INTRODUCTION TO CUSTOM OPERATIONS AND PROCEDURES

Course Description

This Course explains the role of Customs with its economic and fiscal mission in a Trade
facilitation driven world economy development. It also touches on Customs Tariff, and
valuation methods. Some of the topics to be discussed are as follows:

- Functions of Customs Administration worldwide

- Customs Tariff

- The entry making process, clearance and Shipping of goods

- Customs examination techniques

- Customs Valuation and WTO concept

- Customs Valuation.

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INTRODUCTION

The customs procedure is a possible bottleneck in the entire logistics chain of any country
that tries to induce foreign investment. This is an area where exporters and importers
themselves have very little influence to improve the situation. It takes a strong will and
determination of the policy makers to facilitate the customs clearance procedures and to
promote trade with foreign countries. In other words, if there is no improvement in the
procedures of the export and import customs clearance, Cameroon cannot compete with other
countries to induce investment from the foreign countries. This means that all the efforts and
funds to improve the logistics system of this country would be end in vain unless the
procedures of customs clearance are improved.

The purpose of this course is to recognize the current customs clearance situation in
Cameroon, to analyze the problems and to propose ideas for the improvement of the total
procedure to strengthen the international competitiveness of Cameroon.

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 CHAPTER 1 : MISSIONS OF CUSTOMS

Worldwide customs has always been responsible for the collection of taxes and duties on the
importation, exportation of goods as well as the application of some measures of control in
foreign trade, traffic and the fighting against smuggling. Basicly, four missions have been
assigned to customs. They are as follows:

- A fiscal or taxation mission: to collect duties and taxes;

- An economic role: creating an environment that favors activities of production and fair
trade;
-Assistance to other administrations;
- Security and facilitation: protecting the borders and the international supply chain.

1. Tax mission

This mission is to encourage compliance to collect revenue. Each year, the gouvernement
assigns to the customs administration the collection of an amount for its contribution in the
national budget. For instance, in 2018, the gouvernement assigned to customs administration
the production of about 1,000, 000, 000, 000 FCFA. Concretly, the taxation mission consists
of claculation and collection of customs duties and taxes due by shippers for the import and
exports.

2. Economic mission

It consists of the protection of national environment against mal practices or anti-competitive

prcatices qualified as financial crimes. Among these practices, we can list contraband,
smuggling, conterfeit, ect.

3. Assistance mission

The Customs assistance to other public administrations :

 Ministry of Finance
- Assistance in the liquidation of VAT

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 Ministry of Public Health
- Controlling illegal traffic of pharmaceutical products or those from animal or vegetal
species;
- Assistance to health and salubriousness services;
- Struggle against illegal traffic of organs.

 Ministry of Environment
- Phytosanitary regulation;
- Struggle against wastes and dangerous goods.

 Ministry of territorial administration

- Assistance to the Direction of Public Safety by controlling the traffic of weapons and
munitions;
- The respect quality rules, packaging, marking and labelling.

 Ministry of Culture
- Fight against pornography and pedophilia: by banning the importation of pornographic
movies;
- Protection of literary and artistic ownership by getting people to respect laws on ownership.

 Ministry of Industry, mine resources and craft industry

-Protection of industrial ownership: the Cameroonian customs stands against unfair trade
(counterfeit, fake brands, etc.).

4. Security and facilitation mission

The following aspects are considered :

-Trade facilitation by encouraging voluntary compliance with customs laws, achieved through
shippers education and aimed at revenue maximization
- Timely processing of passengers, baggage and cargo with an effective monitoring of goods
in order to stem illegal trade.
-Coorperation with local, regional and international agencies in exchanging information to
ensure regional security and to promote safer trade

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-Delivery of professional services to clients while enhancing public confidence in the
integrity, equity and fairness of customs operations.
-Processing of documents for the importation and exportation of goods, at ports, airport,
warehouses, parcel post, courrier services,

- Facilitating the entry and departure of ships, aircrafts to and from ports, airports and
marinas.

- Facilitating bonds and deposits related to import and exports, including private warehouse
and in-bond facilities.

The vision is to be a modern, effective and efficient Customs administration offering

professional service to all stakeholders, using international best practices, maximizing
revenue collection and protecting the borders.

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CHAPTER 2 : GENERAL OVERVIEW ON CUSTOMS PROCEDURES IN
CAMEROON

Cameroon has a common border with six countries and each particular border can be
considered as an entry point, especially in case of emergency in neighbouring countries. The
main entry points are:

 Mora – Amchide into Nigeria in the Far-North region, West side.

 Ekok into Nigeria in South-West region.
 Kousseri into Chad in the Far-North region, East side.
 Garoua-Boulaï into Central African Republic in the East region.
 Mouloundou into the Republic of Congo in the East region, South side.
 Bitam into Republic of Gabon in the South.
 Kye-Ossi into Gabon and Equatorial-Guinea to the South.

2.1. FORMALITIES FOR OBTAINING IMPORTER-EXPORTER STATUS IN

CAMEROON

The documents required are:

 An information sheet to be obtained from the Directorate of Foreign Trade (DCE)

against payment of francs (1,000 CFA francs);
 A handwritten application with a stamp of five hundred francs (500 CFA francs);
 A certified copy of the trade register;
 A copy of the taxpayer card to establish centers in divisional taxes on production from
the trade register;
 A certified copy of the valid "exporter" license to establish in divisional centers of
taxes;
 A receipt for payment of the sum of fifteen thousand francs (15,000 CFA) to the
Ministry of Commerce;
 An affidavit for cocoa exporters, coffee, timber and medicinal plants.
Important:

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  The renewal of the importer card comes after the financial year, with the following
parts:
 An information sheet to be obtained from the Directorate of Foreign Trade (DCE)
against payment of francs (1,000 CFA francs);
 A handwritten application with a stamp of five hundred francs (500 CFA francs);
 A certified copy of the valid "importer"license;
 A receipt for payment for the amount of ten thousand (10,000 CFA) to the National
Council of Cameroon chargers (CNCC)
 A receipt for payment of ten thousand (10,000 CFA), to the Ministry of Commerce;
 A tax certificate;
 A copy of the old license.

2.2. IMPORT PROCEDURE

2.2.1. PRELIMINARY NOTE

As to the sanitary, phytosanitary, health and quality checks applicable in importation,

pursuant to current Cameroonian legislation, operators and/or their representatives are
required to fulfil formalities, to be submitted to the competent service “the One-Stop Shop
Phytosanitary Unit” (Guichet Unique). To avoid any delays and prior to the handing
operations, the Phytosanitary inspection report should be discharged to the Customs service.

As for a number of products defined by the law and which appear on a list posted at the
Phytosanitary Unit, it is important to initially check the possibility of importing such items via
a phytosanitary inspection sanctioned by a phytosanitary inspection report.

This precaution is of prime importance as joint inspections may be conducted (pursuant to the
Minister of Agriculture’s Memo N° 00917 of 13th September 1999) by the Customs, the
Representative and the Phytosanitary services.

