customs clearance of the goods arriving ......1.2 1.3 1. general customs information 6 gener ation...

2021

CUSTOMS CLEARANCE OF THE GOODS ARRIVING FROM CHINA IN CONTAINERS

INFORMATION BOOKLET OF THE NATIONAL TAX AND CUSTOMS ADMINISTRATION

GENERAL CUSTOMS INFORMATION 3

This information booklet summarises important basic in-

formation you should know during the clearance of import

consignments arriving from China.

WHAT CAN YOU DO FORFASTER CUSTOMS CLEARANCE?

5GENERAL CUSTOMS INFORMATION GENERAL CUSTOMS INFORMATION4

1.1 WHY DO MY GOODS NEED TO BE CUSTOMS CLEARED?

In Hungary, goods cannot be used freely - for example, stored, sold, traded fur-ther or transferred - without customs clearance. Customs clearance is performed by customs offices, namely the tax and customs directorates of the National Tax and Customs Administration (NTCA).

THE PROCESS OF THE CUSTOMS CLEARANCE

Firstly, an electronic import declaration shall be lodged during the opening hours of the customs office. The contact details and the opening hours of the tax and cus-toms directorates are available at this link: https://www.nav.gov.hu/nav/igazgatosa-gok

The importer itself may chose the customs office it presents the goods to for customs clearance, which means that customs clearance may be applied for at any of the customs offices, even at the closest or most easily available customs office.

After lodging the declaration, the customs office may decide to examine the related documents and the goods. After the possible control, the customs office will release the goods to the importer if the duty for the goods has been paid or guaran-tee has been provided.

The declaration may be lodged in advance, no more than 30 days prior to the arrival of the goods.

IF I DO NOT HAVE ANY CUSTOMS KNOWLEDGE, WOULDTHERE BE SOMEBODY TO HELP WITH THE CUSTOMS CLEARANCE?

The importer is allowed to entrust a professional with the customs clear-ance, and it may also decide whether the representation should be indirect or direct. The mode and costs of the representation should be agreed with the con-tracted representative, the customs office does not have a say in that.

1.2

1.3

1. GENERAL CUSTOMS INFORMATION

6 7GENERAL CUSTOMS INFORMATION GENERAL CUSTOMS INFORMATION

If there is no representative, then the importer will lodge the declaration and will also pay the duty and VAT.

In case of direct representation, the declaration is lodged by the representative, but the duty and the VAT are to be paid by the importer.

In case of indirect representative, the declaration is lodged by the representative, and the duty and also the VAT are paid by the representative. These will be paid by the importer to the representative according to their agreement.

The cost of the representation is not included in the amount determined by the customs office, the cost is payable to the contracted representative, in addition to the amount of the duty and the VAT.

WHO APPLIES FOR THE DECLARATION, WHO PAYSTHE DUTY AND THE VAT?1.4

The customs office will carry out a customs inspection if the declaration is in-complete or if it wants to control the goods, for example, due to the declared value of the goods or the description of goods. In this case, the customs office may request further documents, may examine all or part of the goods, and may even take a sample of the goods.

The importer or the representative shall be responsible for the unloading, moving, unpacking and reloading of the goods related to the customs inspec-tion. The possible costs of the inspections - for example the loading fee - shall be paid by the importer. The importer and its representative may be present during the inspection of the goods.

Guarantee shall be provided if the amount of the duty and the VAT calculated by the customs office would be higher than the amount to be paid by the im-porter or its representative according to the declaration lodged.

Depending on the result of the customs inspection, the customs office will keep the guarantee or transfer it back in whole or in part.

IN WHICH CASES DOES THE CUSTOMSOFFICE EXAMINE THE GOODS?1.5

IN WHICH CASES SHALL GUARANTEE BE PROVIDED?1.6

8 9GENERAL CUSTOMS INFORMATION GENERAL CUSTOMS INFORMATION

HOW LONG CAN THE CUSTOMS INSPECTION BE? HOW IS THE INSPECTION CONCLUDED?

WHEN CAN I GIVE MY OWN OPINION?WHAT OBLIGATIONS DO I HAVE?

Once the customs office had received answers for all questions that arose, it will conclude the customs inspection. The conclusion of the inspection will be faster if the importer or its representative actively participates in the in-spection and if it submits the data and documents requested as soon as possible and completely.

The customs office will make its decision on returning or reconciliating the guar-antee after the controlling following the customs inspection.

The custom office will announce the result of its inspection in a decision. If the customs office establishes that more duty or VAT should be paid, then it will provide the amount of such in the decision. If the guarantee or any part thereof should be returned, then it will be transferred back by the customs office.

During the inspection the importer or its representative can indicate at any time if they disagree with the procedure of the customs office, and may appeal the decision within 15 days of the receipt thereof.

All data and information related to the features, characteristics and parame-ters of the goods which the customs office requests must be provided.

All documents and data related to the purchasing and transport of the goods must be presented.

If the deadline set for this cannot be complied with, or if only part of the infor-mation is available, then the customs office must be notified thereof.

1.7 1.9

1.101.8

10 11THE EXAMINATION OF THE CUSTOMS VALUE DECLARED THE EXAMINATION OF THE CUSTOMS VALUE DECLARED

WHAT IS CUSTOMS VALUE AND WHY IS ITEXAMINED BY THE CUSTOMS OFFICE?

WHY IS THE VALUE OF THE GOODS NOTALWAYS ACCEPTED BY THE CUSTOMS OFFICE?

HOW CAN I SUPPORT THE AUTHENTICITYOF MY INVOICE?

WHY IS THE INVOICE NECESSARY?

The customs value is the purchase price paid or payable for the goods by the buyer, or any other person instead of the buyer. The customs office examines the correctness of the customs value since it affects the amount of the duty and VAT payable.

For example, if the declared purchase price is unusually low, or if despite the low price the transport costs beyond the European Union are borne by the ex-porter, then in some cases this might indicate that the customs value is not true.

If the customs office has doubts about the truthfulness of the customs value, then it has the right to examine whether the amount specified in the invoice is true by requesting additional documents and records.

If the customs office requests the verification of the purchase price, then the im-porter may support the correctness of the value declared.

