Customs

Federation of East African Freight
Forwarders Associations (FEAFFA)
THE EAST AFRICA CUSTOMS AND FREIGHT

FORWARDING PRACTICING CERTIFICATE (EACFFPC)
CUSTOMS
• LAWS AND PROCEDURES
• VALUATION AND TARIFF
CLASSIFICATION
FEAFFA in collaboration with East Africa Revenue Authorities

The Federation of East African Freight Forwarders Associations (FEAFFA) is a regional private sector apex body of the
Customs Clearing and Freight Forwarding (CFA) industry in East Africa. It aims at promoting a professional freight
logistics industry for trade facilitation and regional economic growth. FEAFFA strives to address the challenges
experienced by its members through training, provision of information and other aspects of capacity building.
It advocates for the full implementation of the East African Community (EAC) Customs Union. The East Africa
Customs and Freight Forwarding Practicing Certificate (EACFFPC) is the Federation’s and the industry’s premier
training program in East Africa since 2007.
Copyright © 2013 Federation of East African Freight Forwarders Associations (FEAFFA)
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in
any form or by any means without the prior written permission of the copyright holder. Material published in this
manual may not be used for any form of advertising, sales or publicity without prior written permission.
Federation of East African Freight Forwarders Associations liability, trademark and document use rules apply for
the original and the translation.
Copies may be obtained through the following address:
C/O. Federation of East African Freight Forwarders Associations

P.O. Box 22694-00400, Tom Mboya, Nairobi.
The crescent,(Off Parklands Road) Westlands, Nairobi, Kenya
Tel: +254 202-684802 | Cel: +254 738 150 673
Email: info@feaffa.com
Website: www.feaffa.com
THE EAST AFRICA CUSTOMS AND FREIGHT

FORWARDING PRACTICING CERTIFICATE (EACFFPC)
CUSTOMS
• LAWS AND PROCEDURES
• VALUATION AND TARIFF
CLASSIFICATION
FEAFFA in collaboration with East Africa Revenue Authorities

BOOK 1
CUSTOMS LAWS
AND PROCEDURES
CUSTOMS LAWS AND PROCEDURES
Table of Contents
FOREWORD.....................................................................................................................................................2
ACKNOWLEDGEMENT......................................................................................................................................3
LIST OF ABBREVIATION...................................................................................................................................4
UNIT I: CUSTOMS LAWS..................................................................................................................................6

Overview on Customs laws of the East African Community............................................................................................... 6
Over view of the East African Community Customs Union Protocol................................................................................ 6
Customs Laws of the Community (provisions of Art. 39).................................................................................................... 6
Other Laws and regulations impacting clearing and forwarding environment................................................................. 6
Customs Law (EACCMA)......................................................................................................................................................... 6
Structure of the EACCMA........................................................................................................................................................ 7
Compliance Related Provisions Inclearance of Goods from Customs................................................................................ 8
Refunds and Draw Backs......................................................................................................................................................... 12
Customs Agent.......................................................................................................................................................................... 13
Task............................................................................................................................................................................................. 14
Conventions Governing Prohibitions and Restrictions...................................................................................................... 17
Overview of the EAC Customs Regulations (EACCMR)................................................................................................... 18
UNIT 2: CUSTOMS CLEARANCE PROCEDURES................................................................................................28

Import Procedures................................................................................................................................................................... 38
Report of Vessels, Aircrafts and Vehicles.............................................................................................................................. 28
Landing Permit......................................................................................................................................................................... 29
Goods in Transit Shed............................................................................................................................................................. 29
Duties/Taxes Under the Importation..................................................................................................................................... 33
Legal Provisions for Customs Declaration............................................................................................................................ 39
Verification and Release of Imported Goods........................................................................................................................ 41
Verification and Release of Goods for Export...................................................................................................................... 44
Inward / Outward Processing................................................................................................................................................. 48
Customs Bond Securities......................................................................................................................................................... 50
Enforcement ff Bond Security................................................................................................................................................ 56
Transit and Transhipment Procedures.................................................................................................................................. 57
REFERENCES.................................................................................................................................................60
THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 1

Foreword
Clearing agents in the East African Community (EAC) region play a vital role in facilitation of trade particularly
in regard to tax assessment and collection; this in turn facilitates cargo movement and clearance from all ports.
It is important to note that clearing agents who also double up as customs agents in the region work very closely
with customs authorities to ensure that trade in the region is facilitated.
Whereas customs officers have continued to be trained and refreshed, developing experts from their work force,
the same has not been the case with their work counterparts; the customs agents.
The need to train and build the capacity of customs agents has never been more necessary particularly after it
has become imminent that the knowledge gap continues to widen.
The customs agents who also double up as freight logisticians have a wider scope compared to customs officers
creating need for more attention on their ability to deliver professionally.
Most development partners have been focusing more on training customs officers who apart from having better
resources have better entry points. On the other hand the clearing agents do not have a defined academic entry
point or defined resources for training.
This has resulted to a struggling clearing agent trying to catch up with the knowledgeable counter parts in
Customs, yet both MUST work together.
Customs agents originate documents that facilitate movement and clearance of cargo culminating into errors
that slow down the flow of business.
Movement of cargo depends on how fast and correctly documentation is done by Customs Agents for verification
by the respective Customs Authorities. A delay in customs clearance increases the cost of doing business.
The intervention by Trade Mark East Africa (TMEA) came at the right time to facilitate initial revision of
EACFFPC training materials in 2013 to enhance training and capacity build the private sector with emphasis
on the practicing customs agents in the EAC region.
The support did not only focus on revision of the materials but also brought together the private sector and the
regional revenue authorities’ experts who have worked together to come up with EACFFPC training materials
acceptable to both parties.
With these revised materials, the road to enhancing training for clearing agents continues in earnest.
2 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

Acknowledgement
The Curriculum Implementation Committee (CIC) is grateful to the National Revenue Authorities and the
National Freight Forwarders Associations for accepting to release their staff and members to carry out the
development of the training materials. CIC acknowledges the FEAFFA secretariat for excellent co-ordination
of the process of materials development and the eventual compilation of the manuals.
The tremendous support provided by TradeMark East Africa (TMEA) who provided financial support to revise
and publish the 2013 edition of the EACFFPC training materials cannot go unnoticed. We remain indebted to
you.
A big THANK YOU to the following individual subject experts below who took their valuable time and wide
experience in developing this CUSTOMS MODULE that have gone down the history lane. We also appreciate
all EACFFPC trainers and students for the constant feedback that has been incorporated in this edition of the
training materials.
1. Ahmed Mohamed
2. Erizaphan Siringi
3. Felicite Nibigira
4. Joy Basabe
5. Lilian Baguma
6. Wambura Waryuba
7. Jean-Marie Vianney Bakanibona
8. Lillian Umuhire Rugambwa
9. William Ojonyo
VALUATION AND TARIFF CLASSIFICATION
1. George Munyetafu
2. Isaac Barya Winyi
3. Marie Goreth Bizindavyi
4. Providence Mukamurenzi
5. Shehe Mzungu
6. Theophile Ngabonziza
7. Emma Marie Ndoricimpa
8. Francis Otyama
9. Kisa Kejo
10. Winfred Jillani
11. Lillian Umuhire Rugambwa
12. William Ojonyo

List of Abbreviation
EACCMA East African Community Customs Management Act
ASYCUDA Automated Systems for Customs Data
AWB AirWay Bill
BIF Bond in Force
COMESA Common Market for Eastern and Southern Africa
CPC Customs Procedure Codes
EAC East African Community
EACCMR East African Community Customs Management Regulations
EACCMRR East African Community Customs Management (Duty Remission) Regulations
EPZ Export Processing Zones
GATT General Agreement on Tariffs and Trade
ICD Inland Container depot
ICT Information and communication Technology
MUB Manufacturing Under Bond
SAD Single Administrative Document
SADC South African Development corporation
TREO Tax Remission Office
VAT Value Added Tax

UNIT 1:
CUSTOMS LAWS

Unit 1: CUSTOMS LAWS (d) Applicable decisions made by the Court;

(e) Acts of the Community enacted by the
This course is intended to enable the participants to Legislative Assembly; and
correctly apply provisions of the customs law in the (f) Relevant principles of international law.
process of clearing and forwarding goods.
The Customs law of the Community shall apply
Overview on Customs laws of the East African uniformly in the Customs Union except as otherwise
Community provided for in the Protocol. The Partner States shall
conclude such annexes to this Protocol as shall be
Sub-topic deemed necessary.
Customs Laws under article 39 of the protocol Other Laws and regulations impacting clearing
establishing EAC Customs Union and forwarding environment
Introduction The clearing and forwarding environment is

governed by various laws apart from the Customs
Over view of the East African Community laws of the Community. That being the case, a
Customs Union Protocol Customs agent within the community is supposed
to be aware of the laws and regulations prior to
The three Partner States of East Africa signed a engagement within the industry. The regulations
treaty for the establishment of the East African cater for the establishment of a company to practice
community. This treaty came into force on 7th July, within the clearing industry.
2000. These Partner States undertook to establish
among themselves a Customs Union as an integral Whereas the EACCMA and its Regulations
part of the community. harmonizes the licensing and Customs Agents’
practices across the EAC, it is important to note
A Customs union is an agreement between two or that there are other National laws and regulations
more countries to remove trade barriers with each impacting on establishment and registration of
other and establish a common tariff and non-tariff Companies such as :
policies with respect to imports from countries a) Provision of Company’s Ordinance/Act with
outside of the agreement. regards to establishing of a company. This
differs in each Partner State
A Protocol for the establishment of the East African b) Registration requirements from the registrar of
Community Customs Union was signed by three companies.
East Africa Heads of State for Uganda, Kenya and c) Business Licensing requirements from the
Tanzania on 2nd March, 2004 in Arusha, Tanzania. specific government organs.
Later on, both Rwanda and Burundi joined the East d) Any other Laws or regulations necessary to be
African Community in the year 2007. completed prior to starting a business.
Customs Laws of the Community (provisions of A Customs agent is supposed to know all the
Art. 39) stakeholders of the respective Partner States and the
relevant laws and Regulations as well as the respective
This unit will enable trainees to correctly apply Authorities granting them powers to operate. It is
provisions of the Customs law in the process of the duty of the agent to know the various relevant
clearing and forwarding goods. laws and to fulfill regulatory obligations.
According to article 39 of the protocol, the Customs CUSTOMS LAW (EACCMA)

law of the Community shall consist of:
Specific Objectives:
(a) Relevant provisions of the Treaty;
(b) The Protocol for the establishment of EAC and At the end of this topic, trainees should be able to:
its annexes; i. Describe the structure of the EACCMA
(c) Regulations and directives made by the ii. Comply with the provisions related to clearance
Council; of goods.

iii. Apply provisions related to valuations of goods PART V: Exportation

and assessment of taxes
iv. Demonstrate understanding of Customs • Prohibited and restricted exports
offences and offence procedures and • Exemption of goods in transit
consequences of non-compliance. • Entry of cargo for export
v. Explain legal proceedings • Vehicles departing overland
vi. Exercise right to appeal • Treatment of goods under transit and
vii. Apply provisions related to exemption, transshipment
remission, refunds and drawbacks.
viii. Comply with legal requirements for PART VI: Departure and clearance of aircraft
operationalization of Customs Agents. and vessels
Structure of the EACCMA • Clearance required for departure to foreign

port
The EAC CMA is comprised of twenty one parts, two • Deficiency or surplus in cargo or stores
hundred and fifty three sections, and six schedules
as follows: PART VII: Importation and exportation by post
PART I: Preliminary provisions to include • Application of Act to postal articles

• Time of entry of postal articles
Short title, application and commencement • Registered couriers companies to land, stores,
Interpretation etc
PART II: Administration PART VIII: Carriage coastwise and transfer of

goods
• The Directorate of Customs and its functions
• Provisions relating to staff, Customs seal and • Meaning of carriage coastwise and transfer
flag • Loading, etc. of coastwise and transfer cargo
• Officers to have powers of Police and hours of • Transire to be delivered on arrival
attendance • Examination of coasting vessels and goods
• Offences by, or offences in relation to officers
• Exchange of information and common border PART IX: Provisions relating to securities
controls
• General provisions relating to giving of security
PART III: Importation • Enforcement of bonds
• Prohibited and restricted imports PART X: Liability to duty

• Power to prohibit, etc, imports
• Exemptions of goods in transit. • Rates, etc, of duty
• Procedures on arrival • Preferential tariff treatment under COMESA
• Reports and SADC
• Arrival overland • Exemption regime
• Entry, examination and delivery of cargo • Goods imported duty free liable to duty
• Time of entry determines rate of duty
PART IV: Warehousing of goods • Value of goods for export
• Allowance for tare
• Dutiable goods may be warehoused • Agency notices
• Entry and removal of warehoused goods • Anti-dumping and countervailing duties
• Operations in the warehouse • Drawback, remission, rebate and refund
• Penalty for unlawfully taking, etc., warehoused
goods PART XI: Customs agency
• Bonded warehouses
• Licensing of agency

• Liability of duly authorized agent PART XIX: Legal proceedings

• Liability of owner for acts of agents
• Actions by or against the Commissioner
PART XII: Prevention of smuggling • Protection of witnesses
• Power of officer to prosecute
• Power to require vessels, etc, to bring to or to
depart PART XX: Appeals
• Power to stop vehicles
• Power to search persons PART XXI: Miscellaneous provisions
• Power to require production books, etc. SCHEDULES:
PART XIII: Manufacturing Under Bond • First schedule: Declaration of Officer

• Second schedule: Prohibited and Restricted
• Licensing of bonded factories Imports Generally
• Manufacturer to provide facilities • Third schedule: Prohibited and Restricted
• Goods from bonded factory may be entered Exports Generally
for home consumption • Fourth schedule: Determination of Value of
Imported Goods Liable to Ad Valorem Import
PART XIV: Export Processing Zones and Duty
Freeports • Fifth schedule: Exemption Regime
• Sixth schedule: Warrant of Distress
• Goods entering Export Processing Zones or
Freeports COMPLIANCE RELATED PROVISIONS IN
• Designated areas in Export Processing Zones CLEARANCE OF GOODS FROM CUSTOMS (I.E.
or Freeports CLEARANCE AT PORT, AIRPORTS, BORDER
POST AND POST OFFICE, TRANSIT, ICD AND
PART XV: Inward and Outward Processing WAREHOUSES)
• Procedure of Inward operations Introduction

• Compensating products and rate of yield
• Authorization for Outward Processing The term compliance means adherence to the
• Relief from payment of duty provisions or guidelines in relation to something. For
the case of Customs, compliance to the laws is thus
PART XVI: Application of information adherence to the provisions of Customs laws in each
technology and every aspect. The compliance provisions range
from adherence to controls of goods, movement of
• Customs formalities may be carried out by ICT passengers as well as means of conveyance.
• Unauthorized access to or improper use of
Customs computerised system Compliance during Clearance of goods
PART XVII: Offences, penalties, forfeitures and According to the EACCMA, Customs operations
seizures are conducted within the specified places identified
as Customs areas. Those Customs areas are
• Offence with violence clearly mentioned in the Act (section 12). Other
• Offences related to prohibited, restricted and than Customs areas, the Act also provides for
uncustomed goods appointment of ports, airports and places of loading
• General penalty and unloading. The need to have all these is to
• Restoration of seizures ensure control of goods, means of conveyance as
well as passengers.
PART XVIII: Settlement of cases by the
Commissioner The role of agents is to comply with all procedures
for the clearance of goods depending on where
goods are located. The necessary considerations

by an agent before starting the clearance process Accordingly, goods entered but not removed from
include the following: the first place of entry within fourteen days will
i. Submission of Reports to the proper authority attract Customs warehouse rent.
such as Port Authorities and Revenue
Authorities Customs controls of goods
ii. Legality of the places where the goods are to be
loaded/unloaded A Customs agent has to understand his role in
iii. Having in place the necessary documents facilitating the clearance of goods under Customs
iv. Time limit for the entrance of goods and the control as well as the purpose of Customs control of
implications of the time of entry imported goods. Customs emphasis on controls is to
v. The implications of the regimes for which the ensure that:-
goods will be entered • the revenue due on imported goods is charged
vi. The Customs controls in force for the goods. and collected;
• prohibited goods are not imported;
Submission of reports • allowed goods are imported in accordance with
all the conditions governing their importation;
The major role of Customs agent is to clear goods and
from Customs area and deliver them to the owner. • goods whose duty free importation is
Before a Customs agent starts the clearance process, conditional upon the status of the importer
he/she is supposed to know whether goods have and/or their end use are imported and used in
already been unloaded from the importing vessel accordance with such conditions.
and a report submitted to the Proper Officer.
Depending on the means of conveyance, the task to It is the role of a competent agent to inform the
report is vested to different persons but there should importer that goods under customs control are
be a report before Customs authorize goods to be subject to the following:
delivered. Hence it is the role of a Customs agent to • any officer may at any time examine such
be aware on whether the report is already within the goods; and
Customs department. • no person may interfere in any way with
such goods except in a manner authorized or
Places of loading and unloading prescribed under the EACCM Act.
These are places appointed for loading and unloading Offences

goods subject to Customs control.
Customs offences
The entry and exit to these Customs areas is
restricted. This unit will enable trainees to understand how
offences committed during the process of clearing
The discharge of goods in the proper place of loading and forwarding of goods under Customs control are
is thus facilitated by a competent Customs agent dealt with.
who should know all the places for discharge at a
Customs area and how goods must be so discharged. A Customs offence is any breach or attempted breach
The master who fails to discharge the goods commits of the statutory or regulatory provisions which are
an offence and will be held liable. provided in the East African Community Customs
Management Act (EACCMA) .
Time within which clearance must be effected
Customs offences may be dealt with by the Customs
Imported goods must be cleared by the owner within authorities, in accordance with procedures laid
21 days from the date of discharge from the means down in the EACCMA, 2004.
of transport on which they were imported. An Agent
should inform the owner that goods which remain Customs offences are committed when any person
un-entered after this period shall be removed to the contravenes any of the provisions Act. Offences
Customs warehouse. are generally covered by part XVII of the EACCM
Act. The sections under this part spell out how a

particular offence should be dealt with. Some of the Legal Proceedings

offences covered in the Act include the following:
Authority
i. Section 200- offences related to prohibited,
restricted and unaccustomed goods Sections 220 and 221of the EACCMA 2004, legal
ii. Section 202-offences related to import or proceedings can be instituted in the court of law
export of concealed goods and suing done in the name of the Commissioner.
iii. Section 203-offences to make or use false However, some Acts establishing some East African
documentation. Revenue Authorities carry provision(s) stating
that the suing should be done in the name of the
It is important to note that most of the offences are Commissioner General of the Revenue Authority.
covered in sections 193-208 of the Act.
Court proceedings may be instituted where the
Offences commonly committed Commissioner is satisfied that an offence has been
committed.
1. Misdeclarations in the following areas:
• Tariff- example refrigerated container Violations leading to Legal proceedings
declared as cooling unit
• Quantity- declare less weight or pieces Generally the violation of the requirement(s) of the
• Wrong item e.g. mineral water yet its wine provisions of Customs law(s) is an offence for which
• Year of manufacture/registration legal proceedings can be instituted in the court of
especially on motor vehicles. law. Penalties, fines and/or imprisonment upon
2. Smuggling /diversion conviction are prescribed in various provisions of
3. Concealment the EACCMA 2004.
4. Under-valuation
5. Abuse of temporary importation procedures Particularly sections 193 to section 208 of the Act
6. Counterfeit/prohibited goods state some of the offences and how they are dealt
7. Abuse of transit/warehousing procedures. with. Such offences include:
i. Conspiring to contravene the provisions of the
Legal Proceedings and Appeals EACCMA.
Introduction ii. Maliciously shooting at an aircraft, vessel,
vehicle in the service of Customs.
The East Africa Community Customs Management iii. Being armed while committing offense under
Act (EACCMA) 2004 provides various measures this Act.
for enforcing the compliance with the provisions iv. Rescuing person arrested for any offense under
of the Act and /or procedures related thereto. The the Customs Law.
non-compliance with the provisions of the Customs v. Removing or defacing a Customs seal
laws is an offence for which measures for enforcing vi. Inducing another person to commit offence.
compliance can be instituted. The measures include vii. Warning an offender with the intent to obstruct
Tax recovery measures and/or measures for non- the proper officer in the execution of his/her
compliance with any other provisions of the duty.
Customs laws. viii. Assuming character of a proper officer.
ix. Importing or carrying coastwise prohibited
The provisions of the Act empowers the goods.
Commissioner of Customs to apply measures, x. Importing or carrying coastwise restricted
such as compounding offence(s), recovery of tax goods contrary to the conditions governing
by distress warrant, Agency notice etc; to recover their importation or carriage coastwise.
unpaid tax and/or enforce compliance with any xi. Making or using false document(s)
provision(s) of the Act; whether for tax recovery xii. Refusing to produce document(s).
or mere compliance with the provision(s) of the
Customs Law. On the other hand, the compliance
can also be enforced by instituting legal proceedings
in the Court of law.

Appeals The complete list with the conditions for exemption

is found in the fifth schedule and the agent is urged
Various provisions of the EACCMA 2004, including to understand those conditions before clearance
sections 193 to 208 lists areas where offence can be with Customs. It is also essential for the agent to have
raised and legal proceedings be instituted, by the all documents to justify qualification for specific
Commissioner of Customs, in a court of law. On exemptions.
the other hand, the Commissioner is empowered by
the EACCMA 2004 to make a decision, assessment Remission of duty
of tax or to determine the value of imports/exports
within the framework of the Customs laws. In Section 140 of the EACCMA 2004, empowers the
the process, the assessment made can aggrieve a EAC Council to grant remission of duty on goods
taxpayer, who may be an importer or exporter. The imported for manufacture of goods for export or
aggrieved person may decide to apply for review for home use in case of an urgent national need.
or appeal against the decision. An application for The procedure for approval of goods, for which
review or an appeal can be effected by an importer/ remission may be granted, is provided for in the
exporter, Customs Agent. Where an appellant is not East African Community Customs Management
satisfied with the Commissioner’s verdict, he/she (Duty Remission) Regulations (EACCMRR) 2008.
may appeal to the Tax Tribunal. In case one is not
satisfied with the Tribunal’s decision may appeal EACCMRR 2008 regulation 6 provides that the
to a judicial Court. The appeals mechanisms are remission of duty granted shall be valid for a period
provided for under section 229 of the Act. of twelve months from the date of the publication of
the grant in the Gazette.
Exemption under 5th Schedule
Application for remission
The 5th schedule to the Act provides for general and
specific exemptions. An application for remission of duty shall be
made to the Council through the Commissioner
Specific exemptions cater for the following:- in a specified form (Form R 1) in the Schedule to
a) The presidents, Remission Regulations.
b) Partner States Armed forces
c) Commonwealth and other governments Upon receipt of an application for remission, the
d) Diplomatic and first time arrivals Commissioner shall forward the application to
e) Donor Agencies with bilateral or multilateral the Committee established to oversee remission
agreement with Partner States applications for its comments.
f) International and regional organizations.
g) The war graves commission The Commissioner shall after receiving the
h) Disabled, blind and physically handicapped comments forward the application together with his
persons or her comments to the Council.
i) Rally drivers
j) Goods and equipment for use in Aid funded The Council may for reasons to be communicated
projects to the applicant reject or approve an application for
remission under the Regulations.
Likewise general exemptions provide narrative
explanations for the importation of the following: Maintenance of records
a) Aircrafts operations
b) Container and Pellets One of the mandatory tasks for a manufacturer is to
c) Deceased person’s effect maintain records for the goods produced. When it
d) Fish, crustaceans and molluscs comes to the issue of duty remission, a manufacturer
e) Passengers Baggage and personal effects is expected to maintain separate books and records
f) Samples and Miscellaneous Articles relating to the following;
g) Ships and Other vessels
h) Preparation for cleaning diary apparatus (a) locally sourced goods;
(b) goods imported by the manufacturer;

(c) goods received by a manufacturer by way of v. Payment under protest

transfer under regulation 11 of the Remission vi. Undelivered cargo
Regulations. vii. Goods imported are not in accordance with the
contract of sale and if returned to the seller
All these records have to be availed for audit by viii. Goods are damaged or destroyed while under
the Commissioner as per section 236 of EACCMA Customs control
2004. It is therefore the duty of the manufacturer ix. Goods are damaged or pillage during voyage
to maintain those records for the period specified
under the Customs laws. Duty Drawbacks
AND
REFUNDS AND DRAW BACKS Duty drawback is a refund of all or part of any
Refund of duty import duty paid in respect of goods exported. This
is a facility adopted within revenue administration
Refund of duty is the payment of import duty or to facilitate trade and encourage production of
part of it, previously paid on imported goods which goods for export using imported inputs. During
has been damaged or pillaged during the voyage importation the manufacturer will pay duties for
or damaged or destroyed while subject to Customs the imported inputs and will claim a refund when
control. The refund also refers to the payment of the final goods are exported or used in a manner or
import duty or export duty paid in error. for a purpose prescribed as a condition for granting
a duty drawback. The goods under duty drawback
Conditions for refund of duty are subject to Customs control as per section 16 of
EACCMA.
A refund claim may be effected where the
commissioner is satisfied that:- Conditions for granting duty drawback
i. The description, quality, state and condition of Sections 138 to 139 of the EACCMA 2004 provides
the goods; for which a refund is claimed, was for conditions under which duty drawback can be
not in accordance with the contract or that the allowed:
goods were damaged before delivery out of
Customs control or the goods with consent of i. The goods should be entered in a prescribed form
the seller are returned unused or destroyed and manner; and produced for examination by
ii. The goods for which a refund is claimed, proper office prior to exportation.
were damaged or pillaged during the voyage ii. A person claiming drawback should Complete
or damaged or destroyed while under and subscribe a declaration on a prescribed
Customs control. A refund in this case will form.
be proportional to what has been damaged, iii. For goods exported or put on board any vessel/
pillaged or destroyed aircraft for use as stores the conditions include
iii. Import or export duty was paid in error that:
iv. A claim for refund must be presented to the • The goods have been exported or put on
Commissioner within twelve months from the board as stores.
date of payment of duty. • The owner, at the time of declaration of
the goods for drawback was and continues
Circumstances under which refund may arise to be entitled to drawback
include: iv. The goods, after having been put on board
any vessel/aircraft for exportation or use as
i. Double lodgments where two entries are stores have been destroyed by accident and/or
lodged and paid for to clear the same cargo abandoned to Customs.
ii. Valuation dispute where a higher value led to v. For goods imported for use in the manufacture
over payment of goods which are exported, transferred to a
iii. Tariff dispute where an issue under dispute led free port or transferred to Export Processing
to overpayment Zone(EPZ) ,the drawback is allowed if the
iv. Short landing whereby less quantities are goods exported, transferred to a free port or
received EPZ are a direct result of the imported goods

used in the manufacture of such goods. involving international shipping process

vi. The claim for drawback is presented within iii. Provide bond guarantees for goods under
twelve months from the date of exportation of clearance where necessary
the goods or performance of the conditions for iv. Facilitate refund claims such as duty draw back
which a drawback is allowed. claims
CUSTOMS AGENTS v. Prepare and facilitate goods for examination
CUSTOMS AGENT vi. Facilitates and avails warehousing facilities
vii. Provides import/export consultancy services
A Customs Agent is a person who is licensed by the viii. Acts as a freight forwarder on behalf of his
Commissioner for transacting business relating to clients
the declaration or clearance of goods or baggage ix. Provide related transport/shipping and
(other than accompanied un-manifested baggage)
logistical services
subject to Customs control of a person travelling by
x. Provides network with related government
air, land, or sea; on behalf of the owner.
officials and agencies
Section 145 of the EACCMA 2004 empowers the
Commissioner of Customs to license or to decline. Licensing procedures:
The Commissioner may refuse to issue a license,
suspend, revoke any license or decline to renew A person intending to be a Customs agent has
such license if the agent has failed to meet certain to apply for a license in a prescribed form to
conditions for licensing or contravened the law. Commissioner. The application shall be accompanied
with an application fee as may be prescribed by the
A Customs Agent performs his/her duties under the Commissioner.
authority of the owner of the goods. In accordance
with section 146 of the EACCMA 2004, the agent Where the application is approved, the applicant
has to be authorized in writing by the importer/ shall pay the license fee and execute a security bond
exporter. of such amount as the Commissioner may require.
The importance of a Customs Agent Conditions for licensing
Declaration and /or clearance of goods through The applicant must have the following:
Customs, requires professional knowledge and
competences without which the clearance of goods • He or She must have established office with
can be delayed or fail. A Customs Agent with office equipment including computers capable
professional knowledge and Competences in the of being connected to customs computer
clearance of goods through Customs and subsequent network
forwarding them to the importer minimizes delays • Employees with minimal acceptable
associated with clearance and forwarding of goods
qualifications according to customs regulations.
to final destination(s). He uses his/her professional
• Documentary evidence regarding
knowledge for easy compliance with various laws
establishment of the customs agency.
and procedures related to clearing and forwarding
of goods; thus minimizing delays, costs and penalties
associated with non-compliance of the provisions Liability of a duly-authorized Agent:
of the laws governing clearance and forwarding of
goods. Importance of customs agents is reflected The Customs agent shall be deemed to be the owner
from the roles of customs agents which are; of the goods and hence:
i. Acts as an intermediary between an importer/ • Be liable to pay all Customs duties and taxes.
exporter and other parties in clearance of • Be able to answer all questions asked by
goods and border protection. the proper officer in relation to a particular
ii. Customs clearance of goods by capturing transaction.
declarations and performing related activities
involving paper work in trade facilitation

Role and Liability of owner TASK
The owner of goods who authorizes an agent to What restrictions have been imposed to the use of
perform any business transaction under Customs the motor vehicle as far as temporary importation
control on his/her behalf, shall be liable to the is concerned?
declaration made by the agent and be prosecuted for
any offence committed by such agent, unless such RESTRICTIONS AND PROHIBITIONS
offence is committed by the agent due to his/her
negligence. Specific Objectives
For clearance purposes, the owner-the importer or At the end of this topic, the trainee will be able to:
exporter- will have to submit documents related to i. Differentiate between prohibitions from
the imported goods or goods under export to his/ restrictions
her Customs Agent. ii. Identify specific provisions on prohibited and
restricted imports/exports
Sample Question iii. Identify prohibited and restricted imports and
exports under the Customs law
Exercise I iv. Identify various regulatory authorities
administering restrictions
The students from Masai Mara Girls School were on a v. Identify legal requirements for complying with
study tour in Dar es Salaam being hosted by Institute restrictions on specific imports/exports.
of Tax Administration (ITA) in collaboration with
Tanzania Freight Forwarders Association (TAFFA). INTRODUCTION
The students had planned to visit Dar es Salaam Port
and other customs areas to gain expertise in various Movement across the border involves goods which
customs issues. On the part of TAFFA, you had been are of different categories. These goods may be
appointed to head the delegates. Miss Kidunducy, acceptable either as they are or under certain
one of the talkative students asked, specification in one region but banned in the other.
Prohibited goods are goods that are not allowed to
a) “You said most of the goods in customs area be imported, exported or transferred into or outside
are there for the purpose of control. What types any of the Partner States. i.e These are goods that are
of goods specifically should we expect to find banned to be traded and cleared through Customs.
in those customs areas?”
b) “What can we understand by the term goods Restricted goods are goods whose importation
being under Customs control?” or exportation is subject to meeting specific
c) “What is the reporting procedure for a ship conditions before they are allowed to be cleared
coming from Mombasa to the Port of Dar es through Customs. The importation or exportation
Salaam?” of such goods is controlled by specific government
agencies depending on their nature. According to
TASK the EACCMA 2004, restricted goods are any goods
the importation, exportation, transfer or carriage
Respond to her properly basing on the EACCMA coastwise must abide with any set conditions
2004. regulated by or under the Customs laws”.
Exercise II It means therefore, that the importation of the

identified goods will only be granted against import
Mr. Nkosi arrives for the first time in Tanzania permits, certificates or any other authority issued by
through Tunduma Border accompanied by his wife, a relevant agency before importation or exportation.
Nadhipa and Two Children using his Toyota Hiace
with Zambia registration. The family expects to pay
a visit in various national parks before going back to
Zambia.

CONVENTIONS GOVERNING PROHIBITIONS About 105 psychotropic substances are controlled,

AND RESTRICTIONS most of them in pharmaceutical products acting on
the central nervous system.
There are various international conventions
regulating production, possession and movement The Convention on psychotropic substances has
of certain goods. Countries signatories to these judged some of these substances to be particularly
conventions must adhere to them and fulfill all
dangerous, such as LSD, and made calls to place
requirements. There are conventions relating to
them under even stricter control than narcotic
narcotic drugs, psychotropic substances, intellectual
property etc drugs. Furthermore, the convention calls for
substances with very wide legitimate medical use to
International conventions on narcotic drugs be controlled in a less stringent way not to hamper
Shanghai Convention 1909 their availability for medical purposes but on the
other hand to avoid their diversion and abuse.
The control of narcotic drugs has been of global
concern ever since the first international conference The United Nations Convention against illicit
on the subject, held in Shanghai in 1909. Traffic in Narcotic Drugs and Psychotropic
Substances, 1988.
The international control system has been built
up step by step, continuing from 1920 under the This convention urges the member countries to;
auspices of the League of Nations, and since 1946 by

the United Nations
i. Prevent the laundering of money obtained
A series of treaties adopted under the auspices of the from illicit trafficking.
UN require that: ii. Provide concrete instruments for international
law enforcement cooperation.
• Governments exercise control over production iii. Provide legislation covering the tracing,
and distribution of narcotic drugs and freezing and confiscation of proceeds and
psychotropic substances. property derived from drug trafficking.
• Governments combat drug abuse and illicit
traffic. OTHER INTERNATIONAL CONVENTIONS/
• Governments maintain the necessary AGREEMENTS
administrative machinery and report to
international organs on their actions.
i. CITES- Convention on International Trade for
Endangered Species
The Single Convention on Narcotic Drugs, 1961
ii. Basel (1992)-hazardous wastes /disposal
This convention replaced the treaties concluded iii. Stockholm (2004)-Persistent Organic
before the Second World War on opiates, cannabis Pollutants (POPs)
and cocaine. iv. Rotterdam-prior informed consent on
chemicals
At present, control is exercised over more than 116 v. Montreal (1987)-Ozone depleting substances
narcotic drugs, including opium and its derivatives vi. Chemical weapons conventions-weapons
as well as synthetic narcotics such as methadone and vii. Lusaka task force
pethidine.
Prohibitions and Restrictions on Specific Imports/
The Convention on Psychotropic Substances, Exports Under EAC Customs Laws
1971
Prohibition and restrictions of goods is governed by
This Convention controls drugs not covered by
previous treaties. Substances under control include; the provision of section 18, 19 and 20 of EACCMA
hallucinogens, amphetamines, barbiturates, non- 2004 for imports and section 70, 71, 72 for exports.
barbiturate sedatives and tranquilizers.

Prohibited and Restricted Imports Legal that date they were required to be re-exported.
Compliance
Prohibited and Restricted Exports
Goods specified in Part A of the Second Schedule
are prohibited goods and the importation thereof is According to the EACCMA, goods specified in
prohibited (Sec 18 (1)). The list of prohibited items Part A of the Third Schedule are prohibited goods
is however not exhaustive. Other prohibited items and the exportation of the goods is prohibited and
are found in the national laws in respective Partner goods specified in Part B of the Third Schedule are
States. restricted goods and the exportation of the goods,
save in accordance with any conditions regulating
Goods specified in Part B of the Second Schedule their exportation, is prohibited (Sect 70 –Exports).
are restricted goods and the importation thereof,
save in accordance with any conditions regulating Restricted and Prohibited Imports and Exports
their importation, is prohibited (Sec 18 (2))..This Under the EAC Customs Management Act.
subsection provides a stepping stone for goods which
are restricted within the Partner States. The goods Part A and Part B of the Second Schedule to the
can be imported or exported upon complying with EAC Customs Management Act 2004 list prohibited
conditions governing their importation/exportation. and restricted goods.
Apart from restrictions at EAC regional level, each
Partner State has laws governing restricted import/ Part A - Prohibited Goods
exports.
i. All goods the importation of which is for the
Prohibitions and restrictions are monitored by time being prohibited under this Act, or by any
the council through publication in gazette. The written law for the time being in force in the
council is mandated to publish a list of goods which Partner State.
are prohibited or restricted either generally or in ii. False money and counterfeit currency notes
relation to any Partner States. The order, in respect and coins and any money not being of the
prohibited or restricted goods, made by the Council established standard in weight or fineness.
will provide goods or class of goods, importation iii. Pornographic materials in all kinds of media,
of which is prohibited or restricted in the Partner indecent or obscene printed paintings, books,
State or any of its area. The Council may also limit, cards, lithographs or other engravings, and any
in respect of any Partner State, the application of the other indecent or obscene articles.
provisions of the Second Schedule in respect of all iv. Matches in the manufacture of which white
or any of the goods specified in the order. phosphorous has been employed.
v. Any article made without proper authority
Prohibitions and restrictions do not apply to goods with the Armorial Ensigns or Court of Arms of
imported in transit, or for transshipment, or as stores a partner state or having such Ensigns or Arms
of any aircraft or vessel, unless: so closely resembling them as to be calculated
to deceive.
• The goods are within paragraph 2 of Part A of vi. Distilled beverages containing essential oils
the Second Schedule of EACCMA, 2004 (that or chemical products, which are injurious to
is: false money, counterfeit currency notes health, including thijone, star arise, benzoic
and coins and any money with no established aldehyde, salicyclic esters, hyssop and absinthe.
standard in weight or fineness) or Provided that nothing in this paragraph
• The goods are expressly prohibited or restricted contained shall apply to “Anise and Anisette”
in any order made under the Act prohibiting or liquers containing not more than 0.1 per
restricting the importation of goods. centum of oil of anise and distillates from
either pimpinella anisum or the star arise
However, such goods shall be re-exported within allicium verum.
such time and subject to such conditions as the vii. Narcotic drugs under international control.
Commissioner may specify otherwise they will be viii. Hazardous wastes and their disposal as
deemed to be prohibited goods, or restricted goods, provided for under the base conventions.
as the case may be, and to have been imported on

ix. All soaps and cosmetic products containing 5. Arms and ammunition specified under
mercury. Chapter 93 of the Customs Nomenclature.
x. Used tyres for light Commercial vehicles and 6. Ossein and bones treated with acid.
passenger cars. 7. Other bones and horn - cores, unworked
xi. The following Agricultural and Industrial defatted, simply prepared (but not cut to
Chemicals: shape) degelatinized, powder and waste of
(a) Agricultural Chemicals these products.
1. 2.4 - T 8. Ivory, elephant unworked or simply prepared
2. Aldrin but not cut to shape.
3. Caplafol 9. Teeth, hippopotamus, unworked or simply
4. Chlordirneform prepared but not cut to shape.
5. Chlorobenxilate DDT 10. Horn, rhinoceros, unworked or simply
6. Dieldrin prepared but not cut to shape
7. Dibroacethanel (EDB) 11. Other ivory unworked or simply prepared but
8. Flouroacelamide cut to shape.
9. HCH 12. Ivory powder and waste.
10. Hiplanchlor 13. Tortoise shell, whalebone and whalebone hair,
11. Hoscachlorobenzene horns, antlers, hoovers, nail, Claws and beaks,
12. Lindone unworked or simply prepared but not cut to
13. Mercury compounds shape, powder and Waste of these products.
14. Monocrolophs (certain formulations) 14. Coral and similar materials, unworked or
15. Methamidophos simply prepared but not otherwise Worked
16. Phospharrmion shells of molasses, crustaceans or echinoderms
17. Methyl - parathion and cattle-bone, Unworked or simply prepared
18. Parathion but not cut to shape powder and waste thereof.
15. Natural sponges of animal origin.
(b) Industrial Chemicals 16. Spent (irradiated) fuel elements (cartridges) of
1. Crocidolite nuclear reactors.
2. Polychlorominatel biphenyls (PBB) 17. Worked ivory and articles of ivory.
3. Polyuchorinted Biphenyls (PCB) 18. Bone, tortoise shell, horn, antlers, coral, mother-
4. Polychlororinated Terphyenyls (PCT of pearl and other animal carving Material and
5. Tris (2.3 dibromopropyl) phosphate articles of these materials (including articles
6. Methylbromide (to be phased out in obtained by moulding).
accordance with the Montreal Protocol 19. Ozone Depleting Substances under the
by 2007). Montreal Protocol (1987) and the Vienna
Convention (1985).
(c) Counterfeit goods of all kinds 20. Genetically modified products.
21. Non-indigenous species of fish or egg of
Part B- Restricted Goods progeny.
22. Endangered Species of World Flora and Fauna
1. All goods the importation of which is for the and their products in accordance with CITES
time being regulated under this Act by any March 1973 and amendments thereof.
written law for the time being in force in the 23. Commercial casings (Second hand tyres).
Partner State. 24. All psychotropic drugs under international
2. Postal franking machines except and in control.
accordance with the terms of a written permit 25. Historical artefacts.
granted by a competent authority of the Partner 26. Goods specified under Chapter 36 of the
State. Customs Nomenclature (for example,
3. Traps capable of killing or capturing any percuassion caps, detonators, signalling flares).
game animal except and in accordance with 27. Parts of guns and ammunition, of base metal
the terms of a written permit granted by the (Section XV of the Harmonised Commodity
Partner State. Description and Coding System), or similar
4. Unwrought precious metals and precious goods of plastics under Chapter 39 of the
stones. Customs Nomenclature.