Several scenarios are worthy depending on whether the goods fall within the scope of the
Customs Revenue Security Programme (Programme
de Sécurisation des Recettes Douanières – PSRD) set up by Presidential Ordinance N° 95/004
of 7th December 1995.

There are 3 scenarios:

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1. Goods with a FOB value less than CFAF 1 million: not subject to inspection;
2. Goods with a FOB value equal to or more than CFAF 1 million, but less than CFAF 2
million: subject to a mild inspection procedure;
3. Goods with a FOB value more than CFAF 2 million: subject to inspection prior to loading or
shipment; inspection fees are claculated based on 0.95% FOB or 110,000 XAF as minimum
amount.

The first two scenarios are merged hereunder, while the more specific third option is subject
to a particular procedure.

22.2. CLEARING TRANSACTIONS

1) On the basis of a Forwarding Instructions sheet previously received from the importer, the
forwarding Agent/authorised customs broker shall key in the various entries of the
importation document using the computer terminal (connected to the CAMCIS system)
installed in their offices or at the One-Stop Shop (within the Customs Clearance Unit). The
business operator shall provide the forwarding agent/authorised customs broker with the
following documents :

 The Supplier’s Trade Invoice;

 The Freight Invoice;
 The Insurance Company Invoice;
 The Bill of Lading or Seaway Bill;
 The Packing-list;
 Any tax and duty exemption vouchers;
 Any attestations (sanitary, phytosanitary, veterinary, qualitative, technical, …) required by the
regulations currently applicable in Cameroon and issued by the competent authorities of the
countries of shipment of the goods for which the attestations are required;
 The domiciled Import Declaration (ID) (for transactions between CFAF 1 and 2 million
only);
 The phytosanitary inspection report on the products for which the formality is required.

2) The operators or their representatives shall report to the Port Authority Unit at the One-
Stop Shop to pay the port charges of the goods. The operator shall provide the PAD staff with
the following documents:
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 Bill of Lading or Seaway Bill
 Weighing Certificate when necessary.

3) Thereafter the operator or representative shall pay the required port charges drawn by the
port staff at the One-Stop Shop Bank Unit, designated by the port, which issues a receipt to
the operator or representative.

4) The forwarding agent/authorised customs broker designated by the operator shall establish
the Customs Declaration from his/her own terminal linked to the CAMCIS IT system or one
of the system terminals installed at the Customs Clearance Unit of the One-Stop Shop
(Guichet Unique), then print a temporary taxation slip.

5) The forwarding agent / authorised customs broker shall pay duties and taxes to the
Treasury and receive a receipt (if not exempted).

6) The hard copy of the Customs Declaration shall be submitted to the service in charge of
admissibility at the customs unit.

7) The customs agent shall immediately issue the Delivery Order (BAE) or request an
inspection of the document and /or undertake a timely inspection of the goods.

After an in-depth inspection of the Customs Declaration, in most cases, the customs agents
shall issue the Delivery Order immediately. However, upon suspicion of fraud or depending
on the selection criteria, further information can be requested by the customs to the authorised
customs broker, as well as inspection of the goods, upon which the Delivery Order is issued.
The outcome of the joint inspection may lead to an amendment of the Temporary Taxation
Slip (TTS). Thereafter, a new printout of the document is produced.

These steps are not necessarily chronological.

Duties and Tax Exemption

Humanitarian goods imported by NGOs or UN Agencies can have total or partial exemption
of duties and taxes according to agreements signed with Cameroonian government.

NGOs must sign an agreement with the Government of Cameroon to be allowed to work in
the country. This agreement will also be needed to open a bank account in Cameroon.

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 Authorisation to work in Cameroon:

Application file has to be sent to ministry of terrtorial administration and decentralisation and
copied to ministry of external relations :

 4 status copies
 4 Internal regulations copies
 4 Declaration receipt copies
 1 list of NGO managing members
 1 CV or NGO representative in Cameroon
 1 activities report
 1 activity plan in Cameroon
 1 criminal record of NGO representative in Cameroon (less than 3 months).

This application is validated by Ministry of Territorial Administration prior Ministry of

External Realations agreement on the application. Application file can be sent directly and at
the same time to both ministries to speed up the process.

2.3. EXPORT PROCEDURE

2.3.1. Inspection procedure

All export operations are centralized at the one stop counter for Foreign Trade Operations
(GUCE). This one-stop involves, all the various stakeholders in the export operations in the
same space.
 The export procedure includes the following steps:
- Treatment and Plant Health Inspection
 Treatment and Plant Health Inspection for coffee / cocoa and timber.
 Treatment of coffee / cocoa
 Treatment for coffee and cocoa. In effect, any export transaction for coffee and cocoa
should be preceded by:
 Batch processing by accredited companies;

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  Issuing an audit report;
 Issuing the phytosanitary certificate to the phytosanitary unit located at the one stop;
The clearance of various charges collected by the National Office of coffee and cocoa (for the
benefit of the NCCB, the Interprofessional Council of Cocoa and Coffee (CICC),
international organizations, including the International Coffee Organization and the
International Cocoa Organization);
The issuance of the Certificate of Origin (OIC / ICO). The documents providing a packing list
and quality newsletter.
Important: Certain treatments of cocoa / coffee can take up to 7 hours. Therefore initiate
these treatments in advance, by approaching one authorized treatment and pest Service
Company.
 Indeed, coffee / cocoa batches can be processed in advance and stored one of the
safety chain stores at the port of Douala. The list of these safety channels are displayed
at GUCE.
 A batch of cocoa / coffee processed in advance and stored in a safety chain store is
immediately certified by the phytosanitary service.
- Phytosanitary inspection logs
The export of logs requires two (2) preliminary steps:
 A delivery of a request for inspection by the one-stop unit of phytosanitary service
based on the sales contract, the packing list and newsletter service specifications for
Water and Forests;
 Issuance of a Plant Health certificate by the Plant Health services.

2.3.2. Obtaining the export declaration

 It is issued by SGS on presentation of documents relating to the goods to export.
Depending on the type of goods, SGS returns a number of copies of the Export
Declaration to the operator.
 Some products are subject to restrictions or can be forbidden. Goods whose
export from Cameroon is subject to authorizations such as endangered species under
the Convention On International Trade Endangered Species of Wild Fauna and Flora
CITES (apes and lemurs, pandas, South America apes; major balunis, cheetahs,
leopards, tigers, elephants, rhinos, prose birds, cranes, snakes, parrots, turtles, etc.).

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2.3.3. Domicile of the Export Declaration
 The exporter must have the bank payments in his possession for the transactions.
 The documents required for obtaining the export declaration depend on the goods to
be exported:
Manufactured goods are
Cocoa / coffee Wood
subject to VAT
- 06 copies of ED or F1 - 06 copies of ED or F1
- 06 copies of ED or F1
stamped stamped
stamped
- SALES CONTRACT - 02 copies of the proforma
- 02 copies of the
- The specification invoice
proforma invoice
Bulletin - The appropriate Files
- Acknowledgment
- The proforma invoice - The Purchase Order or
- The appropriate files
- The appropriate files packing list

 The exporter must then apply to the exchange service. It records the Domicile Export.
The copies of the Export Domicile will be stamped ". The copies referred are returned
to the operator, who then submits them to the Bank for debit and Customs.

