets and TIR Operations

�� Common Transit Procedure

�� Single Administrative Document (SAD)

�� Guarantee Procedure in Common Transit System

�� New Computerised Transit System

Objectives

By the end of this module, you will be able to;

�� Describe the role of Customs in Transport and Trade

�� Fill in the TIR Carnet correctly

�� Analyze the TIR operations and the actors of TIR Transit System

�� Describe the Common Transit Regime and it’s specific functions in

Customs

�� Fill in the Single Administrative Document (SAD) correctly

�� List the type of guarantees and explain the differences between them


4-2

Module 4:

Module 4:

Module 4:

Module 4:

Introduction

Customs transit is a corner stone of vital interest to the European

transport and trade business. It enables goods to move more freely and makes

customs clearance formalities more accessible. It does so by temporarily

suspending duties and taxes that are applicable to goods being imported into

the community (Community transit), or between the European Community, the

European Free Trade Association, SECI and Vise grad countries (via the

Common Transit Convention) or among the states that are now contracting

parties to the TIR Convention. For the countries of SECI, access to the common

transit system plays a key role in their pre-accession strategy.

Some 20 million Community and common transit documents and two and

half million TIR carnets are issued every year representing billions of euro in

duties and charges and these figures are continuously rising.

In this unit three transit systems and the basic ideas behind the

computerization of these transit systems will be explained.

Scenario: Unexpected Payments

E-Trans firm was sending goods to Europe for long years. However, 10% of

their net profit was lost in the customs every year. This year, E-Trans firm considered

this case, made interviews with truck drivers and examined the past events. The

result showed that these losses were mostly originated from the unexpected

payments and waiting times in Customs.

Truck drivers mentioned that different passing conditions were experienced in

every country and this increased the waiting times. Especially, the delay of goods

and deterioration of materials such as food increased dissatisfaction of customers.

E-Trans firm was looking for a way to solve this problem, but could not find a

solution.

Do you think the firm can settle this problem by itself? What might be the solution of


4-3

Movement of Goods

When goods enter a country/territory, customs demand a payment of

import duties and other charges and, where appropriate, apply commercial

policy measures (for example anti-dumping duties). This is the case even where

the goods are only meant to pass through (transit) that country/territory on their

way to another. Under certain conditions the taxes and charges paid may be

reimbursed when the goods leave that country/territory. In the next

country/territory this procedure may have to be repeated. The goods may have

to undergo a series of administrative procedures at border crossings before

reaching their final destination.

Functions of Transit

Transit is a customs facility available to operators so

their goods can cross a given territory without charges due in

principle when the goods enter (or leave) that territory (‘pure

transit’) being paid. Compared to the situation described above

it offers an administratively simple and cost advantageous procedure for

carrying goods across customs territories (Transit Manual, 2001).

It also allows goods to travel to a point

within a territory where the customs clearance

procedures (for release to free circulation or

export) will be carried out (“inland” or

“proximity” transit). This form of transit is

particularly relevant to the Community where

a single customs territory is combined with a

multiplicity of fiscal territories: goods can

move under transit from their point of entry

into the Community to the point of their

clearance where the customs and the local

fiscal obligations are taken care of.

Its essence is to allow the temporary

suspension of customs duties, excise

and VAT payable on goods originating

from and/or destined for a third country

while under transport across the territory

of a defined customs area. This

suspension of duties and taxes remains

in place until the goods either exit the

customs territory concerned, are

transferred to an alternative customs

regime or the duties and taxes are paid

and the goods enter free circulation.

Essence of Transit


4-4

Apart from these two main functions of transit the procedure is also used

to transfer goods, which are entered for, or have just been removed from

another custom’s procedure from one part of the customs territory to another

(but alternative transfer procedures exist).

Transit Reform

Because of the vast amounts of money involved, the transit systems

have always been the focus of fraud. The possibility of fraud occurring has

increased with the success of the internal market and with the growth of the

world trade in general.

The common and Community transit systems began showing

weaknesses in the early nineties:

Table 1: Weaknesses of Transit Systems

A similar process had been going on in the field of the TIR system. In the

early 1990s, the TIR system also began to experience a significant increase in

fraud leading to large losses of duties and charges.

Who can be the active and non-active actors in transit fraud?

�� The paper-based system turned out not to be fraud-proof;

�� There was a growing lack of clarity in procedures and an increasing lack of

parallelism between the two systems;

�� The incapacity of the systems to deal with specific situations, which meant the

risks grew higher and reliability decreased;

�� The administrations were incapable of complying with the regulations in force as

administrative communication and cooperation were insufficient.


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Guarantor

A guarantor is a natural or legal person

who undertakes in writing to pay jointly and

severally with the debtor (in most cases the

principal) the amount of charges and duties

that become due when a transit document is

not discharged properly. In order to become a

guarantor one must be established in one of

the 22 countries of the Common Transit

Convention and be recognised as such by customs.

The TIR System

The TIR System is similarly based on an international convention, signed

on 14 November 1975. The system is very attractive for the transport operators

and Customs authorities because of its simplicity and effectiveness. It facilitates

the movement of goods in international trade while effectively protecting the

revenue of each country through which such goods are carried. The figure

below shows the five main pillars of the TIR transit system; (Europarl, 2001).

Figure 1: The TIR System (IRU, 2001)

A Guarantor may be an individual or firm

or other body that is eligible to contract

as a legal third person (normally a Bank

or an Insurance Company). The

Guarantor is responsible for the payment

of duties and other charges where these

are not paid promptly by the Principal.

Guarantor


4-6

Goods are carried in sealed vehicles or containers which are approved

for use by Customs and re-approved every two years.

Duties and taxes due in case of irregularity are secured by an

international guarantee chain throughout the journey.

The goods are accompanied by the TIR Carnet: a control document

accepted by the Customs authorities of the countries of departure, transit and

destination. Control measures taken in the country of departure are accepted by

countries of transit and destination.

Access to the TIR procedure for national associations to issue TIR

Carnets; and for natural and legal persons to utilize TIR Carnets should be

authorised by competent national authorities.