28. Armoured fighting vehicles under heading No v. Uganda

8710 of the Customs Nomenclature. a. Uganda National Bureau of Standards
29. Telescope sights or other optical devices (UNBS)
suitable for use with arms, unless mounted b. Wildlife Authority
on a firearm or presented with the firearm on c. National Drugs Authority
which they are designed to be mounted under d. Ministry of Internal Affairs -Narcotics
Chapter 90 of the Customs Nomenclature. Squads division
30. Bows, arrows, fencing foils or toys under e. National Environmental Management
Chapter 95 of the Customs Nomenclature. Authority (NEMA)
31. Collector’s pieces or antiques of guns and
ammunition under heading No 9705 or 9706 OVERVIEW OF THE EAC CUSTOMS REGULATIONS
of the Customs Nomenclature. (EACCMR)
Agencies That Enforce Prohibitions and Specific Objectives

Restrictions
At the end of this topic, trainees should demonstrate
Apart from the regional prohibitions and restrictions, the ability to;
Partner States have the power to prohibit/ restricts i. Describe the structure of the EACCMR
some goods entering or leaving the country. ii. Identify and appropriately use prescribed
However, this should be known to others for the forms under the EACCMR
sake of harmony. Apart from Customs authority iii. Identify fees and penalties applicable under
there are other government organs administering specific provisions
the prohibitions and restrictions. The respective iv. Comply with other regulations applicable in
organs from each Partner States are as hereunder clearing and forwarding process
(the list is not exhaustive):
STRUCTURE OF THE EACCMR
i. Tanzania
a. Tanzania foods and Drugs Authority The EAC Customs Management Regulations were
b. Tanzania Bureau of standards made by the Council of Ministers under section
c. Fair Competition Commission 251 of the EAC CMA to give effect to the Act. The
d. Ministry of Home Affairs- Police force commencement date of the EACCM Regulation
e. National Environmental Management 2006 was on 01/01/2007. Currently, the regulations
Council ( NEMC) applicable is East African Community Customs
Management Regulations 2010 which revokes the
ii. Kenya EACCMR, 2006.The structure of the East African
a. Kenya Bureau of Standards Community Customs Regulations is composed of
b. Public Health eighteen parts namely;
c. National Environmental Management
Authority (NEMA) PART I: Preliminary Provisions
d. National Radiation Management Board. • Citation and commencement
• Interpretation.
iii. Rwanda
a. Rwanda Bureau of Standards PART II: Administration
b. Rwanda Environmental Management • Delegation of powers of Commissioner
Authority (REMA) • Working days and hours.
c. Ministry of Internal Affairs – Police Force • Overtime fees
department • Fees to Customs revenue.
• Customs Union Seal and Flag.
iv. Burundi
a. Burundi Bureau of Standards PART III: Importation
b. Ministry of security • Arrival and Report of Aircraft and Vessel
c. Ministry of Health • Arrival Overland
• Entry, Examination and Delivery

PART IV PART XIII

• Internal Container Depot • MANUFACTURING UNDER BOND
PART V PART XIV

• Warehousing of Goods • EXPORT PROCESSING ZONES
• Bonded Warehouses
• Government Warehouses PART XV
• FREE PORTS
PART VI
• Exportation PART XVI
• Entry Outward and Loading of Aircraft and • INWARD AND OUTWARD PROCESSING
Vessels • Inward processing
• Departure Overland • Outward processing
• Goods in transit or for transshipment
• Goods in transit PART XVII
• Transhipment • SETTLEMENT OF CASES BY THE
COMMISSIONER
PART VII
• Clearance and general declaration for aircraft PART XVIII
• Departure and Clearance of Aircraft and • MISCELLANEOUS PROVISIONS
Vessels
SCHEDULES
PART VIII • FIRST SCHEDULE Consists of various
• Importation and Exportation by Post customs forms used in the process of clearing
goods
PART IX • SECOND SCHEDULE is the East African
• Importation and Exportation by Registered Community Customs Union Flag that
Couriers symbolizes the unity among the Partner States
PART X CUSTOMS FORMS

• CARRIAGE COASTWISE AND TRANSFER
OF GOODS Under EACCMA 2004 read with EAC Customs
Management Regulations 2010, there are various
PART XI forms that a Customs Agent should be well
• DUTIES conversant with in the process of clearing goods.
• Goods imported for temporary use or purpose There are C-forms and CB-forms which are
• Duty Drawback harmonized within the regions and serves as
• Remission or refund documentary evidence when used within Customs
• Rebate department. The forms may be used either as it is
• Refund or as an attachment to another Customs forms
or documents. Below is the current list of the
PART XII harmonized Customs forms together with the
• CUSTOMS AGENTS applicable regulations.

Table: the list of Customs forms
No. FORM FULL TITLE OF THE FORM APPLICABLE REGULATION

No.
1 C1 Overtime Request Regulation 5 (1)
2 C2 Report Inward/Outward of Vessel/Aircraft/Vehicle Regulations 11 (1), 12 (2), 20 (1), 88,
110, 112 (2)
3 C3 Parcels List Regulation 11 (2)
4 C4 General Declaration – Aircraft Regulation 12 (1) (2), 109 (1) (2) (3) (4)
5 C5 Cargo Manifest – Aircraft Regulation 12(2), 20(1), 21,109(3)
(4)110,111(2
6 C6 Passenger List/Manifest Regulation 15 (1), 93 (1), 111 (1) (2) (3)
7 C7 Declaration of Consumable Stores on Board Vessels Regulation 15 (1) (b)
8 C8 Application to Break-bulk Prior to Making Report and Unloading Regulation 22
Goods Prior to Entry
9 C9 Application to Amend Inward/Outward Manifest Regulation 110
10 C 10 Application to Proceed to Sufferance Wharf or other Unapproved Regulation 30, 90
Place
11 C 11 Landing Certificate Regulation 38
12 C 12 Application for Release of Perishables or Other Goods Prior to Regulation 49 (1)
Payment of Duty
13 C 13 Application for Inward/Outward Processing Regulation 185 (1), 186 (2), 192 (1),
193 (2)
14 C 14 Certificate of Clearance Regulation 107
15 C 15 Request to Repack Warehoused Goods Regulation 70 (1) (2)
16 C 16 Request to Transfer Ownership of Warehoused Goods Regulation 71
17 C 17A Single Administrative Document (SAD) – ASYCUDA Regulation 39, 89, 104, 105
18 C 17B Single Administrative Document (SAD) – SIMBA Regulation 39, 89, 104, 105
19 C 18 Application for License of Premises to be used as a Bonded Regulation 57 (1), 74 (1)
Warehouse/Factory/Internal Container Depot (ICD)
20 C 19 Licence for Private/ General Bonded Warehouse/Factory/ Regulation 57 (3), 74 (4), 153 (4)
Internal Container Depot
21 C 20 Application for Customs Agents’ License Regulation 149 (1)
22 C 21 Customs Agents’ License Regulation 151 (3)
23 C 22 Application to Ship Goods Prior to Entry Regulation 94 (1)
24 C 23 Application to Reload Goods Unloaded in Error Regulation 95 (1)
25 C 24 Application to Ship Stores Regulation 96
26 C 25 Application to Transfer Stores of Aircraft/Vessel Regulation 98
27 C 26 Application for Refund of Deposit/Cancellation of Bond Regulations 104 (15), 148 (2)
28 C 27 Transire Regulation 123
29 C 28 Vehicle/Vessel License for Conveying Transit Goods Regulation 104 (5) (a) (b)
30 C 29 Certificate of Approval for Licensed Motor Vehicles/Vessels from Regulation 104 (10)
COMESA/SADC
31 C 30 Duty Drawback Rate of Yield Notification Form Regulation 139 (2)
32 C 31 Duty Drawback/Debenture Form Regulation 139 (3)
33 C 32 Temporary Importation of Road Vehicles from COMESA, SADC Regulation 136 (2)
and Countries with Bilateral Arrangements with the Partner
States - Declaration of Importation
34 C 33 Application for Remission /Refund of Import Duty on Regulation 143 (2), 145, 147
Abandoned/Damaged/Pillaged/Destroyed Goods
35 C 34 Application for Remission /Refund of Import Duty on Re- Regulation 146 (2) (a)
exported Goods
36 C 35 Request for Settlement of a Case Regulation 196
37 C 36 Declaration of Particulars Relating to Customs Value Regulation 197 (1) (2)
38 C 37 Notice of Seizure Regulation 200

No. FORM FULL TITLE OF THE FORM APPLICABLE REGULATION

No.
39 C 38 Application for Payment of Proceeds of Sale of Goods Regulation 208
40 C 39 Application for Licensing Vessel/Vehicle for Conveyance of Regulation 210 (1)
Goods Under Customs Control
41 C 40 Vehicle/Vessel Licence for Conveying Goods under Customs Regulation 210 (2)
Control
42 CB 1 Bond for Delivery of Perishable or Other Goods Prior to Payment Regulations 49 (1), 171 (2)
of Duties/Taxes
43 CB 2 Bond for Removal of Goods from One Port/Place to be Examined Regulation 179 (2)
and Entered at Another Port/Place
44 CB 3 Bond for the Warehousing of Goods or Removal of Warehoused Regulation 68 (1)
Goods
45 CB 4 Bond for Exportation Regulation 94 (2)
46 CB 5 Bond for Shipment of Stores Regulation 68 (1), (99)
47 CB 6 General Bond for Security of Warehoused Goods Regulation 76, 155
48 CB 7 Bond for Goods to be Shipped Prior to Entry Regulation 94 (2)
49 CB 8 Bond for Transit Regulation 104 (3)
50 CB 9 Bond for Transhipment of Goods Regulation 55 (2), 105 (1)
51 CB 10 Bond for Re-Exportation of Imported Goods Delivered without Regulation 173 (3)
Payment of Duty
56 CB 11 Bond for Customs Agents Regulation
57 CB 12 Bond for the Conveyance of Goods Subject to Customs Control Regulation 104 (9), 211 (1)
58 CB 13 General Bond for Ensuring Compliance with Customs Laws and Regulation 57 (5)
Securing Duties on Goods Deposited into an Inland Container
Depot
59 CB 14 Bond for Removal of Goods from/to Export Processing Zone Regulation 169(2), 172(2), 174
Apart from the above mentioned forms there are ii. Departing from the authorized place of
other forms which are recognized in individual unloading without clearence from the proper
Partner States for administrative purposes and officer
may differ from one Partner State to another
though serving the same purposes. For examples iii. The return of a vessel, aircraft or motor vehicle
while Tanzania is using F88 to assess accompanied into Partner State after depature to foreign
passenger’s baggage, Uganda is using Passenger without authority of the Proper Officer while
Baggage Assessment forms (PB-forms). on any voyage to a foreign port, bring the vessel
or aircraft into within the Partner States except
FEES AND PENALTIES in accordance with the Act.
To ensure compliance to the Customs laws and iv. A person should consult a Proper Officer
regulations, the Act provide for penalties in case before boarding a vessel. If he/she does it
of non- compliance. These are charges imposed commits an offence and shall be liable to a fine
for either doing what is not supposed to be done not exceeding $25O (Sec 23).
or abstain from doing the rightful act within the
premises of the laws and regulations. It is an offence to remove goods from a Customs
area without payment of duty. Once removed, these
There are penalties applied in respect to Customs goods shall be liable to forfeiture (Sec 39).
offences for example;
It is an offence for people to disembark from an
Offence on arrival (Sec 21) aircraft or vessel. In any other place other than
appointed in accordance with section 11 of the Act
i. Landing a vessel, aircraft or vehicle at place (Sec 44).
other than authorized port or are within the
Partner States

Warehoused goods can be delivered as stores the value of the goods, whichever is higher. ( Sec 168)
provided they shall not be used as stores for a vessel Any individual person who accesses Customs
of less than 250 tons. Contravention of this provision computerized system without prior authorization
is an offence (Sec 55). commits an offence and is liable to an imprisonmet
for a term not exceeding two years or a fine not
Taking warehoused goods unlawfully is an exceeding five US thousand dollars.
offence, once committed, there is a penalty of an
imprisonment term not exceeding two years or a In the case of a corporate body , a fine not exceeding
fine equal to 25% of the dutiable value of goods (Sec twenty five thousand US dollars.
61).
Any person who conspires with others to act
Failure to enter cargo for exportation in the contrary to the CMA commits an offence punishable
prescribed manner and lack of documentary by 5 years imprisonment if convicted.
evidence of the goods referred to in the entry is an
offence (Sec 73). A person who for no reason shoots at any aircraft ,
vessel or vehicle belonging to Customs, wounds an
Deficiency in cargo is when the goods are reported officer on duty in the process or commits any form
on arrival as remaining on board and yet upon of violent acts commits an offence punishable by
inspection, the goods are actually not on board.This improsonment for a period not exceeding 20 years.
is also an offence (Sec 91).
A person who commits an offence with any firearm
Surplus in cargo is when goods which are not or other weapons and is found with goods that
contained in the manifest are found on an aircraft or should be detained commits an offence punishable
vessel. Any goods in respect of which such offence by imprisonment for a period not exceeding 10 years
has been committed shall be lable to forteiture. A person who commits a crime in disguise and
poses illegal goods while doing so commits an
The transire should be delivered to the proper officer offence punishable by imprisonment for a period
immediately, but in the case of a vessel of 250 tons not exceeding 3 years
register, such transire may be delivered within 24 hrs
of arrival. ( Sec 101) A person who breaks, destroys or throws seized
goods off an air craft, vessel or vehicle, rescues any
Goods on transit should be conveyed on routes person arrested for any offence or obstructs any
approved by the Commissioner. A person who does officer commits an offence.
not follow the specified route commits an offence.
(Sec104) Any person other than the proper officer found
interfering with any lock,seal, mark or other
The owner of goods shall be prosecuted for any fastening placed by an officer on any building,
offence committed by his authorized agent as if the room or place commits an offence whose penalty is
owner has himself committed the offence. (Sec 160) imprisonment for maximum period of 3 years or a
It is an offence for any person to use his premises fine of less than $2,500.
for manufacture under bond without a license and
on conviction will be liable to a fine not exceeding If goods in a sealed building are a miss, the owner
$5000 or imprisonment for a term not exceeding of the building or the occupant commits an offence
three years or both. (Sec 160) whose penalties imprisonment for a maximum
period of 5 years or a fine equal to 25% of the value
It is possible for a licensee to alter the premises of the goods.
of a bonded factory as long as he/she has prior
permission from the commissioner. (Sec 161) The penalty for committing an offence with violence
is the imprisonment for a term not exceeding twenty
It is an offence to remove goods from an export years. Sec 194)
processing zone or freeport for home consumption
without prior authority from the Commissioner. The A person who commits an offence while armed
offender shall be liable to a fine of $5000 or 50% of with fire arm or other offensive weapon shall be

liable on conviction to imprisonment for a term not Offences related to prohibited, restricted, and
exceeding ten years. uncustomed goods? (Sec 200)
And, any person who commits an offence under A person who;

this Act while disguised in any way shall be liable
on conviction to imprisonment for a term not 1. Imports or carries coastwise any prohibited
exceeding three years. or restricted goods contrary to any condition
regulating the importationof such goods.
A person who willfully removes any Customs seal
from any ship, aircraft, vehicle, train or package 2. Unloads after importation or carriage coastwise
without the proper authority commits an offence any prohibited goods; or any restricted goods
and shall be liable on conviction to imprisonment which have been imported or carried coastwise
for a term not exceeding three years or to a fine not contrary to any condition regulating such
exceeding USD 250 or to both. (Sec 195) importation;
A person convicted of inducing another to commit 3. Exports, carries coastwise, or puts on board
an offence shall be liable to imprisonment for a term any aircraft, vehicle or vessel, or brings to any
not exceeding one year. (Sec 196) Customs airport, Customs area, or place, to
be put on board, for exportation or for use as
A person who warns an offender shall be liable stores or for carriage coastwise any prohibited
on conviction to imprisonment for a term not or restricted goods contrary to any condition
exceeding two years or to a fine not exceeding two regulating that process.
thousand five hundred dollars or to both. (Sec 196)
Assuming character of an officer 4. Acquires,has in his or her possession, keeps or
conceals, or procures to be kept or concealed,
It is an offence under the law for a person, who is not any goods which he or she knows, or ought
an officer, to take or assume the name, designation, reasonably to have known, to be prohibited
character or appearance of an officer. (Sec 198) goods; or restricted goods which have been
imported or carried coastwise contrary to
The impersonation will on conviction lead to an any condition regulating such importation or
imprisonment for a term not exceeding three years. carriage coastwise; or uncustomed goods.
Smuggling using (Sec 199) On conviction for offences related to prohibited,

restricted, and uncustomed goods, a person shall be
When a vessel/aircraft is used for smuggling, A liable to imprisonment for a term not exceeding five
master of that aircraft or vessel, and any person in years or to a fine equal to fifity percent of the the
charge of a vehicle, commits an offence. A vessel is dutiable goods involved or both. ( Sec 200)
said to be used for smuggling if it has any secret or
disguised place adapted for concealing goods. One conviction for an offence, a person is liable
to pay a fine, and unless the goods are prohibited
In the case of the master of a vessel of less than two goods or are ordered to be forfeited under this Act,
hundred and fifty tons register, he shall be liable to payment of duty shall be made in addition to the
a fine not exceeding seven thousand dollars and in fine. ( Sec 201)
the case of the master of any aircraft or vessel of two
hundred and fifty tons register or more, to a fine not A person who imports or exports any goods that are
exceeding ten thousand dollars. concealed in any way commits an offence and shall
be liable on conviction to emprisonment for a term
A person in charge of a vehicle, used for smuggling not exceeding five years or to a fine equal to fifty
shall be liable to a fine not exceeding five thousand percent of the value of the goods involved. ( Sec 202)
dollars.
A person who, in any matter relating to the Customs,
makes use of false documents commits an offence.
(Sec 203)

On conviction, a person making or using false A person who, on finding any uncustomed goods
documents shall be liable to imprisonment for and fails to report such discovery to the nearest
a term not exceeding three years or to a fine not officer commits an offence and shall be liable to
exceeding ten thousand dollars. a fine not exceeding two thousand five hundred
dollars. (Sec 206)
A person who interferes with any aircraft, vessel,
vehicle, buoy, anchor, chain, rope, mark, or other A person who commits an offence under this Act for
thing used for the purposes of the Customs commits which no specific penalty is provided shall be liable
an offence. (Sec 205) to a fine not exceeding five thousand dollars.
On conviction, a person who interfers with Customs On conviction, the court may impose a fine not
gear shall be liable to a fine not exceeding two exceeding three times the value of any goods in
thousand five hundred dollars. ( Sec 205) respect of which the offence was committed or the
specified amount, whichever is the greater. (Sec 209)
The table below gives a summary of penalties as emanated from the offences.
PENALTY GUIDELINES
Section of the Summary of the offence Forfeiture Penalty

EAC CMA
9 Bribery and Corruption of Officers - X
15 Failure to enter or leave or bring goods into or out of appointed entrance or to X X
enter or leave Customs area when required to do so
16 Interfering in any way with goods subject to Customs control X X
21 Failure by Master of aircraft or vessel to come to an approved port and report - X
23 A person who other than health officer boards a vessel before the proper officer - X
24 A master or agent of aircraft or vessel who makes a false or incorrect report X
25 Failure by Master or agent of aircraft or vessel to answer questions or produce - X
documents
26 Failure by owner or agent of aircraft or vessel to account for any goods within - X
the period allowed
28 Failure by master or agent to report vessel or aircraft lost or wrecked, etc. X
29 Failure by owner of vehicle arriving overland to report to Customs, etc. X X
33 Unloading of goods in an unapproved place X X
36 Failure to furnish entry within forty-eight hours, in case of provisional entry of - X
goods
39 Delivery from Customs area in special circumstances not returned X X
48 Removing goods to the warehouse and in packages in which they were X X
imported or re-packed
51 Contravening a condition imposed in the operation in bonded warehouse X X
53 Failure to return goods temporarily removed from warehouse X X
55 Warehoused goods entered as ship stores not delivered as such X X
59 Gaining access to a bonded warehouse without the presence of a proper officer - X
61 Removing or destroying goods in a warehouse - X
62 Using premises as a bonded warehouse without authority or contrary to X
conditions of license
64 Failing to provide facilities in a Customs bonded warehouse - X
65 Interfering with warehoused goods X X
67 Failing to produce warehoused goods when required to by a proper officer - X
74 Master or agent of aircraft or vessel who fails to enter outwards vessel or aircraft - X
and goods
73 Owner who fails to enter goods for export by aircraft or vessel X X
75 Goods loaded on board aircraft or vessel without entry etc. X X

76 Contravening conditions to load goods without entry etc. X X

77 Offloading of exports within the country etc. X X
78 Contravention of conditions for bonded goods entered for export X X
79 Failure to export goods entered as stores X X
80 Short-shipped goods not reported within forty-eight hours X X
88 Departure of an aircraft or vessel without clearance - X
89 Failure by master or agent of vessel to fulfil undertaking or return cancelled - X
certificate or clearance
90 Failure of master or agent of aircraft or vessel to produce clearance certificate X
91 Possession in an aircraft or vessel of goods not declared in the manifest or X
found short
92 Failure to bring aircraft or vessel to a boarding station when required to do so - X
83 Failure to answer questions put up by a proper officer to a person about to X X
depart to foreign
99 Loading or unloading coastwise goods onto or from aircraft or vessel at X X
unapproved place etc.
100 Giving incorrect or false information on Transire - X
101 Failure by master or agent or aircraft or vessel to produce Transire on arrival X
102 Contravening conditions for loading or unloading of coasting vessel X X
104 Coasting aircraft deviating from its voyage or failing to report wreck etc. X X
105 Refusal by master of aircraft or vessel to answer questions or making incorrect X
reply.
160 Use of unlicensed premises to manufacture under bond or contravention of X X
licence conditions
162 Failure to enter goods, equipment etc. on expiry of licence X
163 Failure of Manufacturer to provide facilities, records etc. - X
164 Failure to enter and properly store materials in the raw material stockroom X
166 Goods from bonded factory entered for home consumption X X
164 Imported machinery and raw materials not delivered from bonded factory X
The Act however provides for general penalties in 5. Application for remission of duty.
case of any act that no specific charges/penalty has 6. Publication of goods and
been imposed. This is according to section 209 of manufacturers.
EACCMA 2004. 7. Conditions attached to remission of
duty.
Other Regulation 8. Entry and bond for goods imported.
9. Cancellation of bond.
Duty Remissions
10. By-products scrap or waste from
process of manufacture
In 2008 the EAC Council ratified the remissions 11. Transfer, etc. of goods.
regulations to cater for the matters pertaining to the
12. Commissioner may authorise re-
remission of duties. The regulation is cited as East exportation.
African Community Customs Management (Duty
13. Maintenance of books and records.
Remission) Regulations 2008. The purpose was
14. Powers of a proper officer.
to put in place a harmonized mechanism for duty
remission in all the Partner States. 15. Revocation of grant.
Enforcement and Compliance Regulation

REGULATION TITLE
1. Citation and commencement.
As at time of publication of this material, the
2. Interpretation. enforcement and compliance regulation has not
3. Goods on which remission may be been ratified. Once ratified, the regulation will be
granted.
enforceable and will become part of the training
4. Duty Remission Committee. material.

SAMPLE QUESTIONS 5. An applicant for Customs Agent license is

required to meet certain conditions in order
1. The East Africa Community Management to be issued with a license. Briefly identify and
Act (EACCMA, 2004) the Regulation thereto explain conditions governing Customs Agent
provides control measures and procedures for licensing.
unloading and removal of cargo imported in a
vessel from Customs area. 6. What do you understand by the term
compliance? Give six examples where
Briefly explain the procedure applied and control compliance is required.
measures in the unloading and removal of imported
goods from a Customs area. 7. List the commonly committed Customs
offences.
2. With specific examples, briefly explain what
you understand by; 8. Explain how a Customs offence of
a) Prohibited goods misdeclaration can be settled by the
b) Restricted goods Commissioner under section 219 of the Act.
3. Identify International Conventions on 9. In certain cases, a Customs Agent is required to

Prohibited and Restricted goods and give their defend the rights of an importer against certain
role in controlling prohibited and restricted decision of the Commissioner of Customs.
goods. Briefly explain legal measures and processes
the Agent can take to ensure that his/her client
4. Discuss reasons for imposing restrictions and is not affected by the wrongful decision or
prohibitions omission of the Commissioner of customs.

UNIT 2:
CUSTOMS
CLEARANCE
PROCEDURES

UNIT 2: CUSTOMS CLEARANCE PROCEDURES there is no bill of lading, to the proper officer on the
prescribed form and in the prescribed manner.
This course unit will impart skills and knowledge on
how to clear goods through Customs in compliance Outwards report of vessels, aircrafts, and
with Customs laws and regulations vehicles
Sub-Units This is a Customs procedure where the master or

agent of every aircraft or vessel in which any goods
IMPORT PROCEDURES are to be exported make a report of such aircraft or
vessel to the proper officer on the prescribed form
Specific Objectives: and in the prescribed manner.
At the end of this course, trainees shall demonstrate All Aircrafts, Vessels and Vehicles etc, from Foreign
the ability to: ports must report at appointed ports. When
i. Explain reporting procedures for means of reporting at appointed ports they must go straight
conveyance to mooring areas and or landing or boarding areas.
ii. Use various regimes for Customs clearance for
imported goods Once the vessel reports, it is not allowed to depart to
iii. Prepare Customs declarations using relevant another port within the country unless the proper
supporting documents and attach those officer has granted permission to the Master.
supporting documents.
iv. Assess duty and taxes Once the Master departs to foreign ports, he is not
v. Facilitate activities involved during verification allowed to call at any place within the country unless
and release of declared goods the proper officer according to the law has granted
him the permission. (Section 21 (1) and (2))
Reporting procedures for means of conveyance
The proper officer may direct the vessels or aircraft
There are various Customs formalities to be to a place of mooring (Section 22)
accomplished when goods are brought into a
Customs territory in order to ensure compliance with Restriction on Boarding Vessel before Proper
Customs law. These are the operations that must be Officer
carried out by both the persons concerned with the
goods and by Customs in order to comply with the Once arriving at the place of mooring it is the duty
statutory or regulatory provisions which Customs of proper officer to board the vessels/aircraft. The
has responsibility to enforce. However as the agent should know that it is only Proper Officer
goods arrives from the foreign destination it is first who is responsible to board vessels/ aircraft and the
essential to identify the means of conveyance used agent should facilitate such role in a manner allowed
to bring those goods and the reporting procedure of within Customs laws. In some occasion, port pilot,
such means which entails the control purposes from the health officer or any other public officer in the
the Customs perspective as the control of goods and course of performing his duties and duly authorized,
vessel under Customs control is very important for may board before the proper officer (S 23). The
the sake of combating revenue loss. Act provides such exclusion, Provided that prior
permission from the proper officer has been granted.
REPORT OF VESSELS, AIRCRAFTS, AND
VEHICLES Making formal reports (S 24 of EAC Customs
Management Act, 2004,
Inward report of vessels, aircrafts, and
vehicles The Master of the vessel, Aircrafts or vehicle when
arriving from foreign must furnish a formal report
This is a Customs procedure where a master of every to the proper officer on arrival using the prescribed
aircraft or vessel arriving from a foreign port at any Customs forms. The report should be within 24 hours
port, make report of such aircraft or vessel, and of before arrivals in case of vessels and immediately
its cargo and stores, and of any package for which after taking off from the last point of departure

to the Partner States in case of Aircraft. Every i. Where goods reported for discharge are not
report must show goods to be unloaded, in transit; dully unloaded and deposited in a transit
transshipment and those remaining in the aircraft shed or Customs area the master/agent must
or vessel. Goods in transit, for transshipment, and pay the duty thereof unless he explains to the
goods remaining on board for other ports must be satisfaction of the proper officer. (Section 26)
shown separately. ii. The owner of the vessel or aircraft or his agent,
or the transit shed owner who fails to count for
Amendment of report S.24 (5) the goods in ones custody commits an offence.
iii. The owner of a vessel or aircraft or the owner of
In case of obvious error or any omission which a transit shed is liable to pay for the reshipment
result from accident or inadvertence, the agent or for destruction of the goods condemned.
may be allowed to amend the report or submit iv. The owner or agent of an aircraft or vessel
supplementary report. or owner of a transit shed who fails to meet
the costs of reshipment or destruction of any
The Master or Agent may ask for the amendment of condemned goods commits an offence.
the report – (Manifest) using a prescribed form. He
must satisfy the officer that: Goods Reported to be unloaded but not
unloaded:
i. Goods were not shipped
ii. Landed at a previous port or When goods which are supposed to be unloaded
iii. Over carried and landed at a subsequent Port and the goods are not in effect not unloaded in a
and transit shed the masters or agent of the aircraft or the
iv. If over carried, have been returned to a Port in vessel shall pay duty on the goods unless acceptable
the Territory explanation is given to the proper officer.
v. Lost at sea
vi. Stolen or destroyed before arrival Shipwrecked or Damaged in an accident in
transit
All correspondences on short landed goods must be
filed in the manifest file. The master of an aircraft or vessel accidentally forced
to land in the East African Community States must
Each page of the report must be signed initialed, report immediately on the cargo and stores to the
numbered and sealed together by the master or nearest Customs officer or Administrative Officer.
his agent, if required, signed in the presence of the The cargo and stores of an abandoned vessel or
proper officer. aircraft will be subjected to seizure unless the master
o agent gives satisfactory explanation to the proper
LANDING PERMIT officer.
Landing permit is required for goods declared In case of loss or wreck of ships or air craft master or
as parcel using parcel list. The agent should know agent of aircraft or vessels shall, with all reasonable
the time limit for the landing permit at the time of speed make report of such aircraft or vessel
submitting it. and its cargo and stores to the nearest officer or
administrative officer. (Section 28)
The information about the value, classification and
taxes with respect of the goods are entered on the Manifest, Bill of Lading and Airway Bill
reverse of Landing Permit.
Manifest
GOODS IN TRANSIT SHED
A manifest is a list of goods by consignments to be
Due to some working environment some goods may landed at one particular port within the country. If
be unloaded in a transit shed. However, Goods in vessel or aircraft is going to land or call at more than
a transit shed are deemed to be in the importing one port a separate manifest should be prepared.
vessel/aircraft until they are delivered and the owner
or agent shall continue to be responsible.

A manifest is a report presented to Customs ii. Sign a declarations as to the truth of all
Department pertaining to goods being conveyed by particulars filled in the form
vessel aircraft or vehicle arriving from or departing iii. Fully and immediately answer any relevant
to a foreign port/airport. questions put to him/her by the proper of
about the vehicle and cargo.
The Customs Agents’ Role in Manifest Section iv. Produce all consignment notes or other
relevant documents demanded by the proper
I. To submit reports of all aircrafts, vessels and officer.
vehicles arriving from or leaving for a foreign v. Unless provided otherwise in the Customs laws
port make due entry of the vehicle and any such
II. To apply and recheck the rotation/Manifest goods conveyed. Section 29 of the EACCMA
numbers allocated by Proper Officers in respect of 2004 provides that the goods and the vehicle
of all vessels, aircrafts and vehicles arriving which are dutiable will not be removed from
from or departing to foreign ports the Customs area until after due entry and
III. To liase with the officers in case of amending permission to remove the vehicle and the
the manifests as applied for by shipping cargo from the Customs area. A person who
agents/ Customs agents and submit the contravenes the above procedure commits an
reasons advanced in respect of the applications offence and may render the goods and vehicle
in satisfaction of the Customs Laws and liable to forfeiture.
regulations
IV. To advise the client on the Customs Warehouse Arrivals by International trains
Date
V. To ensure that all documents necessary to With arrival by international trains the Customs
facilitate compilation of the ships files have area is the border railway station. The stationmaster
been submitted to Customs or other person in-charge of the railway station acts
VI. To compile ships files on behalf of the Railway Company or corporation.
Manifest information (the minimal) The procedure then is as follows;
• Ships details (Ship’s name, ship’s tonnage) i. The station master or any other person in-
• Voyage details( departure/destination date, charge of the railway station on the arrival
departure/ destination port) of the train at the port submits to the proper
• Owner – supplier names officer copies of invoices, consignment notes,
• Consignee’s name, address way bills or other documents relating to the
• Description of goods (types, Weight of goods in wagons, which are subject to Customs
packages etc) control received by her/him at the station or
• Marks/numbers of packages, supposed to be entered at the station.
ii. The station master or other officer in-charge of
ARRIVAL OF GOODS BY OVERLAND ROUTE the railway station must not allow any goods to
leave the Customs area without the permission
Arrivals by vehicles of the proper office because removal of such
goods without permission constitutes an
A person in-charge of a vehicle whether carrying offence.
any dutiable or un-dutiable goods which arrives iii. A station master or other person in-charge of
overland at a frontier of a partner state from outside the railway station shall not, without written
the East African Community must adhere to the permission of the proper officer deliver to the
following procedures before unloading or depositing consignee or other person’s goods require to be
the vehicle or goods at the frontier port. Report his/ entered at any other station.
her arrival to the Customs officer stationed at the iv. An owner or user of a private railway siding shall
relevant frontier port he/she enters the Partner State. not receive wagons containing goods subject to
Customs control into a private railway siding
i. Fill in information in prescribed form about unless he/she is granted permission from the
the vehicle and the cargo. commissioner of Customs and excise.

v. Any person who contravenes these provisions During importation it is thus necessary for them to
as per section 30 of the EACCMA of 2004 may understand various regimes under which goods are
tender the goods subject into seizure. imported
Arrivals overland by other means The entry when delivered to the proper officer by
the owner must have particulars, which are fully
If a person arrives by land into a Partner State with supported by documentary evidence.
any goods in his possession shall before disposing of
the goods must follow the following procedure; From the above, the imports has been divided into
four
i. Report to the proper officer at the nearest point
of entry into the Partner State. 1. Direct imports
ii. Furnish information about the goods in his/ 2. Temporary imports
her possession in a prescribed form 3. Re-imports
iii. Declare and sign that all the particulars given 4. transfer
in the form are true.
iv. Answer fully and immediately all questions Import process
asked by the proper officer about the goods.
v. Produce all consignment notes and other Under the EAC Customs Management Act, 2004, no
documents demanded by the proper officer. goods may be removed from the port area, unless
vi. Make entry of such goods unless the Customs they have been duly reported, entered and the
laws state otherwise. proper officer has given authority for their removal
vii. Removal of goods received in a Customs area or delivery. (Section 34). This entails us to the first
at any place of entry into Partner States is process of importation which is unloading of goods.
prohibited except with the permission of the Unloading is authenticated by the report presented
proper officer. to the Customs which is the manifest.
viii. The commissioner however subject to
conditions may specify may exempt any person After the Manifest has been received, the Importer
or a class of persons from the provisions in or his authorized agent may enter goods on Single
section 31 of the EACCMA of 2004. However Administrative Document.
contravening these provisions may render the
goods in question liable to forfeiture. Entries must be supported by documents showing
the value of goods at the place at which they were
Clearance by pipeline: purchased together with the freight, insurance and
other charges.
Pipelines are means of conveying goods such as
petroleum or gas. The owners of the pipelines are The owners or their authorized agents shall enter the
like vessels and aircraft’s. The procedure for arrivals whole of the cargo of any aircraft or vessel, which is
of such goods is a follows; unloaded, or to be unloaded either for:
i. The nature and quantities of goods imported or i. Home consumption

exported through a pipe line shall be recovered ii. Warehousing
and reported by the operator of the pipeline in iii. Transshipment,
a manner the commissioner may direct. iv. Transit
ii. For the purpose of recording and reporting the v. Export Processing Zone
commissioner may specify the apparatus and
appliances to be used by the operators of the Importation documents
pipeline at their expense.
The owner of the goods is required to produce
Categories of imports documentary evidence as a proof of the declaration
made to the Customs. This is according to section
The role of Customs agents in the process of 34 (2) of EACCMA. Most of these documents may
clearance is to act on behalf the owner of goods. be used by other organs with the same merit as

Customs as as the frontline officers, Customs has The Kyoto convention specifies that National
the mandate to require the owner/agent to them to legislation shall specify the point in time used for
evidence the transactions in hand. As the Customs determining the rates chargeable, for example, be
agent, you should appreciate this role of Customs the time when the goods arrive, the time when the
and facilitate the production of those documents. Goods declaration is lodged, the time when the
declaration is accepted by Customs, the time when
Documents produced will depend on the nature of the duties and taxes are paid, or the time when the
goods imported, thus an agents is supposed to have a goods are released. Most administrations choose the
prior knowledge of the documents required for each time when the declaration is accepted by Customs.
type of goods imported. Some of the documents are Whichever time is chosen, Customs must ensure
as follows; that it is specified in national legislation
I. Supplier’s invoice Determination of value of imported goods liable to

II. Bill of lading ad valorem import duty
III. Certificate of origin
IV. Customs declaration of value For most commodities, the duty is expressed as an
V. Freight invoice ad valorem rate (i.e. a percentage of the value), while
VI. Taxpayer/personal identification number for others, the rate is specific, e.g. so much money
VII. Health certificate per litre. Occasionally, the rate is expressed as some
VIII. Parking list combination of ad valorem and specific rates. The
IX. Permits, etc duties are generally found in the Customs tariff and,
in other legislation also. Various rates of duty may be
Assessment of duties and taxes indicated for each item.
The clearance of goods usually involves the lodgment Once the appropriate rate of duty is established, the
of a Goods declaration with/without supporting basis on which the duty is calculated (value for duty)
documents (e.g. import/export permit, certificates of must be determined.
origin, etc.) and the payment of applicable duties and
taxes. General release is granted as long as payment Usually this is the price paid or payable. The
has been entered into the books of the importer. Agreement on the Implementation of Article VII
Most Customs administrations allow payment to be of the General Agreement on Tariffs and Trade
deferred and made on a transaction-by-transaction (GATT), generally known as the Customs Valuation
or periodic (usually monthly) basis, provided the Code (the Code), is the basis used for most domestic
importer/owner meets certain conditions. Security Customs valuation systems. Article VII of the GATT
may be required to guarantee payment. deals with the issue of valuation for Customs
purposes by providing basic Guidelines for national
Under the Kyoto convention it is stated that the legislation. The Code is based on the application of
National legislation shall define the circumstances the transaction value method for determining the
when liability to duties and taxes is incurred or the Customs value for imports which is the price the
point in time to be taken into consideration for the importer and exporter agree to pay for the particular
purpose of determining the rates of duties and taxes. import, subject to specified adjustments.
Such circumstances arise when goods are cleared for Under the EACCMA, Where imported goods are
home use after their arrival in the Customs territory liable to import duty ad valorem, then the value of
or when they are cleared for home use from a free such goods shall be determined in accordance with
zone or a warehouse. Similarly other circumstances the Fourth Schedule and import duty shall be paid
may also arise in administrations that have export on that value.
duties and taxes when the goods are exported from
the Customs territory. In addition, goods under Upon written request, the importer shall be entitled
a temporary admission procedure that are not to an explanation in writing from the proper officer
exported within the stipulated time period may also as to how the Customs value of the importer’s goods
be subjected to duties and taxes. was determined.