2.3.4. Payment of fees

Royalties are payable according to the goods to be exported

 Port fee
 The amount of the fee is calculated on the basis of the packing list. The amount of the
fee is set at the unit of the Bank (the one stop shop)
 The bank issues a receipt and directly informs the Port of financial transfers that will
be done for its profit.
 NCCB / CICC fee
 As part of exports for cocoa / coffee, royalties are paid to the benefit of:
- NCCB itself,
- Interprofessional Council of Cocoa and Coffee (CICC)
 The documents required for the calculation of the fee are as follows:
- The packing list
- Manual Count

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 - Cheques payable to: NCCB and CICC
 The payment of these fees is entitled to a statement of fees and contributions and the
issuance of the certificate of origin.

Steps for Exportation of Cameroonian goods (except timber logs, cocoa, coffee) :

Step 1 - The forwarding agent/authorised customs broker shall move to the bank unit opened
at the One-Stop Shop to undertake the domiciliation of his foreign trade transaction. Thus
he/she shall submit the Form1: Exportation Domiciliation.

Step 2 - The forwarding agent/authorised customs broker shall move to the service in charge
of admissibility to countersign the Form 1: exportation domiciliation.

Step 3 - The forwarding agent/authorised customs broker shall enter the export file data at the
computer terminal linked to the CAMCIS system.

Step 4 - The forwarding agent/authorised customs broker shall proceed to the port unit to
establish the bill of port charges on goods.

Step 5 - The forwarding agent/authorised customs broker shall establish the Customs
Declaration.

Step 6 - The hard copy of this Customs Declaration shall be submitted to the service in charge
of admissibility at the customs unit. The forwarding agent/authorised customs broker shall
ensure that all the required documents are attached to the Declaration.

Step 7 - The customs agent shall immediately grant the Delivery Order (BAE) or request a
thorough document examination or inspection of the goods.
These steps are not necessarily chronological. The authorised customs broker can undertake
similar transactions.

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Case study N°1: Inspection fee valuation

Mr. SAMAH a trader based in Buea decides to import different types of containerized goods
from Spain through the Douala seaport for direct consumption. As a consultant in customs
clearance procedures, assist the shipper in determining the inspection fee of this importation.
The following information are to be considered:
-Goods transported in a 20’container
-200 cartons of toothpaste, unit price 34,500 XAF
-300 cartons of plates, unit price 42,000 XAF
-100 cases of champagne, unit price 60,000 XAF
-Inland carriage : 100,000 XAF
-Customs export : 200,000 XAF
-Main segment : 750,000 XAF
-On carriage : 150, 000 XAF
-Insurance : 2% FOB
-Loading fee : 150, 000 XAF
-Local insurance : 250,000 XAF

Question 1 : Determine the inspection fee for this importation

Question 2 : Determine the customs taxable value

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CHAPITRE 3 : CUSTOMS REGIMES (CUSTOMS PROCEDURES CODES)

Customs Procedure Codes (CPC) are used to identify the Customs regimes to which goods are
being entered and from which they have been removed. The CPC signals to the system
whether the declaration is for an import, an export, transit, or any other circumstance possible
in a Customs environment. The Code identifies to the system how the data input from the
Direct Consumption (IM4): Exemption certificate must be signed by both Ministry of
External Relations (MINREX) and Ministry of Finance (Customs Department).

They are 3 categories of regimes in Cameroon :

-Final regimes or direct regimes

-Suspensive regimes

-New economic regimes

3.1. Model of declaration

Model of declaration is a table that links each CPC to the import or export declaration model.
By using this link, the descriptions on screen (and on the declaration) take an import or export
format.

The model of declaration screen allows description of the model type to be defined for display
to users. For example, IM4 is Import declaration, direct import and sets an alphanumeric
character as a prefix for the reference and assessment numbering series.

Models of Declaration

EX 1 exportation
EX 2 temporary export
EX 3 re-export

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 EX 8 transit to export
other export
EX 9 procedures
EX CIMS re-export from
W3 warehouse
IM 4 entry for home use
IM 5 temporary import
IM 6 re-importation
IM 7 entry for warehousing
other import
IM 9 procedures
short entry for non customs and
comercial use courier
IMS where
4 applicable
CIMS Transfer of
TR 7 warehouse goods
cims entry ex-
WH warehouse for home
4 use

3.2. Composition of the CPC

The CPC is made up of a series of numeric and alpha characters that is built up from left to
right. The first number is called the General Procedure. This number combines with the
second number to create the Requested Procedure. The third and fourth numbers are called the
Previous Procedure. Collectively the first four numbers are called the Extended Procedure.
There are then Additional Codes that can be added as the fifth through the seventh
letters/numbers. The maximum length of any full CPC is therefore seven numbers/letters.

Each component of the CPC is described below:

General Procedure

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The first numeric character of the CPC signifies the general procedure code. This
is an internationally agreed standard –

Code General Procedure

1 Permanent export
2 Temporary export
3 Re-export
4 Import entry for direct import
5 Temporary import
6 Re-importation
7 Entry for Customs warehousing
8 Transit
9 Other procedures

Requested procedure

The Requested procedure is the first and second digits of the extended procedure. It defines
the procedure to which the goods on the declaration are to be subjected to at this time.

Previous procedure

The Previous procedure is the third and fourth digits of the extended procedure. It defines the
last procedure to which the goods on the declaration had been subjected (if any).

3.3. Extended procedure

Extended procedure is the name for the 4-digit CPC. The extended procedure is the combined
requested procedure and previous procedure in a 4-digit format. Entering the requested
procedure and selecting a previous procedure, creates the extended procedure. If there is no
previous procedure, code 00 is added to the requested procedure to create the extended
procedure.

Users are asked to note the Use of following Commonly Used Extended Procedure
Codes:

2300 - Goods Temporary Export For Repairs

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 6023- Goods Re- Imported After Repairs

4000 – Home Use- Goods imported where there is no relief of duty

4300 – Home Use where goods are entered under Conditional Duty
Exemption o 4370 – Ex-Private Warehouse o 4371 – Ex-Duty Free Shop

4700 – Home Use where goods are entered under Cabinet

Conclusion o 4770 – Ex-Private Warehouse o 4771 – Ex-Duty
Free Shop

7070- Re-warehousing of goods from a private warehouse into a private warehouse

7170– Re-warehousing of goods from a private warehouse into a duty free shop

3.4. Study of particular regime : transit regime

Goods loaded on trucks are not escorted but transit order and custom declaration are joined.
Both documents are signed by all customs offices along the corridor up to the boarder.