Approval of Road Vehicles and Containers

With regard to security, the TIR Convention stipulates that goods should

be carried in containers or road vehicles with load compartments to which there

is no access to the interior when it is secured by a customs seal and that any

tampering will be clearly visible.

In order to achieve this aim the Convention sets out standards of

construction and approval procedures. Goods may only be carried under cover

of a TIR Carnet if the road vehicle or the container is approved in accordance

with such requirements.

What are the negative results of complex customs procedures of SECI

region in transport and trade?


4-7

International Guarantee System

The second basic element of the TIR transit regime is its international

guarantee system. This system was devised to ensure that customs duties and

taxes at risk during transit operations are covered at ever moment by a national

guaranteeing association, if the TIR transport operator cannot be held

responsible for paying them.

The operation of the TIR guarantee

system is straightforward. Every association

representing carriers in a particular country

and recognized by the customs administration

of that country, guarantees payment within that

country of any duties and taxes which may

become due in the event of any irregularity

occurring in the course of the TIR transport

operation.

This national guaranteeing association assures the payment of duties

and taxes of national or foreign carriers under a TIR Carnet, which has been

issued by this national guaranteeing association itself or by an association in

some other country. Every country therefore has the benefit, for all TIR

transport operations within its territory, of a guarantee provided in its territory.

Therefore, there is a national partner that customs authorities can address if

there are any cases of irregularity (UNECE, 1995).

The system may therefore be considered as a succession of national

transit movements relying, however, on international rather than national

measures, that is traveling under the cover of an internationally valid guarantee.

All the guaranteeing associations constitute a guarantee chain linking all TIR

countries. Today the only existing guaranteeing chain is administered and

backed by the International Road Transport Union (IRU) in Geneva,

Switzerland.

Administrations are advised to limit the

maximum amount payable by the

guaranteeing association by TIR Carnet,

to 50, 000 US Dollars.

For the tobacco alcohol TIR Carnet the

maximum amount has been fixed at

200, 000 US Dollars.

Maximum amount of the guarantee


4-8

TIR Carnet

The third and most visible element of the whole TIR

system, apart from the TIR plate on the vehicle itself, is the TIR

Carnet, which also constitutes the administrative backbone of

the TIR system. Several countries, including all European

countries except Iceland, have signed a convention with a view

to speeding up the carriage of goods transported by road

vehicles or containers by simplifying frontier formalities

(UNECE, 1995).

Transportation is carried out under the cover of an international customs

document, CARNET TIR that may be used for successively crossing several

frontiers. This sort of transit is no longer allowed in the European Community

except if the transport starts and/or ends in a third country. If the transport is

carried out only in the Member States of the European Community, Community

transit must be used.

TIR stands for the French for International Road Haulage. The TIR

Carnet system started in 1960 as a result of a convention on the international

transportation of goods. It was devised to prevent the huge amount of time

wasting that was occurring because long-distance vehicles were held up for

customs inspection and resealing at every frontier.

Is it possible to estimate how much fraud there is in the TIR transit system?

If so, how?

= International Road Haulage


4-9

The idea was to provide a document on entry to a country that gave solid

evidence of the goods arriving in that country. Now, the customs officer at the

point of entry need not do more than examine the seals on the vehicle to ensure

they have not been broken, and glance at the rest of the vehicle to ensure that

the framework of the container, the tilt or other external cover is intact.

The vehicle is then sent on its way. At the point where it leaves the

country the vehicle surrenders a second copy of the carnet. When these two

copies arrive at the central office they can be compared/matched and this

indicates that the goods arrived in and later left the country, therefore a duty is

not payable.

If the second copy does not arrive, it is clear that the goods remained in

the country and duty is payable. A guarantor - the body authorized to issue

carnets, usually a trade association - is then required to pay the duty if an

irregularity has occurred, and recovers it from the hauler whose staff were

probably liable for the irregularity. If the country concerned is the country of

destination the goods will be liable to the import procedure for that country and

duty will be collected from the appropriate person - usually the holder of the TIR

Carnet.

TIR Carnets are at present issued by

the IRU to the national guaranteeing

associations under conditions set out in a

contractual commitment signed with the IRU.

Each association in turn issues the TIR

Carnets to carriers in its country in accordance

with the conditions set out in the declaration of

commitment signed by the carrier with the

association.

The TIR Carnet covers the duties and

other charges at risk on goods moving

from one country to others.

Each individual TIR carnet can be used

for one TIR operation. The TIR carnet is

returned to the IRU for control and

archiving.

TIR Carnet

What happens to used TIR Carnets after a TIR operation has been completed?


4-10

Table 2: General Rules Regarding the use of TIR Carnet

Issue In the country of Departure or in the country of which the

holder is resident

Language Printed in French (cover page is English)

Validity Valid until the completition of the TIR Operation at the

Customs Office of Destination

Number of Carnets One Carnet for each combination of vehicles

Number of Customs of Office

of Departure/ Destination

Shall not exceed four

Number of Forms 2 sheets for each country of departure, destination and

country traversed

Presentation at Customs

Office

Presented with all combination of vehicles at each customs

Table 3: Filling Procedures of TIR Carnet

Erasures, over-writing No erasure or over writing

Information concerning

registration

If there’s no registration number, identification or

manufacturer’s number can shown

The Manifest The manifest must be completed in the language of the

country of departure

Information must be clear or legible on all sheets

Any commercial documents can be attached to the

manifest (the number of sheets attached and the number

and type of packages should be stated.)

If the TIR Carnet covers a combination of vehicles, indicate

the contents of each vehicle or container on the manifest

Packing lists, photographs,

plans, etc.