Where, in the course of determining the Customs In practice most tariff are ad valorem. Advalorem
value of imported goods, it becomes necessary for rates are more transparent, and are indexed. They
the Customs to delay the final determination of such maintain an automatic link between the domestic
Customs value, the delivery of the goods shall, at and foreign prices; ensure that the most efficient
the request of the importer be made: Provided that supplier will continue to save the market, ensure
before granting such permission the proper officer that there is no discrimination, reduce lobbing.
may require the importer to provide sufficient Under the ad valorem an increase in value of the
guarantee in the form of a surety, a deposit or some goods the tariff revenue will keep pace with price
other appropriate security as the proper officer increase. Specific tariff have the advantage of not
may determine, to secure the ultimate payment of requiring Customs Authority to determine the value
Customs duties for which the goods may be liable. of imports when entering the country and are not
sensitive to changes in the value of the goods
The proper officer must satisfy him/herself as to
the truth or accuracy of any statement, document ii. Value Added Tax (VAT),
or declaration presented for Customs valuation
purposes and nothing in the Fourth Schedule shall VAT is the amount of tax on output tax over input
be construed as restricting or calling into question tax. It is the last consumer of goods or services who
the rights of proper officer to do so. bears the burden.
In the course of applying or interpreting this iii. Excise duties

section and the provisions of the Fourth Schedule
due regard shall be taken of the decisions, rulings, It is tax levied on imports and certain locally
opinions, guidelines, and interpretations given by produced goods. The excise duty is used as an
the Directorate, the World Trade Organization or instrument to influence consumer behavior. In case
the Customs Cooperation Council. Decisions and of Tanzania, excise duty on imports is paid on alcohol,
Rulings made by the Custom should be published wines, spirits and beers. Each of these specific taxes
and should be easily accessible by clients in the is charged per unit of measure (e.g. per pint, per
form of directive memoranda, electronic database gallon, per liter, etc) and it is not entirely clear who
publications, Internet web sites, etc. carries the tax burden. The seller of the products
will usually strive to pass on the tax incidence to the
Duties/taxes under the importation purchaser by raising the price accordingly.
Import duty Tax rates /bands on import and its reasons
It is Customs duties and other charges of equivalent Customs administrations have an obligation to
effect levied on goods by reason of their importations. raise government revenue, provide protection to
Import duty is paid at the rate in force at the time domestic producers, provide supply chain security,
when the goods liable to such duty are entered for prevent the importation of prohibited or restricted
home consumption goods, and combat the trade of narcotics through
the implementation of laws and regulations that
Customs tariff may be are in line with the World Trade Organization
commitments Simplification of procedures are
a. Ad-valorem. The duty levied at an ad-valorem required in order to facilitate international trade.
rate on the CIF value of goods imported into The Harmonised System (HS) of tariff nomenclature
the country. It is a percentage of the value of is used as a facilitating tool for the collection of
the imported products. In this context, the duty Customs duties and international trade statistics by
is levied on the transaction value. WTO member state.
b. Specific. This is the tax levied on the certain
properties or goods. For example, the length of In East Africa there are three tax bands on imports
a film or a given amount of money per physical (Zero, ten, and twenty five percent).
unit like a litter of wine,
c. Combination of the two: This is ad-valorem
plus unit of currency per litter.

i. Zero-rated STEPS DO DETERMINE TAX LIABILITY

Some imports are zero rated so as to encourage
investments, agriculture and mining. These STEP1: Determination of Customs value:
includes agricultural tractors, fertilizers, pure The Customs value can either be in foreign or
breeding animals, motor vehicles in complete local currency. It the duty of the Customs agent to
knocked down (CKD) form, raw materials, establish the correct Customs value for computing
capital goods, computers, and supplies the correct amount of taxes and duties. Failure of
imported by mining companies or their sub- which it amount to false declaration.
contractors up to the first year of production.
Inputs for horticulture and agriculture, solar STEP 2
equipment and accessories
Apply the current exchange rate to convert the
ii. Ten percent rate Customs value to local currency, if it is in foreign
Fully processed inputs for industries and semi- currency.
produced inputs are imported at the rate of ten
percent to encourage industrial development. For example: If US$ 100 is the Customs value and
These goods are like motor vehicle spare parts UGX 1747.64 is the current exchange rate. Then the
pen nibs, lubricating greases, etc Customs value is $US100 x UGX 1747.64 = UGX
174,764. If exchange rate is quoted in ASK- BID
iii . Twenty five percent rate form then buying rate is used for export and while
Final consumer goods are imported at the rate selling rate is for import
of twenty five percent. The reason behind is
to discourage importation of final consumer STEP 3
goods so as to promote local production as well
as investment. Compute the duties and taxes appropriate for the
consignment. In most cases, The following are the
Note that some goods are charged at the higher taxes applicable on imported goods.
rate than twenty five percent with the intention of
protecting environment as well as industries. These (a) Import duty
goods include all types of sacks, plastic bags and (b) Excise duty
worn clothes (c) VAT
Computation of Duty Given the correct Customs value (CIF) and HS Code
the taxes are calculated as followed:
According to section 120 of the EACCMA, 2004 (d) import duty (ID) = ID rate x Customs value(CIF)
time of entry determines rates of duty. Import duty (e) Excise duty (ED) = ED value (Customs Value +
therefore is paid at the rate in force at the time when Import duty) x ED rate
the goods liable to such duty are entered for home (f) VAT =VAT Value (CIF+ID+ ED) x VAT rate
consumption. (g) The total tax liability is the sum of all taxes/
Where goods are entered before arrival of the aircraft duties above. i.e Import duty, excise duty and
or vessel, import duty is paid at the rate in force at VAT
the time of arrival of such aircraft or vessel. Where the product in question does not attract excise
duty then:
Goods are supposed to be entered within 21 days VAT = (ID+ CIF) x VAT rate i.e. (ID+ 0 + CIF) x VAT
after commencement of discharge and in the case rate.
of vehicle on arrival or such further period as may Incase ID is nil then VAT = CIF x VAT rate i.e. (CIF+0
be allowed by the proper officer (section 34 of the +0) x VAT rate
EACCMA, 2004). Once goods have been entered
they should be removed from the first point of entry NB: This is VAT on imported goods.
within 14 days
Under the Kyoto convention, In order for
importers and brokers to be able to establish what
the actual rate is on the determined date, there

should be a published list of the rates for exchanging • is equivalent to1.5 dollars or less, no duty
foreign currencies to the domestic currency on shall be collected;
that particular day in question for each import • exceeds the equivalent of 1.5 dollars and
transaction. Customs should not be arbitrary in includes a fraction of a dollar the fraction
preparing these lists and they should be market shall be treated as a complete dollar and
based, i.e., rates could be sought from the central duty shall be collected
bank of the nation.
b) Computation of Duty on gross weight of
Under Sec 122 of the EACCMA 2004, the rate of package.
exchange to be used for determining the equivalent
of a Partner State currency of any foreign currency Consider a situation where goods liable to
shall be the selling rate last notified by the Central duty according to weight are imported in any
Bank of the respective Partner State when an entry package, and the goods are intended for sale, or
is presented to and accepted by the proper officer. are normally sold retail, in the package then, if
the package-
Useful consideration in determination of duty/
tax liability • is not marked or labelled with the net
weight of the contents; or
a) Adjustment for fractions of a dollar. • is not commonly sold as containing, or as
reputed to contain, a specific quantity or
The Kyoto convention states that National weight, and in either such case,
legislation shall specify a minimum value • the owner of the goods is unable to satisfy
and/or a minimum amount of duties and the proper officer of the correct net weight
taxes below which no duties and taxes will be thereof,
collected. Then the goods shall be liable to duty according to
the gross weight of such package and its contents
With the advent of the next millennium the
number of transactions that will occur over the c) Computation of Duty on reputed quantity.
Internet will increase tremendously in the next
few years. Electronic commerce (E-commerce) Consider another situation where goods liable
has become a very convenient shopping choice to a specific duty are imported in any package
for consumers. Normal duty and taxes systems and the goods are intended for sale or are
will still be effective in the collection of the normally sold retail, in the package, then, if the
relevant duties and taxes on these transactions package-
as these purchases will still entail the physical
delivery of these goods at the border. Of • is marked or labelled as containing a
course, the number of low value shipments and specific quantity of such goods; or
deliveries by couriers will increase along with • is commonly sold as containing, or as
the number of these electronic transactions. reputed to contain a specific quantity of
Customs must ensure that they are ready to the goods,
respond to this flourishing trend. Then the package shall be deemed to contain not
However, the collection and payment of less than such specific quantity.
duties and taxes should not be required for
negligible amounts of revenue that incur d) Allowance for tare
costly paperwork, both for the Customs
administration and the importer/exporter. The Commissioner may fix the allowance for
Customs administrations must establish and tare that may be granted and the conditions
specify in national legislation amounts below under which any such allowance may be
which duties and taxes need not be collected granted, for the purpose of the computation
or paid. Under the EACCMA 2004, where the of the duty. Depreciation of motor vehicles is a
total amount of duty computed with reference good example of allowance of tare allowed by
to any one Customs document- the commissioner for Customs under section
128

e) Duty on package Goods under Customs control which belong to

any person from whom duty is due, and any goods
Goods may be imported or exported in any afterwards imported or entered for export by that
package which, in certain cases in the opinion person, shall be subject to a lien for such debt and
of the Commissioner- may be detained by the Partner State until such
duty is paid and the claim of the relevant Partner
• is not the normal or proper package of the State shall have priority over the claims of whatever
goods; or nature of any other person upon the goods and the
• is designed for use, subsequently to such goods may be sold to meet the duty due if the duty
importation or exportation, other than as is not paid within two months after the goods are
a package for any goods of the same or a detained.
similar nature,
Unpaid duty
The package shall be liable to duty as if it were a
separate article and shall, for all the purposes of the Where any duty payable to a Partner State as penalty
Customs laws be deemed to be a separate article. under this Act by a person is not paid one month
(Sec 129). after the due date of payment, the Commissioner
may authorise distress to be levied upon the
Recovery of duty following items-
Under the Kyoto convention the National legislation • goods, chattels and effects;
shall specify the period within which the Customs • material for manufacturing or plant of a
may take legal action to collect duties and taxes not factory;
paid by the due date • premises, vehicles or other property;
• animals,
When duties and taxes are not paid by the due date,
it may be necessary for Customs administrations The above will be withheld if they are in the
to take legal action to collect the duties and taxes. possession or custody of-
The period within which they may do so must be
indicated in national legislation. The period may • that person;
vary, depending on the reasons for the late payment. • his or her agent; or
For example, there could be harsher time limits if a • any other person on his or her behalf.
false declaration has been submitted
A person authorised to distrain may, if necessary
a) Recovery of duty by distress 130. break open any building or place during the daytime
with the assistance of a police officer or other person
The Kyoto convention states that it is necessary that who can lawfully give assistance.
national legislation specify the person(s) responsible
for the payment of duties and taxes. It should A person authorized to distrain shall keep the item
stipulate whether it is the importer, agent, broker, distrained at the expense of the owner for fourteen
or transporter who is accountable, to provide clarity days from the date of distress or until the amount
for Customs and the trading community. In some due together with the costs and any other charges
instances two or more persons can be held jointly are paid in full before the end of the fourteen days
responsible. and if payment is not effected after that period the
person authorized to distrain may sell the item.
Under the EACCMA 2004 where any goods are
liable to duty, then such duty shall constitute a Where an item is sold the proceeds of the sale shall
civil debt due to a Partner State and be charged on be applied as follows-
the goods in respect of which the duty is payable;
and such duty shall be payable by the owner of • payment of the tax due to the relevant Partner
the goods and may, without prejudice to any other State ;
means of recovery, be recovered summarily by legal • payment of any fine imposed for non-payment
proceedings brought by the Partner State. of the tax, if any;

• payment of the expenses or other charges for Consequences for non-collection and
levying of distress and for the sale. remittance of duty
The balance of the proceeds shall be paid to the Where an agent fails to remit any amount of duty
owner, on application to the Commissioner within specified in the notice addressed to him or her
twelve months from the date of the sale of the item. within thirty days of the date of service of the notice
on him or her, or, of the date on which any moneys
b) Recovery of duty by Agency notices. came into his or her hands or become due by him or
her to his or her principal, whichever is the earlier
The Commissioner may, by written notice addressed and he or she has not complied with the provisions
to any person (in this section called the agent) of the Act relating to the collection and recovery of
appoint that person to be the agent of another duty shall apply as if it were duty due and payable
person (in this section called the principal) for the by him or her from the date when such duty should
purposes of collecting duty due under this Act from have been paid to the Commissioner.
the principal where the Commissioner is satisfied
that the agent— An agent who has made payment of duty under
this section shall for all purposes be deemed to
• owes or is about to pay money to the principal; have acted therein with the authority of his or her
• holds money for or on account of the principal; principal and of all other persons concerned, and
• holds money on account or some other person shall be indemnified in respect of that payment
for payment to the principal; against any proceedings civil or criminal and all
• has authority from some other person to pay process, judicial or extra judicial, notwithstanding
money to the principal; any provisions to the contrary in any written law,
• holds goods belonging to the principal which contract or agreement.
are liable to duty and on which duty has not
been paid, and the Offence and fine for false statement
Commissioner shall in the notice specify the amount A person who, in giving a notification, wilfully
of duty to be collected by the agent, which amount makes any false or misleading statement, or
shall not exceed the amount, or value of the goods, wilfully conceals any material fact, commits an
held or owing by the agent for or to the principal. offence and shall be liable on conviction to a fine
not exceeding two thousand five hundred dollars
The Commissioner may, by notice in writing, require or to imprisonment for a term of not more than
any person to furnish the Commissioner within three years or to both. Sec 131 of the East African
thirty days from the date of service of the notice, Community Customs Management Act, 2004
with return showing details of any moneys or goods
which may be held by that person from whom duty c) Security on property for unpaid duty
is due under this Act.
If the owner of land or buildings situated in any
This section shall apply to an agent appointed as Partner State, fails to pay any duty or other sum
though he or she were a duly authorized agent acting of money due and payable under this Act, the
on behalf of the owner. Commissioner may by notice in writing inform
that person of his or her intention to apply to the
Notification to the Commissioner for non Registrar of Lands for the land or buildings to be the
compliance subject of security for the duty or other sum of an
amount specified in the notice.
An agent who is appointed under and who claims
to be, or to have become unable to comply with the If a person on whom a notice has been served under
notice for any reason shall notify the Commissioner this section fails to pay the whole of the amount
accordingly in writing stating the reasons for his or specified in the notice within thirty days of the date
her inability, and the Commissioner may accept, of service thereof, the Commissioner may by notice
amend or reject the notification as the Commissioner in writing direct the Registrar of Lands that the land
may deem fit. or buildings, to the extent of the interest of that

person therein, be the subject of security for duty or duties and taxes less than that legally chargeable,
other sum of a specified amount, and the Registrar they shall correct the errors and collect the amount
shall, without fee, register the direction as if it were underpaid. However, if the amount involved is less
a mortgage over or charge on the land or buildings than the minimum amount specified in national
and thereupon the registration shall, subject to any legislation, the Customs shall not collect or recover
prior mortgage or charge, operate while it subsists in that amount.
all respects as a legal mortgage or charge to secure
the amount payable. Under the EACCMA 2004, where any duty has
been short levied or erroneously refunded, then
The Commissioner shall, upon the payment of the the person who should have paid the amount short
whole of the amount by notice in writing to the levied or to whom the refund has erroneously
Registrar of Lands, cancel the direction made under been made shall, on demand by the proper officer,
that subsection and the Registrar shall, without fee, pay the amount short levied or repay the amount
record the cancellation. (sec 132) erroneously refunded, as the case may be; and any
such amount may be recovered as if it were duty to
Effects of obligation to pay duty. which the goods in relation to which the amount
was short levied or erroneously refunded, as the case
Where any obligation has been incurred, whether by may be, were liable.
bond or otherwise, for the payment of any duty, then
such obligation shall be deemed to be an obligation Under the Kyoto convention the National legislation
to pay all duties which are or may become payable or shall determine the rate of interest chargeable on
recoverable under the provisions of the Act. amounts of duties and taxes that have not been paid
by the due date and the conditions of application of
Where the Commissioner is satisfied that the whole such interest.
or any part of duty or tax due under this Act from
any person cannot be effectively recovered by reason Also, late accounting penalties may be levied in
of impossibility, or undue difficulty or excessive cost certain circumstances. The penalties should be
of recovery, he or she shall notify the Council in applied for each transaction not accounted for in
writing, who shall consider the matter, and with the the time specified. The application of these penalties
approval of the East African Legislative Assembly, could vary depending upon the value of the
remit or write off in whole or in part the duty. (sec shipment, e.g. higher penalties or shorter time limits
133) for high value shipments. Importers and brokers
should be made aware of any overdue releases by
Effect of alteration in classification of goods. means of a daily report issued by Customs, such as
an Outstanding Transaction Status Client Report.
Where any practice or method of procedure of the
Customs approved by the Commissioner or arising Importers and brokers, who, notwithstanding the
from a ruling by the Directorate or the Customs Co- levying of the initial penalty, still delay accounting
operation Council relating to the classification or for the payment of duties and taxes, may be issued
enumeration of any goods for the purposes of the with a notice as a final reminder to comply within
liability to duty is altered with the result that less duty a specified time. Failure to do so may subject the
is thereafter charged on goods of the same class or importer or broker to an additional penalty. Also, in
description, no person shall become entitled to any the case of deferred payment regimes, a client who
refund of any duty paid before such alteration took continues to delay in accounting for the payment of
effect. (sec134) Of The East African Community duties and taxes may loose future deferred payment
Customs Management Act, 2004 . privileges.
Short levy or erroneous refund. Under the EACCMA 2004, Where a demand is
made for any amount the amount shall be deemed
Under the Kyoto convention If the Customs to be due from the person liable to pay it on the date
find that errors in the Goods declaration or in the on which the demand note is served upon him or
assessment of the duties and taxes will cause or have her, and if payment is not made within thirty days
caused the collection or recovery of an amount of of the date of such service, or such further period

as the Commissioner may allow, a further duty of a Goods deemed to be entered

sum equal to five percent of the amount demanded
shall be due and payable by that person by way of a It is essential for the person acting as an agent to
penalty and a subsequent penalty of two percent for understand the provision of laws under which duty
each month in which he or she defaults. liability is determined. Duty becomes liable when
goods arrive within the boundary of the Partner
The proper officer shall not make any demand after States but first the goods need to be entered. Under
five years from the date of the short levy or erroneous the EACCMA, 2004 goods shall be deemed to be
refund, as the case may be, unless the short levy or entered when the entry in the prescribed manner is
erroneous refund had been caused by fraud on the made and lodged by the owner and any duty due or
part of the person who should have paid the amount deposit required under the EACCM Act in respect
short levied or to whom the refund was erroneously of the goods has been paid, or security has been
made, as the case may be. Sec135 Of The East African paid, or security has been given for compliance with
Community Customs Management Act, 2004 the EACCM Act. When this condition is satisfied
and goods are declared for use in the Partner States,
Samples may be taken without immediate then the goods are deemed to be entered for home
payment of duty. consumption.
The proper officer may, subject to such conditions Time of importation

as he or she may impose, permit the owner of any
goods subject to Customs control to take samples Time of importation shall be deemed to be time at
of the goods without payment of the duty thereon which the goods come within the boundaries of the
at the times the samples are taken.( Sec 136) of the partner state.
EACCMA 2004
Time of entry determines rate of duty
Customs Declaration
Duties must be paid at the rate in force at the time
Meaning and Purpose of Customs declaration when the goods liable to such duty are entered for
home consumption. That is the rate applicable at the
Customs declaration means the entry of cargo in time the entry is passed, and taxes paid. Section 120
Customs prescribed forms furnishing full particulars of the EACCMA 2004
of the goods. It is the process of filling the Customs
documents as stipulated by the Customs laws/ Importation by post
regulation and any other practicing guidelines
In case of importation by post, time of entry is
The purposes of cargo declaration are as follows:- deemed to be the time, when the duty thereon is
a. Tax assessment assessed by the proper officer, except in the case
b. Tax payments or arrange for payments of any where actual entry is required.
relevant taxes and dues
c. Determination of bond in force (BIF) Importation overland
d. To process the documents across the various
institutions timely, In case of Importation overland time of entry of
e. Obtain genuine and authentic clearance from such goods for home consumption shall be deemed
various institution involved in clearing process to be time when import duty thereon is paid.
LEGAL PROVISIONS FOR CUSTOMS OBLIGATION OF DECLARANTS

DECLARATION
a. Capturing of Customs entries electronically
In accordance with section 34 of EACCMA, goods b. Avail proper accompanying documents to
are to be entered within 21 days from the date of Customs
of discharge. However, the commissioner may allow c. Respond to queries from customs related to
goods to be entered prior to arrivals of the importing declarations
aircrafts or vessels. d. Assessment of proper taxes

e. Pay appropriate taxes in time • Re-exports after temporary importation

f. Facilitating Customs examinations of goods for repair
g. Delivery of goods to the owner • Re-exports after temporary importation
• Re-exports under drawback
IDENTIFY VARIOUS CUSTOMS REGIMES
iv) Imports for home use with the underlisted
Customs regimes are given numerical codes that Customs transactions:-
identify the type of Customs Transactions for which • Imports for home use duty paid
declarations are made. However, the codes have • Provisional Import Declaration
alphabetical character prefixes which may differ • Release of perishables or other goods
from one Partner State to another. • Imports for home use tax free by tariff
• Ex-warehouse home use duty paid
The following are the different types of Customs • Ex-warehouse home use duty paid for
Regimes:- regional market
1. Exports 1 • Ex-warehouse home use tax free
2. Temporary Exports 2 • Ex-warehouse home use duty exempt
3. Re-Exports 3 under 3rd schedule of the EACCMA, 2004
4. Imports for home use 4 • Home use after temporary importation in
5. Temporary Imports 5 unaltered state
6. Re-imports for home use 4 • Home use after temporary importation
7. Warehousing 7 for repair
8. Transit 8 • EX-EPZ home use
9. Other procedures 9 • Ex-MUB home use
• Imports for home use duty exempt under
Customs Procedure codes 3rd schedule to the EACCMA, 2004
These are the extended digit codes however; the v) Temporary imports for the underlisted
additional codes will be dealt with under the Customs transactions:-
different electronic data processing systems of the • Temporary importation for return in
Partner States. unaltered state
• Temporary importation for repair
i) Domestic Exports with CPC for the under
listed Customs transactions:- vi) Re-imports for home use for the underlisted
• Direct Exports of home produced goods Customs transactions:-
• Direct Exports of home produced goods • Re-importation of goods after temporary
incorporating imported materials export for renovation or repair, where
• Direct Exports of home produced goods repair charge has been raised
under the Export promotion program • Re-importation of goods after temporary
• Direct exports of shipstores export for renovation or repair, where no
repair charge has been raised
ii) Temporary exports for the underlisted • Re-importation of goods after
Customs transactions: temporary export , where the goods have
• Temporary exports for return in an substantially changed their character on
unaltered state tariff classification
• Temporary exports for repairs • Re-importation of rejected or returned
• Temporary exports for outward exports
processing
vii) Warehousing for underlisted Customs
iii) Re-exports with the underlisted Customs transactions:-
transactions:- • Warehousing of goods
• Ex-warehouse export • Warehousing of goods for regional market
• Ex-warehouse export for shipstores • Warehousing of goods for crude
• Ex-MUB export petroleum products
• Ex-EPZ export • Ex-warehouse removal

• Entry into an MUB from foreign This is usually done upon payment of duties or
• Entry into an EPZ from foreign execution of sufficient security bond to secure the
• Entry into an MUB of home produced taxes payable.
goods
• Entry into EPZ of home produced goods Once the goods have been released in the respective
• Transfer from one MUB to another Customs system, the cargo is delivered to the owner
• Transfer from one EPZ to another by the clearing agent and this may then be followed
with the process of bond cancellation for bonded
viii)
Transit for the underlisted Customs cargo.
transactions:-
• Transit inward Direct Release of the goods after payment of
• Transit outward taxes
• Road Customs transit manifest
Goods declared shall be released as soon as the
ix) Other Customs procedures for the underlisted Customs have examined them or decided not to
transactions:- examine them, provided that:
• Accompanied baggage
• Unaccompanied baggage i. No offence has been found;
• Transshipment ii. The import or export licence or any other
• Post parcels documents required have been acquired;
• Courier AWB iii. All permits relating to the procedure concerned
have been acquired; and
VERIFICATION AND RELEASE OF IMPORTED iv. Any duties and taxes have been paid or that
GOODS appropriate action has been taken to ensure
their collection.
This is the physical examination of goods entered in
accordance with section 34 of the EACCMA, 2004. Once Customs is satisfied that the physical goods
The verification is to ascertain that the declaration are in compliance with the basic requirements of
made is correct for purposes of tax collection as the procedure to be applied, the goods should be
provided for under section 41 of the EACCMA, released to the declarant as soon as possible.
2004.
Release of Goods Under bond
The verification should target to confirm among
others the following:- Goods may be released to the owner before payment
of taxes by execution of bond security. Normally, the
• Description of the goods vis-à-vis the bond security will cover the total revenue liability of
declaration made the goods.
• Declaration of value
• Declaration on quantity Case study:
• Declaration on type
• Declaration on tariff code etc. 1. Mr. Banjumni arrives in Tanzania by road
at Tunuma Border accompanied by his wife
The verification findings commonly referred to Saadie and two children using a Toyota Hiace
“Examination Account” should be captured online with Zambia registration. What Customs
by the Customs examination officers to facilitate procedure will Mr.Banjumnin and family
clearance and release of goods. adhere to arrival, if they do not expect to return
to Zambia
Release of goods
2. Mr. Akber is the owner of Maski Drink Ltd. He
Release of goods means system authorization of engages more with the distribution of various
final clearance of goods and the subsequent physical drinks. Recently he scored a deal and become
removal of goods for delivery from Customs area to the country distributor of STOUT beerfrom
the importer. UK. Being unfamiliar with Customs procedure,

Mr. Akber appoints you as his Customs Agent. REQUIRED

On your part you know very well that, as far
as VAT is concerned the product is a taxable Determine the Import duty, Excise Duty (if any),
supply at a standard rate of 18%, 25% Import VAT and total tax payable for each vehicle given the
Duty and 6% exercise duty of 60%. The first following information;
consignment was 20 containers each having i. Import Duty rate is 25%
3200 cartons of beer. The parking list shows ii. Excise Duty Charged for motor vehicle
that one (1) carton has 16 cans of 270ml each. manufactured more than 10 years is 20%
The contract price charged to Mr. Akber is iii. Excise duty is charged for motor vehicle of
$ 1.65/ lit (C & F). Freight charge is $1,500 more than 1500 C.C. is 5%
while insurance paid for the consignment was iv. The cost charged for container is distributed
$2,000. equally to the vehicle
v. The current exchange rate is applicable.
Required
EXPORT PROCEDURES
a) Establish the total quantity in litres imported
by Mr. Akber Objectives:
b) Compute the customs value in local currency
c) Compute import duty, exercise duty and VAT By the end of this topic, trainees shall be able to:
to be paid by Mr. Akber if the exchange rate on i. Demonstrate understanding of categories of
the date of entry was shs .1,210 per one USD. export and the export process
ii. Apply the procedures for outward clearance of
3. Miss Amina of Bujumbura imports two motor means of conveyance
vehicles on June 11, 2009. iii. Comply with conditions for exports and export
documentation
The detail of each motor vehicle is as depicted in the iv. Apply procedures under Export Promotion
following table: Schemes
Toyota CALDINA Toyota CARINA CATEGORIES OF EXPORTS

1 Purchasing Price $ 1800 $ 2400
2 Year of 2000 2001 Exportation means the movement of goods from
Manufacturer
one country to another. In accordance with the
3 Engine Capacity 1950 1648
EACCMA, 2004 S.2 (1), the term export means
4 Transmission Auto Manual
to take or cause to be taken out of a Partner State.
5 Inspection Fees $200 $200
There are three types of exportations, namely
6 Other charges in $100 $ 100
Japan outright exportation, temporary exportation and
re-exportation. Transit and Transshipment are also
The two motor vehicles were imported in a 1X considered as exports.
20’ PCIU 967511-4. The transport charges for the
container were as follows: Outright exportation
Amount This covers goods which are exported out of

1 From Yard to Port (Japan) $250 the country with the intention to remain there
2 From Port to Dar es Salaam $3200 permanently or to be consumed in those foreign
3 Dar es Salaam to Bujumbura Shs 1,000,000 countries e.g manufactured goods like sugar, coffee,
4 Insurance cover $ 300 tea, nuts etc.
5 Port Charges at Japan $ 150
Temporary exportation
This covers goods which are exported out of the

country for special purposes and will be brought
back e.g. goods exported for renovation, exhibition
or entertainment and declared on the respective

procedure code whereby the re-importation c. Name and address of Customs agent /
certificate is issued as confirmation that the goods declarant.
have left the country and may be re-imported. d. Country of destination.
e. Commodity code and description of
Re–exportation goods.
f. Value of goods and total amount of duty
Re–exportation is the Customs procedure whereby payable.
goods that were imported for temporary use g. Marks and numbers of transporting
or purpose are to be exported after the end of vessel, aircraft, or vehicle.
the intended activities, examples are goods for h. Total number of packages
exhibition or entertainment. Such goods have to i. All other information as appears in SAD
be entered properly and be secured with a Customs
security bond. (v) The goods to be exported are grouped into
three categories of which are to be entered
Re-exportation is normally checked against the separately according to Customs procedure
preceding entry to ensure that the particulars on codes:- (CPC) as shown below:
the re-export entry match/tally with the previously • Exports of domestic goods free of duty.
temporary importation entry. • Exports of domestic goods liable to export
duty.
Export process • Re-exportation of goods not under
drawback.
For goods to be exported they need to be entered for
export. Once the Customs agent makes an entry then Other trade related documents are also important
goods are to be physically examined before being as they may be required when goods arrives at the
loaded for export. The export process is terminated intended destination. These include certificate of
i.e comes to an end, when vessel carrying goods origin, health certificate, certificate from Standard
for export leave the boundary of Partner States to Bureau etc
foreign destination.
CONDITIONS FOR EXPORTS
Export documentation and declaration
Loading of goods on any aircraft or vessel or vehicle
Before goods are exported, the owner of the goods is departing to a foreign state should be done subject
expected to formalize all the procedure for exports. to the permission of the proper officer or conditions
These include the following; as he/she may impose.
(i) Has to obtain an export license upon meeting The following conditions must be fulfilled before
the business requirements. loading any aircraft or vessel:-
(ii) All goods to be exported should be loaded onto (a) Goods shall only be put on board any aircraft
any aircraft or vessel departing to a foreign port or vessel when they are dully entered.
within the boundaries of the port. (b) Goods shall only be put on board any air craft
or vessel within the time prescribed by the
(iii) The goods to be loaded for export should Commissioner.
be entered on the export entry (SAD) in (c) Goods shall only be put on board any aircraft
quadruplicate copies and the owner shall be or vessel from an approved place of loading or
required to furnish full particulars, supported from a sufferance wharf.
by documentary evidence. i.e. Commercial (d) Goods shall only be put on board any aircraft
invoices, permits, receipts etc that relate to the or vessel after an entry outward of such vessel
goods for export. has been made.
(e) Goods shall be put on board any vessel to be
(iv) The entry must show the following details: loaded on to any aircraft or other vessel only
a. Name and address of exporter. when such goods may be directly put on board
b. Name and address of importer. such aircraft or other vessel.

(f) Goods put on board any vessel to be loaded on • the cost of the goods;
to any aircraft or other vessel within the limits • transport and all other charges up to the time
of the port. of delivery of the goods on board the exporting
aircraft or vessel, or at the place of exit from the
The agent should be aware that, no goods that have Partner State.
been put on board any aircraft or vessel for export • If the cost of the goods cannot be determined
should be discharged at any place within the Partner under the above, the cost of similar or identical
States without a written permission of the proper goods exported from a Partner State at about
officer. This is an offence as per the provision of or the same time shall apply.
EACCM Act.
After payment of export duty if any, export entries
VERIFICATION AND RELEASE OF GOODS FOR shall be referred to the officer in-charge of the
EXPORT export station for the purpose of allocating officers
to witness loading and sealing of containers at the
The Document Processing unit may, before exporters premises.
processing of export entries refer them to the
Customs port of loading or entry for any necessary After the verification process, all packages in
clarifications. The Unit shall ensure that the the consignment are to be sealed with Customs
declarations in the registered entry conform to the tamperproof seals before leaving the manufacturer’s
verification reports. premises.
In case of restricted exports, they must be covered Exportation of Bonded Goods:-

by the appropriate export permits while for goods
on which drawback is to be claimed, the particulars At the Customs port of exportation, the Customs
on the entry shall be compared with the particulars Officer has to confirm exportation by endorsing
of the respective import entry for conformity. the hard copies of the export entry with export
certification. Similar certification of shipment
There should be proper manning of entry gates account is to be posted against the respective
by Customs enforcement Officers, to confirm the customs entry.
correct verification report and container details
before allowing export containers into the port. This account together with the Certificate of Export
will be used by Security Bonds Management office
All exports are subject to Customs control, hence for bond cancellation, or at the border, in the case of
a Customs Officer has the power to examine such automatic acquittal of the bond.
goods, but any other person has to seek for authority
from the Commissioner of Customs to intervene in The customs agent has to make sure that goods
any way on such goods. Goods shall be examined at loaded for export are loaded in presence of customs
the risk and expense of the owner, thus the owner is officer as no export cargo shall be received at Export
required to unpack, sort, pile, or otherwise prepare Stations without evidence that it was loaded under
the goods for examination. Exports are referred for Customs supervision. At export stations, releasing
physical examination or scanning before they are Officers have to check and satisfy themselves that
exported. Examining Officers must ensure that the seals have not been tampered with.
supporting documents have correct information in
respect to quantity, weight and value. If seals are interfered with, 100% physical verification
must be done before release for export.
Upon satisfaction that the declaration is correct in
every aspect, an examination account is to be put At all times the releasing Officers have to endorse
in the Customs system (ASYCUDA/SIMBA) for the their findings in form of an examination account.
export entry to be passed and if liable to any export
duty its then collected. If duty is advalorem then The Once satisfied that the cargo is correctly entered as
value of goods for export shall include- per inspection results its released with an online
Release Order and issued with a certificate of export.