General Provisions

- The roads defined in CAR/Cameroon and Cameroon/Chad as concerned land transportation

of goods are the sole legal roads known for the transit to CAR and to Chad.

- The customs services shall stamp transit declarations only in fix check points established
according to the provisions of these conventions.

- Transit is done by land (road or railway) under the cover of IM8 customs declarations
models. This instruction does not apply to transit by air or by sea.

- The D15 model declaration is liquidated by one or many transit vouchers, a transit voucher
being a customs document which identifies a precise traveling cargo. It refers to the original
IM8 declaration. It is stamped by the customs office services which have issued the original
IM8

- In case of mixed transportation ways (rail/road) with loading disrupting at Belabo or at

Ngaoundéré, new transit vouchers liquidating the first ones are issued there to escort the
goods on the Belabo – CAR – Ngaoundéré – Chad trip.

- It is forbidden to visit goods in transit.

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- Customs escort practice is finished.

- The transportation of manufactured products for export under the VAT system is done
according to the provisions of this instruction.

- As concerns goods going to the other countries of the CAEMC (CEMAC) sub-region apart
from CAR and Chad, the traditional procedure remains applicable.

Procedures to be followed at the customs office issuing the IM8

- An IM8 model declaration is subscribed by a CAEMC (CEMAC) chartered customs

broker.

- The proof that the import operation has been made in the destination country’s currency is
attached to the file.

- The handling of transit files is done by the competent office chief and the appointed visit
inspector.

- The formalities to be fulfilled at the goods withdrawals point are the following: a transit
voucher is issued for all goods withdrawals. It is signed by the Transit Chief of Service as
soon as the cargo is loaded on the transportation vehicle.

- The service shows the legal road to follow on the transit voucher which keeps the same
prescribed value as the IM8.

- No other visa is required until the withdrawal of the goods from the port or from the
factory.

Formalities to be fulfilled on the way

- The customs agents present at check points shall make sure that the lead knots, the seals and
the marks on the parcels transported have not been broken or altered, and that their numbers
are identical to those mentioned on the original IM8 accompanying them or the transit
voucher.

- They put their stamp on the original IM8 or on the transit voucher with the inscriptions
“Seen on passage with seals or lead knots intact” and they mention the number of parcels
presented. When the lead knots or seals are broken, the service mentions it on the IM8 or the
transit voucher with the inscriptions “Seen on passage with lead knots or seals broken”. The
customs agents immediately check the cargo and establish a report.

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Liquidating IM8 and a guarantee release

The liquidation takes place at the customs issuing office on presentation :

- For goods going to CAR and Chad, transit vouchers duly signed on the road as well as in the
destination country

- As concerned goods going to the other countries of the sub-region :

The original IM8 bearing the inscription (Seen on passage, lead knots intact, marks conform)
by the customs units crossed

Of the proof that the goods shall be taken care of in the country of destination.

This complete file is deposited at the issuing customs office which after studying it, gives a
guarantee replevin or any other answer within a period not exceeding two (2) clear days as
from the registration date of the file.

Apart from the IM8 suspended for the export of products manufactured under the VAT
system, any other IM8 model declaration are subjected to bank guarantees,

- The bank guarantees cover the amount of duties and taxes.

- Partial replevin can be issued on presentation of N° 1 transit voucher samples having

received a visa from the customs services of the country of destination.

- The immediate liquidation of duties in case of non-respect of the subscribed engagements is

done after a previous contradictory procedure with the customs broker at the end of which a
report is written and a copy of it notified to the tax payer. The latter has a period of eighty (8)
days to settle the dispute. After this period, the guarantee is liquidated by the customs office
Chief having issued the IM8.

- The transportation should be fulfiled for a given period of time

- The chartered customs broken is responsible for the execution of the subscribed
engagements.

Full Listing of Extended codes

1000 Direct permanent export

1021 Permanent Export after TE for return in an unaltered sate

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1022 Permanent Export after TE for outward processing.
2100 Temporary Export for return in an unaltered state
2200 Temporary Export for outward processing.
2300 Temporary Export For Repairs
3000 Direct Re-Exportation
3051 Re-export after temporary import
3052 Reexport after customs inward processing procedure
3070 Re-export after warehousing from a private warehouse
3071 Re-export after customs warehousing procedure from a duty free shop
4000 Direct entry for home use
4051 Entry for home use after TI for return in an unaltered state
4052 Entry for home use after TI for inward processing
4070 Entry for Homeuse after warehousing from a private warehouse
4071 Entry for home use after Customs warehousing proc from duty free shop
4100 Payment of Duties on items previously relieved of duties
4141 Post entry - Additional item(s) after exit of goods
4142 Post Entry - Returning Nationals Additional Items after release
4143 Post Entry - Items Incorrectly Declared and or Classified
4200 Entry for home use for non-commercial and passanger baggage
4300 Conditional Duty Exemptions
4370 Goods Ex-Whse Private:Entered for homeuse:Condit.Duty Exemptions
4371 Goods Ex- Duty Free Shop Entered for home use:Cond. Duty Exemptions
4400 Goods entered for Home Use under Fiscal Incentive Act
4470 Goods Ex-Priv.Whse ehtered Under Fiscal Incentive Act
4471 Goods Ex_Duty Free Shop Entered Under Fiscal Inventive Act
4500 Goods Entered under other legislation or enactment relieved of duties
4570 Goods Entered Ex-Priv.Whse under other legislative or enactment
4700 Entry for Home use Relieved of Duties/Taxes Under Cabinet Conclusion
4770 Goods Ex-Priv. Whse Entered for Home use Under Cabinet Conclusion
Goods Ex-Duty Free Shop Entered for Home Use Under Cabinet
4771 Conclusion
4900 Direct imports under drawback procedure
5100 Temporary import for return in unaltered state.

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5200 Temporary import for customs inward processing procedure
6000 REIMPORT
6010 Re-Importation After Outright Exportation
6021 Reimport after TE for return in an unaltered state
6022 Reimport after TE for customs outward processing
6023 Re-Importation After Repairs
7000 Direct entry for customs warehousing into a private warehouse
7070 Transfer of goods from a Private Warehouse to another
7071 Goods transfered from a duty free shop to a private warehouse
7100 Direct entry for customs warehousing procedure into a duty free shop
7170 Goods transfer from a private warehouse to duty free shop
7171 Transfer of goods from a Duty Free Shop to another
8100 Through Transit:From One Office of Entry to Another Office of Exit
8200 Transhipment: Within Seaport or Airport
9000 Direct Supplies For Ship and Aircraft Stores
9070 Supplies For Ship and Aircraft;From Private warehouse
9071 Supplies For Ship and Aircraft; From Duty Free Shop
9100 Goods Sold in Auction
9200 Destruction of Goods Before Customs Clearance
9370 Destruction of Goods After W/hsing in Private Warehouse
9371 Destruction of Goods After W/hsing in Duty Free Shop

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Case study N°2: Determination of the fraction of CD to be paid for teporary admission

A company based in Douala imported equipment for the construction of stadia and other
infrasctructures for the AFCON scheduled in Cameroon in January 2021. The customs value
of this importation is XAF 100 000 000. The tax code indicates that the lifetime of this
equipment is 10 years with a depreciation rate of 10%. You are consulted by the shipper to
determine the partial customs duties to be paid taking into consideration the fact that customs
depreciation system is linear.