When such documents are required by customs authorities

for the identification of heavy or bulky goods they must be

endorsed by customs authorities and attached to page 2 of

TIR carnet (refer to these documents in box 8 of all

vouchers)

Signature All vouchers must be dated and signed by the holder of the

TIR Carnet or his/her agent


4-11

CARNET TIR* (Name of International Organization)

1. Valable pour prise en charge par le bureau de douane de départ jusqu'au inclus Valid for the acceptance of goods by the Customs office of departure up to and including

.....vouchers

2. Délivré par Issued by (nom de l'association émettrice / name of issuing association)

3. Titulaire Holder

(nom, adresse, pays / name, address, country)

4. Signature du délégué de l'association émettrice et cachet de cette association: Signature of authorized official of the issuing association and stamp of that association:

Signature of the secretary of the international organization:

(A remplir avant l'utilisation par le titulaire du carnet / To be completed before use by the holder of the carnet)

6. Pays de départ Country of departure

7. Pays de destination ( 1 )

Country/Countries of destination ( 1 )

8. No(s) d'immatriculation du (des) véhicules(s) routiers(s) ( 1 )

Registration No(s). of road vehicle(s) ( 1 )

9. Certificat(s) d'agrément du (des) véhicule(s) routier(s) (No et date) ( 1 )

Certificate(s) of approval of road vehicle(s) (No. and date) ( 1 )

10. No(s) d'identification du (des) conteneur(s) ( 1 ) Identification No(s). of container(s) ( 1 )

11. Observations diverses Remarks

No

12. Signature du titulaire du carnet: Signature of the carnet holder:

( 1 ) Biffer la mention inutile

Strike out whichever does not apply

CARNET TIR* (Name of International Organization)


.....vouchers


3. Titulaire Holder














No




CARNET TIR*

(Name of International Organization)


.....vouchers


3. Titulaire Holder




* Voir annexe 1 de la convention TIR, 1975, élaborée sous les auspices de la Commission économique des Nations Unies pour l'Europe. * See annex 1 of the TIR Convention, 1975, prepared under the auspices of the United Nations Economic Commission for Europe.











No




Figure 2: TIR Carnet


4-12

TIR Operations

A TIR operation is an international transport operation (a transit operation

across one or more borders) of goods, only a part of which has to be made by

road. A TIR operation may take place between a customs office of departure of

countries with which a TIR transit operation can be established and a customs

office of destination of another such country.

Below is a schematic chart showing how the TIR operation is performed

in practice: (IRU, 2001).

National Guarantee Association

Customs

Customs Office of

Departure

Holder

Customs Office of

Exit

Customs Office of

Exit

Customs Office of

Entry

Customs Office of

Destination

1

2

3 Customs Customs

TIR Carnet issued by

TIR Carnet issued to

Carnet presented at

Controls the goods Affixes the Seals

Checks the Seals

Checks the Seals Checks the Seals

Checks the Seals

Controls the goods Removes the Seals Discharges the Carnet

Customs Office of

Entry

Figure 3: TIR Operations


4-13

Multimodal TIR Carnet

On 1 September 1987 a new multimodal TIR Carnet was introduced, in

addition to the regular TIR Carnet, which caters specifically for the requirements

of regional and intercontinental multimodal transport.

The new multimodal TIR Carnet, also issued by the IRU, contains an

additional sheet, clearly separated from the usual sheets, exclusively designed

for multimodal transport and identifying the persons making up the transport

chain.

The holder of the multimodal TIR Carnet, when carrying the goods under

cover of the TIR Carnet in the course of a multimodal transport operation,

enters the name and address of the successive bearer of the multimodal TIR

Carnet on the additional sheet. This person, in turn, ascertains the state of the

seals or identification marks affixed by customs authorities and confirms the

number of transport documents attached to the Carnet (if any).

"Tobacco/Alcohol" TIR Carnet

On 1 October 1994 a new TIR Carnet,

called the “Tobacco/Alcohol” TIR Carnet became

an integral part of the TIR Convention. Through

Resolution No. 47, the UN/ECE Working Party

on Customs Questions affecting Transport had

already recommended to utilize such a Carnet

as of 1 September 1994.

While the TIR Convention did not exclude the right of customs authorities

to claim more than the recommended $US 50,000 per TIR Carnet from national

guaranteeing associations (this can be stipulated in the agreement, concluded

under national law, between national customs authorities and the respective

national guaranteeing organization).

There are three types of TIR Carnets:

TIR Carnet

Multi-modal TIR Carnet

Tobacco Alcohol TIR Carnet

TIR Carnet Types


4-14

International Recognition of Customs Control Measures

The fourth basic element on which the TIR system rests is the principle

that customs control measures taken in the country of departure should be

accepted by the countries of transit and destination.

As a consequence of this principle, goods carried under the TIR

procedure in sealed road vehicles or containers will not, as a general rule, be

examined at customs offices en route, and that is where the main advantages of

the TIR system for the transport operator come into play.

Figure 4: Customs Control Measures

Of course, this does not exclude the right of customs offices to carry out

spot checks in cases where they suspect irregularities, but it is understood, and

even stipulated in the convention, that such checks should be exceptional.

This procedure, which is very attractive for the transport operator,

essentially means that the checking undertaken by the customs office of

Country of Departure

Country of Destination Same

Control Measures

Customs 1 Customs 2

Is there a need for harmonizing the Customs control measures in SECI region?


4-15

departure is acceptable to all other customs offices during the TIR transit

operation. As a consequence, and in order to promote and ensure trust in the

TIR system by/of all customs authorities involved, the customs office of

departure plays a crucial role.

Controlled Access to the TIR System

On 17 February 1999 a number of modifications to the TIR Convention

came into force these established further requirements and obligations for the

transport industry when utilizing the TIR system. These measures have been

introduced to safeguard the system against fraudulent activities, committed in

particular by internationally organized crime groups.

In a new annex 9 to the convention providing for authorization by national

competent authorities (usually customs authorities) of national associations to

issue TIR Carnets, minimum conditions and requirements for such authorization

are stipulated. This annex also introduces the requirement that customs

authorities should control access to the TIR system for all its users, that is

transport operators.

What kind of new procedures can reduce the costs, smuggling and corruption

in cross border operations?


4-16

Case Study: Fake Seals

A TIR of Trust Transport passed border customs with cargo that had been

loaded in the export country and had then arrived at the customs of the importing

country where the customer company resides.