Certificate of Exports The designated Officer should ensure that requests

for assistance under the terms of a trade agreement
A Certificate of export is issued upon confirmation are expedited and that officers of sufficient seniority
of exportation by the exporter/Clearing agent and experience are appointed to undertake the
presenting endorsed copy of the original bill of investigations. The Investigation findings are to
lading from the shipping line confirming that the be conveyed to the foreign Customs Authorities
goods were exported. through the office of the Commissioner of Customs
as a matter of acceptable operational protocol i.e
The proper Officer has to confirm both the (exchange or information.
information on the Bill of Lading and the Customs
entry. PROCEDURES FOR OUTWARD CLEARANCE OF
If the information matches/tallies then the Officer MEANS OF CONVEYANCE
issues a certificate of export to allow the clearing
agent cancel his security bond incase of bonded The master or agent of every aircraft/vessel or vehicle
goods. in which any goods are to be exported, should make
entry outwards to the proper officer on the Customs
Certificates of Origin prescribed form. Such entry outwards should only
be made after the whole of the cargo reported for
Certificates of Origin are issued to facilitate discharge has been discharged.
privileged Customs treatment of goods exported
from a Partner State to countries with which the Goods which have been put on board any aircraft
Community has preferential trading agreements. or vessel for export, or for use as stores, or as
passengers’ baggage, should not be discharged at any
These Certificates of Origin are issued in respect of place within the Partner States, except by written
qualifying goods upon payment of the appropriate permission of the proper officer and in accordance
fees. with such conditions as he or she may impose.
The certification of Certificate of Origin is done by For the case of a vehicle, A person in charge of a
Officers specially appointed for that purpose and vehicle departing from a partner state, whether or
whose stamps and signatures are registered and not such vehicle is conveying goods, should depart
circulated to the respective trading partners/blocs. through the appointed port under Section 11 and
before departing he/she should do the following:-
Where the provisions of the trade agreement allow
retrospective issuance of Certificates of Origin in (a) Report his/her intended departure to Customs
respect of goods exported without such a certificate, officer.
then the certificate may be issued provided all the (b) Furnish on the prescribed forms all information
documentation is in order. related to the vehicle and goods for exports.
A Certificate of Origin can only be issued by the (c) Fully and immediately answer all relevant
Officer authorised to sign it after confirmation of exit questions put to him/her by the proper officer.
of goods and It cannot be substituted by any other (d) Produce any consignment notes or any relevant
document, except where the export destination or documents demanded by the proper officer.
Consignee has changed and this should be done (e) Make due entry of the vehicle and goods for
before the goods are exported and approval is exports.
granted by the Officer in-charge of administering
the rules of origin. Export Promotion Schemes
Trade agreements provide for co-operation between Export promotion schemes are schemes designed
trading partners in the investigation of fraudulent to promote production of goods for export.
claims on certificates of origin. Accordingly, requests Partner States have agreed in the Protocol for
made for assistance should be fast tracked with the establishment of customs union to engage in
thorough investigations. some of the export promotion schemes with a
motive to promote trade. Some of the schemes are
Manufacturing Under bond, Export processing

zones or special economic zones, Inward/Outward iii. Keep record of all types of plant, machinery
Processing. and equipment, raw materials and goods
manufactured in the factory and keep that
MANUFACTURING UNDER BOND record at all times available for examination by
the proper officer;
Manufacturing under Bond is a facility extended iv. Provide all necessary labour and materials
to manufacturers to import plant, machinery, for the storing, examining, packing, marking,
equipment and raw materials tax free, for exclusive coopering, weighing and taking stock of the
use in the manufacture of goods for export goods in the factory whenever the proper
The EACCMA empowers the Commissioner of officer so requires.
Customs to license any person who wishes to v. Non compliance with set conditions may result
manufacture goods under bond subject to condition into suspension, revocation or refusal to issue
he/she may impose. a license by the Commissioner
Conditions for licensing EXPORT PROCESSING ZONES
i. Application for a licence to be made in a EPZs are specialized areas in the EAC Customs
prescribed form specifying the purpose for Union where imported goods are offered duty
which each building, room, place or item of free treatment for purposes of processing or
plant is to be used. manufacturing for export under given conditions.
ii. Security to be furnished as the Commissioner
may think appropriate. According to the EACCMA an Export Processing
iii. Suitable office accommodation to be provided Zone is a designated part of the Customs territory
to Customs officer. where any goods introduced are generally regarded
iv. Premises for manufacturing process must be for the purpose of import duties and taxes as being
approved by commissioner as to suitability outside the Customs territory but are restricted by
and safety. The Customs officer can inspect the controlled access and to which benefits provided
premises to that effect. under the Regulations made under Article 29 of the
v. A prescribed annual license fee to be paid. East African Community Customs Union Protocol.
vi. No alterations to be made on the premises
without prior permission of the commissioner Application, Licensing and approval of EPZ
vii. violation of any of the terms or conditions for
licensing is an offence and one who commits Applications for investment in any EPZ, must be
such offence shall be liable on conviction to a made in the first instant to the relevant Authority.
fine not exceeding five thousand dollars or to
imprisonment for a term not exceeding three For operational purposes, Export Processing Zones
years or to both; and any goods in respect to are considered to be foreign territories for the
which an offence has been committed shall be purposes of the application of the Customs and
liable to forfeiture. Excise Act. However, the removal of goods from
port to an EPZ enterprise must be covered by a bond.
Responsibility of a bonded factory Licensee Any goods leaving the Zone into the Partner State
must be considered as imports and are subject to the
i. Make an entry, prior to commencement of importation rules and duty. Local goods supplied to
manufacturing under bond, in the prescribed EPZ enterprises are considered as exports and must
form specifying the purpose for which each comply with all conditions governing such exports.
building, room, place or item of plant is to be
used. The Objectives of the EPZ
ii. Provide office accommodation and scales,
measures and other facilities materials or just i. To attract export led industrialization
weights, for examining and taking account for diversification and enhancement of
of goods and for securing them as the proper competitiveness.
officer may reasonably require; ii. To earn more foreign currencies.
iii. To increase employment and develop the
capacity of skilled labour.

iv. To benefit from technology transfer and Section 141 of the same Act provides that where
v. To process more local materials for export. any goods are lost or destroyed by accident
Obligations of EPZ investors Either on board any aircraft or vessel; or in

removing, loading, unloading, or receiving them
i. To produce for Export markets. into, or delivering them from, any Customs area or
ii. To provide details of all raw materials received warehouse; or in any Customs area or warehouse,
at the site of manufacturing during the previous before the goods are delivered out of Customs
quarter of the year. control to the owner, then, if the Commissioner is
iii. To produce semi-finished or finished products satisfied that such goods have not been and will not
including by products exported or off-loaded be consumed in a Partner State, the Commissioner
in the Customs territory. may remit the duty payable in respect of the goods.
iv. To provide details of waste-products and how
they are disposed. DUTY DRAW BACK
v. To provide accurate records of losses through
evaporation, spillage, leakage or other causes. Most administrations have in place procedures
vi. To produce balances of law materials and which help promote export trade and are in the
semi finished products including stocks of by interest of the national economy. Drawback is one
products at the premises of manufacture and such procedure. This procedure grants repayment of
transit. import duties and taxes paid on:
vii. To facilitate inspections and examination by
the Customs. • Goods used in the processing or manufacture
viii. To take all measures to reduce the fears of task of exported products,
cheating in a way that Tanzania Investment • Materials contained in the goods or consumed
Centre cannot provide. in the manufacture of the exported products,
or
Treatment of Goods Deposited in EPZ • Imported goods re-exported in the same state.
Section 191(2) required all goods imported for EPZ The repayment may be partial or total. Drawback
to be entered in SBE together with cargo receipt is one of the several procedures which provides
and lending account book and a bond in the form relief from duties and taxes for the manufacture
of EPZRI shall be executed. The goods must be of exported goods and is extensively used. Some
destined in sealed containers, boxes or vehicles administrations may allow it in combination with
except in case of exceptionally bulky loads. Goods other procedures like inward processing, temporary
imported to EPZ from the custom territory must be admission or Customs warehouses.
treated in the same manner as if such goods were
imports. “Drawback procedure” means the Customs
procedure which, when goods are exported, provides
DUTY REMISSION for a repayment (total or partial) to be made in
respect of the import duties and taxes charged on
Section 140. (1) Of the East African Community the goods, or on materials contained in them or
Customs Management Act 2004 provides that The consumed in their production.
Council may grant remission of duty on goods
imported for the manufacture of goods in a Partner Economic benefits
State.
The imported goods are used to process or
The Council may prescribe regulations on the manufacture goods for export by the domestic
general administration of the duty remission under industries. The use of domestic labour and
this section. processing or manufacturing of goods add value
to the finished goods for export. The repayment of
The manufacturer, and the approved quantity, of the duties and taxes paid on the imported goods enables
goods with respect to which remission is granted domestic industries to offer the goods at competitive
under this section shall be published by the Council prices on international markets.
in the Gazette.

Some administrations restrict the categories of · Generates domestic economic activities,

goods qualifying for drawback. This is usually · Provides for revenue protection on imported
an economic consideration and is designed to goods released into the Customs territory, and
encourage the use of equivalents of imported goods · Offers options to interested persons when
which are produced within the country by domestic other procedures such as temporary admission
industry. cannot be applied to the goods.
Where it may be difficult to identify certain When Customs administers the drawback procedure
exported goods as being those that were originally by implementing modern control techniques of
imported or those resulting from the processing of selective verifications, risk assessment of users, post-
imported goods, administrations should allow the audits of users’ records and electronic data exchange
exportation of equivalent goods (e.g. compensating and transfer of payments, drawback can be well
goods equivalent in all respects to the goods which managed and offers the full array of economic
should normally have been re-exported) and apply incentives to national economies. (See Chapter 6 of
the drawback procedure to repay import duties the General Annex and its Guidelines.)
and taxes where goods or materials are replaced
by equivalent goods or materials. This is a practice Interested persons have import options regarding
which is recommended in this Chapter. whether to make the financial commitment to pay
the duties and taxes and wait for repayment to be
Countries wishing to encourage trade through free completed under drawback after the goods are
zones in their territory may also apply the drawback exported, and whether this affects the competitive
procedure to goods that are re-exported into these pricing of exported goods.
zones.
INWARD / OUTWARD PROCESSING
Usually goods imported with the intention to re-
export them, other than those used for processing The Commissioner of Customs is given power
or manufacture, are not permitted to be used during by the law to allow temporally importation or
their stay in the Customs territory. If such use is exportation of goods for processing operations free
allowed, administrations usually have provisions from tax provided that the ownership of such goods
under which the amount of drawback granted is shall remain to the exporter, and importer shall only
reduced according to the extent of the resulting process them under contract. The Commissioner
depreciation. may also allow the importation of equivalent goods
to replace the temporarily exported goods for
Some administrations use the term drawback for outward processing.
refund of taxes on imported goods that are not
according to specification and are returned to the Inward processing means the Customs procedure
seller, or goods used in manufacture for home under which certain goods can be brought in a
consumption, or imported goods that are obsolete, partner state conditionally exempted from duty
etc. The procedure covered by this Chapter does on the basis that such goods are intended for
not relate to such goods. This issue is covered in manufacturing, processing or repair and subsequent
Standard 4.19 of the General Annex. exportation.
The drawback procedure will not apply to repayment Procedure of operation:

of or relief from other taxes (e.g. sales tax, value
added tax) or to items which may be aids to the The operator shall apply for authorization to the
manufacturing process that are granted relief or commissioner in a prescribed form to carry out
repayment under other provisions. the inward processing operations. The application
detailing the intended inward processing shall be
Other economic benefit of the Duty Drawback made in advance prior to importation of the goods
System of drawback procedure offers distinct subject to the process.
benefits to national administrations and interested
persons in that it:

Conditions for granting an authorization (d) Placing the goods in free zones.
(e) Entered for home consumption
i. The applicant offers the necessary guarantee
for the proper conduct of the operation However, the commissioner may prescribe specific
ii. The administrative arrangements and time limit for in-ward processing.
supervision of the process are not
disproportionate to the economic needs of the Exportation of compensating products:
applicant.
iii. The applicant is established in the community The goods may be exported through a Customs
except where imports of non commercial office other than the office through which the goods
nature are involved under in-ward processing were imported, either in
iv. The imported goods can be identified in the full or in parts under separate entries
processed products
v. The applicant has provided Customs security. Compensating products entered for home
consumption:
Entry and examination of goods
When goods placed under in-ward processing are
Goods imported for inward processing shall be entered for home consumption either compensatory
entered in Customs prescribed form on production products or goods in an unaltered state, the import
of: duty shall be computed on the basis of the nature,
quantity, Customs value and duty rate applicable to
(a) Original inward processing authorization the goods at the time they were entered for in-ward
(b) Original invoices and other supporting processing
documents.
Outward processing
The proper officer shall examine such goods at
the port of entry or at the owners premises before Outward processing means the Customs procedures
release for inward processing. under which goods which are in free circulation
in a partner state may be temporarily exported for
The person authorized shall keep all records of the manufacturing, processing or repair outside the
inward processing activities and the records shall partner state and then re-imported.
indicate:
The Commissioner shall only authorize goods to be
i. The description of quantity of goods entered exported temporarily from the partner state when:
for the procedure. a) The exporter confirms that the compensating
ii. Date of importation. product shall result from the processing
iii. Details of processing. operation
iv. Correct amount of duty and taxes payable. b) The outward processing procedure does not
v. Disposal of goods and waste or scrap or by- affect the interest of the partner state
products. c) The compensating products shall be re-
vi. Compensating products obtained. imported within a period of one year from the
date of export
Time limit for inward processing:
During re-importation, the compensating products
Inward processing procedure shall be terminated may be re-imported through a Customs office
upon: other than the Customs office through which the
goods were exported either in full or in partial
(a) Re-exportation of the compensating product consignment under separate entries. Goods may
in one or more consignments within a period also be re-imported in an un-altered state.
of one year.
(b) Re-exportation of the goods in the same state The imported compensating products or unaltered
as imported immediately. goods may be granted total or partial relief from
(c) Release of processed products to circulation payment of duty when they are cleared for home
under duty relief. consumption in the name of

(a) An authorized person Classes of bonds

(b) Any person with the consent of the authorized
person They are two classes of bonds namely;
(c) Where the re-imported goods were repaired · Particular Bonds
and such repair could not have been undertaken · General Bonds
in the Partner States
(d) Equipment or other goods were added to the Particular bonds
exported goods that could not be added within
the partner state. These are bonds that cover only single specified
transactions and are valid for a period ranging
Processing or manufacturing was done on the re- from 48 hrs to twelve months. They are executed
imported goods and the goods exported were the in accordance with the provisions of Section 117 of
product of, and originated within the Partner States. EACCMA, 2004 and have no provisions for further
extensions. They are retired/discharged upon
CUSTOMS BOND SECURITIES completion of the Customs transaction.
Objectives: General bonds
By the end of this topic, trainee shall be able to: These are bonds that cover many transactions
and are valid for duration of three years. They are
i. Demonstrate an understanding of the concept executed in accordance with Section 107 (3) of
of Customs securities EACCMA, 2004 and are replenishable.
ii. Comply with conditions of Customs processes
requiring security guarantees Bond Execution, cancellation and enforcement
This is a contract executed under seal whereby the Bond execution is the processing of the security
party or parties entering into it bind themselves to bond through the filling of the bond form; signing;
pay to some other person or body a specified sum of sealing; witnessing; approval and capture in the
money, referred to as the penalty to bond, if any of system for use in Customs transactions.
the conditions of the bond are not performed. It is
required either to protect revenue or to ensure due Customs security bonds can be executed in
compliance. accordance with Sections 106-109 of the EACCMA,
2004.
Penalty to bond
In the process of bond execution, the following have
This is the amount of money specified in the bond to be observed:-
as payable if the conditions of the bond are not met
or are contravened. It is the Bond In Force (BIF) that i) Bond forms should be fully completed , signed
is enforceable in case the conditions of the bond are and sealed
contravened (Sec.109 of the EACCMA, 2004). ii) Be white in colour and size A4
iii) Be submitted in four copies, each clearly
The Principal marked;
· Original,
This is the person or party that undertakes to fulfill · Duplicate,
the conditions of the bond and also to pay the · Triplicate and
penalty to the bond. This is either an importers or · Quadruplicate.
his/her appointed clearing agent. iv) Show full address of the principal; guarantor
and their identification numbers
The Guarantor v) Show total bond amounts in both words and
figures
This is the person or party that undertakes to pay vi) The declared Bond In Force amount be
penalty to bond if the principal fails to fulfill the supported by attachments
conditions of the bond. This is either an insurance vii) The signatories to show their full names and
company or banking institution. ranks

viii) Be executed under relevant regulations as to payment of the security as though it were duty
bond types under the EACCMR, 2010 due and unpaid (Section 109 of the EACCMA,
ix) The forms be signed by authorized signatories 2004)
who should be either, Directors or Company · When the importer fails to meet the conditions
Secretaries and for officers of ranks below that, of the bond or defaults, he/she commits an
authority of the Board be obtained and Power offence for which legal action shall be taken
of Attorney given. in accordance with the Customs offence
x) To affix revenue stamp on original bond compounding procedures (Section 219 of the
xi) Signatories to appear physically before EACCMA, 2004)
a Customs Officer at specified times for · Seize the goods and have them forfeited to the
confirmation and updating of the specimen state (Section 210 of the EACCMA, 2004)
signatures · Recover the amount of the Bond In Force
xii) Bonds should not be; transferred to other from the surety, which is referred to as bond
parties, punctured, perforated, erased or liquidation or penalty to bond.
altered.
Processes/transactions that require Customs
The executed bond upon approval is captured in security bonds
the system for use by the importer/clearing agent in
readiness for registration of entry(ies). Bond securities are used for different Customs
transactions/regimes where duty is not paid upfront
Bond cancellation for imported cargo such as:
This is the process of bond termination upon i) Goods in Transit and transshipment
completion of the specified Customs transaction(s) ii) Goods to be warehoused
within the stipulated time limits. Cancellation of iii) Goods for projects
Customs security bonds is provided for under iv) Perishable goods
Section 108 of EACCMA, 2004. To facilitate bond v) Shipstores
cancellation/discharge, the importer or clearing vi) Temporary imports
agent is expected to make an application by filling vii) TREO, EPZ and MUB goods etc.
a bond cancellation form (C29) for processing
and acquittal. The application has to be supported Benefits of Security bonds
by documentary evidence that the secured goods
have been treated as stipulated in the Customs law. The following are the benefits accruing from the
Withdrawal will be complete when the letter of usage of Customs security bonds:-
discharge is given by Customs to the Guarantor with
original copy of the bond so that the Principal is i) It is sort of credit given to importers as their
discharged from the obligations of paying premiums. cash is not tied up in upfront tax payments,
thus boosting their cashflow
Bond security enforcement ii) It facilitates international trade, thus
conforming to the tenets of the WTO Revised
Bond enforcement is the process of recovery of Kyoto Convention
revenue on the bond in force once the principal iii) It is convenient to manufacturers who import
flouts any of the conditions of the bond. raw materials to manufacture goods for
both local consumption and for export, thus
Bond enforcement can be effected in the following boosting the growth of local industries leading
manner:- to the creation of job opportunities
· Where the conditions of any bond have not iv) The secured revenue is easier to recover in case
been complied with, the Commissioner may by of fraud or tax evasion
notice in writing require the person who has v) Cargo clearance time is minimized, which is
given security under it to pay to him or her the cost saving.
amount of the security within fourteen days
of the notice; and on failure to comply with
the notice, the Commissioner may enforce

Challenges in the management of Customs sub-divided into public and private warehouses.
security bonds Section 62-69 of the Act provides for warehousing
of goods and regulation 64-87 gives the procedure
Challenges are many given the dynamics of the ever for warehousing.
changing business trends and amongst them are the
following: Government warehouses
i) Tax payment is delayed for a long time, thus A Government Warehouse is any building or place
denying the Government revenue provided by the Government in a partner state,
ii) Guarantors giving unilateral notifications to and approved by the Commissioner Customs for
Customs to their decision to withdraw from the deposit of dutiable goods on which duty has
guaranteed security bonds to some principals not been paid and which have been entered to be
and expecting Customs to exonerate/exempt warehoused.
them from liabilities already incurred
iii) Use of forged/fake security bonds leading to Customs bonded warehouses
loss of revenue
iv) Difficulties in recovery of revenue from A bonded warehouse is any building or place licensed
outstanding security bonds from Principals by the Commissioner Customs for the deposit of
and Guarantors who have prematurely wound dutiable goods on which duty has not been paid, and
up which have been entered for warehousing (S62-69 of
v) Some guarantors and principals failing to the CMA).
honour their obligations
vi) Tendency of most Guarantors to engage There are two types of Customs bonded warehouses
Customs in prolonged correspondences when as described here below
called upon to honour demand notes on
outstanding security bonds a) General Bonded Warehouse are licensed
vii) It increases Customs administrative costs in premises used for warehousing goods for the
the control of the uncustomed cargo under general public;
bond. b) Private Bonded Warehouses are licensed
premises used for warehousing goods of the
Warehousing procedure licensee.
Specific Objectives General or private bonded warehouses include
i) Identify various types of warehouses Vehicle Bonded warehouses

ii) Comply with conditions for licensing bonded
warehouse, bonded factory and Inland These are designed to store only imported vehicles.
Container Depot. Specialized Bonded warehouses
iii) Describe procedures for declaration and
documentation of warehoused goods These are specially designed to store goods such
iv) Apply the correct procedures in the treatment as bonded oil installations and those that store
of goods entered for warehousing explosives such as the armory.
Types of Warehouses Factory Bonds
A warehouse is a building where goods are stored These are used store raw materials in factory
pending clearance through Customs. There are establishments to be used in the manufacturing
various types of warehouses depending on the process
purpose for which they are licensed or approved
by the commissioner, with due considerations of Duty Free Shops:
ownership. Under Customs procedure, Warehouses
are broadly categorized as Government warehouses, For storage and sell of dutiable goods, duty free to
Customs bonded warehouses and Customs entitled persons and organizations.
warehouses. The three broad categories are further

Customs warehouses (v) prospective licensees should be instructed to

arrange that only one door is locked from the
A Customs Warehouse is “any place approved by outside and that all the other doors are locked
the Commissioner for the deposit of un-entered, from inside the premises. When the premises
unexamined, detained or seized goods for the are fitted with sliding doors, the Inspecting
security thereof or of the duties and taxes due Officer must see that suitable stopping
thereon.” Any place or premises may be deemed to arrangements are provided on the rails to
be a Customs warehouse by a proper officer where prevent the doors from being slid off when
the situation so warrants. locked.
(vi) have suitable office for Customs which is
Types of goods deposited in a Customs Warehouse. furnished with the necessary equipment
including but not limited to a connection to
(a) Seized goods. the Customs computerized business system.
(b) Unclaimed goods. (vii) have weights, scales, measures and other
(c) Un-entered goods. facilities necessary for examining and taking
(d) Goods for which the Proper Officer for any account of goods and for securing them.
reason has withheld release.
(e) Goods removed from licensed bonded Provision of separate Compartment:
warehouses in accordance with sections 56 and
69 of the Act, Where necessary, the applicant or prospective
(f) Abandoned and derelict goods. licensee should provide a compartment for the
(g) Any goods dealt in contrary to the Customs storage of sensitive goods within the warehouse;
law. such as spirituous liquors and tobacco and must be
separately walled off ’ from the rest of the bonded
Conditions for licensing bonded warehouses warehouse space and provided with a door capable
of being locked with a Customs lock. The Inspecting
Application for the approval and licensing of any Officer must state in his recommendation whether
premises, as a bonded warehouse must be submitted or not a special compartment is provided.
to the Commissioner Customs in the Form C18,
which must be accompanied by a plan of the If a separate compartment is not provided, it is
proposed building and its situation in relation to the policy of the Department to limit the type of
other buildings and thoroughfares. goods, which may be stored in the proposed bonded
warehouse by excluding sensitive goods such as
A security Bond to secure the duty on the goods spirituous liquors and tobacco. Intending licensees
deposited in the bonded warehouse, when licensed, should be informed of this limitation and given an
is to be given by the applicant in accordance with opportunity to make necessary structural alterations
the Form C B.6. The applicant is to comply with if they so desire.
the bond security amount and additional request
for collateral security fixed or requested for by the Marking of Warehouse:
Commissioner Customs.
Numbering and marking must distinguish a
The prospective licensee should prepare for an Bonded Warehouse. When a Bonded warehouse is
inspection to be undertaken by a Customs officer to licensed, the words “Customs Bonded Warehouse”
satisfy him/herself that the premises are:- and the number allocated to the warehouse must
be clearly marked on the principal entrance to
(i) safe, secure, waterproof and pest-proof the warehouse, or elsewhere as Customs may
(ii) suitable for use as a bonded warehouse as far as approve. These markings must be removed when a
construction and situation in regard to other Warehouse ceases to be licensed under the Customs
buildings and accommodation are concerned: Laws, and prior to the cancellation of the security,
(iii) fitted with adequate lights and suitable an officer will inspect the building and ensure that
ventilators, and the markings have been removed.
(iv) fitted with doors capable of being secured by
Customs locks in addition to the licensee’s
locks.

License Fees: Structural Alterations
In the event of a change of name of a licensed No structural alterations to a bonded warehouse may
company, a fresh application for a license is to be be made without permission from Customs. Care
made as provided for under the EACCMA. Such should be taken to see that all structural alterations
a license when granted is to be treated as a new are made under official supervision, and do not
license, for which the appropriate fee is to be charged interfere with the suitability of the warehouse.
whether or not the annual license fee has been paid
by the previous company. Customs Locks Opening of Bonded Warehouses
Under Sect. 62 of the Act it is clear that it is the All Bonded Warehouses must be secured with locks
building which is licensed and that any such provided by a licensee and approved by Customs and
building must be the subject of a newly granted no warehouse may be opened except in the presence
license specific to that building. It follows therefore and/or with the authority of the proper officer.
that when a building ceases to be licensed, the
license must be revoked and there is no provision Duties of Licensees of Bonded Warehouse
whereby the unexpired part of any such license may
be applied to any other building. Every warehouse licensee must : -
a) provide such office accommodation and
Closing Down of a Bonded Warehouse weights, scales, measures and other facilities
for examining and taking account of goods,
If a bonded warehouse is to be closed down, either and for securing them as the proper officer
by voluntary action on the part of the licensee or may require.
because of the cancellation of the warehouse license b) keep a record of all goods warehoused therein
by the Commissioner Customs, the provisions of and shall keep such record at all times available
Sect. 62 of the Act are to be applied. The Customs for examination by the proper officer,
locks are not to be removed off the doors of the c) stack and arrange the goods in the bonded
warehouse and the bond security is not to be warehouse so that reasonable access to and
cancelled until all the goods in the warehouse examination of every package may be possible
have been accounted for to the satisfaction of the at all times, and that the package marks are
Customs Regional Manager, and the markings on clearly visible at all times; Provide all necessary
the building have been removed. No License Fee or labor and tools for the examination, packing,
part thereof is refundable. marking, coopering, weighing and taking
stock of the warehoused goods whenever the
Warehouse-keeper to Notify Owner Bond officer so requires,
d) maintain the packages in which warehoused
Where a warehouse licensee does not wish to renew goods are contained in a proper state of repair;
his license, he is required under Section 63 of the e) pay the Import Duties and any other taxes
Act to notify the owners of the goods warehoused on all warehoused goods removed from his
therein. In addition, where a license for a bonded warehouse except by authority and on all
warehouse has been revoked or has expired, then, warehoused goods not produced to the officer
within such time as the Commissioner Customs on demand unless such goods are accounted
may direct, all goods therein must be entered and for to the satisfaction of the Customs.
delivered for home consumption, exportation, f) Bond Officer must report particulars of any
removed to another licensed bonded warehouse or dereliction of the above duties to the Customs
use as ship/aircraft stores. If goods are not entered Regional Manager at once.
and delivered accordingly, then the Customs may
arrange for their removal to the Customs Warehouse.
On receipt into the Customs Warehouse, such goods
are to be dealt with in accordance with Section 42 of
the Act.

Declaration and documentation of warehoused Bill of lading/airway bill/railway consignment note,

goods Customs Transit documents (T1 or RCTD). The
entry is assessed to ascertain the Bond in Force. The
Warehoused goods may be delivered from a entry is then released for the goods to be moved
warehouse for 4 main reasons: to the destination Bonded warehouse. The proper
officer should not pass an IM7 entry unless it is
· Home use supported by a formal acceptance in accordance
· Exportation with Regulation 69 of the EAC-CMR 2006 (Form C)
· Removal/Transfer by the bonded warehouse keeper to have the goods
· Used as stores in aircraft or ship. warehoused in his bonded warehouse.
Home consumption Goods not entered for direct warehousing at the

entry point will be consigned to an Inland station or
This is when goods are entered first into their bonded warehouse on a C17 under IM 8 procedure.
respective entries by owners before delivery from a The physical entry will be submitted to the Customs
bonded warehouse. These goods are intended for a Business Center supported by preceding documents
delivery into home use and duty due on them must such as the Bill of lading/airway bill/railway
be paid before delivery. consignment note, Customs Transit documents
( RCTD). On processing of the IM8, taxes are
After making the correct ex-warehouse entry and has assessed to ascertain the Bond In Force and a T1
been passed, the owner of goods goes and presents to accompany the goods is generated. The T1 is
his/her goods to the proper officer for examination then released for onward transit to the destination
before delivery. Customs station/bonded warehouse from where a
warehousing entry will be made.
Re-exports: Numbering of warehoused export
entries is done in registers for record purposes and g Provisional declaration to Warehousing Entry
Removal/Transfer The Proper Officer may permit under Section 37 and

38 of the Act, that the goods with no or insufficient
Removal of bonded goods from one warehouse documents/information may be entered on the usual
to another is done with the submission of ex- form of Warehousing Entry (SAD/C17.A Regime
warehousing SBL. IM.7), the value being declared approximate, and
that such entries shall be submitted and dealt with
Cargo receipts are to be prepared for removal of in accordance with the above sub-paragraphs.
warehoused goods.
Goods declared on approximate value to
Aircraft/Ship stores Warehousing Entries must be examined to the same
scale and in the same manner as goods entered for
• Aircraft/ship stores delivery register is to be Home Consumption. Such estimated duty shall be
kept; allowed and a bond equivalent to such estimated
• The kids are delivered to ship or aircraft duty furnished. The taxpayer (importer) may make
representative; an undertaking to produce the required information.
• The ship representative gives receipt for the
registered goods; Amendment of Warehousing Entries
• Consolidated entry will be prepared on weekly
basis. Where the required supporting documents in
regard to provisional entries are furnished the
Procedure for warehousing provisional entry shall be appropriately amended.
Where a warehousing entry has been amended,
Goods may be entered for warehousing upon arrival the warehousing registers are to be appropriately
at the frontier port (IM 7). The physical entry will amended to reflect the correct Bond in Force (BIF).
be submitted to the Customs Business Center
supported by proceeding documents such as the

Security e.g. Form F.7: Certificate of receipt of goods

into Bonded warehouse.
The importer of goods entered for warehousing
must give security for the removal of goods from Report : of return of shipment of Bonded
the landing station (Frontier station/ICD) to the goods. Reg. 66
bonded warehouse and storage in the bonded
warehouse. A particular bond may be given for each Report: of Short landed goods - (Goods
transaction or a general bond to cover the amount entered for warehousing).
likely to be outstanding at any one time in respect of
the transactions of a particular agent/importer Form F. 119: Cargo Receipts.
(ii) Where goods are entered for warehousing/ All such forms/reports are to be numbered in annual
removal to another warehouse as provided in Sect. series commencing with number 1, date and stamped,
54 and Regulation 68, the delivery of goods should serial number and number of packages on the form
not exceed 24 hours in the case where the Warehouse relevant to a particular entry are to be endorsed in
is at the station of entry and for removal to other the right hand side of the Register on the same line
Warehouses the period should not exceed 48hours. as that used when the allocation was brought into
force.
Bond in Force
Electronic accounts or book balances in the
The amount of Bond required in the case of manual format are to be adjusted by posting
particular bonds or allocations in the case of a entries or deductions as specified by corresponding
general bond will be determined from the genuine warehousing entries or ex warehousing entries to or
documents accompanying the SAD as declared from the total BIF.
to Customs by the clearing and forwarding agent
during the declaration process. In cases where ENFORCEMENT OF BOND SECURITY
documentation may be found inadequate, a detailed
examination account of the goods must be done to Where an allocation remains outstanding for more
enable determination of value using other methods. than the prescribed period (2 days in case of transit
When there is adequate bond security available on or 6 months in case of warehoused goods), from the
the electronic bond security account of the bonded date when the entry was passed, the Importer/Agent
warehouse to which the goods are destined, the is to be called upon, in writing, to pay the duty.
warehousing entry is passed and the bond guarantee
reference number is reflected on the entry. In case Evidence of payment must be produced by owner/
of a manual process, the Proper officer establishes agent to allow cancellation of BIF.
that there is adequate bond before the warehousing
entry is passed, the particulars of the entry and the Warehousing Procedure
amount of bond executed are to be recorded in the
Bond Allocation Register, and all copies of the entry Warehousing is a Customs procedure whereby
are to be stamped; goods liable to Customs duty on first importation
are entered for custody without payment of duty, for
DISCHARGE OF SECURITY - (Allocation Register) the purposes of protecting government revenue and
other security reasons.
(a) The discharge of security given can only be
permitted when a full and proper account has Warehousing of goods must be done in compliance
been made by the clearing and forwarding with specific provisions of the EACCMA in
agent of all the goods covered by the bond particular Section 34 and Regulation governing
security. goods transiting to the warehouse and warehousing
(b) Notification of the account of goods will be requirements applicable to warehoused goods.
recorded on the right hand side of the Bond
Allocation Register and these accounts will A Customs clearing and forwarding agents must
stem from the receipt of documents relevant to observe the period; within which goods must be
the particular cargo. entered for warehousing after the commencement

of discharge of imported goods, this is referred to Section: 57 of the Act, within six months from the
as Customs warehousing dates, which is the 21st day date on which they were warehoused may with the
(excluding Sunday and public holidays). written permission of the Commissioner be re–
warehoused for a further period of three months.
Also for transit goods expected to be entered into Thereafter, they shall be sold by public auction after
a warehouse, for goods to be re-warehoused at the one month’s notice of such sale.
expiry of the warehousing period, beyond which
goods released from the warehouse must be delivered Types of Goods, which May be warehoused in a
once they have been entered for ex warehousing Bonded Warehouse
Want of Entry Lists All goods may be warehoused in a Bonded

Warehouse with the exception of-
Upon receipt of the advice mentioned in paragraph
12, the Handling Agents will prepare a want of i. acids for trade and business;
entry list, in quadruplicate, which will be sent to ii. Ammunition for trade and business;
Supervisor Station to be checked against the relative iii. Arms for trade and business;
inward report iv. Chalk;
v. Explosives;
Goods may be entered at the entry point for vi. Fireworks;
warehousing inland or they may be consigned and vii. Dried fish;
delivered on transit documents at the destination viii. Perishable goods;
warehouse after which the process of entering the ix. Combustible or inflammable nature, but not
goods will start. including petroleum products for storage in
approved places;
Reporting procedure at the Bonded warehouse x. Matches other than safety matches
should be observed and the clearing and forwarding xi. Goods the Commissioner gazettes as not to be
agent must facilitate the loading/off loading, warehoused
depositing, stacking of goods and taking of account
of warehoused goods on arrival at warehouse in TRANSIT AND TRANSHIPMENT PROCEDURES
accordance to section 64 of the Act.
Objectives:
Receipt of goods into any bonded warehouse must
be authorized in writing in form of a “Licensee’s At the end of this topic, the trainee should
Certificate of Agreement” accepting goods into the demonstrate the ability to:
bonded warehouse by the warehouse keeper.
i) Describe the concept of transit and
Examination Account transshipment
ii) Apply the declaration process under Transit
An examination account must always be prepared and transshipment
(section 47 CMA) for all goods entered for iii) Apply the procedures for handling goods in
warehousing after they are examined. The account Transit
shall be recorded on the SAD, in the warehousing
register and where applicable captured in the system. Transit
The proper officer in-charge of the warehouse will
prepare for each warehousing entry an examination Transit means the movement of goods imported
account reflecting the entered particulars and from a foreign place through the territory of one or
there after forward the entry and accompanying more of the Partner States, to a foreign destination
documents for further processing at the processing (Section 2(1) of the EACCMA, 2004).
centre.
Transit shed or Transit godown
Warehousing Period
Transit shed means any building appointed by the
All warehousing goods, which have not been Commissioner in writing for the deposit of goods
removed from the warehouse in accordance with subject to Customs control (Section 2(1) of the

EACCMA, 2004).It’s important to note that similar The entry should be supported with attached
premises located outside the port licensed by the documents to ascertain the taxes payable, such as:-
Commissioner for the deposit of transit cargo · Invoice
awaiting transportation to the final destinations are · Bill of lading
known as transit godowns. · Packing list
· Manufacturer’s literature etc.
Types of Transit
The appropriate Customs security bonds as per the
There are two transit types namely; Transit Inwards East African Community Regulations 2010, should
and Transit Outwards be executed to cover the transit and transshipment
transactions.
Transit Inwards
In the case of direct transshipment, involving the
Transit Inwards means the movement of imported direct transfer of goods from the incoming aircraft
transit goods from a foreign place into a Partner or vessel to the departing ones, then security bond
State (s) to a foreign country may not be necessary as the goods have to be
transshipped under Customs supervision.
Transit Outwards means the movement of transit
goods from a foreign country through Partner It is important to note that even duty free transit
State(s) destined for export, for example Diamond goods have to be bonded albeit, with nominal bond.
in transit from DR Congo into Tanzania destined for
a third country The Customs security bonds for both transit and
transshipment goods shall be cancelled/acquitted,
Transshipment upon confirmation that the goods have left partner
State(s) in the same state as declared (Sec. 87 of the
Transshipment means the transfer, either directly EACCM Act, 2004)
or indirectly of any goods from an aircraft, vehicle
or vessel arriving in a partner State from a foreign Customs Control of Transit and Transshipment
place, to an aircraft, vehicle or vessel departing to
a foreign destination (Sec.2(1) of EACCMA, 2004). The control of Transit and Transshipment goods
is anchored in Sections 85, 86 & 87 of the East
Types of Transshipment African Community Customs Management Act,
2004 and Regulations 104 to 106 of the East African
They are two namely; Direct Transshipment and Community Customs Management Regulations,
Indirect Transshipment 2010
Direct Transshipment means the transfer of goods
directly from the incoming aircraft or vessel into the The following are some of the measures that have
outgoing aircraft or vessel been put in place by Customs administrations to
control transit and transshipment goods to minimize
Indirect Transshipment means the removal of goods cases of fraud:-
from the incoming aircraft or vessel and transfer of
the same later into another aircraft or vessel. i) The requirement that transit goods should
be shown separately in the Inward Report
Declaration of Transit and Transshipment cargo (Manifest) of the importing vessel or aircraft to
Transit and transshipment are goods under Customs enable Customs to identify transit goods from
control (Sec. 16 of the EACCMA, 2004) local ones before they are entered so that they
are monitored at manifest level
It’s a legal requirement that all transit and ii) Legal requirement that all transit goods on
transshipment goods on importation into the importation into the country be entered in a
country be entered in a prescribed Customs form prescribed Customs form (C17B) within 21
(C17B) within 21 days from date of commencement days from date commencement of discharge
discharge (Sec. 34 of EACCMA, 2004) (Sec. 34 of EACCMA, 2004).


