Applying for an authorisation for inward processing

For the inward processing authorisation to be granted, the following conditions must be met:

• The applicant is established in the customs territory of the EU. In occasional cases where it is deemed justified, the authorisation can also be granted to an applicant established outside the customs territory of the EU.
• The applicant has a valid guarantee.
• The applicant has not committed any serious infringements of customs or tax legislation.
• The applicant commits to keeping sufficient records that allow for customs controls. 
• The inward processing authorisation does not adversely affect the essential interests of EU producers (economic conditions).
• Customs must be able to exercise customs supervision without having to introduce administrative arrangements disproportionate to the economic needs involved. 

Read more about the conditions in the detailed guidance on inward processing (pdf, in Finnish).

The written authorisation must be valid when the goods are placed under the inward processing procedure. 

Examples of details in a written authorisation

The written authorisation is usually valid for 5 years. If the authorisation concerns sensitive agricultural products listed in Annex 71-02 of the DA, the authorisation is valid for no more than 3 years. You can also ask for a shorter period of validity than this if you need the authorisation for a short work project.

In the application for a written authorisation, you must give the details of the goods to be placed under the procedure for the whole period of validity of the authorisation. Example: You estimate that you will place 5 machines a year under the inward processing procedure for repair. In that case, you should state in the authorisation application that your estimated need is 25 machines over five years (5 machines x 5 years).

Amending a written authorisation

You must notify Customs if there have been changes to the company’s operations that affect the validity or content of the authorisation. 

If you wish to amend the details in the authorisation for inward processing, you should submit the amendment application immediately. 

Apply for the authorisation amendment in the Authorisations and Decisions Service.

Read more about amendment of authorisations

Discharge the procedure as stated in the authorisation

When you have placed the goods mentioned in the authorisation under the procedure, you must also discharge the procedure in accordance with the conditions of the authorisation. For instance, if you amend the authorisation, you can use the new authorisation conditions for those goods that are placed under the procedure after the amendment of the authorisation. 

Using equivalent goods

The use of equivalent goods is allowed in inward processing. Equivalent goods are Union goods which are used or processed instead of the goods placed under the inward processing procedure.

As a rule, the equivalent Union goods and the non-Union goods placed under the procedure must have the same eight-digit commodity code, the same commercial quality and the same technical characteristics.

You need a written authorisation

To use equivalent goods, you must have a written authorisation for inward processing granted by the Customs Authorisation Centre. It must be indicated in the authorisation that the use of equivalent goods is allowed. If you want to use prior export, this must also be indicated in the authorisation.

Apply for the authorisation in advance in the Authorisations and Decisions Service.

Situations where equivalent goods are used

In inward processing, equivalent goods can be used in either inward processing IM/EX or inward processing EX/IM (so-called prior export). That is, the products produced from the equivalent Union goods can either be exported after the non-Union have been placed under the inward processing procedure (IM/EX) or before the non-Union goods have been placed under the procedure (EX/IM).

Read more about prior export under “Starting inward processing with prior export”.

More information

Read more in the detailed guidance on the use of equivalent goods in special procedures (pdf, in Finnish).

 

Goods placed under inward processing or processed products can be exported to a country outside the customs territory of the EU for further processing. To use further processing, its use must be mentioned in the written authorisation for inward processing.

When further processing is used, the inward processing procedure does not end with the goods being exported. After the further processing, the goods are brought into the customs territory of the EU and again placed under the same inward processing procedure. For example, the time-limit for discharging the procedure does not change from the time-limit that was originally set.

If there is no mention of further processing in the authorisation

If the possibility to use further processing is not mentioned in the inward processing authorisation, and there is a need to process goods or processed products outside the customs territory of the EU, the procedure ends with re-export. When the goods that have undergone further processing are re-imported to the customs territory of the EU, they can be placed under a new inward processing procedure with its own time-limit for discharging the procedure.