The importer can do so by submitting the documents (from the order until the payment) generated in the commercial transaction (for example, sale, commis-sion, agency, etc.), which verify the purchase price in a credible manner, but the

following are required in any case:

• commercial invoice,

• business correspondence related to the transaction,

• commercial contract,

• bank transfer,

• bank account statement,

• the accounting entries related to the transaction,

• the form for the declaration of the customs value.

Because the invoice verifies the purchase price.The purchase price however can be verified only by the final invoice, that is the invoice which includes the total payment obligation, the pro-forma invoice - even if it is an offer, preliminary invoice or partial invoice - is not sufficient for this purpose.

2.1

2.3

2.4

2.2

2. THE EXAMINATION OF THE CUSTOMS VALUE DECLARED

12 13THE EXAMINATION OF THE CUSTOMS VALUE DECLARED THE EXAMINATION OF THE CUSTOMS VALUE DECLARED

It is advisable to also submit the shipping bill, the shipping contract and the document verifying the costs of the insurance policy related to the shipping, and also the contract for the licence fee, if any.

IMPORTANT! It is the obligation of the importer to obtain all data and infor-mation which - for example - verifies the purchase price published on the online marketplace between the Chinese seller and its buyer!

The entry summary declaration of the products purchased on the online mar-ketplace, i.e. the products ordered on the internet requires special attention. In case of such consignments, a domestic company (importer) usually under-takes to carry out the customs clearance of the consignments in Hungary which were collected in a container and dispatched in China.

The actual consignees of the numerous consignments to be found in the ship-ment will be the persons who appear on the online marketplace as buyers. For this very reason, the domestic company (importer) applying for the customs clearance must have all information and documents which the customs of-fice may request from it in these cases. If the domestic company (importer) is not familiar with customs procedures, then it may use a customs representative, which is able to mediate with appropriate expertise between its principal and the customs office in order to clarify the issues that arise during the customs clearance.

(The various documents to be submitted for the examination of the value of the goods are presented by the case studies included in the annex.)

HOW IS THE VALUE OF THE GOODS EXAMINED?2.5

NOTIFICATION

NOTIFICATION

ASSESSMENT

Rejection Approval

GUARANTEE

Data/Document/Information

Customs guarantee

14 15TARIFF CLASSIFICATION OF GOODS ONLY ORIGINAL AND SAFE PRODUCTS CAN BE IMPORTED

HOW DOES THE CUSTOMS OFFICE EXAMINETHE CORRECTNESS OF TARIFF CLASSIFICATION OF GOODS?

WHAT IS SAMPLING?

WHY IS THE CUSTOMS OFFICE INTERESTED IN THIS?

WHAT HAPPENS TO THE NON-ORIGINAL OR UNSAFE GOODS?

WHAT SHOULD I PAY ATTENTION TO IF I IMPORTORIGINAL PRODUCTS OR PRODUCTS WITHOUT BRANDING?

In order to determine the correctness of tariff classification, the customs office may request photos and technical descriptions of goods, and may also examine the goods. In this case the customs office also examines whether the de-scription of goods and the tariff heading indicated in the declaration are correct, and whether the goods declared actually have to be classified under the heading specified.

Counterfeit - i.e. not original or not safe - goods constitute a risk to human life and health, therefore it is also examined by the customs office. Counterfeit goods are for example the imitation goods, or the products affixed with fake logos.

Subject to the decision of the competent authority or the company, the customs office may order the destruction of the counterfeit or unsafe goods.

The indication of the CE marking which verifies the safety of the goods has strict rules, and the existence of the marking in itself is not necessarily sufficient. Dur-ing the course of the examination, the customs office may request additional documents related to the product.

If the customs office determines that the laboratory testing of the goods is re-quired, then it will take sample of the goods. One sample belongs to the client (importer or representative), one sample belongs to the customs office, while one sample will be tested in the laboratory. The sample can contain several items.

3.1

3.2

4.1

4.2

4.3

3. TARIFF CLASSIFICATION OF GOODS4. ONLY ORIGINAL AND SAFEPRODUCTS CAN BE IMPORTED

16 17

CUSTOMS PROCEDURE/CUSTOMS CONTROLIF CUSTOMS VALUE CONSTITUTING RISK

WHERE ECONOMIC OPERATORS ARE COOPERATIVE OR NON-COOPERATIVE

LODGING

1.

Lodging ofdeclaration (release

for free circulation)

EXAMINATIONOF GOODS

3.

Performing of examination of goods (optional). Partial or full

examination of goods (identification of goods)

GUARANTEE

5.

Providing guarantee for the customs debt

or declaring a higher

value, upon the request of the client

CONTROL

4.

Ordering customs control.

(notification of the client via electronic

means)

RISK

2.

Identification of risk (doubt) raised in

connection with the customs value (low

value)

RELEASE OF THE GOODS

NO

The economic operator fails to submit the documents requested by the direc-torate, or submits them incompletely.

Obtaining information:carrier, financial institution,

in the framework of foreign legal assis-tance also to the customs authority of the

sender country.

Rejection of the customs value declared, settlement of the customs

debt from the customs guarantee

YES

Submission of the documents reques-ted by the directorate

If the directorate clarified the doubt, then acceptance of the customs value, releasing the customs guarantee

COOPERATIVE ECONOMIC OPERATOR?

FIRST CUSTOMS PROCEDURE

18 19

CUSTOMS PROCEDURE/CUSTOMS CONTROLIF CUSTOMS VALUE CONSTITUTING RISK

WHERE ECONOMIC OPERATORS ARE COOPERATIVE OR NON-COOPERATIVE

ADDITIONAL CUSTOMS PROCEDURE(SAME GOODS, SAME CONDITIONS)

NO

The directorate establishes thatthe economic operator does not have a closed customs value examination

within one year (same goods, same conditions)

Providing guaranteefor the customs debt,

conducting customs control

YES

The directorate establishes thatthe economic operator already has

a closed customs value examination within one year (same goods, same

conditions)

The directorate may clarify the risk (does not initiate a customs value exami-

nation again)LODGING

1.

Lodging of a repeated declaration

(same goods, same conditions).

RISK

2.

Identification of risk (doubt) related

to customs value (low value).

COOPERATIVE ECONOMIC OPERATOR?