1) Determine the annual amortization of this equipment

2) Determine annuities amount to be paid
3) Determine the residual value after 6 years of use
4) Calculate the CDT to be paid, if this equipment is to put to direct consumption after 6
years of use.

23
CHAPTER 4 : CUSTOMS CLEARANCE SYSTEM

4.1. Procedures of International Trade and Logistics Flows

System of Custom Clearance

It is an illustration of international trade and logistics, and necessary procedures. It is noted

that so many related parties are involved in the export and import business. There are five
kinds of flows such as:

The flow of money, The flow of contracts, The flow of information (documents), The flow
of procedures, and The flow of cargo.

Needless to say, in order to promote export and import, it is quite important and necessary to
educate the people in the trade circle properly, including traders, manufacturers, freight
forwarders, shipping agents and even customs officers.

All Competent Authorities should be provided with training for staff in ports and customs
points on an ongoing basis, to include in particular:

-Full assimilation of laws, regulations, flyers, and their amendments, and

-Reasonable knowledge of English language to enable dealing with documents and

certificates.

Custom Clearance Procedure as an Improvement Focus

Cameroon can be a very competitive location for the European and Asia market. Land and
labor cost is competitive, but not the logistics infrastructures, especially speaking of the
control of lead-time, if we look at the information widely spread on the Internet. Moreover,
the Free Trade Agreement with the EU will open up a great future for Cameroon, if there is an
improvement in certain fields to build up the international competitiveness.

24
The most important key for the international competitiveness is to shorten the time to release
imports into Cameroon. Thus, drastic change and modernization of the Customs Clearance
System is critical for the progress of the Cameroonian economy and for the improvement of
the total logistics system of Cameroon.

Cameroon has a great history and wonderful natural resources. But in the field of the
international trade and foreign investment, the competition is open and free to any country.

4.2. Existing Problems in Customs Clearance in Cameroon

It is reported that it takes more than 20 days to clear cargo in Cameroon compared with
only a few days in some countries (e.g. 3 days in Denmark, 4 days in Singapore) according to
“Doing Business in 2015. The Report also indicates that numbers of signatures are needed for
a shipment before the cargo is cleared. The same is true for the required number of
documents for customs clearance. The Customs Authority is characterized by an aggressive
approach to duty collection rather than trade facilitation. Cameroonian Customs has a
tendency to dispute the appropriate classification and value of the cargo to determine the
amount of duty. Despite the common international practice, commercial invoices are rarely
accepted as a document in determining the value of the shipment without official proof of the
bank payment.

Apparent Problems

Necessity to Monitor Website Information on Cameroon

There seems to be a tremendous improvement in the recent years in Cameroon including

clearance time and cost, number of steps, number of disputes. According to a report,
increasing numbers of entries are submitted electronically. However, the information of this
improvement has not been reflected yet on most of the websites about Cameroon.

In order to improve the quality of the information on Cameroon, it is strongly suggested that
an appointed government agency should monitor the information from the foreign investors’
point of view and to promote the reality of the country to the international society.

-Too Many Government Agencies Involved

There are too many government authorities controlling export and import in Cameroon. The
number is not too surprising since it is almost the same in any country around the world. The
question is, whether or not there is good coordination.

25
Ideally speaking, if those authorities adopted the one Single Window System, the procedure
would be much shortened, like 1~3 days. Successful countries are: USA, most of the EU
countries, Singapore, Hong Kong and partially Japan.

Policy Efforts of Customs Authority

4.3. Recent Activities by Cameroonian Customs Authority

The Cameroonian Customs Authority is enhancing its information network and service
procedures with the help of equipment, and software programs, installation and testing of
software, and updating databases as well as executing training programs in all customs-
enabled ports nationwide.

The reform is in progress in the following areas:

- A new simplified tariff reducing the number of items and duty rate,

- Providing online customs service with extensive training,

- Implementation of post release auditing,

- E-payment and payment system of duty fees, and

- Launching Cameroonian Customs Authority website.

The above information was incorporated with the result of the interviews with the trading
circle such as the traders and customs brokers on the appraisal of the customs clearance in
Cameroon.

Although it is premature for making a conclusion, the Cameroonian Customs Authority is

steadily building up modernization steps to reform the system with a firm perspective.

According to recent statistics, it took a dealer 22 days to go through the employees in charge
offices coupled with the unclearness of things required from importers/exporters, which
therefore opens the door for corruption and puts the dealer all the time under the customs
employee’s mercy in the absence of any efficiency raising strategy and performance
assessment standards for customs employees. On one hand, this resulted in a state of
confusion and loss of rights, time and money. On the other hand, smuggling and fraudulent
actions increased and the public state treasury lost large amounts of revenues due to the lack
of transparency, credibility and clearness.”

4.4. General Assessment

26
Modernization of the Cameroonian Customs Procedure

It is a very rare case in the world history of customs’ modernization that all the facilities
should be well installed, and its improvement would be remarkable in a short time. The
modernization of the Cameroonian customs procedure took place in the following examples :

-The new simplified tariff reducing the number of items and duty rate : the new customs tariff
was implemented in 2012. In this new tariff, the structure was simplified, thought the
categories are still from 5% to 30 %. This modification resulted in reducing the confusion
about customs tariffs and also facilitating the application of the tariff by the customs officers
and by the importers /exporters as well.

-Single Window System (GUCE and CAMCIS) the system provided online services for the
first time, as follows:

- Customs statement filing service,

- Manifesto filing service, and

- Enquires about tariff items and exchange rates.

Importers/Exporters who were allowed access to the service had been already registered and
trained on filing their customs statements and manifestos online.

-Implementation of post release auditing : Post Release Auditing is an efficient and important
tool to achieve the balance between facilitating the trade and maintaining the efficient
customs control.

All operations and reviews of Post Release Auditing simply aim at ensuring the correctness of
data and documents, submitted by the importer for release, and not aim at revising the release
procedures. Importers may not be punished except for submission of false data for release.

-Duty e-payment and deferred payment system the Cameroonian Customs Authority has
developed and implemented payment automation for the first time.

Assessment by Importers and Customs Brokers When we interviewed the importers and
customs brokers, most of them stated that there was a remarkable improvement in the total
number of days for the release of the imported cargoes. However, the story varies depending
on the importers and also on the kind of commodities they import. Some importers informed
that they could clear the goods in 7-9 days after the arrival of the vessel at the port, while

27
other importers informed it still takes three weeks to clear the cargo after the arrival of the
vessel. The reason for the difference between the interviewed importers may be due to the
difference of the document preparation period between one importer and the other.