There are certain situations where you cannot apply for an inward processing authorisation with a customs declaration; instead, you have to apply for a written authorisation for inward processing.

You need a written authorisation in the following cases:

• The goods are agricultural products belonging to customs tariff chapters 1–24. However, you should always check the product coverage in Annex 71-02 of the DA. 
• You’re declaring the goods using a simplified declaration.
• You’re making the customs declaration by an entry in the declarant’s records.
• You’re using centralised clearance.
• You’re using equivalent goods in the processing.
• You’re using inward processing EX/IM (prior export).
• The goods are placed under the procedure or the procedure is discharged in different EU countries, or the place of processing is located in another EU country.
• You’re applying for a retrospective authorisation, that is, the goods have already either incorrectly been placed under another customs procedure or a customs declaration has not been submitted at all.
• You’re using an economic condition code that requires a written authorisation. Read more under “Economic condition codes that require a written authorisation”.
• The economic conditions must be examined at EU level. Read more under “Examination of the economic conditions”. 

You need a written authorisation when using certain processing operations (a certain economic condition code). You must have the authorisation before you can place goods under the procedure.

You need a written authorisation if the economic condition code is one of the following (the code in brackets):

• the processing of durum wheat into pasta (4)
• the placing of goods under inward processing within the limits of the quantity determined on the basis of a balance in accordance with Article 18 of Regulation (EU) No 510/2014 of the European Parliament and of the Council (5)
• the processing of goods which are listed in Annex 71-02 of the Delegated Regulation (EU) 2015/2446, in the following cases:
  • There is no availability of goods produced in the Union sharing the same 8-digit CN code, the same commercial quality and technical characteristics as the goods intended to be imported for the processing operations envisaged. (6)
  • There are differences in price between goods produced in the EU and those intended to be imported, where comparable goods cannot be used because their price would not make the proposed commercial operation economically viable. (7)
  • There are contractual obligations where comparable goods do not conform to the contractual requirements of the purchaser of the processed products based in a non-EU country, or where, in accordance with the contract, the processed products must be obtained from the goods intended to be placed under inward processing in order to comply with provisions concerning the protection of industrial or commercial property rights. (8)
  • The aggregate value of goods to be placed under the inward processing procedure per applicant and calendar year for each eight-digit CN code does not exceed EUR 150 000. (9)
• denaturing (20)

In the case of sensitive agricultural products listed in Annex 71-02 of the DA and economic condition code 6, the expression “no availability” refers to any of the following situations:

a) The total absence of production of comparable goods within the customs territory of the EU.
b) The unavailability of a sufficient quantity of those goods in order to carry out the processing operations envisaged.
c) Comparable Union goods cannot be made available to the applicant in time for the proposed commercial operation to be carried out, despite a request having been made in good time. 

In most cases, you cannot use an authorisation applied for with a customs declaration when the goods to be placed under the inward processing procedure are agricultural products belonging to customs tariff chapters 1–24 that are mentioned in Annex 71-02.

You cannot apply for the authorisation with a customs declaration even if these products were to undergo a processing operation with an economic condition code that could otherwise be used in a customs declaration that functions as an authorisation application. Since it must be possible to examine the economic conditions, you need a written authorisation for inward processing.

An exception to this is code “19 – the reduction to waste and scrap, destruction, recovery of parts or components”. You can obtain an inward processing authorisation applied for with a customs declaration for agricultural products listed in Annex 71-02 in the following situation:

• the circumstances are exceptional and duly justified
• the economic condition code is 19 and
• the value of the goods does not exceed EUR 150 000.

However, if the operator intentionally bought a rotten batch of grapes worth less than EUR 150 000 from outside the EU and placed it under the inward processing procedure with an authorisation applied for with the customs declaration, that would not be allowed. In that case, the situation would not be exceptional, as the business activity of the operator would be based on the disposal of bio-degradable waste. In such a case, the company cannot apply for the inward processing authorisation with a customs declaration; a written authorisation is mandatory. Nor would the operator be able to use economic condition code 19.

