Archives for November 2019

Here is a case study of Value Added method.

Company A manufactures Table lamps (HS SubHeading 9405.20)

Table lamps of SubHeading 9405.20 are manufactured from the following
non-originating materials:

Tubes of brass	€ 3.00
Plates of brass	€ 2.00
Switch	€ 1.00
Cable:	€ 0.30
Contact	€ 0.20
Steel wire	€ 0.15
Plastics components	€ 0.25
Textile fabrics	€1.20
Light bulb	€ 0.30
Lamp holder:	€ 0.50
Screws	€0.05
Varnish:	€ 0.03
Various materials	€0.40
Total value	€ 9.38

 

The lamps are sold at an ex-works price of € 20.-

 

The list rule for heading 94.05 requires the following working or processing to
be carried out on non-originating material:

“Manufacture in which the value of all the materials used does not exceed 50 %
of the ex-works price of the product”.

The total value of the non-originating materials used in the manufacture of one
lamp (€ 9.38) is less than 50 % of the ex-works price of one lamp (€ 20.-).

The origin requirements are fulfilled and the lamps can be regarded as
originating products.

Here is a case study of Value Added method.

Company A manufactures Plastic Boxes (HS heading 3923)

from Non-originating granules of plastics (heading 3901).

Non-originating granules of plastics are imported from country B where
is not a  Party of the FTA;

 

The unit price of a single Plastic Boxes is priced as:
Ex-works price of the boxes: € 10.- per box.
Value of granules used: € 4.- per box.

 

Example PSR for goods of subheading 3923 is:

“Manufacture in which the value of all the materials used does not exceed
50 % of the ex-works price of the product”.

As the value of the granules needed for the manufacture of one box (€ 4.-) is less
than 50 % of the value of the final box (€ 10.-), the condition to acquire originating
status is fulfilled.

Therefore, the boxes can be regarded as originating products.

But when the price of the granules soars to (€ 6.-), it’s price becomes more than
50% of the ex-works price of one box (€ 10.-).

In this situation, the condition to acquire originating status is not fulfilled.
The boxes, therefore, cannot be regarded as originating products.

Personally I do not recommend to adopt the VA method because foreseeing the
future price of the material is almost impossible.

If it’s possible, I would recommend adopting the CTC method rather than The
VA method.