4.5. Steps to Improve Customs Clearance Procedures in Cameroon

-Basic Improvement

Basic improvement should be a realistic improvement that does not require massive financial
investment but rather more of a structural reform. For instance one of the ideas is to allow a
preferential procedure for the industries within the foreign trade zone or for specific
companies that have established credibility with the customs department.

In most of the countries where they induce foreign investment companies into a free trade
zone, they allow benefits of Tax and Duty Exemptions for easier customs procedures.

-Large Scale Improvement

Full and large-scale improvement may call for the following:

- Building of a system architecture that will manage all the port related activities,

- Designing of a framework for cooperation between traders, customs, and other agencies,

- Building of a database that allows all stakeholders (i.e. shippers, forwarders, ship’s agents,
warehouse operators, port operators, ocean carriers) easy access to information, and

- Standardization of procedures.

-Single Window System

The Single Window System is a trade facilitation idea. The implementation of a Single
Window System enables international traders to submit regulatory documents at a single
location and/or single entity. Such documents are typically customs declarations, applications
for import/export permits, and other supporting documents such as certificates of origin and
commercial invoices.
28
Single Window increases the efficiency through time and cost savings for traders dealing with
various government authorities for obtaining the clearance and permits for moving cargoes
across borders.

In a traditional pre-Single Window environment, traders have to visit the every government
agencies that are related to import or export to obtain the necessary papers, permits and
clearance in order to complete their import or export procedures.

4. 6. Recommendations

The following issues are suggested to be monitored:

(1) Assessment of user satisfaction has to be made. The above-mentioned general assessment
is mostly from the Customs Authority’s view point regarding their accomplishment of the
modernization effort.

It should be noted that documents required to clear imports in Cameroon include:

- Authorization from consignee to forwarder to clear customs, - Bank Certificate to certify

that the value of the goods was paid by the buyer to the seller, - Original Bill of Lading, -
Legalized by Cameroon Consulate Invoice issued at exporter's country, - Certificate of origin
stamped by a bank, - Certificate from the appropriate Ministry - Importer's business
registration card, sales tax card, company tax card, - Customs' Registration, -Custom's
declaration form, and - Receipt from Import and Export Administration of fee payment.

Especially, the “Bank Certificate” and the “Original Bill of Lading” may not be available for
some importers at the time of the arrival of the vessel, depending on the business deal and the
distance from the shipping point. If there is no change in this requirement all the efforts by
the Customs Authority to modernize the procedure will be simply ruined. In most of the
trading countries, Bank Certificate is not required and also the original B/L can be substituted
by a non-negotiable B/L copy or an electronic copy.

views are essential to materialize the modernization of the customs procedures.

Training should be provided to staff in ports and customs points on an ongoing basis, to
include in particular:

- Full assimilation of laws, regulations and flyers and their amendments, and

29
- Reasonable knowledge of English to enable dealing with documents and certificates.

All control authorities (for inspection/testing) must be assembled in the complex to facilitate
one-time exit of unified committees and simultaneous start-up of operations.

Refrain from claiming catalogues of previously imported products.

Working to gather inspection and testing laboratories and equipment in all ports and customs
points in one location.

Setting out a sample-taking system that ensures no damage is caused to the shipment and
returns equipment samples inspected immediately and in good condition to be marketed,
especially in the case of importing a fixed number of units.

Requesting the port authorities to equip buildings within ports to group all authorities
competent for release of shipments therein.

-Public advertisement has to be monitored. Especially the Internet information, which is the
most reliable source for the potential foreign investors.

It is also suggested that operation and maintenance of the customs system should be observed
constantly in the future, and there should be information updates through the website for the
general public. The English version is indispensable to convey the message to foreign visitors
through the website because they are the potential investors for the manufacturing plants in
Cameroon.

-Customs Authority is the least trusted government office in the developing countries.

30
CHAPTER 5 : CUSTOMS TARRIFS IN CAMEROON

There are three categories of imported products: free products which do not incur any
restriction, products requiring a technical visa or a certificate of conformity from a competent
Ministry (Health, Security....) and products which are prohibited in the entire territory of
Cameroon. However, every import must be controlled before its loading. This control relates
to quality, quantity and price.

Customs Duties and Taxes on Imports

Cameroon is part of the Economic and Monetary Community of Central Africa (CEMAC)
that has the following countries as its members : Cameroon, Congo, Gabon, Equatorial
Guinea, Central African Republic and Chad. Countries belonging to the CEMAC are
acquitted of duties and taxes as defined in the Common Exterior Tariff (TEC), whatever may
be the entry point in the CEMAC. Custom duty rates are applicable according to the category
of the imported product :

- Primary necessary goods : category I, 0%

- Raw materials and equipment goods : category II, 10%
- Intermediary and miscellaneous goods : category III, 20%
- Fast-moving consumer goods as well as valuable goods : category IV, 30%.

To determine the category of your product, you can consult the Customs Nomenclature in
force in Cameroon (conforming to the Harmonized System).

Table : CEMAC Customs tarrifs

APPLIED
N° DUTIES and TAXES OBSERVATIONS
RATE
1 Customs Duties Import 5%-10%-20%- Different categories of goods

31
 30%
2 Droits d’accises (Excise 12,5%- 25% Applied on luxury products
tax)
3 VAT 17.5% Applied on taxable value
4 Centimes Additionnels 10% Applied on VAT
Communaux (Council
taxes)
5 Taxe Communautaire 0.6% For importations out of CEMAC
d’Intégration zone
(Communautary
Integration Tax)
6 Contribution 0.4% For importations out of CEMAC
Communautaire zone
d’Intégration
(Community Integration
Contribution)
7 OHADA Tax 0.05% For importations out of OHADA
countries
8 Précompte (shippers tax) 0 to 10% In case of holding taxpayer card or
not
9 Redevance Informatique 0.45% In computerized customs offices
(Computer tax)
10 Taxe d’Inspection SGS 0.95% Applied on FOB prior to shipment
(Inpection fees)
11 Taxe d’inspection 3% Per animal
sanitaire vétérinaire ISV
(Veterinary tax)
12 Taxe phytosanitaire TPS 50 f Per ton
(Phytosanitory tax)
13 Scanning Contribution 60,000 and Respectively 20’ and 40’
85,000
14 Customs Protocol 10,000
EXPORT
DUTIES
15 Droits de sortie hors bois 2% General cargo
(Customs duties export)
16 CDE 5,65% (Sawn wood

32
 wood)- 30%
(timber)
17 Taxe de contrôle de 0.50%
conditionnement
(Packaging tax)
18 Computer tax 15,000 XAF
19 Customs protocol 10,000 XAF
20 Scanning contribution 30,000 and Respectively 20’ and 40’.
45,000
21 Veterinay Tax 3% and 4,000 Per animal
22 Scanning contribution
23 Extra Tax for timber 5000/4000/1000
exportation XAF/ m 3

