How is the correctness of proofs of origin controlled in the export country?
Customs can take the initiative to inspect the accounts of the exporting company to check if prerequisites exist for applying for or making out a preferential proof of origin for the export product. The origin of the export product can also be controlled based on a request from the customs administration in the country of destination for the export, i.e. the import country.
If it turns out that the proof of origin has been applied for or made out on false grounds in the export country, the preferential treatment will be refused in the country of destination for the export.
An exporter who applies for an EUR.1 movement certificate from Customs or makes out invoice declarations must be able to present the documents to prove the originating status of the products. These documents must be kept in accordance with Customs’ archiving instructions for at least six years from the end of the calendar year when the goods were exported.
Correctness and error situations
A proof of origin makes an originating product eligible for preferential treatment according to the free trade or preferential agreement or arrangement in the country of destination for the export. These agreements or arrangements also always include rules of origin, which determine the minimum conditions of the production or manufacture of goods for originating status. The rules of origin also determine precisely the form of the proofs of origin and their content requirements. The rules of origin also contain provisions on administrative cooperation between authorities, including, among other things, the originating status of the goods and the verification of the correctness and authenticity of the proofs of origin.
When proofs of origin are made out and issued, the exporter is expected to follow the rules of origin of the agreement or arrangement applicable at the time, and thereby also the rules concerning the correctness of the proofs of origin. The formal requirements for movement certificate applications or invoice or origin declarations must be followed precisely. Slight discrepancies or obvious typing errors will not necessarily cause the proof of origin to be rejected.
If the country of destination for the export detects technical errors in the proof of origin upon customs clearance or later, the document will be rejected and given back to the importer. In such cases, the importer can request the exporter to provide a new appropriate proof of origin subsequently.
Doubts about the authenticity and correctness of the documents will lead to the subsequent verification procedure, and in some cases, the preferential treatment may also be refused without the verification.
Subsequent verification of origin
The country of destination for the export can verify the correctness of a proof of origin or proofs of origin either through random checks or through risk analysis or whenever there is reason to doubt the authenticity or correctness of proofs of origin. In such cases, the competent authorities in the country for destination of the export will send the proofs of origin to be verified by the corresponding competent authorities of the export country.
Finnish Customs will request the exporter to establish the factors affecting correctness of the proofs of origin and present the necessary documentary evidence, when it has received a request for verification.
Consequences of proofs of origin issued on false grounds or otherwise incorrectly
An immediate consequence of the rejection of a proof of origin in the country of destination for the export is usually that the customs duties will be levied there in full with possible increases and other consequences. If the importer has to pay the customs duties because of an error made by the exporter, the importer will usually demand a refund or other compensation for the damage caused. If such an error has occurred in several consignments, this can easily amount to a considerable sum of compensation to be paid by the exporter, especially as countries of destination for the export often apply higher general duty rates than the EU.
If the exporter repeatedly breaks the rules of origin or otherwise misuses the authorisation, the customs authorities may revoke the approved exporter authorisation. A penalty fee according to the national customs act may also be imposed for the breach or violation of the conditions of the authorisation.
In the rules of origin (e.g. the pan-Euro-Mediterranean rules of origin, Article 35), there is a mention of possible penalties in cases where the exporter draws up, or causes to be drawn up, a document which contains incorrect information for the purpose of obtaining a preferential treatment for products in the country of destination for the export. In Finland, such consequences are provided for in Chapter 46 section 10 of the Penal Code. According to this section, false declaration of the origin of an export may lead to a fine or to imprisonment for at most two years.