To answer questions about the preferences for certificates of origin

The Customs officer of Cau Treo International Border Gate (Ha Tinh) inspects the exported steel. Photo: H.Nu.

The Dong Thap Petroleum Trading Co., Ltd inquired about the tax refund when the enterprises needed to change the form from the temporary import to import for business, whether the Customs would office consider refunding the tax for the enterprises that had submitted C/O form D/KV to the Customs previously or not?

According to the General Department of Customs, the guidance at Point 2 of Official Letter No. 1317/GSQL-TH dated October 4th, 2016 of the General Department of Customs relating to C/O problems, when the enterprises change the import form from the tax-exempt subjects to the taxable subjects, the enterprises must present C/O at the submission time of the customs dossiers for new customs declarations. C/O must be issued lawfully and validly as prescribed by Circulars of the Ministry of Industry and Trade guiding the Agreements.

For cases where the enterprises want to use one C/O for two import customs declarations, the Customs shall be deducted under the guidance of the Finance Ministry's Official Letter No. 6136/BTC-TCHQ of May 9th, 2016.

The Hoa Phat Furniture Company and the Hoa Phat Steel Sole Member Limited company asked the company imported a product (manufactured and had C/O form E) from China. The seller of the contract is a company in Hong Kong. The company purchased the goods from a trading company in China. This Chinese trading company had C/O form E and granted to them. Was C/O form E valid?

For the question of the enterprises, the General Department of Customs asked they studied Article 23, Appendix 2 of Circular 36/2010/TT-BCT dated November 15th, 2010 of the Ministry of Industry and Trade on the implementation of the Rules of Procedures for origin issuance and inspection in the ASEAN-China Trade and Goods Agreement. Specifically: The Customs office accepts a C/O form E in the case that a commercial invoice issued by a company based in a third country. Invoice number of the third party must be indicated in cell 10 of C/O form E. Exporters and consignees must have their headquarters located in parties taking part in the Agreement; A copy of invoice of the third party must be submitted together with the C/O form E to the Customs office of the importing party.

The Teco Vietnam Technology Co., Ltd said, in the process of production and business, the company imported from Malaysia/Philippines some materials including the equipment and variable components used to produce the rheostats, power switches in the industry. In accordance with the ASEAN Trade and Goods Agreement, origin of these imported materials were compatible with the conditions for enjoying import duty exemption and had been submitted C/O Form D together with the import documents at the time of the goods clearance for the Long Thanh Customs Sub-Department (the Dong Nai Customs Department) in accordance with regulations relating to customs procedures.

However, after the post-customs clearance inspection, the Long Thanh Customs Sub-Department issued the decision on collection arrears of import tax and VAT on the reason that C/O form D of the company were not valid. Some C/O forms were not accepted as valid because it was the first time these C/O had been issued but they were mistaken as issued later (indicator No. 13 "issued retroactively").

For this reason, the company wondered, in case, unimportant administrative errors of C/O from the exporters, the company thought that they did not mislead about the determination of origin of goods, C/O was still appropriate with the actual imported goods and all remaining indicators of C/O were correct, whether it would be acceptable?

Also according to the company, the origin criteria of goods that were not suitable must be CTH instead of CTSH, although the actual goods met the origin requirements. Because, in fact, the shipment originated from Malaysia as shown clearly at the import document and had undergone the process of converting the commodity code. According to the company, the display in cell No. 8 CTSH instead of CTH was the fault of the C/O issue due to write origin criteria un-correctly although the goods met the conditions of origin and content.

At the same time, cell No. 7 wrote generally without the quantity of goods issued C/O, without specifying goods details, without HS codes on C/O, that were not suitable with the guidance at Point 5 of C/O back. They wrote the origin criteria for many goods. Actually, although the C/O did not the detail of the goods groups/ goods quantities, looking at the C/O, it is possible to determine immediately the shipment/import declaration of C/O.

Regarding this issue, according to the Department of Customs Management Supervision (the General Department of Customs), there was an Official Letter No. 25/GSQL-GQ4 dated January 9th, 2017 in reply to the enterprises.

Accordingly, the declaration of origin criteria of goods on C/O: According to Clause 5, Article 6, Appendix 7: Procedures for issuance and examination of C/O Circular No. 21/2010/TT-BCT dated May 17th, 2010 of the Ministry of Industry and Trade was amended and supplemented in Circular No. 42/2014/TT-BCT of the Ministry of Industry and Trade's dated November 18th, 2014: "Many items can be declared on the same C/O, in condition that each item meets the origin requirements for that item”. Accordingly, each item must present each criterion of origin and HS code for this item.

As for C/O issued later, in Article 10, Annex 7 of Circular No. 42/2014/TT-BCT stipulates: Exception when C/O is not issued at export time or after 3 days from export date due to errors, forget unintentionally or have legitimate reason, C/O may be issued no later than one year from the date that the shipment is loaded on ship and cell "Issued Retroactively" is marked. Therefore, the marked "issued retroactively" when issuing C/O on the date of export has been not consistent with the above guidelines.

For questions of the enterprises regarding the criteria of origin of goods, according to the General Department of Customs, in Article 2 and Article 4, Annex 1, Circular 42/2014/TT-BCT of the Ministry of Industry and Trade guides, in order to enjoy the preferential tax rate, the goods must meet the requirements on “regional value added content” (RVC) not less than 40% or "conversion of goods code at 4-digit level” (converting group-CTH), while C/O expresses that the goods meet the converting origin criteria at the subcategory level of CTSH, the goods do not satisfy the rules of origin to be defined as the goods originate from ASEAN.