20 21ÁLTALÁNOS VÁMKÉRDÉSEK EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE

EXAMPLESCUSTOMS VALUE EXAMINATION

ACCEPTANCE OF THE TRANSACTION VALUEEXAMPLE 1

Alpha Ltd., as the direct customs representative of Beta Ltd., applied for a customs procedure for release for free circulation at the South Budapest Tax and Customs Directorate (hereinaf-ter referred to as Directorate) of the National Tax and Customs Administration (NTCA) on 6th February 2019.

Alpha Ltd. applied for the release for free circulation of various non-Union goods of Chinese origin on a declaration consisted of fourteen items, based on commercial invoice number 222222; the application was accepted and registered by the Directorate.

The sum of 2 572.32 euros was declared as the value of the 1104 pieces of non-Union goods included in item 4 of the declaration, with the description of goods “doorstop made from textile” and classified under TARIC code 6307909899. The Directorate had doubts about the accuracy of the customs value declared, regarding whether the value declared constituted the full amount1 paid. On the basis of the above, further examination of the customs value de-clared became necessary, and therefore the Directorate delivered a customs control decision - also requesting the submission of the documents necessary for the examination - to Beta Ltd. electronically.

In the order, the Directorate required that Beta Ltd. submitted the following documents and data,:

• if not made available to the customs office previously, the notarized signature specimens of the persons authorised to sign on behalf of the economic operator;

• the invoices of the transaction registered and entered in the accounts, the transport doc-

ument and the transport invoice, if the goods have been shipped by own means of trans-port, then the calculation of transport costs;

22 23EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE

• Hungarian translations of the business correspondence related to the transaction: offer, confirmation of offer, order;

• Hungarian translation of the transport contract;

• customs value declaration on form No. D.V.1., provided that it was not submitted during the customs procedure;

• the accounting records of the transaction: the entry in the accounts of the relevant com-mercial invoices for the payment of the purchase price and the accounting records relating to the items increasing the customs value and the VAT base;

• the general ledger statement, including the balance, the insurance policy, the royalties and licence fee records file;

• the transfer or bank account statement verifying the payment of the purchase price and the costs increasing the customs value;

• declaration on the distribution of the transport costs related to the imported goods;

• declaration on the insurance costs related to the imported goods - a negative declaration is also required;

• declaration on intangible assets, stating whether the economic operator paid any royalties, licence fee, etc. related to the products subjected to the customs procedure in the declara-tion examined;

• statement elaborating the customs value, the factors affecting the customs value and the factors affecting the VAT base (sections 45 and 47);

• if previously not made available for the customs office, the accounting policy, the chart of accounts and the system of accounts used;

• all documents not mentioned in the previous sections which support the correctness of the customs value declared;

• declaration stating that the document copies submitted are completely identical to the originals; without thus declaration the document copies cannot be accepted as evidence.

Due to the customs control ordered, as a condition of the release for free circulation with tem-porary customs value (release of goods), the Directorate requested customs guarantee for the difference, which was paid by the importer.Afterwards, based on the temporary customs value (item line 4), the Directorate released the imported goods for free circulation.

Of the documents requested in the order, Beta Ltd. submitted the following:

• presentation of the accounting entries (in the form of screenshots);

• importer’s declaration on the insurance premium;

• importer’s declaration on affiliated companies; ;

• importer’s declaration on the elaboration of the customs value;

• accounting policy;

• importer’s declaration related to the customs value examination ordered;

• notarized signature specimen and empowerment to act as representative

• Seller’s invoices Nos. 222222, 333333, 444444 and 555555;

• business correspondence, order;

• D.V.1. customs value declaration;

• bank documents verifying the payment of the consideration of the commercial invoices.

The Directorate examined the documents individually and also as a whole, and after the assess-ment it established that the documents supported the accuracy of the transaction value of 2 572.32 Euros declared in item 4 of the declaration, and therefore the documents are suitable for dispelling the doubts of the Directorate related to the customs value.Based on the above, the Directorate completed the customs control and accepted the customs value declared as transaction value.

24 25EXAMPLES - REJECTION OF THE TRANSACTION VALUE EXAMPLES - REJECTION OF THE TRANSACTION VALUE

REJECTION OF THE TRANSACTION VALUEEXAMPLE 2

Alpha Ltd., as the direct customs representative of Beta Ltd. applied for a customs procedure for release for free circulation at the South Budapest Tax and Customs Directorate (hereinafter referred to as Directorate) of the NTCA on 25th February 2020.

Alpha Ltd. applied for the release for free circulation of various non-Union goods of Chinese origin on three items, based on commercial invoice number 20201234; which was accepted and registered by the Directorate.

The sum of 13 751.25 euros was declared as the value of the 14475 pieces of non-Union goods indicated in item 1 of the declaration, under the description of goods “shoulder-bag with textile exterior for shopping” and classified under TARIC code 4202.22-90-90. The Directorate challenged the accuracy of the customs value declared, regarding whether the value declared constituted the full amount2 paid.

On the basis of the above, further examination of the customs value declared became necessary, and therefore the Directorate delivered a customs control order - also requesting the submission of the documents necessary for the examination - to Beta Ltd. electronically.

In the order, the Directorate required that Beta Ltd. submitted the following documents and data:

• if not made available to the customs office previously, the notarized signature specimens of the persons empowered to sign on behalf of the economic operator;

• the invoices related to the transaction, which were registered and entered in the accounts, the transport document and the transport invoice, if the goods have been shipped by own means of transport, then the calculation of transport costs);




• the accounting records of the transaction: the entry in the accounts of the relevant com-mercial invoices for the payment of the purchase price and accounting records relating to the items increasing the customs value and the VAT base;




• declaration on the insurance premium related to the imported goods - a negative declara-tion is also required;

• declaration on the rights representing assets, declaring whether the economic operator paid any royalties, licence fee, etc. related to the products subjected to the customs proce-dure in the declaration examined;

• statement on the elaboration of the customs value, the factors affecting the customs value and the factors affecting the VAT base (sections 45 and 47);

• if not made available to the customs office previously, the accounting policy, the chart of accounts and the system of accounts used;

• all documents which support the accuracy of the customs value declared;



Due to the customs control ordered, as a guarantee for the release for free circulation with tem-porary customs value (release of goods), the Directorate requested customs guarantee for the difference, which was paid by importer Beta Ltd.