Here a representative of the importing company, Imex, met the driver of the

TIR of Trust Transport, and asked him to give the documents required for the import

transactions. Therefore, the driver delivered the documents to the representative of

the importing company so that the transactions could be completed as soon as

possible. After a short period of time, the representative gave the driver the

documents certified with the seals indicating that the importing transactions of

customs had been completed, and the cargo was unloaded to the warehouse of Imex

along with these documents.

However, in fact, the representative of Imex had sealed the importing

documents with fake seals. After few months, the Center of Customs Management

noticed that the TIR card Volet 1 which is given for the vehicle by the center of

border customs management, was delivered but Volet 2, which must be given by the

center of entry customs management had not been delivered. This suggested that

the importing transaction was illegal and therefore should be assessed as a case of

smuggling. Then, the center enforced the applications of guarantee in the frame of

data present on Volet 1.

1. What is the role of driver in this situation? What can he/she do and how?


4-17

Common Transit Procedure

The common transit procedure is managed by the customs

administrations of the various Contracting Parties via a network of customs

offices, known as offices of departure, offices of transit and offices of

destination.

The common transit procedure starts at the office of departure and ends

when the goods and transit declaration are presented at the office of

destination, in accordance with the transit provisions. An officially receipted

copy of the transit declaration is returned by customs to the office of departure

(or a central office in the country of departure). The figure below simply explains

the transit procedure:

Office of Departure

TC 11

SAD Copy 1

SAD Copy 4 5

Office of Destination

TC 10

SAD Copy 5

SAD Copy 5

Figure 5: The Process of Common Transit Procedure


4-18

Single Administrative Document (S.A.D.)

Single Administrative Document (S.A.D.), is an identical document which

can be used for import, transit and export. It is used to draw up the transit

declaration. The SAD consists of numbered copies as follows:

�� a set of eight consecutively numbered copies ( copy 1 to copy 8); or,

�� a set of four consecutively numbered copies (copies 1/6, 2/7, 3/8 and

4/5).

Three copies of the SAD from either an eight page or from two four page

sets are to be used for the transit declaration; i.e. copies 1, 4 and 5.

�� copy 1 is retained by the office of departure after the declaration is

registered;

�� copy 4 accompanies the goods to the office of destination and is

retained there;

�� copy 5 accompanies the goods to the office of destination which

returns it to the country of departure after the end of the transit

procedure.

To complete a transit declaration all necessary boxes of the proper set of

copies of the SAD shall be completed. Certain boxes are mandatory while

others are optional.

Forms should be completed using a typewriter or a mechanographical or

similar process. To line up the form correctly when using a typewriter, the form

should be inserted in the machine in such a way that the first letter of the details

to be shown in box 2, will be in the small box in the top left hand corner of box

2. Only the first (top) copy of the transit declaration is required to be completed.

The details will self-copy to the other copies.

In order to avoid delays which would disturb the normal flow of traffic it is

important that operators correctly complete transit declarations.


4-19

Figure 6: Single Administrative Document (SAD)

17 Country destin. Code

24 Nature of transaction

49 Identification of warehouse

53 Office of destination (and country)

54 Place and date: Signature and name of declarant/representative:

13 CAP

b

40 Summary declaration/Previous document

C OFFICE OF DEPARTURE

1

Cop

y fo

r th

e co

untr

y of

dis

pat

ch/e

xpor

t

2 Consignor/Exporter No

8 Consignee No

14 Declarant/Representative No

18 Identity and nationally oftransport at departure

19 Ctr.

21 Identity and nationality of active means of transport crossing the border

25 Mode of transport at the border

26 Inland mode of transport

27 Place of loading

29 Office of exit 30 Location of goods

3 Forms 4 Loading list

5 Items 6 Total packages 7 Reference number

10 Country first destin.

11 Trading country

1 DECLARATION

15 Country of despatch/export 15 C disp./exp. Code

a b a 16 Country of origin 17 Country of destination

20 Delivery Items

22 Currency and total amount invoiced 23 Exchange rate

Marks and numbers – Container No(s) – Number and kind 32 Item No

33 Commodity Code

34 Country origin Code

a b 35 Gross mass (kg)

41 Supplementary units

Type Tax base Rate Amount MP

Total:

48 Deferred payment

B ACCOUNTING DETAILS

50 Principal No Signature represented by Place and date

Code

31 Packages and description of goods

44 Additional information/

Documents produced/ Certificates

and authori sations

47 Calculation of taxes

51 Intended offices of transit (and country)

52 Guarantee not valid for

D CONTROL BY OFFICE OF DEPARTURE Stamp:

Result:

Seals affixed: Number:

Identity:

Time limit (date):

Signature:

28 Financial and banking data

37 PROCEDURE 38 Net mass (kg) 39 Quota


A.I. Code

46 Statistical Value

1

A OFICE OF DISPATCH/EXPORT

EUROPEAN COMMUNITY 1 2 3 4 5 6 7

9 Person responsible for financial settlement No


4-20

Types of Transit

Community transit is the transport, under cover of one and the same

document, of goods between two places within the European community,

irrespective of the member state to where the goods are to be transported.

Common transit is used if the transport is beginning or ending in the

European Free Trade Association (EFTA), the rules and procedures are

generally the same as for the Community transit. The figure below expresses

the types of transit:

Figure 7: Types of Transit

Non-Community Goods Indicated by the Symbol T 1

These are goods from third countries for which the duties of the common

Customs tariff are payable, according to the common Customs tariff upon

importation in the Community.

Community Transit Common Transit

GERMANY

ITALY

TURKEY


4-21

These are also considered as non-

Community goods, although being Community

goods, goods subject to a Community

measure, which necessitates their exportation

to a third country and for which the

corresponding customs formalities upon

exportation have been completed. For

example: agricultural products for which

refunds may be granted upon exportation.

Community Goods Indicated with T2

These are goods, which were obtained completely in the European

Community. In addition, imported non-Community goods on which import

duties are paid are considered as Community goods and products that are

produced out of the abovementioned Community goods. The transport of

Community goods is named internal Community transit.