The entry should be supported with attached Challenges in the Control of Transit fraud
documents to ascertain the taxes payable, such
as:- The challenges in the control of transit fraud and tax
· Invoice evasion are many. Some of them are as follows:-
· Bill of lading
· Packing list i) Use of forged stamps by agents/importers to
· Manufacturer’s literature etc. fraudulently certify false transit exportations
iii) Transit goods either inward or outward should leading to tax evasion
be covered by a Customs security bond which ii) Cases of falsified certification of transit
must be equivalent to taxes payable (BIF) if exportations through collusion with Customs
those goods were to be consumed locally Officers and other players
iv) Transit cargo is to be transported in covered iii) Undervaluation and misdeclaration by agents/
body trucks or in containers. The body importers with intent to dumb transit cargo
trucks should have both sides boldly printed into the local market
“TRANSIT GOODS” iv) Substitution of high value imported transit
v) Transit goods be occasionally loaded under goods by agents/importers
Customs supervision and be sealed with v) Poor record keeping and risk profiling of
Customs seals, which are affixed to the agents, importers, suppliers etc by Customs
containers or vehicles carrying the goods. authorities
vi) Transit cargo can be subjected to Customs and vi) Use of forged Customs security bonds and fake
police escorts or Electronic Cargo Tracking truck registration numbers
System (ECTS) vii) Lack of serious attention by Customs Officers
vi) Transit cargo must be transported on the to check on declared values.
transit routes gazetted by the commissioner of viii) Conealment of transit cargo to evade tax
Customs and any deviation of the transit truck ix) Prolonged storage of transit goods in transit
from the gazetted route is a punishable offence godowns and transit sheds with motives to
vii) Transit goods are selectively scanned to monitor divert them into local market.
any cases of; concealment, misdeclaration etc. x) Political interference from within and outside
viii) Both containerized and loose transit units dictating clearance of certain transit cargo
moving along the gazetted transit routes must xi) Low staffing levels in the Customs
stop at all transit check points on the route administrations
and be rotated as one of the Customs control xii) Lack of enforcement tools for Customs Officers
measures xiii) Unupgraded systems leading to cargo clearance
ix) Transit cargo should be exported within 30 delays
days from the date of passing of the entry or
within a further period as the Commissioner
may allow
x) Once Transit goods have been exported,
the clearing agent should apply for bond
cancellation not later than 30 days from the
date of exportation (Reg.104 (17)).
xi) Where quantity of transit goods is found to
be less at the port of exit, the importer shall
pay penalty to bond proportionate to the
discrepancy (Reg. 104(14))
xi) Where there’s attempted diversion of Transit
goods, but the goods are recovered, the agent/
importer shall pay fine of 50% of the value of
the goods and the subject goods shall be liable
to forfeiture. These deterrent control measures.

References:
Baker.T. (2002), Dealing with Customs and Excise; Administration, Appeals, Disputes and Investigation, Tolley
Publishing
International Convention on CITES
Lawrence J. Bogard, (1983) Customs Laws and Administration, Oceana Publication
Montreal Protocol (1987) on Ozone Depleting Substances
Partner States Legislation relevant to Customs Operations
Protocol on the establishment of the EAC Customs Union
The EAC Customs Management Act, 2004
The EAC Customs Management Regulations, 2010
The EAC Customs Procedures Manual
The EAC Customs Training Material, 2011
The EAC Duty Remission Regulation, 2008
The EAC Rules of Origin
The EAC website: www.eac.int
Uganda Revenue Authority Customs Departmental Instructions Revised, 2009
Uganda Revenue Authority Customs Procedure Manual, 2010
United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988
WCO Revised Kyoto Convention
WCO SAFE Framework of Standards
WCO website
Wulf, & Jose’ B. Sokol (2004) Edited Customs Modernization Hand book
www.click.wcoomd.org
http://www.clearedanddelivered.com

BOOK 2
CUSTOMS
VALUATION
AND TARIFF
CLASSIFICATION
Table of Contents
UNIT 1: CUSTOMS VALUATION.......................................................................................................................66
Unit Objective........................................................................................................................................................................... 66
Preamble: General Introductory Commentary.................................................................................................................... 69
Annexes..................................................................................................................................................................................... 72
Transaction Value Method...................................................................................................................................................... 73
Case Study 1.............................................................................................................................................................................. 74
Case Study 2.............................................................................................................................................................................. 77
Case Study 3.............................................................................................................................................................................. 79
Case Study 4.............................................................................................................................................................................. 80
Case Study 5.............................................................................................................................................................................. 81
Case Study 6.............................................................................................................................................................................. 82
Case Study 7.............................................................................................................................................................................. 83
Case Study 8.............................................................................................................................................................................. 84
Customs Documentation........................................................................................................................................................ 85
Incoterms................................................................................................................................................................................... 93
UNIT 2: CUSTOMS TARIFF CLASSIFICATION....................................................................................................98

Specific Objective..................................................................................................................................................................... 98
Historical Background............................................................................................................................................................. 98
Moves Toward International Harmonization of Tariff Classification Prior to World War II......................................... 98
Brussels Tariff Nomenclature (BTN) and Customs Cooperation Council (CCC).......................................................... 98
Harmonized Commodity Description and Coding System (Harmonized System)........................................................ 99
The Tariff structure of the EAC-CU..................................................................................................................................... 100
Structure of Harmonized System......................................................................................................................................... 101
Arrangement of Harmonized System into Sections.......................................................................................................... 101
Arrangement of Sections in the Harmonized System....................................................................................................... 106
Arrangement of Headings and Subheadings...................................................................................................................... 107
General Interpretative Rule 1................................................................................................................................................ 111
Case Study Illustrations......................................................................................................................................................... 118
ANNEX........................................................................................................................................................ 120
REFERENCES............................................................................................................................................... 122

UNIT 1:
CUSTOMS
VALUATION
UNIT 1: CUSTOMS VALUATION such as tariff policy objective which may include
and not limited to;
UNIT DESCRIPTION
(a) Raise revenue
The Customs valuation unit briefly describes the (b) Facilitate trade
provisions of the WTO Agreement on Customs (c) Protect domestic industry
Valuation. (d) Encourage importation of certain products
(e) Collect trade statistics.
The unit will explore the key requirements of
the WTO Agreement in addressing application Advalorem duties
of its provisions to modernisation and reform of
members’ Customs procedures. Are taxes, duties or fees that vary depending on the
value of products, services or property on which
The unit will also bring out vividly the objective of they are levied. They are expressed as a percentage
the Agreement which requires countries to adopt a of the value and most of the countries apply this
valuation system that is fair, neutral, uniform, and system e.g. 25% of CIF.
transparent and it prevents the use of arbitrary and
fictitious values by requiring countries to base the Advalorem duty rate is not a recent invention but
value of the imported goods to the greatest extent dates back to the middle ages and what seems to
possible on the transaction value. have been lacking at that time was the application of
precise, standard methods of valuation.
UNIT OBJECTIVES
The preference for advalorem duties re - emerged
By the end of this unit, trainees should be able to: during the industrial era, when it was realized that
• Interpret and apply as accurately as possible the system offered greater protection, as it was
the provisions of the WTO Agreement on more adaptable in the face of price fluctuations and
Customs Valuation differences in the quality of goods.
• Outline the methods of valuation sequentially
• Determine the customs value of imported Specific duties
goods in accordance with the valuation
methods outlined in the Agreement These are duties, taxes or fees levied based on specific
• Outline the different documents required for measures of goods such as number, weight, volume,
Customs valuation area, capacity etc. Here, a specific sum is imposed
• Interpret different incoterms used in on each article regardless of its individual value e.g.
international trade when determining the price per litre of fuel.
Customs value of imported goods.
Importance of Customs Valuation
INTRODUCTION
Customs valuation is important because it;
Definition of Customs Valuation • Enhances International Trade
• Protects domestic industry
According to Oxford dictionary, value is defined as • Encourages the importation of certain products
the worth, desirability, purchasing power, equivalent • Facilitates the collection of revenue
of a thing... which may be substituted or exchanged • Forms the taxable base for customs revenue
for a thing. • Facilitates the compilation of trade statistics
• Facilitate the implementation of Tariff
Customs valuation therefore is the procedure preferences
applied to determine the value of imported goods • Helps in Origin determination
for the purpose of levying advalorem customs
duties. Customs duties are instruments of fiscal and Evolution of Valuation systems
trade policy. These duties may be based on specific
rates, advalorem rates, or a combination of the two. Historical Background of Customs Valuation
The choice of the rate depends on various factors, Valuation of goods for exchange purposes is as old

as trade; it was widely done through barter trade The essential elements of this definition are price,
system which was applied at local and foreign trade. time, place, quantity and commercial level.
The existence of different and unstable valuation The BDV, a product of the trading environment
systems was a major obstacle to the growth of of the1950’s was seen to be subject to arbitrary
international trade; it enabled the incidence of the administration, lacking transparency and
agreed duties to be manipulated unilaterally by unresponsive to the prevailing international
altering the valuation criteria. trading environment. The system gives too much
discretion to the Customs administration. The value
Desperate and unstable systems of valuation led adjustment depended much on the assessment of
to studies in search of a neutral valuation system, the assessor, which allows arbitrary uplifts that are
which would promote international trade. not quantifiable and uncertain which is detrimental
to trade.
After several unsuccessful attempts made under
the auspices of the League of Nations, agreement Between 1973 and 1979, the GATT multilateral trade
on the general principles of Customs valuation was negotiations known as the Tokyo Round took place
reached for the first time during the United Nations in Geneva, representing one of the most significant
Conference on Trade and Employment, held in trade policy events of our time.
Geneva in 1947 and was signed by 23 nations.
The objective of these negotiations was to achieve
The conclusions of this Conference were embodied the expansion of greater liberalization of the World
in Article VII of the General Agreement on Tariffs trade, inter alia, through the progressive dismantling
and Trade (GATT) 1947. The principle provided for of obstacles to trade. One means of achieving this
Customs valuation to be based on the transaction goal was the adoption of a common international
value to the greatest extent possible. Nevertheless, valuation system, more widely accepted than the
that text merely laid down the general principles existing system.
and provided little guidance as to their practical
application. One of the results of these negotiations was the
adoption of the Agreement on the Implementation
Another progress towards international co- of Article VII of the GATT in 1981 also known as
operation in the field of Customs valuation was Agreement on Customs Valuation (ACV). ACV is
taken by the European Customs Union Study a positive concept rather than the notional concept
Group set up in Brussels in 1947. The Group’s tasks under BDV. A Protocol to the 1979 Agreement
included the drafting of a definition of value for use deemed to form the integral part thereof, contain
in the framework of a Customs Union, and a study provisions concerning special problems and trading
of the methods and procedures of application of needs of developing countries, permitting them
such definition. some flexibility in applying the Agreement. This has
become Annex III of the WTO Valuation Agreement
The text of this definition was completed by mid- (GATT 1994).
1949 and it was based on the principles of Article
VII of the GATT 1947. It was incorporated in the The Agreement on Customs valuation is based on
Convention on the valuation of goods for Customs transaction value that is the price actually paid or
purposes, which was signed in Brussels on 15th payable for the imported goods when sold for export
December 1950 and entered into force in 28thJuly to the country of importation.
1953. This resulted into a new valuation method
termed as Brussels Definition of Value (BDV). This system is intended to provide a fair, uniform,
and neutral way for the valuation of goods for
The Brussels Definition of value is based on a Customs purposes, conform to commercial realities
notional concept, which treats the Customs value and precludes the use of arbitrary and fictitious
as the price at which in assumed conditions, the values. Through its precise methodology, it assists
merchandise to be valued would fetch in the open the trading community and Customs authorities to
and free market on interaction of the forces of determine the Customs values and the amount of
supply and demand when sold to unrelated parties. duties payable with more certainty, and therefore,

contributes to the facilitation of trade. Objectives of the WTO Agreement on Customs

Valuation
The Agreement recognizes that Customs valuation
should as far as possible, be based on the actual The objectives of the WTO Valuation Agreement are
price of the goods being valued, subject to certain set out in the preamble of the Agreement as follows:
adjustments of elements which form part of the
value but have not been included. To further objectives of GATT 1994 and secure
additional benefits for developing Countries
Uruguay Round
The Agreement is an important step towards
The Uruguay Round of GATT negotiation which a uniform application of valuation procedures
started in 1986 was finalized in December 1994. This thus promoting international trade. It is also
resulted in the Agreement on Implementation of for developing countries when they become
Article VII of the General Agreement on Tariffs and members, for example, they may delay application
Trade 1994, popularly known as, “the Agreement”. It of its provisions for up to 5 years and may defer
made several changes to the existing Agreement on application of some specific rules for an additional
implementation of Article VII: three-year period.
(a) Creation of World Trade Organization (WTO), It was also agreed that developed countries shall
which came into force 1995. furnish technical assistance which may include
(b) Requirement that all signatories to the WTO training personnel, assistance in implementation,
accept all GATT instruments, including the access to sources of information and advice on
Agreement on implementation of Article VII. application of the provisions of the Agreement.
(c) Some slight amendments to the text of the
GATT Agreement on Customs Valuation. To provide greater uniformity and certainty
(d) Review of Annex III to the Agreement
(e) Adoption of decisions regarding, Burden of Another important objective of the Agreement
proof, Minimum Values and sole agents, sole was to establish a precise set of rules which will
distributors and sole concessionaires be applied in the same way by all the members.
This increases importers confidence that they will
Brief History of Developments of

International Standards for Customs
Article VII of the GATT 1947 Set principles but little

guidance regarding their
practical application
1950 / 1953 JPN 1972 1979 / 1981 JPN 1981
Convention on the valuation of Goods Agreement on Implementation of

for Customs Purposes Article VII of the GATT Protocal
Brussels Defination of Value (BDV) GATT Customs Valuation Agreement
1994 / 1995 JPN 1995
National Positive Agreement on Implementation ofArticle VII of

Concept Concept the GATT 1991
WIO Customs Valuation Agreement (CVA)

receive the same treatment to avoid distortion of procedure is to consider application of the anti-
competition. Article VII of GATT before 1994 was dumping laws (Article VI of GATT 1994).
rather general and left each country with the widest The Structure of the WTO Valuation Agreement
discretion in its valuation system.
The full title of the WTO Agreement on Customs
A fair, uniform and neutral system that precludes Valuation is “Agreement on Implementation of
the use of arbitrary or fictitious customs values Article VII of the General Agreement on Tariffs and
Trade 1994 referred to as “the Agreement”.
Arbitrary or fictitious Customs values refers to
national systems in which Customs values have The structure of the Agreement is as follows:
been assigned to goods without regard to the factors
which govern the transaction between buyer and Preamble General Introductory Commentary
seller. Many countries have tendencies to protect PART I Rules on Customs Valuation (Article1–17)
domestic industry by uplifting the value of imported
PART II Administration, Consultations & Dispute
goods unfairly. The intention of precluding the use settlements (Article18-19)
of arbitrary or fictitious customs values is to ensure
PART III Special and differential treatment (Article
that the valuation of goods is based on the actual
20)
circumstances relating to each transaction.
PART IV Final provisions (Articles 21-24)
The basis for valuation should, to the greatest Annex I Interpretative Notes
extent possible be the Transaction value of the Annex II Technical Committee on Customs
goods Valuation.
Annex III Provisions for Developing Countries
Transaction value in its simplest form refers to, the
price actually paid or payable with any necessary PREAMBLE: GENERAL INTRODUCTORY
adjustments, agreed upon by the buyer and seller. COMMENTARY
The Agreement makes clear that the transaction
value method should be considered first whenever The Preamble gives the general introductory
possible. commentary of the Agreement and introduces
valuation methods in their hierarchical order of
Customs value should be based on simple and application. It also points out that the primary basis
equitable criteria consistent with commercial of the customs value is the Transaction value, which
practices means the price actually paid or payable for the
goods when sold for export, to take in to account
The customs value should be determined on the certain additional costs incurred by the buyer, that
basis of the examination of accurate commercial are not included in the basic price paid or payable.
documentation in line with generally accepted
commercial practices in the specific industry. Article 8 provides, inter alia, for adjustments to the
price actually paid or payable of specific elements
Valuation criteria should be of general application that pass from the buyer to the seller that may not
without distinction between sources of supply necessarily be in the form of money.
Members are required to apply the provisions of The commentary informs us that such elements
the Agreement uniformly to importations from all form part of the value for customs purposes if
countries without distinction between the goods indeed they are incurred by the buyer but are not
and exporters. included in the price actually paid or payable for the
imported goods.
Valuation procedures should not be used to
combat dumping The second paragraph states that if it is not possible
to determine the Transaction value of the goods,
If dumping is taking place, the Agreement should the Customs administration and the importer must
not be used as a counter measure by increasing the consult with a view to establishing the basis of value
customs value of the goods in question. The correct under Articles 2 and 3 (the transaction value of

identical and similar goods respectively). This is Article 2-Transaction value of identical goods
because one party may have information about the
customs value of identical or similar goods that may Where the customs value cannot be determined
not be available to the other party. under Article 1 (Transaction value method), the
Customs value shall be the transaction value of
The third paragraph introduces Article 5 and 6 the identical goods sold for export to the country
which describe the methods to be used if the value of importation and exported at or about the same
cannot be determined under the first three Articles. time as goods being valued and have been valued
The method described in Article 5 (the Deductive and captured in Customs database. These goods
value method) is derived from the price of imported are the same in all respects including physical
goods (identical or similar) which are sold after characteristics, quality and reputation.
importation to unrelated buyers in the country of
importation. Minor differences in appearance shall not preclude
goods otherwise conforming to the definition from
Method 5 is the “Computed value method” where being regarded as identical. The minor differences
the customs value is built up from the value of in appearance would include: color, size, label and
separate elements incorporated in the production pattern.
or manufacture of the goods being valued such as
parts, materials, profits, overheads etc. Article 3-Transaction value of similar goods
However, the use of this method may present Where the customs value cannot be determined
difficulties and that is why Article 4 gives the under Article 1 and 2 the Customs value shall be the
importer the option of reversing the order of transaction value of similar goods sold for export to
application of Article 5 and 6 in consultation with the country of importation and exported at or about
the Customs administration. the same time as goods being valued.
The Fourth paragraph introduces the fallback Similar goods are goods which, although not alike in
method of Article 7 for use in determining the all respect have like characteristics and component
value in the event that customs value cannot be materials which enable them to perform the same
determined under the previous methods. functions and to be commercially interchangeable.
The quality of the goods, their reputation and the
The Commentary as a preamble to the Agreement existence of a trade mark are among the factors to
makes a statement on behalf of members recognizing be considered in determining whether goods are
a series of fundamental objectives that under pin the similar and note that the goods must be produced in
Agreement itself. the same country as the goods being valued.
PART 1 – Rules on Customs Valuation Article 4- Application of Article 5& 6
Part 1 consists of 17articles which explain the criteria Provides for the rights of the importer to alter the
for determining the Customs value, adjustments, sequence of application of articles 5 and 6.
definitions, rights of importers and Customs
Administrations. Article 5- Deductive Value Method
Article 1-Transaction Value Method It provides for determination of the Customs Value
basing on the unit price at which the imported
The basis of Customs Value of imported goods shall goods or identical or similar goods are sold in the
be the “Transaction Value”. It is the price actually greatest aggregate quantity, at or about the time of
paid or payable for the goods when sold for export to importation of goods being valued, to persons who
the country of importation adjusted in accordance are not related to the person from whom they buy
to Article 8. such goods.

Article 6- Computed Value Method giving effect to this Agreement shall be published
in conformity with Article X of GATT 1994 by
Under this article, the Customs value is determined the country of importation which requires that
on the basis of the costs of the production of the a member should inform other members of the
goods being valued, plus an amount for profit and amendments made.
general expenses usually reflected in sales from the
country of exportation to the country of importation Article 13- Obligation to provide for a guarantee
of goods of the same class or kind. system
Article 7- Fallback Method The importer may be allowed to withdraw the

goods from customs if it is necessary to delay the
Provides for determination of the Customs value; final determination of customs value provided that
using reasonable means consistent with principles sufficient guarantee is provided.
and general provisions of the Agreement and on the
basis of data available in the country of importation. Article 14- Interpretative Notes to the articles
These notes are set out under annex 1 and the articles
Article 8- Adjustments to the transaction Value of the Agreement are to be read and applied in line
with these notes. Annex 1, as well as annex II and
This article provides for consideration of costs which III form an integral part of the Agreement.
have been incurred by the buyer but have not been
included in the price actually paid or payable. They Article 15-Definitions
include compulsory and optional Adjustment
This article provides definitions and interpretation
Article 9-Currency conversion of various technical words used in the Agreement.
If conversion of currency is necessary for the Article 16- Rights of importers to a written
determination of customs value, the rate of exchange explanation
to be used shall be that duly published by the
competent authorities of the country of importation This article explains the right of the importer to an
concerned. explanation in writing as to how customs value was
determined.
Article 10- Confidentiality
Article 17- Rights of Customs Administrations
All information which is provided on a confidential
basis shall be treated as strictly confidential by the This article explains the right of Customs
authorities concerned and shall not be disclosed administrations to satisfy themselves regarding the
without specific permission of the person issued truth or accuracy of any documents or declarations
except to the extent that it may be required to be presented to Customs for valuation purposes.
disclosed in the context of judicial proceedings.
PART II –Administration, Consultations and
Article 11-Importer’s right to appeal without Dispute Settlement
penalty
This part has two Articles.
The legislation of each member shall provide for the
right of appeal without penalty within the customs Articles 18-Institutions
administration or independent body up to the
judicial authority. This Article established the basic institutions of
the implementation of the Agreement; these are
Article 12- Obligation to publish laws WTO Committee on Customs Valuation and WCO
Technical Committee on Customs Valuation.
Laws, regulations, judicial decisions and
administrative rulings of general application

Article 19-Consultations and Dispute Settlement Annex I: Interpretative Notes
This article describes the procedure to be followed This annex provides the interpretative notes which
for consultations and dispute settlement. supplement provisions of Article 1 until Article 15.
In particular, they explain in more detail how the
PART III -Special and Differential Treatment valuation methods are to be applied. The notes
emphasize the use of the methods in hierarchical
This part has only one Article: order.
Article 20: Special and Differential Treatment Annex II–Technical Committee on Customs
Valuation (TCCV)
The Article provides for special provisions available
to developing countries. For example, developing This annex establishes the Technical Committee
countries were given a period of 5 years to delay on Customs Valuation under the auspices of WCO
implementation of provisions of the Agreement. and describes the role and the responsibility of
technical committee with a view to ensuring
PART IV–Final Provisions that at the technical level, there is uniformity in
interpretation and application of the Agreement.
This part has 4 Articles. The Agreement has two committees, the Committee
on Customs Valuation based in Geneva and the
Article 21- Reservations Technical Committee on Customs Valuation based
in Brussels. The former is concerned with the trade
This article states that the reservations may not be policy aspects of the Agreement while the latter
termed in respect of any of the provisions of the deals with the Customs aspects of it. The main role
Agreement without the consent of other members. of the TCCV is the examination of specific technical
problems arising in the day to day administration
Article 22- National legislation of the Customs Valuation system of Members and
to give advisory opinions on appropriate solutions
This article requires each member to domesticate based upon the facts presented.
the Agreement and inform the committee of any
changes in its laws. The EAC domesticated the law Technical Committee on
in 2005 vide section 122 read together with fourth Customs Valuation
schedule to the East African Community Customs INSTRUMENTS
Management Act, 2004.
COMMENTARIES STUDIES
Article 23- Review
ADVISORY
This article provides for Review of implementation OPINIONS
and operation of the Agreement by WTO Committee
on Customs Valuation annually. EXPLANATORY CASE
NOTES STUDIES
Article 24-Secretariat
Advisory opinions: These answer questions raised
This Article mandates WTO and WCO Secretariats
on the application of the Agreement to a particular
to service this Agreement.
set of facts.
Annexes
Commentaries: These provide comments on parts
of the Agreement and intended to supplement the
The purpose of the annexes is to explain further
text with additional guidance.
issues covered by the Articles and mainly the
interpretative notes to the Articles, the functions of
Explanatory Notes: These provide the Technical
the Technical Committee on Customs Valuation and
Committee’s views on questions of a general nature
the special provisions to the developing countries.
arising from the application of the Agreement.

Case Studies: These are based on a set of facts relating to or for the benefit of the seller for the imported
to a particular commercial transaction. They can goods.
be used to demonstrate a practical application of the
Agreement. (c) Country of importation
Studies: These set out the results of detailed studies According to Article 15, country of importation
of questions related to the Agreement. means country or customs territory of importation
where goods are being valued.
Annex III-Provisions for Developing countries
(d) Adjustments
This annex provides for:
Implies any cost elements incurred by the buyer but
(a) Five (5) years delay in the application of the not included in the price actually paid or payable for
provisions of the Agreement paragraph 1 of the imported goods being valued.
Article 20. Elements of Transaction Value Method
(b) Retention of minimum value on limited and
transitional basis. The concept of sale
(c) Reservation and reversal of the sequential
order at the request of importer provided In order to establish transaction value, there must be
under Article 4 of the Agreement. a sale of goods before importation. If the imported
(d) Reservation with respect to paragraph 2 of goods are not the subject of a sale, there can be
Article 5 of the Agreement (it allows use no transaction value under Article 1 of the “WTO
of goods that have gone further process in Agreement on Customs valuation”
determination of unit price at which the
greatest aggregate units are sold). Definition of sale
(e) Provision that those developing countries that
may have problems in the implementation of “The Agreement” contains no definition of “sale”. It
Article 1 of the Agreement insofar as it relates to merely indicates that a sale is a specific commercial
importations into their countries by sole agents, operation satisfying certain requirements and
sole distributors and sole concessionaires, shall conditions. It implies a transfer of ownership of the
request for a study of this problem with a view goods for some form of consideration.
to finding appropriate solutions.
Hence a sale necessarily requires an agreement
TRANSACTION VALUE METHOD between a seller, who agrees to transfer the
ownership of the goods in exchange for a specified
Introduction price, and a buyer, who agrees to purchase those
goods for a specified price.
Definitions
Concept of sale for export
(a) Transaction Value
The transaction value of the imported goods is based
It is the price actually paid or payable for the goods on the price for those goods when sold for export.
when sold for export to the country of importation Therefore, in order to establish a transaction value,
adjusted in accordance to Article 8. there must be a sale for export of goods being valued
before importation. If the imported goods are not
(b) Price actually paid or payable (PAPP) subject of a sale, transaction value cannot be applied
under Article 1.
Price actually paid means the price that has already
been paid at the time of valuation or importation.
Price payable means the price that has not been Furthermore, the sale in question must be one for
paid by the time of valuation or importation but has export to the country of importation. If the goods
already been agreed to be paid. Therefore, PAPP is have been sold for the domestic market in the country
the total payment made or to be made by the buyer of export or for export to a third country, those sales

cannot be used to establish the transaction value. (f) Goods imported for destruction
Transaction Value may not be applied on goods that
do not constitute a sale. Costs are usually incurred in connection with the
importation of waste or scrap for destruction where
Examples of cases where there is no sale the exporter pays the importer an amount for his/
her services. As the importer does not pay for
(a) Free of Charge Shipments the imported goods but rather, on the contrary, is
paid for accepting and destroying them, such an
Where a transfer of goods is made free of charge, importation is not considered as a sale. In such a
it cannot be regarded as a sale. This is the case, for case, an alternative method of valuation will be
example, with certain gifts, samples, prototypes and applied.
promotional items.
(g) Goods which are the subject of barter
(b) Consignment sales
Barter trade transactions, constitute a specific case in
Goods dispatched to the country of importation not as much as they are totally or partially expressed in
as a result of a sale, but with the intention that they non-monetary terms. They may involve an exchange
would be sold on the account of the supplier. The of goods of approximately equal value or, expressed
goods remain the property of the foreign supplier in monetary terms but not settled (or only partially
until after they are sold through a selling agent in settled) in monetary terms (e.g., merchandise barter
the domestic market. For example: goods imported which includes a payment to make up the balance).
on consignment for sale by auction. Hence it is necessary to examine, on a case by case
basis, whether the arrangements can be considered
(c) Goods imported by intermediaries a sale.
This relates to imported goods which, at the time Case study 1.

of Customs clearance, have not yet been sold but
are delivered by the foreign supplier to his/her 1. A consignment of televisions is imported
agent generally to be held in stock and then sold and presented for customs clearance. From
after importation for the account and the risk of examination of commercial documentation,
the foreign supplier. Since there is no transfer of you establish that both the buyer and seller are
ownership, there is no transaction value for these based in the country of importation.
goods at the time of importation.
2. Goods are imported by intermediaries who
(d) Goods imported by branches do not own the goods. They find buyers
after importation and arrange for payment
This involves a transaction between two separate to be effected to the seller in the country of
persons, the delivery of goods to a branch office exportation.
which does not have a separate legal status, is merely
a transfer of goods from one office to another. 3. The contract for goods being sold to an
Whether a transaction leading to the importation importer in your country states that payment
of goods by the branch office qualifies as a sale for can be made any time up to two months after
export depends on the role of the branch in the importation. You verify that at the time of
transaction. customs clearance, no payment has yet been
made.
(e) Goods supplied on loan
4. A consignment of sports bags, caps and key
If the goods are loaned by the exporter to an rings are imported as promotional material for
importer, this does not constitute a sale and an a large sports events to be held in your country.
alternative method will have to be considered. The pro-forma invoice states these items are
supplied free of charge. You also find a price
list giving the prices for the same items in case
the importer wishes to purchase more of the
same.

Required; Cash discounts
Determine whether the goods in the above scenarios These discounts are granted to buyers for payment
can be considered as having been sold for export, in in cash or payment made within a specified period
accordance with Article 1 of the Agreement? e.g., 5% for a payment made within 10 days of
receipt of the invoice and, for Customs purposes,
Concept of Price Actually Paid or Payable (PAPP) the discounts must be freely available to all buyers.
There should be a schedule to support the discount
The 4th schedule of EACCMA 2004 provides levels.
that the price actually paid or payable is the total
payment made, or to be made, by the buyer to or for When the transaction involves a cash discount, the
the benefit of the seller for the imported goods. price payable may be determined in various ways.
Thus, the invoice may include a statement specifying
It further clarifies this term by indicating that the the conditions for granting a cash discount, or the
PAPP includes all payments actually made or to be importer will inform Customs, on request, that
made as a condition of sale for the imported goods, he/she has accepted the conditions entitling him/
by the buyer to the seller or by the buyer to a third her to the discount and that the price payable is
party to satisfy an obligation of the seller. the discounted price. The documents submitted by
the importer should be based on quantifiable and
The term “paid” or “payable” means that if the goods verifiable data.
are paid for before valuation, the price paid will be
used as a basis for valuation. If not paid, then the Quantity discounts
price to be paid will be used. The payment needs
not necessarily take the form of a transfer of money. Quantity discounts are deductions from the price,
Payment may also be made by letter of credit or allowed according to the quantities purchased at
negotiable instruments. The following are some of once or over a period of time. Sellers often encourage
the examples in relation to payments; buyers to purchase in bulk as their costs are
proportionately reduced. For valuation purposes, it
Direct and Indirect Payments is the quantity which has determined the unit price
of the goods being valued when they were sold for
(a) Direct Payments export to the country of importation that is relevant.
In order to be accepted by Customs, discounts must
These are payments already made at the time of be freely available to all buyers. Quantity discounts
customs valuation of the imported goods. can be established prior or subsequent to the
importation of the goods.
(b) Indirect Payments
Conditions for use of Transaction Value
These are payments made by buyer whether in
whole or in part in the settlement of a debt owed by The transaction value will, however, only be
the seller. acceptable as the Customs value of the imported
goods, if the four conditions set out in paragraph 1
Discounts and Credits to Article 1 are fulfilled. These four conditions are
as follows:
Discounts are general reductions of the PAPP when
certain conditions put by the seller are met. Such (a) That there are no restrictions as to the
conditions may include prompt payment, quantity disposition or use of the goods by the buyer
bought etc. other than restrictions which:
(i) are imposed or required by law or by
The PAPP is established after deducting any the public authorities in the country of
legitimate (meaning supported by quantifiable and importation;
verifiable data) cash or quantity discounts. The (ii) limit the geographical area in which the
most common discounts include cash discount and goods may be resold
quantity discount. (iii) do not substantially affect the value of the
goods;

(b) that the sale or price is not subject to some Article 8 and costs incurred by the seller in sales in
condition or consideration for which a value which the seller and the buyer are not related.
cannot be determined with respect to the
goods being valued; The tests set forth in Article 1 paragraph 2 (b) are
(c) that no part of the proceeds of any subsequent to be used at the initiative of the importer and only
resale, disposal or use of the goods by the buyer for comparison purposes. Substitute values may
will accrue directly or indirectly to the seller, not be established under the provisions of Article 1
unless an appropriate adjustment can be made paragraph 2 (b).
in accordance with the provisions of Article 8;
(d) that the buyer and seller are not related, or Practical examples in each condition
where the buyer and seller are related, that the
transaction value is acceptable for customs In order to have a clear understanding of the
purposes under the provisions of paragraph 2 situation, we will now examine each of these
of Article 1. conditions.
In determining whether the transaction value is First Condition

acceptable the fact that the buyer and the seller are
related within the meaning of Article 15 shall not in The transaction value does not permit restrictions as
itself be grounds for regarding the transaction value to the disposition or use of the goods by the buyer. As
as unacceptable. In such a case, the circumstances a practical matter, where the purchaser is restricted
surrounding the sale shall be examined and the as to the disposition or use of the goods, the price of
transaction value shall be accepted provided that the those goods may well reflect the restriction. Where
relationship did not influence the price. such a restriction does exist, it would require the
rejection of transaction value.
If, in the light of information provided by the
importer or otherwise, the Customs administration Example
has grounds for considering that the relationship
influenced the price, it shall communicate its Where the buyer is precluded from reselling the
grounds to the importer and the importer shall be goods, that would be a restriction causing the
given a reasonable opportunity to respond. If the rejection of transaction value.
importer so requests, the communication of the
grounds shall be in writing (Article 1 (2) a).
In a sale between related persons, the transaction

value shall be accepted and the goods valued in
accordance with the provisions of Article 1 whenever
the importer demonstrates that such value closely
approximates to one of the following occurring at or
about the same time:
(i) the transaction value in sales to unrelated

buyers of identical or similar goods for export
to the same country of importation;
(ii) the customs value of identical or similar goods
as determined under the provisions of Article Where a machine is sold at a nominal price on the
5; condition that the importer must use it only for
(iii) the customs value of identical or similar goods charitable purposes, this would be a restriction
as determined under the provisions of Article causing the rejection of transaction value.
6;
There are, however, three exceptions to this rule. It
In applying the foregoing tests, due account shall be would permit those restrictions which:
taken of demonstrated differences in commercial
levels, quantity levels, the elements enumerated in a) Are imposed or required by law or by the public
authorities in the country of importation.