Subsequently, based on the temporary customs value (item 1), the Directorate released the im-ported goods for free circulation.

Of the documents requested in the order, Beta Ltd. submitted the following:


• declaration on the identity of the documents;

• notarized signature specimen of the managing director;

• order;

• commercial contract (without signatures and stamps);

• decision on the legal succession of intellectual property rights;

• declaration on the licence fee and royalty;

• invoice on the customs clearance;

• document on cargo insurance policy;

• commercial invoice number 2020JS010;

• certificate of the payment of duty and taxes;

• general ledger statement;

• transport notification.

Since Beta Ltd. provided incomplete data and information, the Directorate requested Beta Ltd. to submit the following documents and instruments again:

• declaration on the terms of delivery (parity) of the consignment;

• declaration on the distribution ratios of the transport cost incurred in- and outside the ter-ritory of the European Union;

• declaration on whether the document submitted containing the 231 Yuan cargo insurance number 035001800111 is related to the consignment subject to the examination;

• the business correspondence related to the consignment;

• the document or bank account statement verifying the payment of the purchase price;

• the commercial invoice, and the document supporting the entry of the payment in the ac-counting.

Upon the notification, Beta Ltd. submitted only a letter of representation and a declaration on the delivery terms.

The Directorate examined the documents submitted incompletely, and found that Beta Ltd. presented such pieces of evidence exclusively, which still failed to support the accuracy of the customs value declared, and since Beta Ltd. failed to provide acceptable explanation for the low unit price and was unable to verify the payment of the purchase price by bank receipts, the Directorate continued to challenge the accuracy of the customs value declared.

The Directorate notified Beta Ltd. of this fact in an order3, and called Beta Ltd. to submit addi-tional evidence or information to verify the accuracy of the transaction value, and to determine the customs value4, thereby providing all opportunities to the company to verify the accuracy of the customs value.

Afterwards, Beta Ltd. submitted - among others - a declaration on the low price, in which it stated that the products examined are made in China, where raw materials and workforce are cheaper than in Europe. The material of the products is textile, their brand is not a fashion brand. Their low-end products are intended for lower-income customers. According to the statement of the company, the products are not comparable to the products of the Western luxury industry.

28 29EXAMPLES - REJECTION OF THE TRANSACTION VALUE EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE

During the customs control, on the basis of the documents submitted and available the Directo-rate examined whether the declared customs value was determined by Beta Ltd. in accordance with the actual data, and whether it determined the factors increasing the customs value in compliance with the legal regulations.

During the customs control, in its submissions Beta Ltd. provided exclusively such documents which failed to dispel the doubts of the Directorate related to the correctness of the customs value, for the following reasons:

• the company failed to provide an acceptable explanation for the low transaction value;

• the company did not submit a financial institution receipt for the payment of the purchase price;

• the company did not submit the business correspondence related to the sale of products;

• the company did not submit a document supporting the entry of the commercial invoice in the accountings;

• despite the low purchase price, the exporter also bears the costs incurred in connection with transportation outside the territory of the European Union.

Based on the above, the Directorate did not accept the transaction value used in item 1 of the declaration, and it established the customs value by applying a secondary method5, which the Directorate recorded in a customs control report and communicated to Beta Ltd.

In connection with the findings of the report the Directorate ensured Beta Ltd. the right to be heard6 , and in its declaration Beta Ltd. stated that it found the customs value determined by the Directorate unrealistic. In addition it referred to the invoice submitted which clearly showed that they resell their products at low prices.

The Directorate supervised all data provisions of Beta Ltd. and found that they did not include the invoice related to the resale of the imported products; based on these facts there is no rea-son to continue the customs control, therefore based on the contents of the report, the Directo-rate rejected the transaction value declared, and established and elaborated the customs value of the non-Union goods according to the secondary method.

On its own behalf, Alpha Ltd. applied for a customs procedure for release for free circulation at the South Budapest Tax and Customs Directorate (hereinafter referred to as Directorate) of the NTCA on 27th February 2019.

In the customs procedure Alpha Ltd. indicated code 1 in Section 43 of the Single Administrative Document, and it determined the value of the non-Union goods in item 1 of the declaration as follows, by taking into consideration commercial invoice number 999999 and based on the transaction value:

Item line 1: 800 kilograms of non-Union goods with TARIC code 6116102000, with the descrip-tion of goods “Five-finger cotton gloves (65% cotton & 35% polyester), with rubber anti-slip dots in the palm area. For internal use”, and with the transaction value of 1 620 Dollars.

Due to the low transaction values, the Directorate had reasonable doubt as to whether the value declared constituted the total amount7 paid. On the basis of the above, further examina-tion of the customs value declared became necessary, and therefore the Directorate delivered a customs control order - also requesting the submission of the documents necessary for the examination - to Alpha Ltd. electronically.

In the order, the Directorate required that Alpha Ltd. submitted the following documents and data:


• the invoices related to the transaction, which were registered and entered in the accounts, the transport document and the transport invoice, if the goods have been shipped by own means of transport, then the calculation of transport costs;



• Hungarian translation of the business correspondence related to the transaction: offer, confirmation of offer, order;



• the accounting entries of the transaction: the entry in the accounts of the relevant com-mercial invoices for the payment of the purchase price and accounting entries relating to the items increasing the customs value and the VAT base;





• declaration on the rights representing assets, stating whether the economic operator paid any royalties, licence fee, etc. related to the products subjected to the customs procedure in the declaration examined);

• statement on the elaboration of the customs value, factors affecting customs value and factors affecting VAT base (sections 45 and 47);


• all documents which support the accuracy of the value declared;


Due to the customs control ordered, as a guarantee for the release for free circulation with tem-porary customs value (release of goods), the Directorate requested customs guarantee for the difference, which was paid by importer Alpha Ltd.

Subsequently, based on the temporary customs value, the Directorate released the imported goods for free circulation.

Of the documents requested by an order, Alpha Ltd. submitted the following:

• certificate of the payment of the customs guarantee;

• bank account statements;

• notarized signature specimen;

• criminal law declaration;

• transport documents (No.12345678), bill of lading, certificate of origin No. 19C3302A3971/00061R, commercial invoice No. 999999;

• transport invoice No. 2019/012345;

• proforma invoice;

• Seller’s current account;

• chart of accounts;



• business correspondence;

• bank confidentiality declaration No. 1234567891;

• bank account transaction list.