The Objectives of Community Transit

To cover the transport, a document is

drawn up, namely a community transit

declaration or T document Depending on

the customs status of the goods, a

distinction is made between:

non-Community goods :

T1 (external transit procedure)

Community goods :

T2 (internal transit procedure)

Community/Common Transit

Objectives of Community Transit

Communication Control Statistics

Figure 8: The Objectives of Community Transit


4-22

Control of the transportation of goods in the Community (country): The

goods that are submitted to customs at an office of departure must be presented

to an office of destination. The single document wi l l be used to inform customs

of the destination, the quantity and other specifications of the goods, which are,

send to their office, so that they can control the goods when they arrived.

Communicating the customs status of transported goods: As the

office of departure is communicating with the office of arrival with a single

document concerning the identification of the goods, at the same time customs

will give the necessary information on the customs status of the goods on that

single document.

The use of a document for statistical purposes: As a document

exists for the already named objectives we can also used that document for

statistical purposes. So that the authorities can see which goods are sent by

different means of transport and which harbor, airport, railway or road is used.

Therefore, authorities can make conclusions about the need for infrastructure

now and in the future.

Organization of the System to Obtain the Three Objectives

Office of departure:

�� Reception of the T-document on the copies 1, 4 and 5

�� Control of the document and validation

�� Control of the goods and identification measures

�� Holding in of page 1 as non-discharged transit document and giving back

copies 4 and 5 to the transporter so he/she can continue his/her way


4-23

At the internal frontiers of the Community there are no l o n g e r formalities

to fulfill.

Office of destination:

Office departure:

After receiving the regular discharged copy 5 of the T-document, it is

compared with copy 1 which was kept at the office of departure. If irregularities

are found the copy is registered in statistics.

Principal in Common Transit

The system is based on the appointment of a ‘principal. The principal is

the person who by making a transit declaration indicates that he wishes to carry

out a transit operation. He is responsible for the presentation of the goods intact

(with seals intact where appropriate) together with the transit declaration at the

office of destination within a prescribed time limit.

He is also responsible for the payment of any duties and other charges

which may become due in the event of an irregularity occurring. The principal is

responsible for the provision of a guarantee to cover the amount of duties and

other charges suspended during the movement of the goods. The guarantee

can be a cash deposit or in the form or vouchers or an undertaking furnished

by a financial institution acting as guarantor (Transit Manual, 2001).

�� Reception of the transport and copies 4 and 5 of the T-document

�� Indication of the arrival on the back of copy 5; which is sent back to the

customs office of departure where they will discharge the transit

document

�� Check of the definitive destination given to the goods within a delay of 20

days


4-24

Obligation of Community Transit

Every time non-Community goods are transported in the territory of

the Community external Community transit must be used except when

other international transit documents as TIR Carnet, international railway

consignment notes can be used. Community transit is applicable to the

following (New Customs Transit Systems for Europe, 2001):

�� Movements of non-Community goods for which Customs duties

and other charges at import are at stake - this is external

Community transit. The document used for external Community

transit is called “T1”.

�� However, where Community goods are placed under the common

transit procedure and are subject to specific Community measures

in relation to their export, then the Community “external regime”

(T1) also applies to them. This is for example the case when there

are refunds payable under the common agricultural policy or

drawback, remission or repayment of duty.

�� Movements of Community goods, which, between their point of

departure and point of destination in the EC, have to pass through

the territory of a third country. The document used for internal

Community transit is called “T2”.

By placing the goods under internal Community transit their Community

status is demonstrated and duties or other charges will not be required when

they re-enter the Community. Internal Community transit is also applicable to

the movement of Community goods to/from those parts of the customs territory

of the Community which fall outside the scope of directives on tax

harmonisation, such as the Channel Islands and the Canary Islands. In those

cases a “T2F” document is used.


4-25

Movements between the Community and Andorra and San Marino are

subject to Community transit; in as far as they involve goods covered by the

customs union agreements. Here both external and internal transit can be

involved depending on whether duties are due or not on arrival.

Cases in Which Community Transit Arrangement Applies

The Community Transit Arrangement applies when there is:

�� An entry of goods through an office at the external frontier of the

community. The Community transit document discharges the

international document with which the goods arrived at the frontier for

example carnet TIR, or when are goods arrived through a seaport or

an airport a general declaration must be done within 24 hours and

which can be discharged by drawing up a Community transi t

document for further transport under customs transit to a destination

in the Community.

�� A consignment to another customs office in the Community or in

EFTA of a warehouse or a place for temporary storage. The

Community transit documents discharges the previous

arrangements.

�� Transport of free goods, which were declared for exportation to a

third country at an internal customs office and for which external

Community transit must be applied.

�� Transport of free goods that were declared for consignment to special

fiscal regions.


4-26

The Formalities in More Detail

We can distinguish several formalities that are carried out at the office of

departure and arrival.

First of all there are the formalities at the office of departure, which can

be split into three parts as shown in the figure:

Control of the Documents

For Community transit the declarer must established a single document on

pages 1, 4 and 5.

After presentation of the goods and copies No 4 and No 5 of the SAD at

the office of destination, customs establish whether the provisions of the transit

procedure have been fulfilled and endorse the transit declaration accordingly.

The most important data on the single administrative document that must

be checked are given in the figure of SAD document below.

Figure 9: The Formalities at the Office of Departure and Destination

Control of the Documents

Control of the Goods

Discharge of the Document After Receiving

the Copy 5


4-27

17 Country destin. Code

24 Nature of transaction

49 Identification of warehouse

53 Office of destination (and country)

54 Place and date: Signature and name of declarant/representative:

13 CAP

b


C OFFICE OF DEPARTURE

1

Cop

y fo

r th

e co

untr

y of

dis

pat

ch/e

xpor

t

2 Consignor/Exporter No

8 Consignee No

14 Declarant/Representative No

18 Identity and nationally oftransport at departure

19 Ctr.

21 Identity and nationality of active means of transport crossing the border

25 Mode of transport at the border

26 Inland mode of transport

27 Place of loading

29 Office of exit 30 Location of goods

3 Forms 4 Loading list

5 Items 6 Total packages 7 Reference number

10 Country first destin.

11 Trading country

1 DECLARATION

15 Country of despatch/export 15 C disp./exp. Code

a b a 16 Country of origin 17 Country of destination

20 Delivery Items

22 Currency and total amount invoiced 23 Exchange rate

Marks and numbers – Container No(s) – Number and kind 32 Item No

33 Commodity Code

34 Country origin Code

a b 35 Gross mass (kg)