Examples of exceptions Where the seller requires that; the imported product
i) requirement to obtain a license or permit be sold to consumers exclusively through individual
prior to any resale or use; sales representatives who use a house-by-house sales
ii) requirement for certain types of labelling technique. This would not be a restriction as it does
or packaging; not substantially affect the price.
iii) requirement for testing or inspection
before release; Second Condition
Where the sale or price is subject to some condition

or consideration for which a value cannot be
determined with respect to the imported goods.
The above situation is further explained in

paragraph 1(b) of the Interpretative Notes through
the following three situations:
i) The seller establishes the price of the imported

goods on condition that the buyer will also buy
other goods in specified quantities.
b) Limitation of the geographical area in which

the goods may be resold.
Example
Where the seller imposes a territorial
restriction, such as regional distributorships,
requiring resale only in a given area (e.g.,
country, region, province, county, etc.)
Third Condition
c) Do not substantially affect the value of the
goods
The buyer and seller are not related, or where the
buyer and seller are related, that the transaction
In regards to this situation, there is no
value is acceptable for Customs purposes under the
precise definition or amount for the term
provisions of paragraph 2 of Article 1. In this case,
“substantially.” It must be decided on a case
the circumstances of sale are considered.
by case basis. In that regard, you may wish to
consider the following:
Case study 2:
i) The nature of the restriction.
ii) The nature of the goods.
1. Importer /buyer A in country Y purchased an
iii) The nature of the industry and its
industrial machine which is highly specialized
practices.
and incorporated advanced technology from
iv) Whether the monetary effect is
exporter/seller B in country X and imported it
commercially significant.
into Y.
Example
2. The industrial machine was imported into
Where the seller requires the buyer of
country Y on 25 April 2009.
automobiles not to sell or exhibit the
3. The commercial invoice shows the following
automobiles prior to a fixed date which
information:
represents the beginning of a model year.
➢ Industrial machine CIF US $ 30,000
This would not be a restriction as it does not
➢ Advance payment US $ 5,000
substantially affect the price.
➢ Discount US $ 500

➢ Early shipment bonus US $ 600 have been incurred by the buyer and have not been
➢ TOTAL US$ 25,100 included. Compulsory adjustments are provided for
4. Accounting record of A and the document under Article 8.1(a) as follows;
issued by a bank show that A made the advance
payment of US$ 5,000 to B on 20 March 2009. Commissions and packing
5. The contract of sale was concluded on 20
January 2009. The contract included the Article 8.1 (a) provides for addition of the following
following information (1) to (4) , and importer elements;
/buyer A provided additional information (5) I. Commissions and brokerage, except buying
and (6): commissions.
• The contract price of the industrial II. Cost of containers.
machine is US$ 30,000(CIF), which has to III. Cost of packing whether for labour or materials.
be paid within 30 days after the shipment.
• If an advance payment of 10% of the Assists
contract price or more is made before
the end of March 2009, the price of the Assists may be defined as the goods and services
machine is discounted by 10% of the supplied directly or indirectly by the buyer, for
amount of such advance payment. free of charge or at reduced cost to the seller or a
• The industrial machine is to be shipped to producer for use in connection with the production
A before the end of June 2009. and sale for export of the imported goods (Article
• In addition to the payment of the contract 8.1(b)
price, A will pay B the amount equivalent
to 2% of the contract price, if the industrial Categories of Assists are as follows;
machine is shipped to A before the end of
April 2009. a) Materials, components, parts and similar items
• A indicated at the time of customs incorporated in the imported goods e.g. raw
clearance that A has paid the cost materials, finished components;
according to the invoice. b) Tools, dies, moulds and similar items used
• There is no relationship within the in the production of the imported goods e.g.
meaning of Article 15.4 of the Agreement hand held drill,
between A and B. c) Materials consumed in the production of the
imported goods e.g. fuel, chemicals;
Adjustments under article 8 of agreement on d) Engineering, development, artwork, design
customs valuation work & plans and sketches undertaken
elsewhere other than in the country of
Definition of Adjustments importation and necessary for the production
of the imported goods.
These are costs incurred by the buyer but not
included in the price actually paid or payable for the Valuation of Assists
goods. The adjustment must be based on objective
and quantifiable data. There are compulsory and The cost of Assists should only be added to the value
optional adjustments. if;
i) not already included in the PAPP,
Compulsory inclusions/adjustments ii) supplied by the Buyer either free of charge or at
reduced cost,
Article 8.1 provides that in determining the customs iii) supplied directly or indirectly by the Buyer to
value under the provisions of Article 1, they shall the Seller,
be added to the price actually paid or payable for iv) For use in the production and sale for export of
the imported goods, where they are incurred by the imported goods.
buyer but are not included in the price actually paid
or payable ‘’. Therefore, Compulsory adjustments
are those costs which must be added to the price
actually paid or payable to the extent that they

Royalties and License fees Optional Adjustments
Article 8.1(c) of the Agreement requires that, when Unlike other adjustments required under Article
determining the customs value under the provisions 8.1(a) of the Agreement, the inclusion of the
of Article 1, there shall be added to the PAPP for the elements listed in Article 8.2 is optional. In framing
imported good: its national legislation, each Member state shall
provide for the inclusion in or exclusion from the
“Royalties and license fees related to the goods being customs value, in whole or in part, of the following:
valued that the buyer must pay, either directly or
indirectly, as a condition of sale of the goods being (a) The cost of transport of the imported goods to
valued to the extent that such royalties and license the port or place of importation;
fees are not included in the price actually paid or (b) loading, unloading and handling charges
payable”. associated with the transport of the imported
goods to the port or place of importation; and
Valuation of Royalty or License fees (c) The cost of insurance.
The Agreement imposes certain requirements on Case study 3.

whether a royalty will form part of the customs
value. Article 8.1(c) requires that the royalty covers Importer I in Country X imported 10,000 pcs of
payments made for the right to use, produce or sell men’s trousers from Supplier S in Country Y. He
a given product. declared to Customs a CIF value of 10,000 c.u , and
attached the following documents to support his
These charges are added to PAPP if they are; declaration;
i) Related to the goods being valued. 1. Commercial invoice No H 0250 dated 21.1.2010
ii) A condition of sale showing 10,000 pcs of trousers and total CIF of
iii) Not already included in the PAPP 10,000 c.u. It also shows the terms of payments
as 90 days after issue of Bill of lading.
Rights associated with royalties and licence 2. The packing list No HP0250 dated 21.1.2010
fees showing 1,000 packages each of 10 pcs.
3. Bill of lading No BOL 45645645 issued on
Categories of Royalty or License fees 23.1.2010 showing 1,000 packages of men’s
trousers; freight as arranged; Shipping Bill No.
i) Patents 13210 of 21.1.2010 and Commercial Invoice
ii) Trademarks No. HO250 dated 21.1.2010.
iii) Copyrights.
The consignment was cleared under transaction
Proceeds value method and on 20.2.2010 the Post Clearance
Audit team visited the importer and found additional
Article 8.1(d) provides that in determining the information on file for this particular importation.
customs value under the provisions of Article 1,
there shall be added to the PAPP for the imported • Shipping bill number IND 546 of 21.1.2010
goods, the value of any part of the proceeds of any showing total export value at 10,000 c.u FOB
subsequent resale, disposal or use of the imported • Freight debit note No. FR45 dated 20.1.2010 of
goods that accrues directly or indirectly to the seller. 3,000 c.u
Proceeds must not be confused with transfers of • An insurance receipt dated 20.1.2010 worth
dividends or other such payments made by the 130 c.u
buyer to the seller. Neither must they be confused • A Telegraphic Transfer remittance to supplier S
with royalties and licence fees which are payable on dated 07.1.2010
the re-sale price of the imported goods. Payments
falling within the definition of royalties and licence Required;
fees must be examined solely within the context of
Article 8.1 (c). 1. Establish the anomalies in the importer’s
declaration

2. Derive the correct customs value Transaction Value of Identical Goods Method
Case study 4. Where the customs value cannot be determined

under Transaction value method, there should
Importer/Buyer A in country I purchased 10 metric normally be a process of consultation between then
tons of chemical fertilizers from Manufacturer/ customs administration and the importer with
Seller B in country X and imported them into I. the view to arriving at the basis of value under the
provision of Article 2. The value of the identical
1. Both the commercial invoice and the contract goods must be previously accepted customs value
of sale show that the price of the imported for goods imported at or about the same time.
goods (10 metric ton of chemical fertilizers) is
USD 3,000 (ex-factory). In regard to identical goods, Article 15.2(c to e) also
2. The Letters of Credit (L/C) also shows that A provides further criteria in the selection of identical
paid B USD 3,000 for 10 metric ton of chemical goods:
fertilizers.
3. There is no relationship within the meaning of i. Goods will not be considered as identical
Article 15.4 of the CVA between A and B. if they incorporate or reflect engineering,
4. A negotiated and contracted with B through an development, artwork, design work, and plans
agent G. On behalf of A, G also arranged two and sketches which were undertaken in the
shipping contract of the goods; one is from B’s country of importation and thus no adjustment
factory to the port of country X and the other was made under Article 8.1(b) (iv);
is from the port of country X to country I. G ii. In order to be identical, the goods must also
paid a transportation company USD 110 for be produced in the same country as the goods
the former shipping contract. A paid directly being valued;
another transportation company USD 500 for iii. Identical goods produced by a different person
the latter shipping contract. shall be taken into account only where there
5. The buying agency agreement between A and are no identical goods produced by the same
G states that G acts for the account of A, G person as the goods being valued.
finds suppliers at the request of A, G negotiates
purchase contracts for A, G arranges shipments Requirements for transaction value of identical
of the goods purchased by A, and A pays G 3 % goods method.
of the contract price of the goods for services
performed by G. (I) Goods were sold for export to the country of
6. With regard to the above importation of importation and exported at or about the same
chemical fertilizers, A paid G USD 200 by time as the goods being valued.
telegraphic transfer (T/T). (ii) Goods are generally at the same commercial
level and substantially same quantity.
Required (iii) Where costs and charges under Article 8 (2),
that is cost of transport, insurance, loading,
Determine the customs value of the 10 metric ton of unloading and handling charges are included,
chemical fertilizer? appropriate adjustments should be made.
(iv) Where in comparison with existing database
Other Methods Of Valuation more than two values are found, the lowest of
such values should be considered.
If the Customs Value cannot be determined under
the Transaction Value Method, then it shall be
determined under the Transaction value of identical
goods method, Transaction value of similar goods
method, Deductive value method, Computed value
method or Fallback method.

Adjustments under transaction value of no such sales are found, a sale of similar goods that
identical goods method takes place under any one of the following three
conditions may be used.
In applying Method 2, Customs administration shall
wherever possible, use a sale of identical goods at (i) A sale at the same commercial level but in
the same commercial level and in substantially the different quantities
same quantities as the goods being valued. Where (ii) A sale at a different commercial level but in
no such sales are found, a sale of identical goods substantially the same quantities;
that takes place under anyone of the following three (iii) A sale at a different commercial level and in
conditions may be used. different quantities is exported at or about the
same time as the goods being valued.
(i) A sale at the same commercial level but in
different quantities Case study 5.
(ii) A sale at a different commercial level but
insubstantially the same quantities; An importer in your country has previously
(iii) A sale at a different commercial level and in purchased a shipment of metal bowls from an
different quantities is exported at or about the overseas exporter and the customs value was
same time as the goods being valued. determined at the time under Article 1.
The Transaction Value of Similar Goods Method The following week, the importer receives another
shipment of different bowls from the same exporter
Where the customs value cannot be determined free of charge for demonstration purposes.
under Article 1 and 2, there should normally be
a process of consultation between the customs This shipment which looks like the previous
administration and the importer with the view to shipment contains:
arriving at the basis of value under the provision
of Article 3. The value of the similar goods must 1. Bowls made from a slightly different alloy,
be a previously accepted customs value for goods 2. Bowls, red,
imported at or about the same time. 3. Bowls, metallic paint,
4. Bowls, green plastic,
Requirements for transaction value of similar 5. Bowls, red, but manufactured in another
goods method. overseas country.
a. Goods were sold for export to the country of Required

importation and exported at or about the same
time as the goods being valued. Determine the articles that would be used to arrive
b. Goods are generally at the same commercial at the value of above goods
level and substantially same quantity.
c. Where costs and charges under Article 8 (2) Deductive Value Method
that is cost of transport, insurance and loading,
unloading, handling charges are included, If the customs value of the imported goods cannot
appropriate adjustments should be made. be established under identical goods or similar
d. The existence of a trademark. goods method, then the deductive value method
e. Where in comparison with existing database should be considered. However, Article 4 provides
more than two values are found, the lowest of that the importer may request the trial of use of
such values should be considered. computed value method before deductive value
method. Should this fail then the basis of valuation
Adjustments under transaction value of similar will revert to deductive value method.
goods method
Under this method, the customs value shall be based
In applying Method 3, Customs administration on the unit price at which the imported goods or
shall wherever possible, use a sale of similar goods identical or similar imported goods are so sold in
at the same commercial level and substantially the the greatest aggregate quantity, at or about the time
same quantities as the goods being valued. Where of the importation of the goods being valued, to

persons who are not related to persons from whom the imported goods or identical or similar goods are
they buy such goods, subject to certain deductions. sold to an unrelated buyer in the greatest aggregate
quantity in the country of importation.
Terms relating to deductive value method
To determine the greatest aggregate quantity all sales
(a) At or about the time of sale/ importation at a given price are taken together and the sum of all
Any period but not exceeding 90 days from the the units of goods sold at that price is compared to
date of importation of the goods being valued the sum of all the units of goods sold at any other
or identical/ similar goods. price. The greatest number of units sold at one price
represents the greatest aggregate quantity.
(b) ‘’Unit price at which goods are sold in greatest
aggregate quantity’’ Selling points Unit Price Units Sold
Means the price at which the greatest number
A 100 60
of units is sold in sales to persons who are not
related to person to whom they buy such goods B 95 70
at the first commercial level after importation C 90 80
at which such sales take place. D 95 50
E 85 90
(c) General expenses
Include the direct and indirect cost of In the above illustration the greatest units sold 70
marketing the goods compared with the goods +50 = 120, therefore unit price at which the greatest
being valued. aggregate quantity was sold is 95.
Requirements for deductive value method Deductions made under the deductive value
method.
(a) Condition as imported (Article 5. 1.(a))
The goods selected for consideration should be Since the starting point in calculating deductive
sold in their condition as imported. However, value is the sales price in the country of importation,
repacking to remove the overseas export various deductions are necessary to reduce that
packing materials or simple repacking for the price to the relevant customs value:
domestic market would still leave the goods
in condition as imported. Natural changes a) Commissions usually paid or agreed to be
such as evaporation, shrinking, normal paid, the sum of profits and general expenses
weathering, etc., would also be considered as added in connection with sales must also be
same condition. Any type of manufacturing or deducted;
further processing, including assembly, would b) Where appropriate, the costs and charges
no longer render the goods as being in the referred to in Article 8.2 (Optional
same condition as imported. Adjustments)
c) The transport costs and corresponding
(b) At or about the time of sale/importation insurance are to be deducted from the price of
If no sale took place at or about the time of the goods when these costs are usually incurred
importation, it is permitted to use sales up to within the country of importation;
90 days of identical/similar goods to the goods d) The customs duties and other national taxes
being valued. payable in the country of importation by
reason of the importation or sale of the goods.
(c) The sales should not be to related persons. e) Value added by assembly or further processing,
The buyer and the seller in the importing when applicable.
country should not be related.
Application of Deductive Value Method Case study 6
The Customs value under deductive value method Goods are sold from a price list, which grants
will be determined on basis of the unit price at which favourable unit prices for purchase made in

increasingly larger quantities. computed value method is considered as alternative

method of valuation.
Quantity Range Unit Price Sales Number
The use of the computed value method will
1-10 100 10 sales of 5
generally be limited to those cases where the buyer
5 sales of 3 and the seller are related, and the producer is
11-25 95 5 sales of 11 prepared to supply to the authorities of the country
Over 25 90 1 sale of 30 of importation the necessary costing and to provide
1 sale of 50 facilities for any subsequent verification which may
be necessary.
The unit prices show the following aggregate totals:
100 c.u. - 65 units sold Computed value method is a rarely used method in
95 c.u. - 55 units sold determining the customs value. Under Computed
90 c.u. - 80 units sold Value Method, the basis of Customs Value is the
cost of production of the goods being valued, plus
Required an amount for profit and general expenses usually
reflected in the sales from the country of exportation
Determine the starting point for the valuation of the to the country of importation of goods of the same
above consignment class or kind.
Case study 7. General expenses
You have sales records for product X, which show These include the direct and indirect costs of
varying prices for varying quantities purchased. marketing the goods compared with the goods
being valued.
Your records show the following sales:
Generally Accepted Accounting Principles
Sales Quantity Unit Price (In USD)
(GAAP)
40 units 100
30 units 90 Refers to the recognized consensus or substantial
15 units 100 authoritative support, within a country at a
50 units 95 particular time as to which economic resources
25 units 105 and obligations should be recorded as assets and
35 units 90 liabilities.
5 units 100
“Goods of the same class or kind” in this context
Totals: means goods which fall within the group or range
of goods produced by a particular industry or sector
Unit Price Quantity Sold Total Quantity Sold and include the identical or similar goods.
90 30+35 65
95 50 50 Requirements for computed value method
100 40+15+5 60
(a) Examination of the costs of producing the
105 25 25
goods being valued and other information
which has to be obtained from outside the
Required
country of importation. However, in most
cases the producer of the goods will be outside
Determine the starting point for the valuation of the
the jurisdiction of the authorities of the country
above consignment.
of importation hence difficulty in verification.
(b) The computed value method will generally
The Computed Value Method
be limited to those cases where the buyer
and the seller are related, and the producer
If customs value cannot be based on any of the
is prepared to supply to the authorities of the
valuation methods under Article 1 to 5, then
country of importation with the necessary

cost information to facilitate any subsequent expenses are high, taken together, they may
verification which may be necessary. nevertheless equal the amount for profit and general
(c) Information supplied by the producer of the expenses usually reflected in the trade.
goods for the purposes of determining the
Customs value under Computed value method Case study 8.
may be verified in another country by the
authorities of the country of importation with A foreign manufacturer is introducing a new
the agreement of the producer and provided product in your country and in order to establish
they give sufficient advance notice to the a foothold in that market, he is willing to accept a
government of the country in question and the low profit margin of 2%. Because the product is
latter does not object to the investigation. new, the producer’s general expenses are unusually
(d) Where information other than that supplied high for the trade, 30% of the cost of materials and
by or on behalf of the producer is used for the fabrication. The usual profit and general expenses
purposes of determining a computed value, of the trade is 32% of the cost of materials and
the authorities of the importing country shall fabrication.
inform the importer, if the latter so requests,
of the source of such information, the data Required
used and the calculations based upon such
data, subject to the provisions of Article 10, Establish whether the producer’s profit and general
which prescribes the treatment of confidential expenses can be used to determine the Customs
information. value of this consignment.
(e) Under the computed value method, the
producer’s general expenses and profit equal Fallback Method
to that usually reflected in sales of goods
of the same class or kind as the goods being If the customs value of the imported goods cannot
valued which are made by the producers in be determined on the basis of Article 1 through 6
the country of exportation for export to the inclusive (method1-5), the customs value can be
country of importation. derived based on one of the five previous methods
reasonably adjusted as necessary. The determined
Elements to be considered under computed value should be based to greatest extent possible
value method on previously determined values only on the data
available in the country of importation.
These elements are outlined in Article 6 as being the
sum of the following: Terms related to the fallback method
(a) The cost or value of materials and fabrication This is a procedure rather than a method per se used
or other processing employed in producing the to determine customs value where the sequential
imported goods; application of the previous methods has failed.
(b) An amount for profit and general expenses
equal to that usually reflected in sales of Flexible application
goods of the same class or kind as the goods
being valued which are made by producers in These include flexibility of some of the previous
the country of exportation for export to the principles of the agreement and condition of the
country of importation; previous methods especially where such conditions
(c) The cost or value of all other expenses necessary have insignificant or no effect on the value. For
to reflect the valuation option chosen by the example, the 90 days under method 4 may be
Member under paragraph 2 of Article 8. extended for a longer reasonable period.
Treatment of profits and general expenses Requirements of fallback method
The amount for profit and general expenses shall The Agreement does not provide for a specific
be taken as a whole. If, in any particular case, valuation method but rather requires that the
the producer’s profit figure is low and his general Customs value be determined:

(a) Using reasonable means; Prohibited means of determining value under

(b) Consistent with the principles and general the fallback method
provisions of the Agreement;
(c) On the basis of data available in the country of Customs value shall not be determined under the
importation. provision of Article 7 on the basis of;
Rights of the importer under fallback method (a) Selling prices in the country of importation of
goods produced in such country (i.e. prices of
If the importer so requests, the importer shall goods manufactured in the importing country)
be informed in writing of the Customs value (b) A system which provides for the acceptance
determined under the provisions of this Article and for customs purposes of the higher of two
the method used to determine such value. alternative values (i.e.; the lowest should be
used);
Demonstration of flexible application under (c) The price of goods on the domestic market of
each method the country of exportation (i.e.; economies of
countries are different);
The methods of valuation to be employed under (d) The cost of production other than computed
Article 7, according to the Interpretative Notes to values which have been determined for
that Article, should be those laid down in Article identical or similar goods in accordance with
1 through 6, but a reasonable flexibility in the the provisions of Article 6 (i.e.; valuation must
application of those methods would be in conformity be arrived at on the basis of data available in
with the aims and provisions of Article 7. the country of importation);
(e) Price of the goods for export to a country other
Some examples of reasonable flexibility are as than the country of importation;
follows: (f) Minimum customs values;
(g) Arbitrary or fictitious values (this is aimed
Identical or similar goods at systems which do not base values on what
happens in the market place, as reflected in
(a) In the case of identical or similar goods, the actual prices or sales and in actual costs, reason
requirement that the goods must be exported of the importation or sale of the goods.
at or about the same time as the goods being
valued could be flexibly interpreted. CUSTOMS DOCUMENTATION
(b) In the case of identical or similar goods, the
requirement that the country of production Introduction
be the same as the country of the goods
being valued could be waived. For instance, Documentation plays an important role in the
identical or similar goods from Netherlands smooth movement of goods in International trade.
or Luxembourg could be used to determine Facilitation of legitimate trade largely depends on
the Customs value of the goods imported from proper documentation. It is therefore important for
Belgium. Customs and other interested parties to be conversant
with International Trade Documentation because
Deductive method it imparts them with the skills to authenticate the
relevant documents used in clearance of goods in
a. The requirement that the goods must have been international trade.
sold in the condition as imported in Article 5.1
(a) could be flexibly interpreted.
b. The 90-day rule in Article 5.1 (b) could be Definitions and interpretation
flexibly administered.
Document; refers to the presentation of data in
In regard to the above examples, it would also be digital or any other form for purposes of exchanging
possible to flexibly interpret Article 1 in conjunction information and communication.
with Article 8. The following would be such an
example of a flexible interpretation of Article 1.

Document check; This is the systematic analysis of should show the price per unit and also work
all supporting documents to a customs declaration through sub-totals and grand totals
in order to facilitate proper valuation of imported • Unit of Measure – The unit of measure
goods. upon which the price is based should also be
indicated i.e. pieces, kilograms, liters, meters,
Importance of Documents square meters etc.
• Terms of Delivery – Basically these are
Documents are useful for: incoterms which should also be very specific
• Clearance of goods • Terms of Payment – these are the agreed upon
• Identification of origin terms on how the importer will pay the supplier
• Provision of data for Statistics i.e. Telegraphic Transfer, cash, letters of Credit
• Post Clearance Audit (PCA) etc.
• Intelligence analysis • Time of shipment – This is usually indicated
• Serving as evidence in Commercial dispute on the Bill of lading and has a bearing on terms
settlement agreed upon in the Contract
• Collection of taxes and duties • Pre-carriage information – This is also
• Protection of community and the environment indicated on the Bill of lading and at times on
• Proof of ownership the Commercial invoice / Pro forma Invoice –
• Facilitation of legitimate trade and is very important for pre-carriage expenses
• Port of loading - This is indicated on the Bill of
Vital information Contained in Documents lading and at times on the Commercial invoice
/ Pro forma Invoice – and has a bearing on the
The following information runs through most of Freight payable
the documents involved in International Trade. It • Type of packaging – At a wider level we are
is important for Customs and other stakeholders to looking at either 20ft or 40 ft container (which
be conversant with this information that plays an can be a risk management pointer to the
important role in customs valuation; total taxes payable); but also at a micro level
it is important for the type of packing to be
• Document name – A document must have specified as either cartons, bales, bags, drums
a name to help distinguish it from other etc.
documents. e.g., a Commercial Invoice as • Marks & Numbers – These can be Container
opposed to a Pro forma Invoice Numbers, seal numbers or serial numbers
• Date & serial Number – A proper Document (in case of Machines) and they are useful in
must have a date and must also be serialized to identification.
help keep track while issuing these documents. • Vessel or Freight Number – This information
• Name of Supplier / Exporter – Clear and is usually found on the Bill of lading and is
detailed particulars of the Supplier or Exporter important in identifying the carrier
must be there (such particulars include the • Country of Origin – This is important
name, physical location, postal address, especially where preferential treatment is
telephone contacts & email) concerned, also origin has a bearing on the
• Name of Importer – Likewise clear and reputation of goods.
detailed particulars of the Importer must be • Harmonized System Code (HSC) – In some
indicated (name, physical location, postal cases the supplier specifies the HS codes and
address, telephone contacts & email) it is usually important to compare it with what
• Quantity & Description – The quantity has been declared; this is at times indicated on
supplied should be clearly indicated and proper the Bill of lading, Packing list and Commercial
description thereof invoice.
• Gross & Net weight – This is vital information • Special remarks – Especially on the Bill of
which points to the weight of the packaging lading should never be taken for granted –
and the actual products & this information is remarks like FCL/FCL, LCL/LCL, and RO/RO
very useful not only at physical examination have special meaning and implication. (Note
but also at valuation Meaning – FCL – full container load; LCL –
• Unit price & Total price – A proper low container load; RO/RO – Roll-on Roll-off)
Commercial invoice / Pro forma Invoice

Relationship between definition of transaction Categories of Customs Documents

value and documentation
Customs documents used in the clearance of goods
It is important for clearing agents to fully appreciate may be broadly categorized as commercial, transport,
the definition and interpretation of Transaction financial and regulatory. All the four categories of
Value and how the term relates to international documents are interlinked and interdependent
trade documentation. Definition of Transaction and should be presented to Customs and analysed
Value embeds most of the documents involved in simultaneously.
international trade.
Analysis of Documents
As indicated in Article1, Transaction Value is the
price actually paid or payable for the goods when All documents in international trade have unique
sold for export to the country of importation and features which distinguish them from the other. The
adjusted in accordance with the provisions of Article information contained in each document should be
8. well known, with particular reference to how the
documents looks, the information it contains and
When broken down into parts and critically its relationship with other documents.
analysed, several Documents are implied in the key
elements in this definition as follows: Below are different categories of documents used in
international trade emphasizing vital information.
Key elements of Reference documents
Transaction Value Commercial documents
Price actually Paid Commercial invoice,
Receipts, sales contract, (a) Purchase order
telegraphic transfer, form E
Price actually Payable Purchase order, pro forma This is a Commercial document used by the buyer/
invoice, price lists, credit importer in placing an order with the supplier/
agreement seller. Important information on this document for
For the goods Sales contract, packing customs purposes include the date when the order
list, certificate of analysis, was placed, the company that ordered, the quantity
specific permits ordered, suggested price to be paid or payable,
When sold Certificate of origin, signature and stamp of the ordering importer,
For export shipping bill or export entry preceding documents (e.g. Price quotation,
To the country of Purchase order, bill of catalogues, price list etc.).
importation adjusted lading, inland transport
in accordance with documents However, it must be noted that different importers
provisions of Article 8 use different means of placing their orders; some
have formal purchasing order forms, others order
Overview of International Documents by telephone while others order by email. Therefore,
it is important for customs to establish the method
Documentation is an essential tool in conducting of ordering that the importer used.
international trade and several documents are
used in carrying out business transactions. These (b) Pro forma Invoice
documents follow a clear sequence right from the
time an importer makes an order up to the time the This is the document which the seller issues in
goods are cleared from the Customs territory. Most response to the purchase order. It stipulates the
of these documents are mandatory for customs terms and conditions upon which the seller will
clearance purposes while others are optional sell the goods to the buyer. Some of the important
depending on the nature of goods being cleared and information contained in this document includes
the national legislation of country of Importation. date of issue, preceding documents description of
goods, unit price and total consignment price, the
terms of payment, terms of delivery, obligations of
each party and signatures of contracting parties.

(c) Sales Contract Transport Documents
This is a legal document that is enforceable by (a) Shipping Bill/ Export entry
parties demonstrating that the buyer and seller
agree on a sale of a particular good. It obliges the This is a Customs document that is generated/
seller to supply goods to the buyer and ensure issued by Customs of the exporting country. Vital
that the buyer acquires proprietary rights over the information contained in this document includes
goods. Important information on this document the Customs reference number of the exporting
for customs purposes include date of contract, country, the exporter, the consignee, the country
terms of sale, description of goods, unit price and of export, importing country, description of goods,
total contract price, terms of payments, seller’s bank incoterms, carrier used, total export Customs Value,
details, swift code and arbitration clause. Sometimes currency and preceding document (if any).
pro forma invoice serves the same role as sales
contract and the two may be used interchangeably. (b) Bill of Lading / Airway Bill
(d) Commercial Invoice This is an official document prepared by the carrier/

shipper duly accepting the goods for shipment and
This is a commercial document prepared by a seller it contains the following information; the serial
as indication of the final agreement on the sale of number, type of bill of lading / Airway Bill (master,
goods. It lists all items sold and presented to the buyer House, combined transport, non-negotiable),
for payment. It contains the following information; date and place of issue, date shipped on board,
date of issue, description of goods, quantity sold, name of the shipping line, name of the consignee,
the actual price paid or payable, terms of payment, name of the vessel, the items shipped, the quantity
terms of delivery, the serial number and the stamp and weight of goods, port of loading, the point of
of the issuing authority. This document is different destination, preceding documents (if any), pre-
from a pro-forma invoice in that whereas on the carriage information, signatures and stamps.
pro-forma invoice there is still room for negotiations
and is subject to change, the commercial invoice is (c) Freight Invoice
the final agreement between the parties.
This is a document issued by the shipper / carrier
(e) Receipt as acknowledgement on the agreed freight terms.
It contains the following information; date of issue,
This is a document that is issued in cases of cash serial number, name of carrier/ shipper, name of the
transactions certifying receipt of payment by the importer, amount paid, balance due if any, signature
seller. Vital information in this document include and stamp.
date of issue, serial number, payee, amount paid,
means of payment (i.e. cash or cheque), balance due (d) Freight debit note
if any, signature and stamp of the seller.
This is a document issued by the shipper/ carrier in
(f) Packing list the event that freight amount is due. It contains the
following information, date of issue, serial number,
This is a document that accompanies goods from name of carrier/shipper, name of the importer,
the exporting country and it gives a detailed amount to be paid and date due, signature and
breakdown of the way goods have been packed in stamp.
the consignment to facilitate both the importer and
customs authorities to easily verify the quantities and (e) Insurance certificate
description of the consignment. Vital information to
consider in this document includes, date and serial This is a legal document certifying that goods or
number, preceding document, goods description, products are insured against certain risks before
weights, quantities and dimensions and signatures. carriage. This can be marine insurance, marine and
road insurance, or all risks cover. This certificate
is issued as evidence that a certain insurance
policy has been undertaken to cover the goods.

It is also contractual in nature meaning that it is letter cannot be amended or cancelled without
a contract between the insurer and the insured. the consent of the issuing agency if any or the
Vital information on this document includes; serial beneficiary.
number; date of issued; the insurer, the insured, the
insured amount, the insurance policy, signature and Bank Guarantee:
stamps.
This refers to a formal security that lending
(f) Insurance Debit Note institutions ensures that the liabilities of a debtor are
met when due on behalf of the applicant in case he/
This is the document issued by the insurance she fails to settle them.
company in the event that insurance charges are
due. It contains the following information, serial A Bank guarantee and a Letter of credit are similar
number; date of issue, the insurer, the insured, the in many ways but they are two different things.
insured amount, the insurance policy, signature and Letters of credit ensure that a transaction proceeds
stamp. as planned, while Bank guarantees reduce the loss
if the transaction does not go as planned. A Bank
Financial Documents guarantee is used to insure a buyer or seller from
loss or damage due to non-performance by the other
a) Payment Documents party in the contract.
These are documents that provide evidence that Bank overdraft:

the goods in question have been paid for or will be
paid for depending on the agreed terms of payment. Literally a Bank overdraft is when someone is able
These documents include Telegraphic Transfer to spend more than what is actually in their bank
(TT), letters of credit (LC), Documentary credits, account; obviously the money does not belong to
Bank draft / bill of exchange and credit agreement them and will have to be paid back automatically
etc. Vital information on these documents varies once money goes into their account.
depending on agreed terms of payment.
It is a mutual agreement between the lending
Accordingly, there are several means of payment agencies to act on behalf of an applicant to settle
used in settlement of amount owed to the supplier/ his liabilities. It can be in form of a bond, cash or
exporter and this includes the following: loan usually on a maximum limit beyond which the
lending agency cannot exceed.
Telegraphic transfer:
Bank draft:
This refers to the payment of money by transferring
funds from the senders account to the beneficiary This is a banker’s cheque used as a negotiable
via an electric cable in form of an automated fund instrument instructing a foreign bank to pay on
transfer system which uses coded messages that are demand a fixed amount of money to a named
safe and convenient. beneficiary. It is also known as “cashier’s cheque”
and it applies when you need to pay somebody with
Letter of Credit: guaranteed funds. Bank drafts are more secure for
sellers because the funds are guaranteed by the bank
This is a formal document issued by financial that issued the draft. If a personal cheque is used
institutions acting on behalf of the applicant by there are possibilities of bouncing, however banks
settling payments for a transaction to the beneficiary. only issue bank Drafts after they have taken money
These letters of credit are of different types, the most from the applicant’s account – so the seller is assured
commonly used are; of being paid.
• Revocable letters of credit; this is a form of In International Trade, a Bank Draft is a negotiable
credit letter whose contents can be amended instrument issued by a local bank instructing a
without the consent of the beneficiary at the foreign bank to pay on demand, a fixed sum of
request and on the instruction of the applicant. money to a named beneficiary.
• Irrevocable letter of Credits; this form of credit

Bill of exchange: Vital information on this document includes; name

of fumigator, name of the exporter, descriptions of
This is an unconditional order issued by a person or goods fumigated, date of fumigation, the methods
Business when directing the recipient to pay a fixed and chemical components used in fumigation,
sum of money to a third party at a future date. The stamp and signature of the authorized institute.
future date may be either fixed or negotiable. A bill
of exchange must be in writing and signed. (d) Sanitary and Phytosanitary Certificate
Regulatory Documents This is a document that certifies that livestock and

plants imported or exported have been tested/
(a) Certificate of Origin inspected and vaccinated to make them free of
infectious diseases. Vital information on this
This is a customs document that certifies the origin document includes; name of vaccinating authority,
of goods. It also gives the criteria for conferring name of the exporter, details of livestock or plants
origin. This criterion may be wholly obtained, value vaccinated, date of vaccination, the methods and
added, change in tariff heading. This certificate chemical components used in vaccination, stamp
shows the preferential treatment of the goods being and signature of the authorized institute
considered.
Pointers to Authenticity in Documents
The Certificate of origin is usually issued either
by the national chamber of commerce or by the Submission of the above documents to support an
export promotion boards and may be countersigned import declaration in itself is not enough to clear the
by Customs authority. Vital information on this goods under transaction value method, it is always
document includes; date and serial numbers, important to verify if the availed documents are
preceding documents (especially the commercial authentic and the table below gives us some of the
invoice Number), description of goods, name of the pointers that can be applied in this regard: -
exporter, name of the importer, criteria of the goods,
issuing authority, signature and stamps of both the
issuing authority and exporter.
(b) Permit/certificate of analysis
This is a document issued by the manufacturer or

bureau of standards in various countries certifying
that the goods exported have under gone inspection
and are certified to be consumed. This analysis is
very crucial because apart from Customs collecting
revenues they also protect the environment
and human health. This certificate therefore
recommends that goods to be consumed are safe to
the environment or human health. Vital information
on this document includes serial number, the name
and address of the certifying authority, name of
inspector, the material compound of the item, the
description of goods analysed, the recommended
life span of the goods, date, signature and stamps of
issuing authority.
(c) Fumigation Certificate
This is a document that certifies that goods imported

or exported have been tested/ inspected and treated
to make them free from pests or fungus and qualify
to be consumed or used.

s/n Major Point Specific Aspects Remarks

1 Values Exceptionally high Declaration of exceptionally high values can be an indicator of
or low values intention to evade Internal / domestic taxes. On the other hand
exceptionally low values are an indicator of a direct evasion of
Customs taxes through under valuation
High insurance costs If the terms of delivery is CIF (Kampala or Kigali) & the breakdown
of inland insurance shows an exceptionally high figure – then there
is a likely-hood of under declaration of the CIF Mombasa
Disproportionate Likewise if the delivery terms is CIF (Kampala or Kigali) and the
Transport cost breakdown of inland freight shows an exceptionally high figure –
then there is a likelihood of under-declaration of the CIF Mombasa
2 Falsification on Erasers, rubbings, If such alterations are done on a document, then it has to be
documents and white-wash authenticated by counter signing and stamping. Anything not
counter-signed should be an indicator of a problem & should be
probed further
Scanned documents Presentation of scanned documents should be followed by a
look at the original documents; otherwise it is possible to change
information on a document while scanning.
Varying font Usually when a document is tampered with, there is a possibility of
the fonts inserted not matching with the original font and at times
even the formation of the numbers might be different – a keen eye
is able to detect such
3 Date & serial Date format There are two major date formats used in International Trade – the
number format British format which is day/month/year; and the American format
which is year/month/date. And these formats were adopted by the
colonies of these respective countries – so a forger who is not keen
enough will mix up these aspects
Serial numbers Serial numbers can be either manual or system generated, however
it is always important to keep track of serial numbers of major
suppliers by keeping copies of their invoices, since someone forging
might not be aware of the running serial number
4 Samples of Invoice set-up, logo, Companies have brands that identify them from others and these
previous & colour are also reflected in their documentation. By keeping copies of
documents from documents for major suppliers one is able to quickly recognize the
same supplier logos, company colours, and document formats of such companies
– so if someone presents a contrary document the difference is
easily noticed
5 Arithmetic Unit price versus Rarely do valuation officers work through the computations on the
accuracy sub totals versus presented invoices / packing lists, however it is not uncommon to
grand totals find inaccuracy in the computations once one works through.
6 Consistency in Weight The weight quoted on the packing list, pro-forma invoice,
information commercial invoice, and bill of lading – should always tally; any
discrepancy is a pointer to an anomaly
Goods description The description of goods should be uniform on the packing list, pro
- forma invoice, commercial invoice, and Sales contract
Value The quoted value should be uniform on the purchase order, pro
- forma invoice, commercial invoice, sales contract, and financial
documents
Ownership The ownership should be consistent on the bill of lading, transit
documents, shipping bill / export entry and the other supporting
documents

7 Disproportionate FOB Where the terms of delivery are FOB it is always necessary to watch
Incoterms out for the quoted Freight & Insurance charges as they are usually
under declared.
CIF Where the terms of delivery are CIF, it is always necessary to
work back-wards by deducting approximate freight charges and
insurance. The remaining FOB should give an indicator on the
authenticity of the declaration
Freight collect It is always necessary to cross-check the freight terms quoted on the
versus freight pre- bill of lading against those on the pro-forma invoice / commercial
paid invoice , sometimes there is a discrepancy
8 Unrealistic terms Cash payments Most Importers who declare terms of payment as cash should be
of payment put under further scrutiny as they are not usually giving the whole
truth & cash payments are the hardest to prove since there is no
third party involved
Unguaranteed credit Payment terms such as ‘payment after 180 days or 360 days’ which
are not supported by guarantees should always be treated with
suspicion. Likewise ‘payment at sight of documents’ means that
goods were dispatched before payment – so even in this case there
should be a guarantee.
9 Vague Suppliers name & If someone is giving vague or incomplete information in terms
information address, importers of addresses, weights, and description of goods it means they are
name & address, holding back some information and such declarations should be
description of scrutinized further.
goods, breakdown
of packages on the
packing list,
10 Incomplete At least all the mandatory documents as per the ‘check list’ must
documentation be attached for a consignment to be comfortably passed under
transaction value method; otherwise attaching only a commercial
invoice is not enough to pass the entry under transaction value
method
11 Signature & If a document has a provision for a signature & stamp then it
stamp should be signed and stamped – otherwise such a document cannot
be accepted.
Grounds for doubting the truth or accuracy of documentation, or other evidences which
the declared value supports his declaration, within the specified
time frame. The Customs Administration
If Customs has reasons to doubt the truth or communicates in writing their final decision
accuracy of the particulars of documents produced to reject the transaction value, explaining the
by traders in support of the declared value, then grounds for the decision. Relevant sections
Customs should communicate such doubt in line of the law should always be quoted to justify
with WTO Decision 6.1 which recommends the Customs rejection of a declared transaction
following steps: value. Decision 6.1 should be read together
with Article 17.
- The Customs administration shall communicate
in writing to the importer, through a specific Dispute settlement and rights of the importer
form, their grounds for doubting the truth
or accuracy of the particulars or documents If the importer is not satisfied with the decisions
produced and asks for further explanation, of Customs administration, he/she shall appeal as
including documents or other evidences. A provided in Article 11 of the Agreement. According
reasonable time frame should be given for a to Section 229 of the EACCMA 2004, a person
response. affected with the decision of the Commissioner or
- If the importer fails to provide adequate any other officer shall appeal to the Commissioner

for review of the decision. If the importer is still not bearing risks and costs relating to the goods
satisfied with the decision of the Commissioner, he/ once they are placed/ loaded onto the means of
she shall appeal to the tribunal or to judiciary. transport at the place of export;
• Arranging all Customs formalities for
However, the importer has the right to take delivery importing the goods
of the goods provided sufficient bond security
is executed as provided in Section 122(3) of the (b) CIF (Cost, Insurance and Freight)
EACCMA 2004 and Article 13 of the Agreement.
“Cost, Insurance and Freight” is used only for sea or
INCOTERMS inland waterway transport it means that the seller
delivers the goods on board the vessel or procures
The common terms of sale used in international their delivery. The risk of loss or damage to the goods
trade can be found in a reference book titled passes when the goods are on board the vessel. The
“INCOTERMS”, produced by the International seller must contract for and pay the costs and freight
Chamber of Commerce. The purpose of this book is necessary to bring the goods to the named port of
to provide a set of guidelines for the interpretation destination. The seller also contracts for insurance
of the most commonly used terms in international cover against the buyer’s risks of loss or damage to
trade. The aim is to avoid or reduce the uncertainties the goods during the carriage.
of different interpretations of such terms in different
countries. Seller’s obligations include:
• Contracting at his/her own expense for the
Incoterms define the responsibilities of buyers and carriage of the goods to their destination and
sellers for the delivery of goods and sales contracts. pay all freight charges up to that point;
They are the authoritative rules for determining • Obtaining at his/her own expense any required
how costs and risks are allocated to the parties. export licenses;
Incoterms rules are regularly incorporated into sales • Obtaining at his/ her own expense, freight
contracts worldwide and have become part of the insurance as agreed in the contract.
daily language of trade.
The buyer’s obligations include:
Common INCOTERMS/ Terms of Delivery • Bearing the cost of unloading the goods at the
place of importation, unless already included
(a) FOB (Free On Board) in the freight bill paid by the seller;
• Obtaining at his/her own expense any
“Free On Board” is used only for sea or in land import licenses and carrying out all Customs
waterway transport. It means that the seller delivers formalities (including payment of any Customs
the goods on board the vessel nominated by the duties) for the import of the goods to the place
buyer at the named port of shipment or procures of importation.
the goods already so delivered. The risk of loss or
damage to the goods passes when the goods are on (c) CFR (Cost and Freight) Also known as “C + F”
board the vessel, and the buyer bears all costs from
that moment onwards. “Cost and Freight” is used for sea and inland
waterway transport. It means that the seller delivers
The seller’s obligations include: the goods on board the vessel or procures their
• Delivering the goods on board the vessel delivery. The risk of loss or damage to the goods
named by the buyer at the place of export; passes when the goods are on board the vessel. The
obtaining any required export licenses; seller must contract for and pay the cost and freight
• Bearing risks and costs relating to the goods necessary to bring the goods to the named port of
until they are placed/ loaded on to the means destination. The liabilities of the seller and buyer are
of transport at the place of export. the same as under C.I.F. except that neither party
has an obligation to provide insurance. However,
The buyer’s obligations include: the buyer may then choose whether he/she obtains
• Contracting at his/her own expense for the insurance cover.
carriage of the goods from the place of export;

