HCM City Customs answered many problems about export processing and export production of cashew

A business raised problems in the dialogue. Photo: T.H

Identification of scraps and waste products

Answering questions and concerns of many enterprises about the identification of scraps and waste products in export processing and export production of cashew nuts, a representative of the HCM City Customs Department explained, according to the provisions of Clause 1, Article 55 of Circular No. 38/2015/TT-BCT, as amended and supplemented in Circular 39/2018/TT-BTC of the Ministry of Finance: "Waste products are finished products, semi-finished products that do not meet technical standards (specification, size, quality,...) are rejected during the processing and production of goods for export and do not meet the quality for export." Thus, if the product is not satisfied with export quality (at the current buyer's request) but meets another buyer's requirement, it is not considered a waste product.

According to HCM City Customs Department, the inspection and determination of products discarded from the production process as waste products or not has been guided by the General Department of Vietnam Customs in Official Dispatch 4644/TCHQ-GSQL dated September 29, 2021. Accordingly, the determination of waste products of export processing and production activities is specified in Article 55 of Circular No. 38/2015/TT-BTC amended and supplemented in Clause 35, Article 1 of Circular No. 39/ 2018/TT-BTC dated April 20, 2018, of the Ministry of Finance.

Therefore, to determine whether it is a waste product or not, when checking, the customs authority must base on the actual manufacturing process at the enterprise and the documents showing the production management process, such as Inventory delivery voucher and inventory delivery voucher; the process of checking quantity and quality in the manufacturing process; documents recording the management process of the enterprise in comparison with the current legal regulations as mentioned above.

Regarding the problem of calculating the percentage of scrap and how to declare it when making the annual material settlement report with the Customs authority mentioned by enterprises at the dialogue, HCM City Customs Department has given specific instructions. According to the provisions of Clause 1, Article 55 of Circular 38/2015/TT-BCT, as amended and supplemented in Circular 39/2018/TT-BTC of the Ministry of Finance: "The actual production norm is the number of raw materials used to process and produce one unit of export product and is determined based on the provisions of the form No. 27, Appendix II issued with this Circular."

Accordingly, there is no limit on the rate of defective products. The actual norm calculation follows Appendix I - Circular 39/2018/TT-BTC. Accordingly: "The actual quantity of raw materials and supplies used to manufacture export products includes the number of raw materials and supplies constituting the product and the number of raw materials and supplies consumable, forming scraps and discarded products.". Therefore, final settlement procedures should comply with Article 60 of Circular 38/2015/TT-BCT as amended and supplemented in Circular 39/2018/TT-BTC of the Ministry of Finance.

At the conference, representatives of HCM City Customs Department's functional divisions also instructed enterprises on handling waste products and scraps in Vietnam.

Businesses that have problems must ask immediately

In addition to problems with scrap and products, enterprises also asked many questions about import procedures, adjustment of customs declarations, etc., for imported cashew raw materials.

Long Son, Joint Stock Company, questioned the enterprise specialized in processing cashew nuts for export with a turnover of US$250 million/year. Every year, enterprises import raw cashew nuts from Africa to Vietnam, about 100,000 tons. When carrying out import procedures, enterprises declare, based on the weight shown on the documents after taking goods from the port, that the enterprise would re-weigh the goods under the supervision of the inspection party. After that, the inspection party would issue a certificate determining the weight of the shipment, and the parties use this data to settle the contract. Typically, the number of goods on the deed will differ from the number of goods declared at the customs office due to the long transit time on the ship, which increases and decreases moisture. Can enterprises adjust the customs declaration so that the weight of the goods on the declaration is equal to the actual quantity according to the certificate issued by the third expert? How to carry out the procedure?

Responding to the above problem, Mr Phan Minh Thao, Deputy Head of the Customs Control and Supervision Division, said that the difference in weight, as mentioned above, is typical, and enterprises are allowed to make additional declarations. However, according to Point a.6 Clause 2 Article 20 of Circular 38/2015/TT-BCT as amended and supplemented in Circular 39/2018/TT-BTC of the Ministry of Finance stipulates: In the case that the actual quantity or weight of goods does not match that on an export declaration or import declaration, the declarant shall make an additional declaration at the Customs Branch where the declaration is registered following Point a, Clause 2, Article 20; In case no additional declaration is made, the excess quantity of goods compared to the customs declaration shall not be brought through the customs control area.

Some businesses asked about the procedure type A41 for importing raw cashew nuts from Cambodia to sell in Vietnam (without manufacturing). What permits are required? HCM City Customs Department said that according to Decree 69/2018/ND-CP detailing several articles of the Law on Foreign Trade Management, importing cashew nuts under the A41 type does not need a license. However, based on Circular No. 11/2021/TT-BNNPTNT on promulgating the HS Codes for the list of goods under the State management authority of the Ministry of Agriculture and Rural Development and the list of import and export goods must undergo specialized inspection in the field of agriculture and rural development, the HS code of raw cashew nut is 08013100 which belongs to the list of imported goods subject to specialized inspection before customs clearance, under the management authority of Ministry of Agriculture and Rural Development (plant quarantine, food safety inspection).

Faced with many questions about customs procedures related to imported cashew products, Deputy Director of HCM City Customs Department Nguyen Huu Nghiep noted that businesses, when having problems, need to discuss with the Customs office immediately to get timely guidance. However, they should not wait until the dialogue to ask.

"Recently, the post-clearance audit has discovered many cases of customs violation in processing and exporting cashew products, including many large cases. Therefore, the General Department of Vietnam Customs has directed local customs departments to strengthen post-clearance audit for this area, and businesses should pay attention to comply with regulations."- Mr Nguyen Huu Nghiep informed.