32 33EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE EXAMPLES - REJECTION OF THE TRANSACTION VALUE

The Directorate contacted the banks managing the accounts, in order to inquire whether Alpha Ltd. had fulfilled its duty and tax liabilities. The banks provided the bank accounts’ transaction lists.

The Directorate examined the documents submitted and the bank data individually and also as a whole, and found that the documents and the data supported the transaction value, there-fore the doubts of the Directorate related to the accuracy of the customs value declared were dispelled.

Based on the above, the Directorate closed the customs control and accepted the customs val-ue declared as transaction value.

Alpha Ltd., as the indirect customs representative of Beta Ltd., initiated a customs procedure for release for free circulation at the South Budapest Tax and Customs Directorate (hereinafter referred to as Directorate) of the NTCA on 4th March 2020.

Alpha Ltd. initiated the release for free circulation of various non-Union goods of Chinese origin on three item lines, based on commercial invoice number 5543614. The Directorate accepted and registered the motion.

The sum of 9 240 euros was indicated as the value of the 6600 pairs of non-Union goods includ-ed in item line 3 of the declaration, under the description of goods “children’s shoes with plastic sole and upper” classified under TARIC code 6402999100, regarding the authenticity of which customs value declared the Directorate had doubts whether the value declared constituted the full amount paid under Article 70(1) of the Union Customs Code.

On the basis of the above, further examination of the customs value declared became neces-sary, and therefore the Directorate delivered a customs control order - also requesting the sub-mission of the documents necessary for the examination - to Alpha Ltd. via electronic means. The directorate notified Beta Ltd. of the ordering of the customs control through Alpha Ltd., via electronic means, by order, and it simultaneously called Beta Ltd. to submit the documents necessary for the customs control.

In the orders, the Directorate required that both Alpha Ltd. and Beta Ltd. submitted the follow-ing documents and data:


• the invoices of the transaction marked as received and processed for bookkeeping, the transport document and the transport invoice, if the goods have been transported by own means of transport, then the calculation of transport costs;






• the accounting records of the transaction: the entry in the accounts of the relevant com-mercial invoices for the payment of the purchase price and accounting records relating to the items increasing the customs value and the VAT base;


• the transfer or bank account statement verifying the payment of the purchase price and the customs value-increasing costs;



• declaration on the rights representing assets, stating whether the economic operator paid any royalties, licence fee, etc. related to the products subjected to the customs procedure in the declaration examined;

• statement on the determination of the customs value, the factors influencing the customs value and the factors influencing the VAT base (sections 45 and 47);


• all documents which support the correctness of the value declared;


Due to the customs control ordered, as a guarantee for the release for free circulation with tem-porary customs value (release of goods), the Directorate requested customs guarantee for the difference. Instead of lodging a guarantee, Alpha Ltd. requested the immediate notification of the customs debt to which the goods may ultimately be liable8.

Afterwards, based on the temporary customs value (item line 3), the Directorate released the imported goods for free circulation.

Only Alpha Ltd., customs representative, submitted documents of the ones requested in the order, as follows:

• importer’s declaration on the insurance cost;

• importer’s declaration on the royalties and licence fees;

• importer’s declaration on associated enterprises;

• importer’s declaration on the business correspondence;

• importer’s declaration on the transportation fee;

• commercial invoice number 5543614, packing list;


• notarized signature specimen of the managing director of Beta Ltd.;

• importer’s declaration on the authenticity of the documents;

• transport invoice number 112233445566;

• T1 document, CMR;

• B/L document number XML81314812;

• B/L document number XML7026625;

• B/L document number XML81325282.


The Directorate examined the documents submitted incompletely, and found that Alpha Ltd. presented such pieces of evidence exclusively, which continued to make the correctness of the customs value declared doubtful, and since neither Alpha Ltd., nor Beta Ltd. provided expla-nation for the low unit price and did not submit the bank certificate of the payment of the purchase price, the Directorate continued to doubt the accuracy of the customs value declared.

Through its orders the Directorate notified9 Alpha Ltd. and Beta Ltd. of its continued doubts, and called them to submit additional evidence or information to verify the authenticity of the transaction value, and to develop the customs value10 , thereby providing all opportunities to the companies to verify the accuracy of the customs value.

Beta Ltd. did not use the opportunity provided, while in its submission Alpha Ltd. informed the Directorate that no additional documents are available, therefore it requested that the customs value examination was closed based on the documents submitted previously.

During the customs control, on the basis of the documents submitted and available the Direc-torate examined whether the declared customs value was determined by Alpha Ltd. in accord-ance with the actual data, and whether it determined the factors increasing the customs value in compliance with the legal regulations.

During customs control, in its submissions Alpha Ltd. provided exclusively such documents which failed to dispel the doubts of the Directorate related to the correctness of the customs value:

• neither party provided an acceptable explanation for the low level of the transaction value;

• they did not submit any information or document about the circumstances and the actual realisation of the import transaction, for example, business correspondence, commercial contract, price offer, order, transfer of advance payment, bank transfer, document related to the payment of the purchase price, notification on the arrival of the goods, other e-mail message, etc.;

• no document supporting the registration of the commercial invoice in the accounting records was submitted

Based on the above, the documents submitted did not dispel the doubts of the Directorate, therefore it did not accept the transaction value declared in item 3 of the release for free circu-lation customs procedure declaration, and determined the customs value by applying a second-ary method11 , which the Directorate recorded in a customs control report and communicated to Alpha Ltd. and Beta Ltd.

The Directorate ensured both Alpha Ltd. and Beta Ltd. the right to be heard12 in connection with the findings of the report, which opportunity was not used by either company, therefore the Directorate rejected the transaction value declared, and determined and developed the customs value of the non-Union goods according to the secondary method.


Alpha Ltd., as the indirect customs representative of Beta GP, applied for a customs procedure for release for free circulation at the South Budapest Tax and Customs Directorate (hereinafter referred to as Directorate) of the NTCA on 2nd January 2020.

Alpha Ltd. initiated the release for free circulation of various non-Union goods of Chinese origin on four item lines, based on commercial invoice number BCD-1234. The Directorate accepted and registered the motion.