(d) EXW (Ex-works) also known as “Ex-factory” handling charges may vary according to the practice
of the port.
“Ex-works” may be used irrespective of the mode
of transport selected and may also be used where (g) CPT (Carriage Paid To);
more than one mode of transport is employed. It is
suitable for domestic trade. May be used irrespective of the mode of transport
selected and may also be used where more than one
It means that the seller delivers when it places the mode of transport is employed. It means that the
goods at the disposal of the buyer at the seller’s seller delivers the goods to the carrier or any other
premises or at another named place (i.e. works, person nominated by the seller at an agreed place
factory, warehouse, etc.). The seller does not need (if any such place is agreed between the parties) and
to load the goods on any collecting vehicle, nor does that the seller must contract for and pay the costs of
it need to clear the goods for export where such carriage necessary to bring the goods to the named
clearance is applicable. The seller’s obligations cease place of destination. The seller fulfils its obligation
when the goods leave the works/factory premises. to deliver when it hands the goods over to the
Title and risk pass to the buyer including payment of carrier and not when the goods reach the place of
all transportation and insurance cost from the seller’s destination.
door. It is used for any mode of transportation.
(h) CIP (Carriage and Insurance Paid To);
(e) FCA (Free Carrier)
Is used irrespective of the mode of transport selected
May be used irrespective of the mode of transport and may also be used where more than one mode
selected and may also be used where more than of transport is employed. It means that the seller
one mode of transport is employed. It means delivers the goods to the carrier or another person
that the seller delivers the goods to the carrier or nominated by the seller at an agreed place (if any
another person nominated by the buyer at the such place is agreed between the two parties) and
seller’s premises or another place. The parties are that the seller must contract for and pay the cost of
well advised to specify as clear as possible the point carriage necessary to bring the goods to the named
within the named place of delivery, as the risk passes place of destination.
to the buyer at that point.
The seller also contracts for insurance cover against
In this type of transaction, the seller is responsible the buyer’s risk of loss or damage to the goods during
for arranging transportation, but he is acting at the the carriage. The seller fulfils its obligation to deliver
risk and the expense of the buyer. Whereas in FOB when it hands the goods over to the carrier and not
the freight forwarder or carrier is the choice of the when the goods reach the place of destination.
buyer, in FCA the seller chooses and works with
the freight forwarder or the carrier. “Delivery” is (I) DAT (Delivered at Terminal);
accomplished at a predetermined port or destination
point and the buyer is responsible for Insurance. Title, risk and responsibility cost pass to seller to place
the goods at the buyer’s disposal after unloading at
(f) FAS (Free Alongside Ship); the named terminal at port or place of destination.
It is used for any mode of transportation. The seller
Means that the seller delivers when the goods are delivers when the goods, once unloaded from the
placed alongside the vessel (i.e. on a quarry or arriving means of transport, are placed at the buyer’s
barge) nominated by the buyer at the named port disposal at a named terminal at the named port
of shipment. The risk of loss or damage of the goods or place of destination. “Terminal” includes any
passes when the goods are alongside the ship and place, whether covered or not, such as a warehouse,
the buyer bears all costs from that moment onwards. container yard or road, rail or air cargo terminal.
The seller bears all risks involved in bringing the
The parties are well advised to specify as clear as goods to and unloading them at the terminal at the
possible the loading point at the named port of named port or place of destination.
shipment, as the costs and risks to that point are for
the account of the seller and this cost and associated

(J) DAP (Delivered at Place); Required
Title, risk and responsibility cost pass to seller Advise the importer on how to value the
to place the goods at the buyer’s disposal on the consignment.
delivering carrier ready for unloading at the named
place of destination. The seller bears all risks
involved in bringing the goods to the named place.
(K) DDP (Delivered Duty Paid);
Is used irrespective of the mode of transport

selected and is also used where more than one mode
of transport is employed. It means that the seller
delivers the goods when the goods are placed at
the disposal of the buyer, cleared for import on the
arriving means of transport ready for unloading at
the named place of destination. The seller bears all
the costs and the risks involved in bringing the goods
to the place of destination and has an obligation to
clear goods not only for export but also for import,
to pay any duties for both export and import and
carry out all customs formalities. DDP represents
the maximum obligation for the seller.
The parties are well advised to specify as clearly

as possible the point within the agreed place of
destination, as the costs and risks to that point are
for the account of the seller.
Conclusion
Proper analysis of international trade documents is

an integral part of Customs clearance. If sufficient
documents are availed in support of the declaration,
proper taxes and duties coupled with trade
facilitation will be realized.
However, if there are insufficient or inconsistent

documents, this will cause delays, likewise wrong
taxes, duties and statistics will be collected.
Case study 9.
Importer Y is a cement dealer, who imports from

ABC Cement Suppliers in Country X to his stores
in country Z. Y has already paid the supplier
for the goods and is seeking advice from you on
what documents will be required in country Y for
Customs declaration purposes.

UNIT 2:
CUSTOMS
TARIFF
CLASSIFICATION

UNIT 2: CUSTOMS TARIFF CLASSIFICATION at the two Conferences held in Brussels in 1910 and
1913, a unified International Schedule was drawn up
INTRODUCTION for the first time in 1931 with five main calories and
185 items. This was exclusively for Trade statistics
This unit intends to equip trainees with ability and was not utilised towards the unification of tariff
to classify goods in the international trade in classification among individual countries.
accordance with the Harmonized Commodity
Description and Coding Systems (Harmonized In May 1927, progress to harmonise tariff
System) classification was seen. The World Economic
Conference held by the League of Nations took up
Specific Objective the discussion on wide-ranging issues concerning
tariffs, treaties of commerce and other matters
At the end of this Unit, trainees shall be able to; related to commerce. Among this topic was
unification of a system of tariff nomenclature. The
i. Define basic terminologies in tariff classification Conference recommended to the Council of the
ii. Outline the evolution of Customs League of Nations the formulation of a systematic
Nomenclature Customs nomenclature citing it as a means of
iii. Identify the structure of Harmonized System. ensuring equity in the application of tariffs, ease in
iv. Apply the six General Interpretative Rules collection of trade statistics, removal of a subject for
(GIR) of the Harmonized System disputes as its motives.
HISTORICAL BACKGROUND On the basis of the above recommendation, the

League of Nations established a sub-committee
Harmonization of rules relating to tariff of experts for the unification of Customs Tariff
Nomenclature which in 1931 completed a draft
When imposing tariffs, the customs authorities of Customs Nomenclature (known as Geneva
a country determine the applicable tariff rate for a Nomenclature) comprising 21 Sections, arranged in
given product by first identifying the item in the tariff 86 Chapters and containing 991 four-digit Headings.
schedule under which a product is classified (Tariff
Classification), then determining the product value In 1937, the Geneva Nomenclature was revised upon
as the basis of assessment for products to which ad consideration of the opinions of the government of
valorem tariff rates apply, and finally identifying the each Member State. A portion of it was adopted by
product’s country of origin (Rules of Origin). the European Member States. The movement to
expand its usage was stopped upon the outbreak of
Moves toward international harmonization of World War II.
tariff classification prior to world war II.
Brussels Tariff Nomenclature (BTN) and
In 1853, an International Congress held in Brussels Customs Cooperation Council (CCC)
debated the necessity of unifying Customs schedule
from the awareness that differences among countries In November 1947 after the end of World War II,
tariff classification had led to inconsistencies in the European Customs Study group was created
Trade statistics. to examine the possibility of other Member States
forming a Customs Union in Europe. In 1948, a
In 1989, the International Trade and Industry Committee was set up with the participation of
congress held in Paris adopted a resolution that experts from other Countries. This Committee
uniform nomenclature Tariff and Trade statistics formulated a new tariff schedule (BTN) based on
should be employed. Geneva Nomenclature.
In 1906, the second International Congress After the founding of CCC, the BTN was renamed
of Chambers and Commercial and Industrial Customs Cooperation Council Nomenclature
Association held in Milan, issued a recommendation (CCCN). In 1950, the Convention establishing the
calling for unification of goods classification in CCC was signed (CCC Convention) with a goal
customs tariffs. On the basis of resolutions adopted of harmonizing and unifying monitoring these

outcomes and other Customs related techniques. (partial application) for five years or more upon
CCC Convention entered into force in 1952. request.
In 1955 BTN was revised. In 1959 BTN Convention In 1994, the Customs Cooperation Council (CCC)
entered into force. BTN classified goods in 21 was renamed World Customs Organization (WCO).
Sections, 99 Chapter, 1097 Headings. Creation
of the subheading was left to the discretion of Definition of terms used in classification
the contracting party. A contracting party is not
supposed to change the Notes stipulating the The following are some of the terminologies that are
principles of classification. used in the Classification of goods in tariff.
The inaugural contracting parties to the Nomenclature: A systematic naming, or

Nomenclature Convention were limited to the enumerating of all goods found in international trade
countries in Europe and Turkey. United States of along with international rules and interpretations.
America did not sign the BTN.
Customs Tariff: A systematic classification of
Harmonized Commodity Description and goods entering the international trade for National
Coding System (Harmonized System) interests together with rates of duties.
In 1970, the Council Session established a study Classification: A process of arriving at a particular
group to deliberate on the development of a new heading or sub heading of a commodity entering the
uniform Tariff Nomenclature aimed at including international trade.
the United States and Canada participation in
the uniform Tariff nomenclature. In 1973, basing International Trade: An exchange of goods between
on the report submitted by the Study Group, the two or more countries.
CCC mandated the Session Council to draw up a
Harmonized Commodity Description and Coding Internal Tariff: This is the rate of tax in respect of all
System (Harmonized System). BTN four digit goods tradable within the Community.
classifications were used as the foundation by
refining this four digit code into five and six digit Common External Tariff: Rate of tax in respect of
code. all goods imported into the Community.
On June 14, 1983, the Harmonized System was Inter alia: Among other things.
implemented after a decade’s work. The CCC adopted
the International Convention on the Harmonized Prima facie: At first sight, on the face of it.
System and opened it for signature. On January 1,
1988, the Harmonized System convention entered Mutatis mutandis: Appropriate changes having
in to force and was accepted by numerous Countries been made.
including the United States. Harmonized System is
in use in more than 200 countries and economic Importance of Harmonized System
unions.
All goods in the international trade should be
Harmonized System comprises 6 digit numerical classified uniformly and consistently according to
codes. all contracting parties must apply the General a common international nomenclature. This avoids
Rules of Interpretation of the Harmonized System, reclassifying goods as they are moved from one
the terms of heading and all Section, Chapter, or country to another. Customs terminology can be
Subheading Notes without modification to the scope standardized to make it easier for import and export
of the Section, Chapter, heading or subheading upto companies, manufacturers, shippers and Customs
the HS code. A Contracting party must publicly administrations. It also helps in trade negotiations.
disclose its import and export trade statistics in For example East African Partner States always
accordance with the 6 digit codes of the Harmonized submit lists of raw materials for extension of Duty
System. A Developing Country is permitted to delay remission.
the application of some or all of the subheadings

Trade figures conform to a uniform standard and • As a basis for trade negotiations
can be compared internationally. For example, It is easy for countries to have negotiations as all
analysis of exportation and importation coffee can goods under international trade are classified
be done by targeting the Harmonized System Code under the Harmonized System.
for coffee .This facilitates analysis and comparisons
of international trade. • As a basis for Transport Tariffs and Statistics
The rates for transportation of controlled
Users of Harmonized System chemicals are not the same as the ones for the
normal goods.
If a Commodity description System is suitable
for many types of operation, it becomes useful. • As a basis for the monitoring of controlled
Harmonized Commodity Description and Coding goods
System (Harmonized System Nomenclature) is The monitoring of importation or exportation
designed as a multi-purpose tool and is therefore of narcotics, chemical weapons, ozone layer
used by; depleting substances, and endangered species
can be done by targeting their Harmonized
• Governments System Codes.
• International Organizations
• Importers and Exporters As a vital element of Customs control and
• Manufacturers procedures, including risk assessment,
• Traders information technology and compliance.
• Shipping agents
• Transporters The Tariff structure of the EAC-CU
• Port Authorities
• Statisticians The EAC-CU tariff is composed of two regimes:
Uses of Harmonized System • The Internal Tariffs

• The Common External Tariff (CET)
Among the most important uses of the Harmonized
System are the following: Internal Tariff:
• A basis for Customs Tariffs This is the rate of tax in respect of all goods
Customs duties are levied at such rates as are originating and tradable within the Community.
specified in the Customs tariff laid down in the
East African Community Common External Common External Tariff:
Tariff (EAC-CET). To apply the correct rate of
duty, it is necessary to determine the correct Rate of tax in respect of all goods imported into the
Subheading of the Harmonized System under Community. There are three bands:
which the goods fall.
• 0% is the minimum rate - for raw materials and
• As a basis for the collection of International capital goods.
Trade Statistics. • 10% is the middle rate - for intermediate
Harmonized System Convention stipulates products and spare parts.
that contracting parties should declare • 25% is maximum rate - for finished products.
imported items using the Harmonized System
Codes (Subheading level) such that if analysis Sensitive list:
is required, the Harmonized System Code is
entered or used and data on a particular item Sensitive goods measures beyond CET apply on
of interest is displayed. some goods e.g.
• As a basis for Rules of Origin i) Milk – 60%

The Harmonized System code is used in one of ii) Wheat grain – 35%
the two criteria of Rules of Origin, Change in iii) Wheat flour – 60%
Tariff Heading (CTH). iv) Maize – 50%

v) Sugar – 100% 1. Raw materials/natural goods

vi) Worn Clothing - 50% or USD 0.75/kg 2. Un-worked products
vii) Rice -75% or USD 200/MT 3. Semi-finished products
viii) Portland Cement – 55% 4. Finished products
ix) Kanga, Kikoi and Kitenge – 50%
x) Table and bed lining of cotton ARRANGEMENT OF HARMONIZED SYSTEM
xi) Jute Bags INTO SECTIONS
xii) Primary cells
The Harmonized System comprises of 21 Sections
The list of sensitive items may vary as the list is either which cover all the commodities of international
reduced or increased according to the needs of the trade. The Section numbers are written in Roman
member country. numerals such as I, II, III.
STRUCTURE OF HARMONIZED SYSTEM The following are rough groupings of Sections:
General objective Sections I to IV referred to as the Agricultural or

food Sections
At the end of this unit, the participants will be able
to explain how the Nomenclature is arranged. Sections V to VII referred to as Chemical Sections
Specific Objectives; Section VIII refer to raw hides and Skins, Fur skins
and articles thereof
At the end of this topic trainees will be able to:
Section IX to X refer to Articles of wood and wood
i) Identify the structure of the Harmonized fibres
System Nomenclature;
ii) Identify the principles used in the arrangement Sections XI to XII as Textile Sections
of Harmonised System;
iii) Explain the importance of Notes in the Section XIII refer to Articles of Stones, Cement,
Harmonized System. Ceramic, Glass
Introduction Section XIV refer to precious metals and precious

stones and articles thereof
The structure of the Harmonized System (HS)
Nomenclature is comprised of 21 Sections and 99 Section XV as the Metal Section
Chapters. Chapter 77 is reserved for future use and
Chapters 98 to 99 are reserved for special uses by Section XVI as Machinery Section
the contracting parties. For example, Kenya uses
Chapter 99 for communication services, while Section XVII Transport Equipment
Canada uses one Chapter 98 for goods declared by
returning residents. There are 1,244 Headings and Section XVIII Instruments and apparatus
5,212 Subheadings in the Harmonized System (HS
2012). Section XIX Arms and Ammunitions
The structure of the Harmonised System comprises Section XX Miscellaneous Articles

of
• 21 Sections Section XXI Work of Arts and Antiques
• 99 Chapters
• 1244 Headings
• 5212 Sub-headings
• Notes
Goods in the Harmonized System are generally
arranged based on industrial sectors in their degree
of manufacturing processing stages as shown below:

Classification examples: 5. Rice in the Husk (10.06)

6. Ground Ginger (09.10)
Agricultural products 7. Crushed Vanilla (09.05)
The first 24 Chapters deal with agricultural products Animal or vegetable fats and oils
in the broadest sense (Sections I to IV). Section I
(Chapters 1 to 5) covers Live animals and animals’ Section III consists of a single Chapter (Chapter
products (meat, fish, dairy produce, eggs, honey, 15) covering animal or vegetable fats and oils and
other edible products, and inedible products); products derived thereof (prepared fats, waxes)
excluding, however, certain oils and fats (Chapter
15) as well as hides, skins, fur skins and articles Self-testing questions
thereof (Section VIII). Classify the following at 6 digit level
1. Groundnut oil (virgin)
Self-testing questions. 2. Refined Sunflower oil
Classify the following articles at 4 digits level 3. Palm kernel
1. Animals of travelling circuses. 4. Margarine
2. Live Whale
3. Fresh Meat for Dolphin Answers
4. Natural butter derived from milk 1. Groundnut oil (1508.90)
2. Refined Sunflower oil (1512.19)
Answers 3. Crude Palm kernel oil (1513.21)
1. Animals of travelling circuses (95.08). 4. Margarine (1517.90)
2. Live Whale (01.06)
3. Fresh Meat for Dolphin (02.08) Beverages, Spirits, Vinegar and Tobbacco.....
4. Natural butter derived from milk (04.05)
Section IV (Chapters 16 to 24) covers beverages,
Vegetable products spirits, vinegar and tobacco, together with products
of the food industries not covered by previous
Section II (Chapters 6 to 14) covers vegetable Chapters.
products, whether or not edible (plants, seeds,
vegetables, fruit, cereals, flours, straw, plaiting Self-testing questions
materials,), but excludes certain oils and fats Classify the following at 6 digit level;
(Chapter 15) and wood (Chapter 44). With certain 1. Dried Goat meat
exceptions, the products of the first two Sections 2. Chemical pure sugar
cannot be processed beyond a certain stage. 3. Fresh mango juice (500ml)
For example, prepared or preserved products 4. Tomato sauce in 200ml plastic packaging
(particularly foodstuffs) fall in Section IV. 5. Soya beans oilcake for animal feed
Self-testing questions Answers

Classify the following articles at 4 digit level 1. Dried Goat meat (0210.99)
1. Fresh mushrooms 2. Chemical pure sugar (2940.00)
2. Dried pears 3. Fresh mango juice (500ml) (2009.89)
3. Cinnamon powder 4. Tomato sauce in 200ml plastic packaging
4. Live Bamboo tree (2103.20)
5. Rice in the Husk 5. Soya beans oil-cake for animal feed (2304.00)
6. Ground Ginger
7. Crushed Vanilla
Answers
1. Fresh mushrooms (07.09)
2. Dried pears (08.08)
3. Cinnamon powder (09.06)
4. Live Bamboo tree (06.02)

Mineral and chemical products Answers

1. Cement for filling the teeth (3006.40)
Section V (Chapters 25, 26 and 27) is devoted to 2. A complete first Aid kit (3006.50)
mineral products. 3. Medicated shampoo designed for the treatment
of dandruff (3305.10)
Self-testing questions 4. Toothpaste (3306.10)
Classify the following articles at 4 Digit level
1. Pure sodium chloride Plastics and rubber articles thereof
2. Tailors Chalk
3. Quartzite’s pebbles for road metalling Section VII covers particularly two important
4. Is a table salt, slightly iodized, in order to groups of products, namely plastics and articles
remain dry classified in Chapter 25? thereof (Chapter 39) and rubber and articles thereof
(Chapter 40).
Answers
1. Pure sodium chloride (28.27) Self – testing questions:
2. Tailors Chalk (96.09) Classify the following up to 8-digit code.
3. Quartzite’s pebbles for road metalling (25.17) 1. Surgical gloves of rubber for referral hospital
4. Is a table salt, slightly iodized, in order to 2. Pneumatic automobile tyres for lorry(rim size
remain dry classified in Chapter 25? (25.01) 20)
a) if new
Chemical products b) If retreated or used
Section VI covers chemical and chemical products; Answers

separate chemically defined compounds generally 1. Surgical gloves of rubber for referral hospital
are dealt with in Chapters 28 (inorganic chemicals) (4015.11.00).
and 29 (organic chemicals) 2. Pneumatic automobile tyres for lorry (rim size
20)
Self-testing questions a) If new (4011.20.20)
Classify the following at 4 Digit level: b) If retreated or used (4012.12.00)
1. Sodium bromide
2. Magnesium sulphate Animal products of Leather or Fur skin
3. Sulphides
4. Carbonates Section VIII covers certain animal products: hides
and skins (Chapter 41) articles of leather or animal
Answers gut (Chapter 42), and fur skins, together with
1. Sodium bromide (28.27) artificial fur (Chapter 43). It should be noted that
2. Magnesium sulphate (28.33) headings 42.01 and 42.02 also cover certain articles
3. Sulphides (28.30) other than of leather.
4. Carbonates (28.36)
Self – testing questions:
Products of the chemical industries Classify the following up to 8-digit code.
1. Plastic sports bags
Chapters 30 to 38 cover the other products of the 2. Wooden suitcase
chemical industries (pharmaceutical products, 3. Canvas shopping bag
fertilizers, soap, cosmetics, paints, explosives,) 4. Pure leather briefcase
Self – testing questions;

Classify the following up to 6-digit code. Answers
1. Cement for filling the teeth 1. Plastic sports bags (4202.92.00)
2. A complete first Aid kit 2. Wooden case (4415.10.00)
3. Medicated shampoo (500ml) designed for the 3. Textile shopping bag (4202.92.00)
treatment of dandruff 4. Pure leather handbag (4202.21.00)
4. Colgate Toothpaste 100g

Wood and articles of wood, plaiting material 59) and knitted or crocheted fabrics (Chapter 60).
Section IX is devoted to an important group of Chapters 61 and 62 deal respectively with knitted
vegetable products, namely wood and articles of or crocheted articles of apparel and clothing
wood (Chapter 44) cork and articles of cork (Chapter accessories, and other articles of apparel and
45), and manufactures of plaiting materials, together clothing accessories. Chapter 63 is set aside for other
with basket-ware and wicker-work (Chapter 46). made up textile articles, together with certain sets
However, some manufactures are classified in other and worn textile articles and rags.
Chapters, for example furniture (Chapter 94).
Self – testing questions;
Wood pulp, paper and paper articles Classify the following up to 8-digit code.
1. Typewriter ribbon
Another important group of products of essentially 2. Knitted brassier of cotton
vegetable origin is the subject of Section X, which 3. Woman sanitary pads of cotton
covers pulp (Chapter 47), paper and paperboard
and articles thereof (Chapter 48) and products of Answers
the printing industry (Chapter 49). 1. Typewriter ribbon (9612.10.00)
2. Knitted brassier of cotton (6212.10.00)
Self – testing questions; 3. Woman sanitary pads of cotton (9619.00.10)
Classify the following up to 8-digit code.
1. Bamboo chair Footwear, headgear, umbrellas, walking
2. Textile printed Calendar sticks.....
3. Children’s picture books
Section XII covers footwear (Chapter 64) headgear
Answers (Chapter 65), umbrellas, walking sticks, (Chapter
1. Bamboo chair (9401.51.00) 66), together with certain articles made from
2. Textile printed Calendar (4910.00.00) feathers or down, artificial flowers and articles of
3. Children’s picture books (4903.00.00) human hair (Chapter 67).
Manufactured products Self – testing question;

Section XI is reserved for textiles. This Section • False beard of textile
comprises several groups of Chapters, distributed as • Sun umbrella
follows:
Answers
Textiles in forms ranging from the raw material to • False beard of textile (6704.90.00)
the finished fabric are divided among Chapters 50 • Sun umbrella (6601.99.00)
to 55, according to their nature; textile material of
animal origin are the subject of Chapters 50 (silk), 51 Products obtained from mineral materials
(wool and animal hair), textile materials of vegetable
origin are covered by Chapters 52 (cotton), 53 (other Section XIII deals with products obtained from
vegetable fibres), and man-made textile materials mineral materials, such as articles of stone plaster,
are the subject of Chapters 54 (filaments) and 55 cement (Chapter 68), ceramic products (Chapter
(staple fibres) 69) and glass (Chapter70).
Chapters 56 to 60 cover various calories of textile Self – testing questions:

articles or special textiles such as: Wadding, felt and Classify the following up to 8-digit code (tariff code).
non-woven textile materials, special yarn, twine and 1. Cement building bricks
rope (Chapter 56), floor coverings (Chapter 57), 2. Coffee mugs of porcelain
special woven fabrics, tufted textile fabrics, lace,
tapestries, trimmings and embroidery (Chapter 58) Answers
impregnated, coated, covered or laminated textile 1. Cement building bricks (6810.11.00)
fabrics and textile articles for industrial use (Chapter 2. Coffee mugs of porcelain (6911.10.00)

Cultured pearls, precious stones and these Chapters cover machinery and mechanical
metals......... appliances, and electrical equipment. In particular
the first 24 headings of Chapter 84, which covers
Chapter 71, the only Chapter in Section XIV, covers machinery and mechanical appliances in general,
pearls and precious and semi stones, precious metals identify them with reference to their function
clad with precious and articles thereof; imitation (reactors, turbines, pumps) and, in principle, take
jewellery. precedence over the remaining 61 headings, based
primarily on the purpose for which the goods are
Self – testing questions: used (agriculture, paper).
1. Two tons of current bank coins imported by Chapter 85 covers electrical machinery and
Bank of East Africa. equipment, other than that covered by Chapter 84
2. Silver tie pin. or excluded from Section XVI. The machinery
and equipment of this Chapter is grouped with
Answers reference to its use, as machinery for the production,
1. Two tons of current bank coins imported by transformation or storage of electricity; domestic
Bank of East Africa. (7118.90.00) appliances; machines or appliances, which depend,
2. Silver tie pin(7113.11.00) for their operation on the properties or effects of
electricity;
Base metals and articles of base metals
It should be noted that recent technical advances,
Section XV (Chapters 72 to 76 and 78 to 83) particularly in the fields of information technology
covers base metals and articles of base metals. In and communications technology, have had a
the case of ferrous metals (Chapter 72), a separate significant effect on Section XVI. These developments
Chapter (Chapter 73) has been set aside for articles do have a bearing on the Nomenclature, which must
thereof, whereas the other base metal Chapters i.e. therefore be adapted to keep pace with technological
Chapter 74 (copper), Chapter 75 (nickel), Chapter progress in order to meet the users’ requirements.
76 (aluminium), Chapter 78 (lead), Chapter 79
(zinc), Chapter 80 (tin) and Chapter 81(other base Self – testing questions:
metals and cermet), cover articles of these metals Systematically and logically, classify the following
as the metals themselves, unwrought or semi- up to 8-digit code.
manufactured. However, certain articles of base 1. Vacuum pumps
metal have been diverted to Chapters 82 and 83, 2. Line telephone sets with cordless handsets
thus Chapter 82 has been set aside, in particular, for
tools, implements, cutlery and spoons and forks. It Answers
should be noted that Section XV does not cover 1. Vacuum pumps (8414.10.00)
articles of base metal included in later Chapters of 2. Line telephone sets with cordless handsets
the harmonized system (Machinery and vehicles). (8517.11.00)
Self – testing questions: Transport equipment

1. Wire of refined Copper The four Chapters of Section XVII cover Vehicles,
2. Axes of iron Aircraft, Vessels, and associated transport
equipment, distributed as follows: Railway rolling-
Answers stock (Chapter 86), Motor Vehicles and other
1. Wire of refined Copper (7408.19.00) land vehicles (Chapter 87), Aircraft and spacecraft
2. Axes of iron (8201.40.00). (Chapter 88), and ships and floating structures
(Chapter 89).
Machines
Section XVI comprising Chapters 84 and 85, Classify the following up to 8-digit code.
is one of the most important Sections in terms 1. Aircraft seat
of the number of headings and subheadings; 2. Railway tank wagons

Answers ARRANGEMENT OF SECTIONS IN THE

1. Aircraft seat (9401.10.00) HARMONIZED SYSTEM
2. Railway tank wagons (8606.10.00)
The arrangement of Sections in the Harmonized
Instruments, clocks .... musical instruments System is based on three major criteria.
Chapter 90 (Optical, Photographic, (1) Material content of the article

Cinematographic, Measuring, Checking, Precision,
Medical or Surgical instruments and apparatus). Articles made of same material are grouped together,
Chapter 91 (clocks and watches) and 92 (Musical for example, Section II covers Vegetable products
instruments) together constitute Section XVIII. and Section XV covers Base metal and articles of
base metal.
Classify the following up to 8-digit code. (2) Usage or function of the article
1. Spectacle lenses of glass
2. Electric wall clock Goods that are used for the same need or same
function are put together. Examples are; Vehicles,
Answers aircrafts, vessels and associated transport equipment
1. Spectacle lenses of glass (9001.40.00) are used for transportation and are classified in
2. Electric wall clock (9105.21.00) Section XVII. Arms and ammunitions, parts and
accessories thereof are used for defence purposes
Arms and ammunition; parts and accessories and are classified in Section XIX.
thereof
(3) Degree of processing or of manufacture
Chapter 93 covers arms and ammunition and is the of an article
only Chapter in Section XIX.
Sections are also arranged according to the degree of
Miscelleneous articles processing or of manufacturing, for example A live
cow is classified in Section I. When it is slaughtered,
Section XX covers various articles such as furniture, hides are derived which are classified in Section
lamps and lighting fittings, illuminated signs and VIII. When the hides are further processed, shoes
prefabricated buildings (Chapter 94), toys, games are derived (Section XII).
and sports requisites (Chapter 95) and miscellaneous
manufactured articles (Chapter 96). The above is illustrated as shown below.
Works of art, collectors’ pieces and

antiques..... Live Cow classified in Section I
Process (When slaughtered)

The final Section, XXI has just one Chapter (Chapter
97), covering works of art, collectors’ pieces and Hides from a Cow classified in Section VIII
antique. This include goods that are over 100 years.
When Processed
Shoes of leather from the Hides of Cow are

classed in Section XII

ARRANGEMENT OF THE HARMONIZED SYSTEM

INTO CHAPTERS
Chapters are the next level of sub-division after

Sections in the Harmonized System. Sections in the
Harmonized System contain one or more Chapters.
For example, Section I has 5 Chapters, while Section

III has only one Chapter. Between Chapters

Live trees 06.02 Raw material
The Chapter numbers are always written using
Logs of wood 44.01 Raw material
in Arabic numeral. They always have 2 digits for
instance 01 (Chapter 1), 02 (Chapter 2), 15 (Chapter Pulp of wood 47.03 Semi – finished
15). (chemical)
Newsprint paper 48.01 Semi – finished
Like Sections, arrangement of Chapters in the Newspaper 49.02 Finished product
Harmonized System is based on three major criteria.
Structure of the Heading and Subheading in
(1) Materials content of the article the Harmonized System
Articles made of same material are grouped In the Harmonized System heading number is
together, for example, Wood and articles of wood denoted by four digits codes. The first two digits
are classified in Chapter 44. Plastic and articles show which Chapter a commodity belongs to and
thereof are classified in Chapter 39 the last two digits indicate position of the heading in
the Chapter. A heading may further be sub-divided
(2) Usage or function of the article into two or more subheadings, where deemed
appropriate, individualizing narrower calories of
Articles that are used for the same function are commodities.
grouped together. Examples are; Vehicles used for
transportation are classified in Chapter 87 while Subheadings which are preceded with one or two
Arms and ammunitions, parts and accessories dashes as the case may be are identified with an
thereof are used for defence (Chapter 97). additional two digits numerical code. The one-dash
subheadings are shown as five digits numerical
(3) Degree of processing or manufacture of codes which are generated by adding one digit to
an article the heading.
Articles at the same stage of processing or Degree of A one-dash subheading may be further subdivided
manufacture are put together, for example to two-dash subheadings, which are presented as
six digits numerical codes (HS codes) created by
Article Chapter Stage of processing adding one more digit after their parental one-dash
Iron ore Chapter 26 Raw material
subheadings’ codes.
Iron bars Chapter 27 Semi – finished
The one-dash subheadings and two-dash
Iron doors Chapter 73 Finished product subheadings are also identified by recognizing the
dashes “-” and “--” placed before their terms of
ARRANGEMENT OF HEADINGS AND subheading respectively. In the case that a heading is
SUBHEADINGS not further subdivided, two zeros are added after the
fourdigits codes number and in case a subheading
There are 1224 heading numbers (Harmonized is not further divided, a zero is added after the
System 2012 version). Headings are denoted by the 5th digit. The Six digit code is the international
first four digits. Headings are arranged according Harmonized System code.
to the Degree of manufacture or processing for
example Example
01.06 Other live animals Heading
Within a Chapter
(-) 0106.1 Mammals one dash
Article Heading Stage of processing subheading
Logs 44.01 Raw Material (--) 0106.11 Primates two dash
Railway Sleepers 44.06 Finished product subheading
Wooden frames 44.18 Finished product More digits codes are often used at national/regional
Statuettes of wood 44.20 level. For example, the EAC – CET uses eight digits
codes at its regional level (Tariff code).

Sub chapters in the Harmonized System Importance of Notes in the Harmonized

System
A Chapter may be subdivided into two or more sub-
Chapters to clarify and underline the differences In Harmonized System, there are Sections, Chapters
between products in the same Chapter. Such classes and Subheadings Notes. They help to establish as
which are arranged, according to the characters, to precisely as possible the scope and limits of certain
the level of processing, or to a combination thereof, Sections, Chapters, Headings or to define, or
are provided for in Chapters 28, 29, 39, 63, 69, 71 give classification guidance as to certain terms or
and 72. expressions.
Examples: Below are some of the Notes and their functions;

Chapters 28 and 29 are divided into several sub- Illustrative Notes.
Chapters based on the characters of commodities.
These Notes demonstrate an exhaustive or non-
Chapter 71, which title is “Natural or cultured pearls, exhaustive list of goods falling in a heading of a
precious or semi-precious stones, precious metals, group of headings.Illustrative Notes can further be
metal clad with precious metal and articles thereof; divided into exhaustive and non-exhaustive Notes.
imitation jewellery; coin”, is divided into three sub-
Chapters: (i) Exhaustive Notes
Sub-Chapter I Natural or cultured pearls and They exemplify an exhaustive list of goods falling in
precious or semi-precious; a heading or a group of headings.
Sub-Chapter II Precious metal and metals clad Examples:

with precious metals; 1. Note 3 to Chapter 39 give the exhaustive
list of goods falling in headings 39.01 to
Sub-Chapter III Jewellery, goldsmith Harmonized 39.11(synthetic polymers in primary forms).
System’ and silversmith Harmonized System’ wares 2. Note 11 to Chapter 39 enumerate all articles
and other articles. which are to be classified in heading 39.25(e.g.
builders’ ware of plastic which includes
Regional Subdivision reservoirs, tanks, of a capacity exceeding 300
litres, door, windowsand their frames). The
The following example will help to illustrate the Chapter Note provides the definite scope of
subheading for a heading, which is undivided. heading 39.25.
Heading 84.44 is not subdivided and its subheading, 3. Note 7 to Chapter 90 describe all the goods
therefore, has two zeros after the first four digits, as; falling in heading 90.32 (Automatic regulating
8444.00 (HS code). or controlling instruments and apparatus).
The EAC- CET has eight digits codes. Where the ii) Non-Exhaustive Notes
Harmonized System subheading is undivided, two
zeros are further added after the 6 digits as the 7th These are ChapterNotes which point out a non-
and 8th digits, for example 8444.0000 (EAC Tariff exhaustive list of typical goods falling in a heading.
code). It should be noted that those non-exhaustive lists
merely give examples of products to be covered by
Illustration of the numbering system particular headings.
Examples:
1. Note 4 to Chapter 15 lists some examples of
products falling in heading 15.22.
2. Note 4 to Chapter 25 gives a list of goods,
inter alia, included in heading 25.30 (Mineral
substances and products).