41 Supplementary units

Type Tax base Rate Amount MP

Total:

48 Deferred payment

B ACCOUNTING DETAILS

50 Principal No Signature represented by Place and date

Code

31 Packages and description of goods

44 Additional information/

Documents produced/ Certificates

and authori sations

47 Calculation of taxes

51 Intended offices of transit (and country)

52 Guarantee not valid for

D CONTROL BY OFFICE OF DEPARTURE Stamp:

Result:

Seals affixed: Number:

Identity:

Time limit (date):

Signature:

28 Financial and banking data

37 PROCEDURE 38 Net mass (kg) 39 Quota


A.I. Code

46 Statistical Value

1

A OFICE OF DISPATCH/EXPORT

EUROPEAN COMMUNITY 1 2 3 4 5 6 7

9 Person responsible for financial settlement No

T1 indicate that all sorts of entry duties and

levies are due when the goods are declared for

home use.

T2 indicate that only VAT is due.

Field 1: Customs status of goods

A description of goods is required. If the means

of transport or the goods are not sealed a

detailed description is needed other way the

commercial description will do.

Field 31: Marks and numbers, Container No, Number of Kinds

The ‘gross mass’ means the total weight of

the goods including all packaging but excluding

containers and other transport equipment.

Box 38 is optional for the Contracting Parties.

The ‘net mass’ means the weight of the goods

without any form of packaging.

Field 35 en 38: Gross and net mass in kilogram

Indicate the person (firm) who is responsible

for observing the arrangement of Community

transit and who has to pay the debts when

fraud is practiced. It is also the person or firm

who has to furnish a guarantee if needed, Here

the principal to sign the transit declaration.

Field 50: Principal, name and signature

If the transport leaves temporary the

Community the office of exit and entry

has to be declared in this field. For

example transport through Switzerland to

or from Italy.

Field 51: Intended offices of transit (and country)

Enter the number of the comprehensive

guarantee certificate, the guarantee waiver

certificate, or the individual guarantee voucher,

as appropriate, and the name of the

office of guarantee.

Field 52: Guarantee

Figure 10: Control of SAD Documents


4-28

Control of Goods

The document wi l l then be compared with the goods. If necessary a

physical control of the goods wi l l take place. If the transport corresponds to

the transit document a period of validity will be given.

Customs will also decide which identification measure to take. Agriculture

and excise products have to be sealed. Other products, which are described fully in

the transit document and for which there is no difficulty of identification, do not

have to be sealed. If the transportation is sealed it has to be indicated in field D of

the transit document.

The customs office stamp and the signature of the customs officer in f ield

D means that document has been filled in satisfactorily. Copy 1 of the transit

document will be held and copies 4 and 5 will be given to the declarer and the

transportation is then free for transit.

The End of Transit Procedure and Discharge

The difference between the “end” and the “discharge” of the transit

procedure has been introduced in order to clearly define the scope and limits of

the principal’s obligations and to make sure that his/her liability is restricted to

events occurring up until the end of the procedure, but not later.

The end of a transit operation is defined as the moment when the goods

and accompanying documents are properly presented to the customs office of

destination. However, although the movement is considered to have ended at

that moment, the procedure is not automatically discharged. This can only be

done when the customs authorities of the country of departure, by comparing

the information available at the office of departure with that sent back by the

office of destination, are able to establish that the procedure has been properly

concluded. In addition, on both the legal and operational side, measures have


4-29

been introduced to ensure a speedy finish to the transit procedure after its

proper ending has been established.

If after two months there is still no proof of the proper ending of the

procedure, the principal may produce alternative evidence. For this purpose the

principal may use an extra copy of the single administrative document, which

he/she can have stamped at the office of destination, at the same time as the

original copy that is intended for return via customs channels (New Customs

Transit Systems for Europe, 2001).

If no proof has been produced after

four months, the authorities at the office of

departure must start inquiry procedures. They

will ask for information from the office of

destination and, if appropriate, any office of

transit, in order to find out if the procedure has ended or not. If they establish

that the procedure has not ended, then they will try to locate the place where

the customs duties and other charges are due. This is done in order to establish

which country is responsible for the recovery of duties and other charges.

Figure 11: The End of Transit Procedure and Discharge

End of Transit Procedure

GERMANY GREECE

Office of Departure

Discharge of the Procedure


It should be noted that it is possible for

customs authorities to do a post

clearance check of any document.

Post Clearance Check


4-30

Transit Guarantee

In SECI Region duties and charges differ from one country to other. The

disorder of these conditions are very big problems on the free movement of

goods in the region. In European Common Transit Regime these duties and

charges due on goods placed under the transit procedure are suspended for

the duration of the transit movement. However, the principal shall provide a

guarantee to cover the suspended duties and other charges before the goods

are released for the transit procedure. This guarantee ensures the payment of

duties and other charges in case of occurrence of a Customs debt in the

course of the transit movement (Transit Manual, 2001). There are two

categories of transit guarantee:

�� Individual guarantee

�� Comprehensive guarantee

The details of these guarantees are given in the table below:

Table 3: Types of Guarantees in Transport Procedure (Transit Manual, 2001)

Individual guarantee in the form of a

cash deposit

furnished by

guarantor

in the form of

vouchers

Comprehensive

guarantee

Amount required

as guarantee

100% of all

customs duties

and other charges

100% of all

customs duties

and other charges

100% of all customs

duties and other

charges

100% *)

50% *)

30% *)

0%*)

of the reference amount

Period of validity

of certificates N/A N/A

Maximum one year

after the date of

guarantee

Two years

(one two-year extension

possible)

Geographical

restrictions None

Possible

(in common

transit)

None

Possible

(in common transit)

Proof that

guarantee has

been furnished

Entry in box 52 of

the SAD

declaration and

receipt for cash

deposit issued by

office of departure

Guarantee

document in

accordance with

Annex B1 to

Appendix III of the

Convention/Annex

49 IPC

Individual guarantee

voucher TC 32

*) Comprehensive

guarantee certificate TC

31

**) Guarantee waiver

certificate TC 33


4-31

Combinations of types of guarantee are possible. Each type of guarantee

used is to be indicated in box 52 of SAD document.