Source : Customs tarrifs code 2012

Summary of customs and taxes calculation for import

 CDI= TV x Rate
 ET= (TV+CDI) x Rate
 VAT= (TV+ET+CDI) x Taux
 CT= 10% of VAT
 ST= TV x Rate
 CIT= TV x Rate
 CIC= TV x Rate
 OT= TV x Rate
 CT = TV x Rate
 CP = 10 000
 SC= 60, 000 (20’), 85,000 (40’)

33
Case study N°3: customs duties and taxes valuation

Mr.HAMADOU an importer sales goods bought from Europe through the Douala seaport for
direct consumption. As a consultant in customs clearance procedures, assist the shipper in
determining the customs duties for this importation.
20’ container with a CIF Douala contract.
The following information are provided :
Kraft paper : HS code: 48 10 92 0000
FOB: 8, 500, 000 XAF
Freight : 1, 300, 000 XAF
Insurance : 150, 000 XAF
Local insurance : 50, 000 XAF
Question : Determine the customs duties and taxes import to be paid by the shipper

Case study N°4: customs duties and taxes valuation

34
Mr. SAMAH a trader based in Buea decides to import containerized goods from Spain
through the Douala seaport for direct consumption. As a consultant in customs clearance
procedures, assist the shipper in determining the customs duties for this importation.
The following information are to be considered:
-Goods transported in a 20’container
-100 cases of champagne, unit price 60,000 XAF
-Inland carriage : 100,000 XAF
-Customs export : 200,000 XAF
-Main segment : 750,000 XAF
-On carriage : 150, 000 XAF
-Insurance : 2% FOB
-Loading fee : 150, 000 XAF
-Local insurance : 250,000 XAF
Question 1 : Determine the taxable value
Question 2 : Determine the customs duties and taxes import to be paid by the shipper

Case study N°5: Determination of the fraction of CD to be paid for teporary admission

A company based in Douala imported equipment for the construction of stadia and other
infrasctructures for the AFCON scheduled in Cameroon in January 2021. The customs value
of this importation is XAF 100 000 000. The tax code indicates that the lifetime of this
equipment is 10 years with a depreciation rate of 10%. You are consulted by the shipper to
determine the partial customs duties to be paid taking into consideration the fact that customs
depreciation system is linear.

1) Determine the annual amortization of this equipment

2) Determine annuities amount to be paid

3) Determine the residual value after 6 years of use

4) Calculate the CDT to be paid, if this equipment is to put to direct consumption after 6
years of use.

Case study N°6 : Exportation of timber wood

The company Camtimb Ltd. based in Douala signed a FOB contract with one european client.
35
The following information are provided :
-Container : 40’
-AYOUS timber
-Volume : 50 m3
-Taxable value : 10,000, 000 XAF
Question : Determine the customs duties export to be paid.
Case study N°7 : Exportation of animals
A company based in Douala intend to ship 5 hedgehogs to one european client.
The following information are provided :
-2 boxes
-Taxable value : 10,000, 000 XAF
Question : Determine the customs duties export to be paid.

CHAPTER 6 : THE KYOTO CONVENTION

In this chapter, we explain what the Kyoto Convention is and why it is important to
international and regional trade. This Chapter is relevant to Customs agencies, other
Government agencies and the general trading community. It explains why becoming a party
to the Convention is a necessary and important step forward for APEC economies. It will also
help you to understand the way in which the Convention works.

6.1 Kyoto Convention

The Convention’s full title is the International Convention on the Simplification and
Harmonization of Customs procedures. The original Convention was concluded in Kyoto in
1973 and entered into force in September 1974. It was reviewed over a period of years and
was ultimately amended in 1999. The amendments are contained in a Protocol of
Amendment which was concluded in June 1999. For ease of reference, we shall refer to the
revised Kyoto Convention as either “the revised Convention” or “Kyoto”, as appropriate.

36
6.2 Importance of Kyoto

Kyoto provides a foundation for modern and efficient Customs procedures and is therefore
central to Customs modernisation and reform.

The need for modernisation and reform has never been greater. Since the original Kyoto
Convention entered into force, there have been many developments which have changed the
face of international trade. These include:

• Increased globalisation of trade;

• Rapid growth in international cargo;
• A highly competitive international business environment;
• Establishment of the World Trade Organisation (WTO) and regional trading
arrangements such as APEC and AFTA;
• Reduced tariff barriers through the WTO;
• Removal of many non-tariff barriers;
• Growth in e-commerce and use of EDI for delivery of Government services; and
• Increased focus on trade security.

As a result of these changes, Customs practices and procedures have been put under the
microscope. They have been identified as creating non-tariff barriers, and the WTO has
called for the simplification and harmonisation of Customs procedures as a key to trade
facilitation. The simplification and harmonisation of Customs procedures is therefore
important to the liberalisation of international trade, including trade within the APEC region.

6.3 The review of Kyoto

In response to calls for change, the WCO recognised that it was necessary to review the
original Kyoto Convention, which was intended to be the key to simple and harmonised
Customs procedures. The review, which concluded in 1999 not only confirmed the relevance
of the Convention, but also improved it by making it:

• up-to-date;
• easier to understand;
• easier to join;
• easier to implement;
37
 • harder to avoid obligations; and
• easier to adapt to the changing global environment.

The revised Convention is now the foundation for simple and efficient Customs procedures
for the 21st century. The adoption and implementation of the revised Convention by APEC
economies will deliver tangible benefits to the region by increasing transparency and
efficiency in Customs administration while contributing to reduced transaction costs and
enhanced trade security.

6.4 The parties to Kyoto

There are 62 Contracting Parties to the original Convention, including nine APEC economies:
Australia, Canada, China, Japan, Korea, Malaysia, New Zealand, USA, and Vietnam. With
almost half of APEC already being committed to the principles of Kyoto, it is important that
the rest demonstrate their commitment by acceding to the revised Convention, in order to
strengthen regional cooperation and harmonise regional procedures.

6.5 The purpose of Kyoto

Kyoto is designed to help Contracting Parties to achieve a modern Customs administration, to

achieve improved facilitation and control, and to deliver a simpler, harmonised and more
flexible approach. When implemented, Kyoto will contribute to international trade by:

• Developing uniform Customs practice and procedure around the world;

• Meeting the needs of international trade and Customs for facilitation, through
simplification of Customs procedures and practices;
• Ensuring appropriate standards of Customs control;
• Enabling Customs to respond to major changes in business and administrative methods
and techniques; and
• Reducing the costs to traders and to Governments of Customs processing.
6.6 The benefits from Kyoto

The revised Convention benefits many people. Traders will benefit from improved
facilitation and reduced costs. Shippers and transport operators will benefit from uniform
Customs controls and quicker movement of cargoes and people. Governments will benefit
from more effective controls that increase border security and reduce revenue leakage. In

38
summary, Kyoto will provide international commerce with the predictability and efficiency
that modern trade requires.