3. Note 11 to Chapter 48 states that heading Examples

48.23 (Other papers) applies, inter alia, to the 1. Note 1 to Section VII establishes the
products mentioned in the Note. classification of certain goods put up in sets.
4. Note 2 to Chapter 86 gives a list of goods, inter 2. Note 4 to Section XVII establishes the
alia, falling in heading 86.07 (Part of railway). classification of “amphibious motor vehicles”.
The list given is not exhaustive.
Limitation Notes
Exclusion Notes
The Notes give lists of classifiable goods or articles,
The Notes are designed in order to avoid stipulate requirements for classification, or clarify
misclassification arising when goods are classifiable the scopes of headings. The limitation Notes
under two or more headings by application of only basically include the expressions “… apply only to
the provisions of terms of headings. They therefore …” or “… cover only …” or “do not cover...” in those
exclude some articles from a particular heading, texts.
chapter or section.
Example
Examples 1. Note 3 to Chapter 39 (This Chapter does not
1. Note 1 to Section XI and Note 1 to Section cover …)
XI and Note 1 to section XV provide the 2. Note 1 to Chapter 82 (This Chapter covers only
descriptions which list certain articles that …)
must be excluded from the Sections.
2. Note 1 to Chapter 15 excludes certain goods Preference Notes
like pig fat (heading 02.09), cocoa butter
(heading 18.04) The Notes give priority to one or several headings
3. Note 2 to Chapter 10 exclude sweet corn from over one or several other headings.
heading 10.05 (Fresh Maize corn).
4. Note 5 to Chapter 59 excludes certain fabrics Example
from heading 59.07 1. Note 2 to Chapter 84 stipulates that headings
84.01 to 84.24 and 84.86 take preference over
Definition Notes headings 84.25 to 84.80.
2. Note 5 to Chapter 90 gives preference to
These Notes ascertain the meaning of particular heading 90.31 over heading 90.13 for certain
terms or expressions within a Chapter or a Section. measuring or checking optical instruments,
It is important to note that the meaning might differ appliances or machines.
with a normal dictionary meaning. 3. Note 3 to Chapter 25 gives preference to
heading 25.17 over any other heading of
Example that Chapter as to the products which could
1. Note 1 to Section II defines the term “pellets” potentially be classified in that heading.
mentioned in that Section (Chapters 7,11 and 4. Note 2 to Section VI gives certain headings
12) preference over all other headings throughout
2. Note 5 to Section XVI gives the meaning of the Nomenclature, in respect of products put
the term “machine” used in Notes 1 to 4 of that up in measured dozes or for retail sale.
Section.
3. Note 2 to Chapter 5 defines the meaning of the Constructive Notes
expression “ivory” applicable throughout that
Nomenclature. These are the notes which have expressions like “…
to be regarded as …” or “applies only...” in those
Classification Notes texts.
These Notes establish the class of certain goods Example

which are clearly classifiable under two or more Note 3 to Chapter 12 (the seeds listed in the Note are
headings. They instruct users how to classify such to be regarded as “seeds of a kind used for sowing”).
commodities.

Meaning of Note ‘otherwise require’ help users during classification.However, it should

be noted that these publications have no legal force
Some of the Legal Notes have the expression (not legally binding).
“otherwise require”. This means that if other Legal
provisions provide different views to those notes, Process of Classification of goods
they are given preference.
Specific Objective;
Example At the end of this topic trainees shall be able to;
Note 1 to Chapter 25 reads “Except where the context i. Follow the steps in classification of goods;
or Note 4 to this Chapter otherwise requires, the ii. Classify goods using General Interpretation
headings of this Chapter cover only products which rules of the Harmonized System.
are in the crude state or washed with chemicals to
eliminate impurities without changing the structure Steps involved in classification of goods
of the product, but not products which have been A commodity can be classified either by:
roasted, calcined, obtained by mixing or subjected to • Terms of the heading.
processing beyond that mentioned in each heading.” • Notes to Section, Chapters or subheadings
• General Interpretative Rules 2,3 to 6
On the other hand, the text of heading 25.07 reads
“Kaolin and other kaolinic clays, whether or not The first step in classification is to identify the article
calcined.” by asking the following questions.
• What is it?
In this case, the provision of the terms of heading • What material or substance is it made of?
25.07 is given preference to Note 1 to Chapter 25. • What is its function or use?
• What is its Degree of processing/ stage of
Legal and Non Legal Texts manufacture?
• In what form is it usually imported? Is it
The Harmonized System contains Section Notes, complete, unassembled, disassembled?
Chapter Notes and Terms of the heading which • Locate the possible Sections, Chapters and
are regarded as legal texts according to the General headings
Interpretation Rule (GIR) 1 of the Harmonized • Classify the article after consulting the relevant
System. Section and the Chapter Notes.
The Subheading Notes and terms of the Subheadings These are very important questions to consider
are Legal texts at the subheading level according to for one to come up with the most appropriate
Rule 6 of the General Interpretative Rules of the classification.
Harmonized System. As parts of the structure of
the Harmonized System, Section and Chapter Notes Example
are often located at the beginning of Sections or How to classify a fork made of wood.
Chapters and they should be consulted for every • Identification of the article: article of wood.
classification. • Material content: wood
• It’s function: table use.
Non Legal Texts
Search for the possible Sections: IX
There are some publications that assist in the Identify the Possible Chapter: Chapters 44
classification of goods; they include Explanatory Heading 44.19
Notes (EN) of the Harmonized System, the
Alphabetical Index and the Compendium of Classification using terms of heading
Classification Opinions. These should be referred
to during the classification process. The EN and A heading in the nomenclature is identified by
the Index are the Harmonized System Committee’s 4-digits. There are some classifications that are
formal guidance on the Harmonized System; the according to the terms of the heading.
compendium is the Harmonized System Committee’s
classification decisions of individual goods. They

Example: Live Goat General Interpretative Rule 1

Live Goats are classified in the heading 01.04 Terms
of heading of 01.04 reads Live Sheep and Goats The titles of Sections, Chapters and sub-Chapters
are provided for ease of reference only; for Legal
Goats are mentioned in the terms of the heading purposes, Classification shall be determined
01.04, therefore classed in the heading 01.04. according to the terms of the headings and any
relative Section or Chapter Notes and, provided
Classification using notes such headings or Notes do not otherwise require,
according to the following provisions:
Example:
Classify live Lions that are part of the travelling The Rule begins by establishing that the titles of
menageries used for entertainment. Sections, Chapters and Sub Chapters are provided
“for ease of reference only”. They accordingly have
Live animals are in Section 1 no legal bearing on classification.
According to note 1(c) to Chapter 1 that states in The Harmonized System Nomenclature sets out,
part in systematic form, goods handled in international
‘This Chapter covers all live animals except, animals trade. It groups these goods in Sections, Chapters
of heading 95.08’ and Sub-Chapters whose titles indicate the categories
or types of the goods as concisely as possible. In
Live Lions that are part of a Circus are excluded in many cases, however, goods covered in a Section
Chapter 1 to Chapter 95 or Chapter are so various that it is impossible to
specifically cover or cite all of them in their titles.
Heading 95.08 terms of heading reads
‘Travelling circus……travelling menageries…….’ The second part of this Rule provides that
Lions that perform in the Circus are travelling
menageries. “For legal purposes classification shall be determined
according to the terms of the headings and any
GENERAL INTERPRETATIVE RULES (GIR) FOR relative Sections or Chapter Notes”,
CLASSIFICATION
Where appropriate, provided the headings or
General objective Notes do not otherwise require, according to the
provisions of Rules 2, 3, 4, and 5. The terms of
By the end of this topic, the participants will be the headings and any relative Sections or Chapter
able to classify using the six General Rules of Notes are paramount and take first consideration in
interpretation of the Harmonised System (GIRs). determining classification.
Specific Objective; Examples of application of G.I.R 1:

1. A live Pig is classified in heading 01.03
At the end of this topic, trainees will be able to according to the terms of heading 01.03.
apply the six General Rules for Interpretation of 2. Articles of wood are normally classified in
the Harmonised System in classifying goods in the Chapter 44, but wooden furniture is classified
international trade. in Chapter 94 according to exclusion Note 1
(o) to Chapter 44 and Note 2 to Chapter 94.
Introduction 3. Live Foal (young female of a horse) classified
in heading 01.01 Terms of the heading of 01.01
Classification of goods requires correct interpretation is ‘Live horses, asses, mules and hinnies’. The
and application of the General Interpretative Rules terms of the heading do not indicate the young
of the Harmonized System. of a horse but Note 1 Section I states
Any reference in this Section to a particular genus

or species of an animal, except where the context
otherwise requires, includes a reference to the young
of that genus or species.

The young of a horse is classified in the heading intermediate products having tubular shape, with
01.01 by authority of Note 1 to Section I which one closed end and one open end threaded to secure
allows the classification of the young and adult of a screw type closure, the portion below the threaded
the same species in the same heading. end being intended to be expanded to a desired size
and shape).
In summary, Classification according to GIR 1 can
be made not only where the item is mentioned in Semi-manufactures not yet having the essential
the terms of heading but also in reference to Section shape of the finished articles (such as bars, discs,
and Chapter Notes. These Notes should be referred tubes) are not regarded as ‘‘blanks’’.
to for every classification. Other rules G.I.R 2 to 6
are to be applied when classification using G.I.R 1 The second part of rule 2(a) deals with unassembled
fails. or disassembled goods. Articles presented
“unassembled or disassembled” means articles the
General Interpretative Rule 2 components of which are to be assembled either
by means of fixing devices (screws, nuts and bolts)
This Rule is divided into two parts, 2(a) and 2(b). It or by riveting or welding provided only assembly
applies only when Rule 1 has failed. operations are involved. Presenting unassembled
or disassembled goods may be for reasons such as
General Interpretative Rule 2 (a) states: requirement or convenience of packing, handling or
transport. However, the following points should be
“Any reference in a heading to an article shall be taken into consideration when applying Rule 2(a):
taken to include a reference to that article incomplete
or unfinished, provided that, as presented, the No account is to be taken in that regard of the
incomplete or unfinished article has the essential complexity of assembly method. However, the
character of the complete or finished article. It shall components shall not be subjected to any further
also be taken to include a reference to that article working operation for completion into the finished
complete or finished (or falling to be classified as state.
complete or finished by virtue of this rule), presented
unassembled or disassembled.” Unassembled components of an article which are
in excess of the number required for that article
GIR 2(a) focuses on the classification of “incomplete when complete are to be classified separately as an
or unfinished articles” and “complete or finished independent article.
articles but presented unassembled or disassembled”.
An article that is incomplete or unfinished is still • Cases covered by this rule are cited in the
classified as if it were complete or finished, if it has General Explanatory Notes to Sections or
the essential character of the complete or finished Chapters (e.g. Section XVI and Chapter 44, 86,
article. 87 and 89).
• Goods of Section I to VI are not covered under
The first part of rule 2(a) extends the scope of this Rule.
any heading which refers to a particular article to
cover not only the complete article but also that A bicycle presented unassembled is classified in
article incomplete or unfinished, provided that, heading 87.12 as a complete bicycle since it has the
as presented, it has the essential character of the essential character of the complete bicycle.
complete or finished article.
Classification Questions
The provisions of this rule also apply to blanks.
The term ‘‘blank’’ is contained in Explanatory In which heading (4-digit) would you classify a
Note to Rule 2(a) which stipulates that an article, bicycle without handles?
not ready for direct use, having the approximate
shape or outline of the finished article or part, and What is the item? It is a bicycle
which can only be used, other than in exceptional
cases, for completion into the finished article or In what form is it imported? Incomplete’ missing a
part (example, bottle performs of plastics being handle bar

What is the use or function? Transport In addition, there is the similar statement in
Explanatory Notes to GIR 2(b) (XIII) which reads
What are the possible headings? 87.12; 87.14 “as a consequence of Rule 2(b), if prima facie
classifiable under two or more headings, must be
How should it be classified and what is the basis? classified according to the principles of Rule 3.”
Classification: A bicycle without handles is classified To illustrate the point, the terms of heading 45.03
under 87.12 as a complete bicycle because it has the clearly stipulates that the heading covers “articles
essential character of a complete bicycle. of natural cork” only. A bottle top consisting of
two different materials (natural cork and metals) is
Basis: By application of GIR 2(a) treated beyond the scope of heading 45.03.
General Interpretative Rule 2 (b) states: When GIR 2 (b) applies to the article in question, not
Any reference in a heading to a material or substance only heading 45.03 is taken but also heading 73.26
shall be taken to include a reference to mixtures (Other articles of iron or steel) are extended. That is,
or combinations of that material or substance there are two possible headings for the classification.
with other materials or substances. Any reference Although GIR 2 (b) widens the scopes of the
to goods of a given material or substance shall be headings, it does not conclude the classification. The
taken to include a reference to goods consisting classification must be considered according to the
wholly or partly of such materials or substance. principles of GIR 3.
The classification of goods consisting of more than
one material or substance shall be according to the General Interpretative Rule 3
principles of Rule 3.
When by application of Rule 2 (b) or for any other
GIR 2(b) concerns mixtures and combination of reason, goods are, prima facie, classifiable under two
materials or substances, and goods consisting of two or more headings, classification shall be according
or more materials or substances. The headings to to General Interpretative Rule 3.
which GIR 2 (b) refers are headings in which there
is a reference to a material or substance (e.g. heading This Rule provides three methods of classifying
05.07 (ivory), and headings in which there is a goods which, prima facie, fall under two or more
reference to goods of a given material or substance headings, either under the terms of Rule 2 (b) or
(e.g. heading 45.03 (articles of natural cork). The for any other reason. These methods operate in the
Rule applies only if the headings or the Sections or order in which they are set out in the Rule. Thus Rule
the Chapter Notes do not otherwise require. For 3 (b) applies only if Rule 3 (a) fails in classification,
example, since the terms of heading 39.20 reads and if both Rules 3 (a) and (b) fail, Rule 3 (c) will
“Other plates, sheets not reinforced, or similarly apply. The order of priority is therefore
combined with other material”, the Rule does not
apply. (a) Specific description;
(b) Essential character;
The effect of the Rule is to extend any heading (c) Heading which occurs last in numerical order.
referring to a material or substance to include
mixtures or combinations of that material or The Rule can only take effect provided the terms
substance with other materials or substances. The of headings or Section or Chapter Notes do not
effect of the Rule is also to extend any heading otherwise require. For instance, Note 4 (B) to
referring to goods of a given material or substance Chapter 97 requires that goods covered both by the
to include goods consisting partly of that material description in one of the headings 97.01 to 97.05 and
or substance. by the description in heading 97.06 shall be classified
in one of the former headings. Such goods are to be
The last part of GIR 2(b) states that “the classification classified according to Note 4 (B) to Chapter 97 and
of goods consisting of more than one material not according to Rule 3 (a).
or substance shall be classified according to the
principles of Rule 3.”

RULE 3 (a): Classification by Specific However, when two or more headings each refer to
Description part only of the materials or substances contained
in mixed or composite goods or to part only of the
This Rule states: items in a set put up for retail sale, those headings are
to be regarded as equally specific in relation to those
The heading which provides the most specific goods, even if one of them gives a more complete
description shall be preferred to headings providing or precise description than the others, in such cases,
a more general description. However, when two the classification of the goods shall be determined
or more headings each refer to part only of the by Rule 3 (b) or 3 (c).
materials or substances contained in mixed or
composite goods or to part only of the items in a Rule 3 (b): Classification by essential
set put up for retail sale, those headings are to be character
regarded as equally specific in relation to those
goods, even if one of them gives a more complete or The General Interpretative Rule3 (b) states:
precise description of the goods.
Mixtures, composite goods consisting of different
The first method of classification is provided in materials or made up of different components, and
Rule 3 (a), under which the heading which provides goods put up in sets for retail sale, which cannot be
the most specific description of the goods is to classified by reference to 3 (a), shall be classifiedas if
be preferred to a heading which provides a more they consisted of the material or component which
general description. gives them their essential character, insofar as this
criterion is applicable.
It is not practicable to lay down hard and fast rules
by which to determine whether one heading more This second method of classification relates only to:
specifically describes the goods than another, but in (i) Mixtures.
general it may be said that: (ii) Composite goods consisting of different
materials.
(a) A description by name is more specific than (iii) Composite goods consisting of different
a description by class. Shavers and hair components.
clippers, with self-contained electric motor, (iv) Goods put up in sets for retail sales.
are classified in heading 85.10 as shavers and
not in heading 84.67 as tools for working in the It applies only if Rule 3 (a) fails. In all these cases
hand with self-contained electric motor or in the goods are to be classified as if they consisted
heading 85.09 as electro-mechanical domestic of the material or component which gives them
appliances with self-contained electric motor. their essential character, insofar as this criterion is
(b) If the goods answer to a description which applicable.
more clearly identifies them, that description is
more specific than one where identification is The factor which determines essential character will
less complete. vary between different kinds of goods. It may, for
example, be determined by the nature of the material
Examples of the latter category of goods are: or component, its bulk, quantity, weight or value, or
by the role of a constituent material in relation to the
(1) Tufted textile carpets, identifiable for use in use of the goods.
motor cars, which are to be classified not as
accessories of motor cars in heading 87.08 For the purposes of this Rule, composite goods made
but in heading 57.03, where they are more up of different components shall be taken to mean
specifically described as carpets. not only those in which the components are attached
(2) Unframed safety glass consisting of toughened to each other to form a practically inseparable whole
or laminated glass, shaped and identifiable for but also those with separable components, provided
use in aeroplanes, which is to be classified not these components are adapted one to the other and
in heading 88.03 as parts of goods of heading are mutually complementary and that together they
88.01 or 88.02 but in heading 70.07, where it is form a whole which would not normally be offered
more specifically described as safety glass. for sale in separate parts.

Examples of the latter category of goods are: - a can of shrimps (heading 16.05), a can of
pâté de foie (heading 16.02), a can of cheese
(1) Ashtrays consisting of a stand incorporating a (heading 04.06), a can of sliced bacon (heading
removable ash bowl. 16.02), and a can of cocktail sausages (heading
(2) Household spice racks consisting of a specially 16.01); or
designed frame (usually of wood) and an - a bottle of spirits of heading 22.08 and a bottle
appropriate number of empty spice jars of of wine of heading 22.04.
suitable shape and size.
In the case of these two examples and similar
As a general rule, the components of these composite selections of products, each item is to be classified
goods are put up in a common packing. separately in its own appropriate heading.
For the purposes of this Rule, the term “goods put More examples
up in sets for retail sale” shall be taken to mean 1. Hairdressing sets consisting of a pair of electric
goods which: hair clippers (heading 85.10), a comb (heading
96.15), a pair of scissors (heading 82.13), a
(a) Consist of at least two different articles which brush (heading 96.03) and a towel of textile
are, prima facie, classifiable in different material (heading 63.02), put up in a leather
headings. Therefore, for example, six fondue case (heading 42.02):
forks cannot be regarded as a set within the Classification in heading 85.10.
meaning of this Rule;
(b) Consist of products or articles put up together 2. Drawing kits comprising a ruler (heading
to meet a particular need or carry out a specific 90.17), a disc calculator (heading 90.17), a
activity; and drawing compass (heading 90.17), a pencil
(c) Are put up in a manner suitable for sale directly (heading 96.09) and a pencil-sharpener
to users without repacking (e.g., in boxes or (heading 82.14), put up in a case of plastic
cases or on boards). sheeting (heading 42.02):
Classification in heading 90.17.
The term therefore covers sets consisting, for
example, of different foodstuffs intended to be used For the sets mentioned above, the classification is
together in the preparation of a ready-to-eat dish or made according to the component, or components
meal. taken together, which can be regarded as conferring
on the set as a whole its essential character.
Examples of sets which can be classified by reference
to Rule 3 (b) 5are: This Rule does not apply to goods consisting of
separately packed constituents put up together,
(a) Sets consisting of a sandwich made of beef, whether or not in a common packing, in fixed
with or without cheese, in a bun (heading proportions for the industrial manufacture of, for
16.02), packaged with potato chips (French example, beverages.
fries) (heading 20.04): Classification in heading
16.02. Classification using the General
(b) Sets, the components of which are intended Interpretative Rules
to be used together in the preparation of
a spaghetti meal, consisting of a packet of Example
uncooked spaghetti (heading 19.02), a sachet In which heading (4-digit) would you classify tufted
of grated cheese (heading 04.06) and a small textile carpets, for use in motor cars?
tin of tomato sauce (heading 21.03), put up in
a carton: Classification in heading 19.02. Hierarchical application of GIRs
Possible headings: The Tufted car carpet may be
The Rule does not, however, cover selections considered in two possible heading as;
of products put up together and consisting, for
example, of : 87.08: An accessory of motor vehicles

57.03: Carpets and other textile floor coverings, GIR 2 (a) cannot apply because the rule does not
tufted apply to Sections I to VI.
GIR 1 cannot be applied because the article falls GIR 2 (b) can apply because the set consists of
under two headings. articles that fall in more than one heading, and the
rule directs us to GIR3.
GIR 2(a) cannot be applied because the articles are
not disassembled and are finished products. GIR 3(a) cannot apply because the description is
not specific and each is referring to a composition of
GIR 2(b) cannot be applied because it directs to GIR the article.The possible headings are regarded to be
3. equally specific in relation to the mixture.
Classification:Tufted textile carpets are classified in GIR 3(b) cannot apply because the essential character
heading 57.03 cannot be determined. None of the items gives the
article its essential character and they equally merit
Basis: By application of GIR 3(a) because the consideration.
most specific description is preferred to a general
description. Classification: The article is classified in heading
11.06
G.I.R RULE 3 (c): heading which occurs last in
numerical order Basis: By application of GIR 3(c) because the heading
occurs last in numerical order.
This rule states:
General Interpretative Rule 4
When goods cannot be classified by reference to
Rule 3 (a) or 3 (b), they shall be Classified under Goods which cannot be classified in accordance
the heading which occurs last in numerical order with the above Rules shall be classified under the
among those which equally merit consideration. heading appropriate to the goods to which they are
most akin.
When goods cannot be classified by reference to Rule
3 (a) or 3 (b), they are to be Classified in the heading The rule relates to goods which cannot be classified
which occurs last in numerical order among those in accordance with the Rules 1 to 3. It provides that
which equally merit consideration in determining such goods shall be classified under the heading
their classification. appropriate to the goods to which they are most
akin. When goods are classified in accordance with
Example this rule, it is necessary to compare the presented
Classify a mixture composed of 50% of cassava flour goods with similar goods in order to determine
and 50% of millet flour for preparation of a meal and the goods to which the presented goods are most
justify stating the General Interpretative Rule of the akin. The presented goods are classified in the same
Harmonized System applied. heading as the similar goods to which they are most
akin.
Classification question
What is the product? Mixture of cassava and millet Kinship in the context of this rule depends on many
flour factors such as description, character, and purpose.
This rule is very rarely used and is mainly applicable
What is it used for? Preparing a meal for new articles in the market.
What are the possible headings? General Interpretative Rule 5
Cassava falls in heading 11.06 while millet falls in Rule 5 (a)

heading 11.02
(a) Camera cases, musical instrument cases, gun
GIR 1 cannot be applied because there is no heading cases, drawing instrument cases, necklace cases
which describe the set. and similar containers, specially shaped or fitted to

contain a specific article or set of articles, suitable materials and packing containers presented with the
for long-term use and presented with the articles for goods therein shall be classified with the goods if
which they are intended, shall be classified with such they are of a kind normally used for packing such
articles when of a kind normally sold therewith. This goods. However, this provision is not binding when
Rule does not, however, apply to containers which such packing materials or packing containers are
give the whole its essential character; clearly suitable for repetitive use.
This Rule shall be taken to cover only those This rule governs the classification of packing
containers which: materials and packing containers of a kind normally
used for packing goods which they relate. Packing
(1) Are specially shaped or fitted to contain a materials or containers presented with the articles
specific article or set of articles, they are shall be classified with the articles in accordance
designed specifically to accommodate the with Rule 5(b) if they:
article for which they are intended.
Some containers are shaped in the form of the 1. Are not of a kind covered under Rule 5(a).
article they contain; 2. Are of a kind normally used for packing such
(2) Are suitable for long-term use, i.e., they are goods.
designed to have a durability comparable to
that of the articles for which they are intended. However, this rule is not binding to such packing
These containers also serve to protect the article materials and containers that are clearly suitable
when not in use (for example during transport for repetitive use such as, certain metal drums
or storage,). These criteria enable them to be or containers of iron or steel for compressed or
distinguished from simple packing; liquefied gas, crates of Beer.
(3) Are presented with the articles for which
they are intended, whether or not the articles General Interpretative Rule 6
are packed separately for convenience of
transport. Presented separately the containers “For legal purposes, the classification of goods in
are classified in their appropriate headings; the subheadings of a heading shall be determined
(4) Are of a kind normally sold with such articles; according to the terms of those subheadings and any
and related Subheading Notes and, mutatis mutandis,
(5) Do not give the whole its essential character. to the above Rules, on the understanding that only
subheadings at the same level are comparable.
Examples of containers, presented with the articles For the purposes of this Rule the relative Section
for which they are intended, which are to be and Chapter Notes also apply, unless the context
classified by reference to this Rule are: otherwise requires.”
(1) Jewellery boxes and cases (heading 71.13); (1) Rules 1 to 5 govern, mutatis mutandis
(2) Electric shaver cases (heading 85.10); classification at subheading levels with the
(3) Binocular cases, telescope cases (heading same heading.
90.05); (2) For the purposes of Rule 6, the following
(4) Musical instrument cases, boxes and bags (e.g., expressions have the meanings hereby assigned
heading 92.02); to them:
(5) Gun cases (e.g., heading 93.03). a) “Subheading at the same level”: one-
dash subheadings (level 1) or two-dash
Examples of containers not covered by this Rule are subheadings (level 2)
containers such as a silver caddy Containing tea, or
an ornamental ceramic bowl containing sweets. Thus, when considering the relative merits
of two or more one-dash subheadings within
Rule 5(b) a single heading in the context of Rule 3 (a),
their specificity or kinship in relation to a
This rule states: given article is to be assessed solely on the
basis of the texts of the competing one-dash
Subject to the provisions of Rule 5 (a) above, packing subheadings. When the one-dash subheading

that is most specific has been chosen and CASE STUDY ILLUSTRATIONS
when that subheading is itself subdivided,
then, and only then, shall the texts of the two- Answers in the ANNEX
dash subheadings be taken into consideration
for determining which two-dash subheading Case I
should be selected.
Ms ‘Gurama Enterprises’ a dealer of Used Clothing.
b) “Unless the context otherwise requires”: ‘Gurama Enterprises’ is importing 1x40 HC
except where Section or Chapter Notes containers, STC 350 bales each weighing 70 kg of
are incompatible with subheading texts or used Men’s Leather Shoes from German. The client
Subheading Notes. used ‘Almas’ Forwarders to clear the goods from
port of Dar-es-salaam. The declaration officer of
Example Almas clearing company classified the goods under
An example of inconsistency between a 6403.59.00 which was disputed by his boss.
Chapter Note and a Subheading Note occurs
in Chapter 71 where the scope assigned to Required
the term “platinum” in the Chapter Note 4 Advise on the correct classification of the used Men’s
(B) differs from that assigned to the term Leather Shoes quoting the General Interpretative
“platinum” in Subheading Note 2. Rules of the Harmonized System applied.
Note 4 (B) to Chapter 71 reads as follows: Case II

“The expression [platinum] means platinum,
iridium, osmium, palladium, rhodium and ‘Alupe’ is a refaral hospital in Kenya that has invested
ruthenium.” in research of traditional medicine for many
years. The client used Air connection company to
On the other hand, Subheading Note 2 of clear the goods from Jomo Kenyata international
Chapter 71 stipulates as follows: Airport. The client imported four drums of 5 litres
each Cinchona extract meant for therapeutic or
“Notwithstanding the provisions of Chapter prophylactic dissolved in water. The declaration
Note 4 (B), for the purpose of subheading oficer cannot decide on heading 30.03 and 30.04 .
7110.11 and 7110.19, the expression “platinum”
does not include iridium, osmium, palladium, Required
rhodium and ruthenium”. 1. Advise him on the correct tariff classification.
2. Justify the Classification using the General
For the purpose of interpreting subheadings Interpretatives Rules of the Harmonized
7110.11 and 7110.19, therefore, Subheading System.
Note 2 applies and Chapter Note 4 (B) is to be
disregarded. Case III
c) The scope of a two-dash subheading The systematic coding of the Harmonised System
shall not extend beyond that of the one- makes it easier to classify goods in international
dash subheading to which the two-dash trade. It is therefore imperative to identify parts of
subheading belongs; and the scope of a the structure of the Harmonised System.
one-dash subheading shall not extend
beyond that of the heading to which the Required
one-dash subheading belongs. Identify the names of the structure of the Harmonised
System indicated below.

Section II Case IV
VEGETABLE PRODUCTS XYZ company imported 1x20 container of woven

fabrics of mixed material from India and declare
Section Notes the goods to the cotton heading, while his boss was
insisting to declare the goods under artificial staple
In this Section the term “pellets” means products fibre.The woven fabric consisted the following
which have been agglomerated either directly by materials :
compression or by the addition of a binder in a
proportion not exceeding 3% by weight. • 60% by weight of cotton containing 90% of
cotton by weight of cotton, weighing 250 g/m2.
• 20% by weight of artificial staple fibre
• 20% by weight of synthetic filament yarn
D
Chapter 6
Required: Classify the woven fabric to the correct
B heading up to the six digit level “6”
Live trees and other plants; bulbs, roots and the
like; cut flowers and ornamental foliage
Case V
Chapter Notes.
A
The Harmonised commodity Description and
coding system (HS) forms a framework that makes
Subject to the second part of heading 06.01, this
Chapter covers only live trees and goods (including
it possible to arrange 98% of all goods in the world
seedling vegetables) of a kind commonly supplied by in a systematic way.
nursery gardeners or florists for planting or for orna-
mental use; nevertheless it does not include potatoes,
1. onions, shallots, garlic or other products of Chapter 7.
Required
1. State and explain three principles used in the
2. Any reference in heading 06.03 or 06.04 to goods arrangement of Sections in the HS.
of any kind shall be construed as including a 2. Using the Nomenclature give one example
reference to bouquets, floral baskets, wreaths (heading level) of each of the stated principles.
and similar articles made wholly or partly of
goods of that kind, account not being taken of Case VI
accessories of other materials. However, these
headings do not include collages or similar Rule 5 in the General Rules of Interpretation in
decorative plaques of heading 97.01. the Harmonized system is special and governs the
classification of containers.
C Required:
(a) State the conditions that must be fulfilled for a
container to be classified according to Rule 5a
Heading H.S. Description Unit of (b) Give TWO (2) examples of containers to
Quantity be classified under General Interpretation
No. Code/ Rat Bulbs, tubers, tuberous roots, Y Rule 5a and two (2) examples under General
Rate
06.01 Tariff corms, crowns and rhizomes,

No. dormant, in growth or in flower; Interpretation Rule 5b.
chicory plants and roots other
than roots of heading 12.12.

E
0601.10.00 - Bulbs, tubers, tuberous roots, corms, crowns 0%
and rhizomes, dormantu
0601.20.00 - Bulbs, tubers, tuberous roots, corms, crowns 0%
and rhizomes, in growth or in flower; chicory
plants and roots

ANNEX: CASE STUDY ANSWERS - Containing two or more constituents
Case I The Cinchona extract does not qualify because

- It is not a mixture of two or more constituents
Process of classification but an extract of one vegetable (Cinchona
Identify the Chapter shoes are classified bark)
Read the Chapter Notes
Note 1 (c ) Chapter 64 is relevant. It excludes Worn According to Note 3 (a) (3) Chapter 30, simple
footwear of heading 63.09 vegetable extracts are classified in heading 13.02,
when merely standardised or dissolved in any
Go to Chapter 63 where the heading falls. Read the solvent.
Chapter Notes and find if any is relevant
Therefore Cinchona extract meant for therapeutic or
Note 3 (b) Chapter 63 is relevant. It states in part prophylactic dissolved in water is correctly classified
that heading 6309 applies only to footwear that must in heading 1302.19.00
comply with both the following requirements
1. They must show signs of appreciable wear, Case III
2. They must be presented in bulk or in bales,
sacks or similar packings. Answers
A Restrictive Note 1 to Chapter 6
The Shoes are used and presented in 70kg bales B Title of the Chapter 06
qualifying them to be classified in heading 63.09 C Terms of heading of 06.01
D Descriptive Note 1 to Section II
Classification according to Terms of heading and E Heading number 06.01
relevant Chapter notes is provided in General
Interpretative Rule number 1 of the Harmonized Case IV
System.
Process of classification
Case II Identify the correct Section number-Section XI
30.03 30.04
Similarities Therapeutically or Therapeutically or Read the Section notes-Note 2 (A) to Section XI
prophylactic character prophylactic character which states:
Differences • Not put up in • Put up in measured
measured doses doses
• Mixed together • Mixed or unmixed
Goods classifiable in Chapters 50 to 55 or in heading
• Not packed for product 58.09 or 59.02 and of a mixture of two or more textile
retail sale • Packed for retail sale materials are to be classified as if consisting wholly
• Two or more
constituents of that one textile material which predominates by
weight over any other single textile material.
Identify: Medicinal bark of cinchona trees; source of
quinine and quinidine When no one textile material predominates by
weight, the goods are to be classified as if consisting
Material: A vegetable extract wholly of that one textile material which is covered
by the heading which occurs last in numerical order
Function: Heal or Prevent among those which equally merit consideration.
Possible Chapter: 30 Identify the correct Chapter:

- 60% by weight of cotton containing 90% of
Possible Heading: 30.03 cotton by weight of cotton, weighing 250 g/
m2.- Chapter 52
The characteristic of medicines of heading 30.03, it - 20% by weight of artificial staple fibre –Chapter
should be 55
- Not put up in measured doses - 20% by weight of synthetic filament yarn –
- Mixed together Chapter 54
- Not packed for retail sale Identify Correct Heading – 52.09

Case V Case VI
1.State and explain three principles used in the (a) State the conditions that must be fulfilled for a
arrangement of Sections in the HS. container to be classified according to Rule 5A
• Material content 1. specially shaped or fitted to contain a

• Usage or Function specific article or set of articles,
• Stage of processing or manufacture 2. suitable for long-term use and
3. presented with the articles for which they
2. Using the Nomenclature give one example are intended
(heading level) of each of the stated principles. 4. Of a kind normally sold therewith.
5. Containers do not give the whole its
a) Material content essential character
Article- Plastic plate (b) Give TWO (2) examples of containers to

Classified in heading 39.24 be classified under Rule 5A and TWO (2)
Tableware, Kitchenware, other household articles examples under Rule
and hygienic or toilet articles, of plastics.
5A 5B
b) Usage
1 Binoculars with A dozen of 400g Ginger
Binoculars cases biscuits in paper cartons
Article- Helicopter.
2 Gun presented Bar soap packed in
Classified in heading 88.02 with gun case plastic parking
Other Aircraft (for example, Helicopter,

Aeroplane……)
C) Stage of processing
Tennis Shoes made from the hide of a Cow
HIDE OF A Tennis Shoes from

LIVE COW
COW 18 kg the hide of a cow
01.02
41.01 64.03

References:
Agreement on Implementation of Article VII of GATT, 1994
Customs Valuation Compendium 2nd edition November, 2008.
Customs Valuation Handbook for Customs Administrations in the East African Region (JICA), 2012
(unpublished)
East African Community Customs Management Act (EACCMA) ,2004
East African Community Customs Management Act Regulations (EACCMA) ,2004
General Agreement on Tariffs and Trade (GATT), 1994
Guide to the Valuation Agreement, WCO 1986
Incoterms 2010
Legal Texts: Uruguay Round of Multilateral Trade Negotiations
World Customs Organization (WCO) Basic Training Module.
East African Community Common External Tariff (EAC-CET) 2012
HS Brochures 2012
WCO Explanatory Notes 2012
WCO Harmonizer
WCO Website - www.wcoomd.org.

NOTES

NOTES

Crescent Road, off Parklands Road, Westlands

P.O. Box 22694 00400 Tom Mboya, Nairobi, Kenya
+254 (0)738 150 673, (0)738 165 318
info@feaffa.com
www.feaffa.com
Federation of East African Freight Forwarders Associations (FEAFFA)
@FEAFFA

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Federation of East African Freight

Forwarders Associations (FEAFFA)

THE EAST AFRICA CUSTOMS AND FREIGHT

FEAFFA in collaboration with East Africa Revenue Authorities

Copyright © 2013 Federation of East African Freight Forwarders Associations (FEAFFA)

Copies may be obtained through the following address:

C/O. Federation of East African Freight Forwarders Associations

THE EAST AFRICA CUSTOMS AND FREIGHT

FEAFFA in collaboration with East Africa Revenue Authorities

UNIT I: CUSTOMS LAWS..................................................................................................................................6

UNIT 2: CUSTOMS CLEARANCE PROCEDURES................................................................................................28

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 1

2 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

CUSTOMS LAWS AND PROCEDURES

VALUATION AND TARIFF CLASSIFICATION

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 3

4 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 5

Unit 1: CUSTOMS LAWS (d) Applicable decisions made by the Court;

Introduction The clearing and forwarding environment is

According to article 39 of the protocol, the Customs CUSTOMS LAW (EACCMA)

6 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

iii. Apply provisions related to valuations of goods PART V: Exportation

Structure of the EACCMA • Clearance required for departure to foreign

PART I: Preliminary provisions to include • Application of Act to postal articles

PART II: Administration PART VIII: Carriage coastwise and transfer of

• Prohibited and restricted imports PART X: Liability to duty

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 7

• Liability of duly authorized agent PART XIX: Legal proceedings

PART XIII: Manufacturing Under Bond • First schedule: Declaration of Officer

• Procedure of Inward operations Introduction

8 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

These are places appointed for loading and unloading Offences

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 9

particular offence should be dealt with. Some of the Legal Proceedings

10 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

Appeals The complete list with the conditions for exemption

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 11

(c) goods received by a manufacturer by way of v. Payment under protest

12 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

used in the manufacture of such goods. involving international shipping process

The importance of a Customs Agent Conditions for licensing

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 13

Role and Liability of owner TASK

Exercise II It means therefore, that the importation of the

14 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

CONVENTIONS GOVERNING PROHIBITIONS About 105 psychotropic substances are controlled,

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 15

16 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 17

28. Armoured fighting vehicles under heading No v. Uganda

Agencies That Enforce Prohibitions and Specific Objectives

18 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

PART IV PART XIII

PART V PART XIV

PART X CUSTOMS FORMS

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 19

Table: the list of Customs forms

No. FORM FULL TITLE OF THE FORM APPLICABLE REGULATION

20 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS

No. FORM FULL TITLE OF THE FORM APPLICABLE REGULATION

THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS 21

22 THE FEDERATION OF EAST AFRICAN FREIGHT FORWARDERS ASSOCIATIONS