The sum of 4 025 Dollars was indicated as the value of the 1380 pieces of non-Union goods in-cluded in item line 1 of the declaration, under the description of goods “Non-woven textile shoe protector” and classified under TARIC code 6307909810. The Directorate had doubts about the authenticity of the customs value declared, regarding whether it constituted the full amount13 paid. On the basis of the above, further examination of the customs value declared became necessary, and therefore the Directorate delivered a customs control order - also requesting the submission of the documents necessary for the examination - to Alpha Ltd. electronically. The directorate notified Beta GP of the ordering of the customs control through Alpha Ltd., by its order, and it simultaneously called Beta GP to submit the documents necessary for the customs control.

In the orders, the Directorate required that both Alpha Ltd. and Beta GP submitted the following documents and data:


• the invoices of the transaction registered and entered in the accounts, the transport docu-ment and the transport invoice, if the goods have been shipped by own means of transport, then the calculation of transport costs);




• the accounting entries of the transaction: the entry in the accounts of the relevant commer-cial invoices for the payment of the purchase price, and accounting entries relating to the items increasing the customs value and the VAT base;






• statement on the determination of the factors affecting the customs value and the factors affecting the VAT base (sections 45 and 47);






Due to the customs control ordered, as a guarantee for the release for free circulation with temporary customs value (release of goods), the Directorate ordered the provision of customs guarantee difference, which was paid by Alpha Ltd.

Afterwards, based on the temporary customs value (item line 1), the Directorate released the imported goods for free circulation.

Of the documents prescribed in the ruling, Alpha Ltd. submitted the following:

• invoice number BCD-1234 submitted for the customs clearance and packing list;

• request for quotation of Beta GP, order and foreign confirmation, together with the offer and the proforma invoice;


• bank certificates on the payment of the advance payment related to invoice number BCD-1234;

• the transport invoice number 5678910 issued by Gamma Ltd.;

• declaration on the distribution of the royalties and licence fees related to the imported goods;

• declaration on the general ledger statement;

• declaration on the requests for price quotation and the discounts;

• declaration on the authenticity of the document copies;

• photo and technical data of the goods subject to customs clearance;

• declaration on the scope of use of the goods;

• declaration on the distribution of the transport cost;

• declaration on associated enterprises;

• the resale invoice of the goods subject to customs clearance;

• service fee invoice number 2020/TC/100 issued by Alpha Ltd.;

• authorisation for participation during the customs control.

The Directorate examined the incompletely submitted documents listed above, and it found that the documents are not suitable for supporting the customs value and the low unit price, and neither Alpha Ltd., nor Beta GP provided explanation for the low unit price and did not sub-mit a bank certificate verifying the payment of the purchase price.

Through its orders the Directorate notified14 Alpha Ltd. and Beta GP of this fact and called them to submit additional evidence or information verifying the transaction value and to determine the customs value15 , thereby providing all opportunities to the companies to verify the accura-cy of the customs value.

After this, Alpha Ltd. submitted additional documents:

• the bank statement of K&H Bank Zrt., which includes the payment of commercial invoice number BCD-1234 in 3 instalments;

• the accounting file of carrier Gamma Ltd.;

• the stock file of the goods of the sender;

• the accounting item of the transport cost transaction;

• the bank statement of Raiffeisen Bank Zrt.


Subsequently, the Directorate contacted the banks managing the accounts, in order to inquire whether Beta GP had fulfilled its duty and tax liabilities. The banks provided the bank account transaction lists.

After this, Alpha Ltd. provided further data to the Directorate:

“When settling the transport invoice related to the customs control with the case number re-ferred to above, Beta - by mistake - referred to the incorrect invoice number in the note, but during the customs clearance it transferred the transport fees to the carrier, in this case to Gam-ma Ltd.”

I support this with the following documents.

• The statement of Beta GP on the transfer of the transport invoice,

• The accounting analytics of Gamma Ltd. on the payment of the transport fee”

Beta GP was notified of the bank inquiries by the Directorate.

Based on the business correspondence submitted by Alpha Ltd., the Directorate established that products examined were sold to Beta GP for a specific unit price.

According to the accounting documentation of Beta GP, the import invoice was entered in the records at the transaction value declared and then paid in three instalments. The advance pay-ment of 5 500 Dollars was followed by a transfer of 2 245.9 Dollars and a transfer of 24 000 Dol-lars. The three items covered the import invoice completely.

In course of the customs control, in case of the customs procedure for the release for free circu-lation, the evidence supported the authenticity of the transaction value declared in item line 1 of the declaration, in the total amount of 4 025 Dollars, therefore the evidence was suitable for dispelling the doubts of the Directorate.

Based on the transport cost invoice number 5678910 of Gamma Ltd., general ledger file num-ber 4541 on the entry in the records thereof, and based on the customs value declaration the Directorate established that the maritime transport cost of 693 266 Hungarian Forints (incurred beyond the Community customs territory), which was declared for the FOB WUHAN shipping terms used for the imported goods, was declared correctly as a factor increasing the customs value in the customs procedure for the release for free circulation.




Alpha Ltd., as the indirect customs representative of Beta Ltd., initiated a customs procedure for release for free circulation at the South Budapest Tax and Customs Directorate (hereinafter referred to as Directorate) of the NTCA on 13th June 2019.

Alpha Ltd. initiated the release for free circulation of various non-Union goods of Chinese origin on 3 item lines, based on proforma invoice number HTLY19-JS0041. The Directorate accepted and registered the motion.

The sum of 33 020.47 euros was indicated as the value of the 5280 pairs of non-Union goods included in item line 3 of the declaration, under the description of goods “shoes with plastic upper and sole” and classified under TARIC code 6402919000. The Directorate had doubts about the accuracy of the customs value declared, regarding whether the value declared constituted the full amount16 paid.

On the basis of the above, further examination of the customs value declared became necessa-ry, and therefore the Directorate delivered a customs control order - also requesting the submis-sion of the documents necessary for the examination - to Alpha Ltd. electronically. The directo-rate notified Beta Ltd. of the ordering of the customs control through Alpha Ltd., by order, and it simultaneously called Beta Ltd. to submit the documents necessary for the customs control.