In certain cases, the economic conditions must be examined before you can obtain an authorisation. The economic conditions must be examined if it is deemed that the essential interests of Union producers may be adversely affected.

The details provided in the authorisation application regarding the goods to be placed under the procedure, the economic condition code and the customs debt article affect whether the authorisation can be granted without examining the economic conditions.

Customs will notify you if the economic conditions of the authorisation application must be examined. If the economic conditions are met based on the examination, you will be granted the authorisation for inward processing. However, it will take longer than usual to obtain the authorisation.

Examination of the economic conditions when the customs debt article is Article 86(3) UCC

When Article 86(3) of the UCC is selected as the customs debt article and there is no evidence that the essential interests of Union producers may be adversely affected, the economic conditions for the authorisation application are always regarded as being met and the authorisation can be granted.

If it is deemed that the essential interests of Union producers may be adversely affected, the economic condition code provided in the authorisation application becomes significant.

• If the case provided by the customer is covered by points (a) to (f) of Article 167(1) DA, the authorisation can be granted.
• Otherwise, if the customer’s case is not covered by these points, the authorisation cannot be granted before the economic conditions have been examined at Union level.

Examination of the economic conditions when the customs debt article is Article 85(1) UCC

When Article 85(1) UCC is selected as the customs debt article, the economic conditions for the authorisation applications must be examined in the following situations:

• If the goods to be imported are subject to an agricultural or a commercial policy measure, the economic condition code provided in the authorisation application must be examined more closely.
  • If the case provided by the customer is covered by points (h), (i), (m) or (p) of Article 167(1) DA, the authorisation can be granted.
  • Otherwise, if the customer’s case is not covered by these points, the authorisation cannot be granted before the economic conditions have been examined at Union level.
• If the goods to be imported are not subject to an agricultural or a commercial policy measure, but evidence exists that the essential interests of Union producers may be adversely affected, the economic condition code provided in the authorisation application must be examined more closely. 
  • If the customer’s case is covered by points (g) to (s) of Article 167(1) DA, the authorisation can be granted.
  • Otherwise, if the customer’s case is not covered by these points, the authorisation cannot be granted before the economic conditions have been examined at Union level.

The goods placed under the procedure can, for example, be used to manufacture products, or a machine can be imported for repair.

The scope of goods that can be placed under the inward processing procedure has not been limited, so in principle, all types of goods can be placed under the procedure. In practice, however, the scope may be restricted by trade policy measures that apply to the entry of goods into the customs territory of the EU or their exit from it.

The term main processed product refers to the finished product resulting from the working or processing of goods, the production of which the inward processing authorisation is applied for. The main processed product must always be provided in the authorisation application.

In addition to the main processed product, a secondary processed product may be generated during the processing. A secondary processed product is a by-product that is inevitably produced during manufacturing.

A secondary processed product is, for example:

• By-products such as tall oil are generated in the production of cellulose. The tall oil is a secondary processed product. 
• When manufacturing shirts, so-called offcuts are left over when the fabric is cut. The fabric offcuts are secondary processed products.

In the authorisation application, provide the secondary processed product and the quantity of it that will be generated.

Please note that the inward processing procedure must be discharged also as regards any secondary processed product resulting from the processing.

When applying for an inward processing authorisation, you must estimate the rate of yield in the application.

Rate of yield refers to the amount of main processed product or secondary processed product generated during the processing or the amount of waste left over. As the rate of yield, provide the quantity or percentage of products obtained through the processing of the goods placed under the inward processing procedure.

If a secondary processed product is generated in the working or processing of the goods, for example scraps of fabric or sawdust, you should also provide the rate of yield of the secondary processed product in the authorisation application.

Also, if part of the goods placed under the procedure evaporates or disappears during the production process, for example due to a chemical reaction, this should also be indicated in the application, for example as a percentage amount.

Read more about the rate of yield in the detailed guidance on inward processing (pdf, in Finnish).