Individual Guarantee

An individual guarantee covers only a single transit

operation effected by the principal concerned. It shall be

provided in the form of a cash deposit or by a guarantor. An

individual guarantee provided by a guarantor shall be

furnished:

�� for a single transit operation only or,

�� in the form of individual guarantee vouchers, each for an amount of

7000 EUR, issued by the guarantor to persons who intend to act as

principal.

An individual guarantee shall cover the full amount of duties and other

charges to which the goods are liable. It shall be calculated using the duties

and other charges (f.e. excise and value added tax) applicable to the goods in

the country of departure.

Cash Deposit

The cash deposit is a sum of money lodged as surety against any duties

and charges which might be incurred in the course of a Customs transit

procedure. Guarantee in the form of a cash deposit is mostly used by principals

who not regularly use the transit procedure. Sometimes it is used in

combination with individual guarantee vouchers TC 32.


4-32

Comprehensive Guarantee

A comprehensive guarantee covers several transit

operations up to a given reference amount. It is furnished by a

guarantor. The reference amount depends on the transit

transactions of the principal. The reference amount is equal to

the total amount of duties and other charges, which may be

incurred in respect of good under his transit operations during a

period of at least one week.

Where the principal complies with certain

criteria of reliability the amount of guarantee to

be specified in the guarantors undertaking may

be reduced to 50% or 30% of the reference

amount. The use of a comprehensive guarantee

is granted as a simplification of the standard

rules on transit. It depends on an application by

the principal and an authorization by the

competent Customs authority.

Temporary Ban of Comprehensive Guarantee

It may be necessary to insist that in no case there be a reduction of the

actual amount of the comprehensive guarantee above the “reference amount”

for the transport of specified high risk goods like tobacco. This measure could

be introduced when it is evident that there is an exceptional large-scale risk of

fraud. If even this turns out to be insufficient to protect the revenue, then a ban

on the use of the comprehensive guarantee for the transport of these goods can

also be introduced.

The comprehensive guarantee must necessarily be furnished in the form of

a personal guarantee, in particular by banks and insurance companies.

The actual level of comprehensive

guarantee can be fixed by Customs at

100%, 50% or 30% of the “reference

amount” or they can allow a complete

waiver of the need to have any

guarantee at all. The actual level of

reduction depends on the risks involved,

the track record of the trader concerned

and so forth.

Reduced Levels of Cover


4-33

The guarantee for each declaration covers a well-defined transit

operation and is furnished at the office of departure in the form of a personal

guarantee or a guarantee in cash. This sort of guarantee is not often

used. It will only be used by an occasional principal for example a private

person.

The guarantor, who whishes to stand security for a person intending to

effect a transit operation as a principal, gives to this person a "individual

guarantee voucher" or, if necessary several vouchers depending on the sort and

amount of goods which will be transported.

Recovery of Customs Duties and Other Charges

The Community and common transit systems have essentially the same rules to

establish:

�� If and where a customs debt has been incurred, that is, customs

duties and other charges have become due when the goods have

gone missing or the obligations of the principal have not been met

�� Who is liable to pay this debt (one of these persons is always the

principal but there can be others)

�� Which authority, in which country, should proceed to recover the debt,

and thus to whom the customs duties and other charges shall be paid

If after 10 months, (which is normally the period necessary for an inquiry

procedure) it has still not been possible to establish where the debt is due, then

the country of departure (or of entry) is deemed to be responsible and they then

start a recovery procedure against the debtors or the guarantor and collect the

money.


4-34

If it later appears that the debt actually occurred in another country other

than that which has collected the money, and if this country recovers the

relevant duties and other charges, then, in order to avoid double payment, the

original debtors must be compensated by the authorities of the country that

originally collected the amount due.

Simplified Arrangements

Table 4: List of simplifications (New Customs Transit Systems for Europe, 2001)

General Conditions for any Simplification Authorization is only granted to persons who:

Table 5: General Conditions for any Simplification (New Customs Transit Systems for

Europe, 2001)

�� Use of a comprehensive guarantee or a guarantee waiver

�� Special loading lists

�� Use of seals of a special type

�� Exemption from using a binding itinerary for goods involving greater risk of

fraud

�� Authorized consignor and authorized consignee

�� Special simplifications for large containers and rail, sea, air or pipeline

movements

�� Any additional simplifications that may be granted on the basis of bi- or

multilateral agreements between countries.

�� Are established in a contracting party (which means the company is

incorporated there and can be traced and checked)

�� Regularly uses Community/common transit arrangements, or whose customs

authorities know that they can meet their obligations

�� Who have not committed any serious or repeated infringement of customs or

tax laws


4-35

Simplified Formalities on Departure and on Arrival

Subject to special authorization, it is also possible to simplify the

formalities to be completed at the offices of departure and destination in

connection with Community or common transit.

Belgium has decided to apply this system of simplified formalities,

under certain conditions, to manufacturers and trades people who regularly

dispatch goods abroad or receive goods under cover of a document for Community

or common transit. They should keep an account of which customs

authorities may check the movement of goods.

The main advantage of such simplified formalities is that the goods can be

examined in the factories or stores at departure or arrival without having to be

presented at an office of departure or destination.

This simplified procedure can also be granted to professional declarers,

namely, customs agents who fulfil certain conditions. For example they must have

the available place and equipment to load and unload vehicles so that a full

verification of the transport is possible.

Every time transport is sent or arrives one hour before loading or

unloading the customs office of departure or arrival has to be informed. This

enables customs to visit the firm to take a test if they want to. Only 5 percent of

this transport must be checked.


4-36

The New Computerised Transit System (NCTS)

A key part of the reform of the transit

system is its computerisation. In today’s world,

customs administrations have to adapt to the

needs of trade with speed and flexibility and

keep abreast of the continual changes in the

business environment. The NCTS will serve as

a tool to manage and control the transit system.