In the orders, the Directorate required that both Alpha Ltd. and Beta Ltd. submitted the fol-lowing documents and data:






• the accounting records of the transaction: the entry in the accounts of the relevant commer-cial invoices for the payment of the purchase price, the accounting records relating to the items increasing the customs value and the VAT base;






• statement on the determination of the factors influencing the customs value and the factors influencing the VAT base (sections 45 and 47);





Due to the customs control ordered, as a guarantee for the release for free circulation with temporary customs value (release of goods), the Directorate requested customs guarantee dif-ference. Instead of lodging a guarantee, Alpha Ltd. requested the immediate notification of the customs debt to which the goods may ultimately be liable17 .

Afterwards, based on the temporary customs value (item 3), the Directorate released the im-ported goods for free circulation.

Of the documents requested in the order, Alpha Ltd. submitted the documents sent by Beta Ltd. as follows:

• proforma invoice number HTLY19-JS0041 and packing list;

• Chinese exportation document number 292120190219666409;

• signature specimen of the managing director of Beta Ltd.;

• signature specimen of the managing director of Alpha Ltd.;


• declaration by the managing director of Alpha Ltd. on the insurance policy;

• declaration by the managing director of Alpha Ltd. on the accounting policy;

• declaration by the managing director of Alpha Ltd. on the rights representing assets;

• declaration by the managing director of Alpha Ltd. on the freight costs;

• declaration by the managing director of Alpha Ltd. on the business correspondence;

• declaration by the managing director of Alpha Ltd. on the associated enterprises;

• declaration by the managing director of Alpha Ltd. on the authenticity of the documents submitted.

The Directorate examined the documents submitted incompletely, and found that Alpha Ltd. presented such pieces of evidence exclusively, which continued to make the correctness of the customs value declared doubtful. Since neither Alpha Ltd., nor Beta Ltd. provided explanation for the low unit price and did not submit the bank certificate of the payment of the purchase price, the Directorate continued to doubt the accuracy of the customs value declared.

Through its order the Directorate notified Alpha Ltd. and Beta Ltd. of this fact and called them to submit additional evidence or information verifying the accuracy of the transaction value and to determine the customs value18 , thereby providing all opportunities to the companies to verify the accuracy of the customs value.

Alpha Ltd. used the opportunity provided, and submitted a letter of representation registered as received under the number 5903915579 on 11th February 2020.

During the customs control, on the basis of the documents submitted and available the Directo-rate examined whether the declared customs value was determined by Alpha Ltd. in accordance with the actual data, and whether the factors increasing the customs value were determined in compliance with the legal regulations.

During the customs control, in its submissions Alpha Ltd. provided exclusively such documents which failed to dispel the doubts of the Directorate related to the correctness of the customs value:

• neither Alpha Ltd., nor Beta Ltd. provided an acceptable explanation for the low transaction value;

• the proforma invoice submitted is not suitable for supporting the real transaction value of the non-Union goods, since it does not represent a payment obligation in accordance with the provisions of Article 70 of the Customs Code;

48 49EXAMPLES - REJECTION OF THE TRANSACTION VALUE EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE

• they did not submit any information or document about the circumstances of the import transaction: order, commercial contract, notification on the arrival of the goods, other e-mail message, etc.;

• neither Alpha Ltd., nor Beta Ltd. verified the payment of the purchase price of the goods declared in the declaration by bank documents;

• despite the low purchase price, the exporter also bears the costs incurred in connection with transportation outside of the European Union.

Based on the above, the Directorate did not accept the transaction value used in item 3 of the declaration, and determined the customs value by applying a secondary method19 , which the Directorate recorded in a customs control report and communicated to Alpha Ltd. and Beta Ltd.

Neither Ltd. exercised its right to be heard20 , therefore the Directorate rejected the transaction value declared, and determined the customs value of the non-Union goods according to the secondary method.

Alpha Ltd. (large taxpayer), by its direct customs representative, applied for a customs proce-dure for the release for free circulation at the South Budapest Tax and Customs Directorate (hereinafter referred to as Directorate) of the NTCA on 30th January 2019.

In the customs procedure Alpha Ltd. indicated code 1 in Section 43 of the Single Administrative Document, according to which it determined the value of the non-Union goods in item 3 of the declaration as follows, by taking into consideration commercial invoice number 88175704 and based on the transaction value:

Item 3: 2 563 kilograms of non-Union goods, with the description of goods “garden pavilion (gazebo) made of synthetic fiber, with metal frame”, with the transaction value of 4 844.28 Euros, under TARIC code 6306220000.

Due to the low transaction values, the Directorate had reasonable doubt as to whether the value declared constituted the full amount21 paid. On the basis of the above, further examina-tion of the customs value declared became necessary, and therefore the Directorate delivered a customs control order - also requesting the submission of the documents necessary for the examination - to Alpha Ltd. and its direct representatives electronically.

In the order, the Directorate required the following documents and data to be submitted:








• the accounting entries of the transaction: the entry in the accounts of the relevant commer-cial invoices for the payment of the purchase price and accounting entries relating to the items increasing the customs value and the VAT base;






• statement on the determination of the factors affecting the customs value and the factors affecting the VAT base (sections 45 and 47);



• declaration stating that the document copies submitted are completely identical to the ori-ginals; without thus declaration the document copies cannot be accepted as evidence.

Due to the customs control ordered, as a guarantee for the release for free circulation with tem-porary customs value (release of goods), the Directorate requested customs guarantee for the difference, which was paid by importer Alpha Ltd.

Afterwards, based on the temporary customs value, the Directorate released the imported goods for free circulation.

Of the documents prescribed in the order, Alpha Ltd. submitted the following:

• signature specimen of the company manager of Alpha Ltd.;

• order;

• Seller’s file;


• the power of attorney given to the direct representative on 14th April 2016;

• declaration on the determination of the customs value, made by the direct customs repre-sentative on 4th March 2019;

• commercial invoices Nos. 88176411, 88176420, 88176434 and 88176456;

• declaration on the documents not available and the person who keeps the accounting re-cords, made by the direct customs representative on 4th March 2019;

• declaration on the insurance premium, made by the direct customs representative on 4th March 2019;

• declaration on the associated enterprises, made by the direct customs representative on 4th March 2019;


• bank account statement verifying the payment of the commercial invoices.