When filling in an application for an inward processing authorisation, you must select which customs debt article should primarily be applied. The customs debt article indicated in the authorisation is used if a customs debt is incurred, that is, if processed products mentioned in the authorisation are, for instance, cleared for free circulation. In the authorisation application, the customs debt article is determined for the main processed product that the authorisation concerns.

In inward processing, the customs debt article is one of the following:

• Article 86(3) of the Union Customs Code (hereafter Article 86(3) UCC)
• Article 85(1) of the Union Customs Code (hereafter Article 85(1) UCC)

Changing the customs debt article

In the authorisation application, you can also choose to have the option of changing the customs debt article if a customs debt is incurred. This means that you can indicate in the customs declaration for release for free circulation that you wish to apply the other customs debt article instead of the primary customs debt article.

To be able to change the customs debt article, both of the following conditions must be met:

• It is indicated in the authorisation that the authorisation holder may wish to apply also the other customs debt article.
• If the goods placed under the procedure were declared for release for free circulation on the date on which the customs debt was incurred, they would not be subject to an agricultural or commercial policy measure, a provisional or definitive anti-dumping duty, a countervailing duty, a safeguard duty or an additional duty as a result of the suspension of concessions.

Article 86(3) UCC as the customs debt article

When you have chosen Article 86(3) UCC as the customs debt article and the procedure is discharged by releasing the processed products mentioned in the authorisation for free circulation, the customs debt that is incurred is determined based on the goods placed under the inward processing procedure.

If a customs debt is incurred, it will be levied in accordance with the import duty levels applicable on the day when the customs debt is incurred.

This customs debt article can only be applied if the customs debt is incurred for main or secondary processed products, not for goods placed under the procedure or for semi-finished products.

Article 85(1) UCC as the customs debt article

When you have chosen Article UCC 85(1) as the customs debt article, and the procedure is discharged by releasing the processed products mentioned in the authorisation for free circulation, the customs debt that is incurred is determined based on the products released for free circulation (4051). This means that the import duties are levied on the product, quantity and value that is being released for free circulation.

The customs debt is determined in accordance with the import duty levels applicable on the day when the customs debt is incurred. The customs value used also includes the processing costs. 

You can use this customs debt article if the customs debt is incurred for processed products, a secondary processed product, a semi-finished product, goods placed under the procedure or any waste generated in the processing.

Customs debt article when an anti-dumping duty, a countervailing duty or an additional duty is levied for the goods 

Article 76 of Commission Delegated Regulation (2015/2446) lists certain situations in which Article 86(3) UCC must be applied as the customs debt article. In these situations, Customs must apply customs debt article UCC 86(3), even though the company chose the other customs debt article.

Article UCC 86(3) is applied based on article 76(2) of the Delegated Regulation for example in a situation where the processed products are obtained from goods placed under inward processing which would have been subject to a provisional or definitive anti-dumping duty, a countervailing duty, a safeguard measure or an additional duty at the time of placing the goods under the inward processing procedure.

However, Article 86(3) UCC is not applied as the customs debt article in the following situations:

• If the goods are no longer subject to an anti-dumping duty, a countervailing duty, a safeguard measure or an additional duty at the time when a customs debt is incurred for the processed products.
• If the situation is covered by points (h), (i), (m) or (p) of Article 167(1) of Delegated Regulation (2015/2446):
  • The goods to be processed are of a non-commercial nature (h).
  • Further processing of goods obtained under a previous authorisation, the issuing of which was subject to an examination of the economic conditions (i).
  • Goods are processed into samples (m).
  • The goods are reduced to waste and scrap, destroyed or parts or components are recovered (p).

Read more about the customs debt articles in the detailed guidance on inward processing (pdf, in Finnish).

Must the economic conditions for granting the authorisation be examined?

The details provided in the authorisation application regarding the goods to be placed under the procedure, the economic condition code and the customs debt article affect whether the authorisation can be granted without a so-called examination of the economic conditions.