Based on the use of advanced computer systems and the electronic

processing of data, it will guarantee a more modern and efficient management

than the paper-based system, with its proven flaws. The main objectives of the

New Computerised System are given in the table below (New Customs Transit

Systems for Europe, 2001):

The benefits of NCTS are given in the table below:

The NCTS replaces the paper-based

documentation with electronic messages

containing the information required for

the transit procedure

The system will be more efficient than

the paper-based systems. It will improve

the detection of fraud.

The New Computerised Transit System (NCTS)

�� to increase the efficiency and effectiveness of transit procedures;

�� to improve both the prevention and detection of fraud;

�� to accelerate transactions carried out under a transit procedure and to offer

security for them.

Table 6: Objectives of the New Computerised System

Table 7: Advantages of the New Computerised System

�� Less time spent

�� Flexibility in presenting declarations

�� Earlier discharge of the transit procedure

�� Reduced costs

�� Simple and clear transit operations

�� Effective and fast communication between

customs administrations


4-37

The Architecture of the System

The New Computerised Transit System is split into three main activities.

These domain activities are given in the figure below:

�� The External Domain: for the messages between the trader and the

competent Customs Office;

�� The National Domain: where the messages between the different

national offices are exchanged;

�� The Common Domain: where the messages between the counties

are exchanged.

As a general rule, the NCTS will be used for both external and internal

Community transit and common transit in situations where they are currently

carried out using the single administrative document made out as either a “T1”

or “T2”.

Export Country

Import Country

B C

D

A

1

2 3

Trader

National administrations

Customs (export country)

(External Domain)

(National Domain)

(Common Domain)

Customs (import country)

A

B

C

D

Figure 12: The Architecture of New Computerised Transit System (NCTS)


4-38

Therefore the computerised system will not, at first, cover simplified

procedures under which the goods are transported by rail, air, sea or by

pipelines and where, essentially, the haulier’s own documentation is used.

As the NCTS will be applicable to the movement of goods subject to

Community and Common transit procedures, 22 countries are involved in the

project. It is estimated that it will eventually link some 3 000 European Customs

offices.


4-39

Summary

Transit is a corner stone of vital interest to the European transport and trade. It

offers an administratively simple and cost advantageous procedure for carrying goods

across Customs territories by suspending duties and taxes. Also it enables goods to move

more freely and makes Customs clearance formalities more accessible.

TIR operations takes place between a customs office of departure of countries and a

customs office of destination of another such country. Actors of this system are the national

guarantee associations, transport organizations, operators and Customs.

Common transit procedure facilitates the importation, exportation and movement of goods.

It is managed by the Customs administrations of the various contracting parties via a

network of customs offices of departure transit and destination. The document used in this

system is Single Administrative Document-SAD.

Guarantee system aims to decrease the risk of fraud. Guarantees divide into two: Individual

and Comprehensive Guarantee. Individual guarantee has three types. These are “in the

form of a cash deposit”, “furnished by guarantor” and “in the form of vouchers”.


4-40

Key Terms

New Computerised Transit System

Office of Departure


Office of Transit

Principal

SAD Document

TIR Carnet

Common Transit

Community Transit

Comprehensive Guarantee

Controlled Access

Guarantee

Guarantor

Individual Guarantee


4-41

Progress Check

1. Same control measures in office of department and office of destination

means;

a. Controlled access

b. Mutual recognition of customs control measures

c. International chain of guarantee

d. Security

e. TIR Carnet

2. Maximum amounts of the guarantees payable for the TIR Carnet and

Tobacco Alcohol TIR Carnet are;

a. 25.000 $ – 75.000 $

b. 25.000 $ – 100.000 $

c. 50.000 $ – 75.000$

d. 50.000 $ – 100.000$

e. 50.000 $ – 25.000 $

3. Which of the following does not match with the TIR Carnet?

a. There is a principal who is responsible for the provision of a

guarantee to cover the amount of duties other charges

b. Administrative backbone of TIR System

c. Has 64 contracting parties

d. 2 sheets for each country of departure, destination and country for

traversed

e. Printed in French


4-42

4. Which of the following is the function of national guaranteeing

association in TIR transit system?

a. Controls the goods

b. Guarantees payment within that country of any duties and taxes

which may become due in the event of any irregularity

c. Checks the seals

d. Issues the TIR Carnet

e. Guarantees payment of goods in the event of accident

5. Which of the following does not match with the Single Administrative

Document (SAD)?

a. An identical document which can be used for import, transit and

export

b. Green boxes are mandatory

c. Copy 5 of SAD returns back to the office of departure for controlling

d. SAD should be completed using a typewriter

e. 2 copies of Copy 4 for each country traversed

6. Which of the following is the responsibility of the principal in Common

Transit?

a. Presenting goods at the office of destination

b. Controlling data on the SAD document at the office of departure

c. Sending copy 5 of SAD document to office of arrival

d. Comparing the copy 1 and 5 of SAD document at the end of transit

e. Controlling the seals and goods at the office of transit


4-43

7. In single administrative document guarantee box is;

a. 31

b. 35

c. 50

d. 51

e. 52

8. The transit operation ends;

a. When the documents presented at the office destination

b. When the goods presented at the office destination

c. When copy 5 of SAD document presented at the office of destination

d. When the goods and documents presented at the office of destination

e. When the copy 5 of the SAD document arrived to the office departure

9. Which is wrong for individual guarantee?

a. It covers only a single operation

b. It covers several operations

c. It shall be provided in the form of a cash deposit or by a guarantor

d. Individual guarantee must cover the full amount of duties and other

charges

e. It must be furnished in the form of individual guarantee vouchers,

each for an amount of 7000 EUR, issued by the guarantor to

principal.


4-44

10. Which of the following does not matches with the objectives of New

Computerised Transit System?

a. Increasing the efficiency and effectiveness of transit procedures

b. Improve both the prevention and detection of fraud

c. Increasing the capacity of international road transport

d. Accelerate transactions carried out under a transit procedure

e. Security