The Directorate examined the documents and data submitted individually and also as a whole, and it found that they supported the transaction value, therefore the doubts of the Directorate related to the accuracy of the customs value declared were dispelled completely.




Economic Operator A (private entrepreneur) as importer, by Beta Ltd. (as its direct customs rep-resentative), applied for a customs procedure for release for free circulation at the South Buda-pest Tax and Customs Directorate (hereinafter referred to as Directorate) of the National Tax and Customs Administration on 17th September 2020.

The private entrepreneur applied for the release for free circulation of textile products originat-ing from Taiwan on item 1 altogether, based on one single commercial invoice representing the transaction value, which was accepted and registered by the Directorate.

The sum of 3 029 Dollars was declared as the value of the 11897 kilograms of goods included in item line 1 of the declaration, under the description of goods “FABRIC MADE OF SYNTHET-IC-DYED CONTINUOUS FILAMENT, IN ROLL” and classified under TARIC code 5407920000. The Directorate had doubts about the accuracy of the customs value declared, regarding whether the value declared constituted the full amount22 paid.

On the basis of the above, further examination of the customs value declared became necessary, and therefore the Directorate delivered a customs control order - also requesting the submission of the documents necessary for the examination - to the private entrepreneur elec-tronically.

In the order, the Directorate required that the following documents and data were submitted:


• the invoices of the transaction registered and entered in the accounts, the transport docu-ment and the transport invoice, if the goods have been transported by own means of trans-port, then the calculation of transport costs;




• the accounting entries of the transaction: the entry in the accounts of the relevant commer-cial invoices for the payment of the purchase price and accounting entries relating to the items increasing the customs value and the VAT base;

• the general ledger statement, and the balance, the insurance policy, the royalties and li-cence fee records file;

• the transfer or bank account statement verifying the payment of the purchase price and the customs value-increasing costs;




• statement on the determination of factors affecting customs value and factors affecting VAT base (sections 45 and 47);





Due to the customs control ordered, as a guarantee for the release for free circulation with tem-porary customs value (release of goods), the Directorate requested customs guarantee for the difference of almost 18 million Hungarian Forints.

The private entrepreneur did not pay the customs guarantee, therefore the goods were not re-leased for free circulation and the goods were not released. The private entrepreneur submitted an application to the Directorate, in which - in addition to describing the circumstances of the transaction in detail - the private entrepreneur noted that the imported goods arrived were of reduced quality, and also argued that the payment of the significant amount of guarantee would make his/her activity completely impossible.

In his/her application, the private entrepreneur referred to circumstances which affect the accu-racy of the transaction value significantly and which seemed credible, and which wavered the doubts of the Directorate then already, but the private entrepreneur did not submit documents in support of the circumstances.

Based on the available databases and public company data, the Directorate verified the activity and taxpayer career of the private entrepreneur, and it found that the imported goods received belong to his/her main activity and that his/her activity has a long history.

In order to clarify the facts completely and upon the request of the private entrepreneur, the Directorate then held an urgent extraordinary personal hearing, but the Directorate notified the private entrepreneur in detail and in advance of the documents which it had already obliged the private entrepreneur to submit.

The importer submitted the following documents and information at the personal hearing:

• order, presentation of the business correspondence

• limited power of attorney,

• Bill of Lading document number XXX,

• proforma invoice number 111, final import invoice 2222, packing list,

• Single Administrative Document,

• bank account statement number 1111 of the financial institution (on import invoice)

• financial institution account history,

• transport invoice number 1111,

• bank account statement number 2222 of the financial institution (on transport invoice)

• certificate issued by the exporter and the Hungarian translation thereof,

• declaration issued by the exporter and the Hungarian translation thereof,

• exporter’s bank transfer to importer,

• accounting documentation: The July 2020 turnover, cash book, the cash flow statement of the 2020 suppliers, invoice entered in the accounts,

• photos taken and video recordings made of the product,

56 57EXAMPLES - ACCEPTANCE OF THE TRANSACTION VALUE

The Directorate examined the documents one by one and as a whole, and it found that the doc-uments supported the accuracy of the transaction value declared in line 1, and therefore the documents are suitable for dispelling the doubts of the Directorate, for the following reasons:

• the entire process of the import transaction could be established and was traceable from the documents in a credible manner and without a doubt.

• the accounting entries also contained the economic event in a credible manner.

• the amount equal to the transaction value declared, and also the adjustments thereof were paid transparently, through a transparent financial institution.

• reduced quality - real economic value - of the imported goods was unquestionably support-ed by the documents and other evidence submitted.

• the private entrepreneur participated in the inspection in a constructive manner, and he/she provided the necessary information as soon as possible.

Overall, the documents verifying the transaction value of 3 029 Dollars which was declared by the private entrepreneur in item 1 of the declaration supported the accuracy of the transaction value declared. The importer paid and certified the purchase price of the “reject” product re-mained from the production in accordance with their previous agreement, and also included it in its accounting records in a credible manner.

Based on the above, the Directorate closed the customs control and accepted the customs value declared as transaction value still during the process of the customs procedure, i.e. even before the release of the goods, and then the Directorate released the goods immediately after the verification of the payment of the customs debt.

The fast (i.e. concluded during the process of the customs procedure) and efficient action of the Directorate, accompanied by the constructive attitude of the importer, ultimately prevented the failure of the activity of the economic operator.

1 The full amount paid according to Article 70(1) of the Union Customs Code.


3 Taking into consideration the provisions of Article 140(1) of Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisi-ons of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code (hereinafter referred to as Implementation Regulation).

4 According to Article 74 of the Union Customs Code.

5 The secondary method under Article 74(3) of the Union Customs Code.

6 According to Article 22(6) of the Union Customs Code.

7 The full amount paid according to Article 70(1) of the Union Customs Code

8 With reference to Article 244(2) of the Union Customs Code.

9 Considering the provisions of Article 140(1) of the Implementation Regulation.


11 The secondary method under Article 74(3) of the Union Customs Code.



GLOSSARY

58

14 Taking into consideration the provisions of Article 140(1) of the Union Customs Code.



17 With reference to Article 244(2) of the Union Customs Code.



20 Right to be heard according to Article 22(6) of the Union Customs Code.



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