What if we claim preferential tariff treatment the wrong way in order to reduce customs duties under the FTA?
Customs conduct a verification exercise on the good at random or when they have doubts about the authenticity of the certificate.
Here is an actual case of OriginVerification of a company imported cocoa powder, claiming preferential tariff treatment under one of Japan’s EPAs.
Applicable PSR for 1805.00 (cocoa powder) : CTH, provided that, where non-originating
cocoa beans of heading 18.01 are used, the non-originating cocoa beans are harvested,
picked or gathered in a non-Party which is a member country of ASEAN.
The Customs clearance section ascertained, through documentary examination, that the
certificate of origin showed the goods to be produced from cocoa beans of a non-Party
which is an ASEAN member country.
Then, the Customs clearance section asked the importer about the origin of the cocoa beans, and was informed that the origin was
country E (a member country of ASEAN) (30%),
country F (a member country of ASEAN) (40%),
and “Africa” (30%).
The cocoa beans originating in country E and country F would satisfy the PSR. However, the cocoa beans from “Africa” would not satisfy the PSR. Therefore, the Customs clearance section informed the Post-Clearance Audit (PCA) section of the doubt surrounding the originating status of the good, and requested the PCA section to conduct an investigation.
The PCA section conducted an audit of the importer, but could not obtain enough information to remove the doubt. Therefore, Customs carried out the verification procedure stipulated in the EPA and requested information from the competent authority of country D.
The reply from the competent authority of country D was that the good was not originating.
Customs determined that the good was not an originating good, and preferential tariff
treatment was denied. The importer made an amendment to the declaration of duty and
paid the necessary amount.