6.7 The structure of Kyoto

This is not the place to discuss its substantive provisions at length, and you will need to study
Kyoto in detail. However, it is important that you understand the basic structure of Kyoto,
because the nature of the obligations you will assume when you become a party are directly
related to the revised Convention’s structure.

First, note that Kyoto is in three parts – the Body, the General Annex and the Specific
Annexes. Both the General Annex and the Specific Annexes are divided into Chapters. In
addition, both the General Annex and the Specific Annexes have detailed Guidelines
explaining how they are to operate. To become a party to the Convention you must accept the
Body and the General Annex in their entirety. You do not have to accept any of the Specific
Annexes, but may do so if you wish (either in whole or Chapter-by-Chapter).

The Body is obligatory. It sets out the basic provisions of Kyoto, and contains the preamble
(which sets out the goals and principles of the Convention) and provisions relating to scope,
structure, administration, accession and amendment.

The General Annex is also obligatory. It contains core principles which are not repeated in
the Specific Annexes. It has 10 Chapters, which contain Standards and Transitional
Standards, all of which are mandatory. Detailed Guidelines have been provided to assist with
implementation.

The ten Specific Annexes, which cover different aspects of Customs procedures, are not
obligatory. The Specific Annexes are also divided into Chapters, and have detailed
Guidelines for their implementation. It is possible to accede to either a complete Specific
Annex or to one or more Chapters of an Annex. Accession to the Specific Annexes is
optional and may be accomplished following accession to the Body and General Annex.

Note too that the Specific Annexes contain both Standards and Recommended Practices. If
you accede to a Specific Annex or Chapter, the Standards become obligatory, but you are able
to notify reservations against the Recommended Practices. In other words, if you decide to
accede to a Specific Annex or a Chapter of a Specific Annex, you will be bound to implement

39
any Standards and any Recommended Practices it contains, other than the Recommended
Practices that you have lodged reservations against.

CHAPTER 7 : METHODS OF CUSTOMS VALUATION

a) Method 1: the transaction value method,

b) Method 2: the transaction value of identical goods,
c) Method 3: the transaction value of similar goods,
d) Method 4: the deductive method (price per unit),
e) Method 5: the computed method,
f) Method 6: the fallback method (available data).

METHOD 1: THE TRANSACTION VALUE METHOD

The transaction value is the price actually paid or payable for the goods when sold for export
to Montenegro, adjusted in accordance with the provisions of Article 38 and 39 of the
Customs Law. The price actually paid or payable is the total payment made or to be made by
the buyer to or for the benefit of the seller for the imported goods, and includes all payments

40
made as a condition of sale of the imported goods by the buyer to the seller, or by the buyer to
a third party to satisfy an obligation of the seller.

The customs value of the imported goods is the transaction value of the goods being valued if
all the conditions have been fulfilled.

CONDITIONS FOR THE USE OF THE TRANSACTION VALUE METHOD

The transaction value method corresponds to the principle of liberty of freedom of contract in
trade. A contract of sale means an exchange of goods, services or property to be exchanged
from seller (or vendor) to buyer (or purchaser) for an agreed upon value in money (or money
equivalent) paid or the promise to pay same. A contract must not be necessarily in writing,
verbal concluded agreements are also possible. For the purposes of customs valuation a
contract of sale must pertain to goods, i.e. movable goods and electricity. The contract must
already be concluded in the moment of incurrence of a customs debt.

No sales are:

a) Branch or representation office importing from head office.

In order to use the transaction value method, there must be a sale for export. In
circumstances where the ownership of the goods does not change, e.g. the exporter is shipping
goods to his/her own employee or a branch or representation office which has no authority to
contract on its own behalf, a sale cannot be said to have occurred. b) Free consignments.

c) Rental or leasing contracts.

The conditions for the use of the transaction value method are in particular as follows:

a) there must be sale for export to Montenegro, proved by commercial invoices,

contracts, purchase order, etc.;

b) there must be no restrictions on the disposition or use of the goods by the buyer, other
than restrictions which:

41
 - are imposed or required by law or by the public authorities in Montenegro, e.g.
licence, end-use, etc.

- limit the geographical area in which the goods may be resold, or

- do not substantially affect the value of the goods, e.g. selling or exhibiting
automobiles prior to a fixed date which represents the beginning of a model year;
c) the sale or price must not be subject to conditions or considerations for which a value
cannot be determined with respect to the goods being valued, for example:
- the seller establishes the price of the imported goods on the condition that the buyer
will also buy other goods in specified quantities,
- the price of the imported goods is dependent upon the price or prices at which the
buyer sells other goods to the seller,
- the price is established on the basis of a form of payment extraneous to the imported
goods, such as where the imported goods are semi-finished goods which have been
provided by the seller on the condition that he will receive a specified quantity of the
finished goods (if a value for can be determined in those cases this amount is to be
regarded as a part of the price actually paid or payable);
d) no part of the proceeds of any subsequent resale, disposal or use of goods by the buyer
will accrue directly or indirectly to the seller, unless an appropriate adjustment can be
made in accordance with the provisions of Article 38 Customs Law. Sufficient
information must be available to permit an accurate adjustment for any such proceeds;
e) the buyer and the seller are not related or if so, the price is not affected by this
circumstance. If the buyer and the seller are related, the circumstances surrounding the
sale shall be examined and the transaction value shall be accepted provided that the
relationship did not influence the price. If, in the light of information provided by the
importer or otherwise, the customs administration has grounds for considering that the
relationship influenced the price, it shall communicate its grounds to the importer and
the importer shall be given a reasonable opportunity to respond.

In particular, the importer must demonstrate that:

- the relationship did not influence the price actually paid or payable, or alternatively,
- the transaction value closely approximates to one of the following so-called test
values:

42
 -- the transaction value in sales, between buyers and sellers who are not related in
any particular case, of identical or similar goods for export to Montenegro,

-- the customs value of identical goods, as determined under Article 32 of the

Customs Law,

-- the customs value of similar goods, as determined under Article 33 of the Customs
Law.

If the declarant negates in his/her declaration that seller and buyer are related, the
customs authorities will generally accept this statement without further examination,
unless they have reasonable doubts.

Doubts may arise, e.g.

- due to the names of seller and buyer,

- if there are indications in the documents (terms used such as inter-company, transfer
or netting prices),
- or the customs authorities have specific information.

METHOD 2: THE TRANSACTION VALUE OF IDENTICAL GOODS

Definition of identical goods:

a) identical goods are defined as goods which are: - the same in all respects including:
-- physical characteristics,

-- quality, and

-- reputation,

- produced in the same country as the goods being valued, and

- produced by the producer of the goods being valued;
b) the definition of identical goods excludes imported goods for which engineering, artwork,
etc. is undertaken in the country of importation and is provided by the buyer to the
producer of the goods free of charge or at a reduced cost;

43
c) where there are no identical goods produced by the same person in the country of
production of the goods being valued, identical goods produced by a different person in
the same country may be taken into account;
d) minor differences in appearance would not preclude goods which otherwise conform to
the definition from being regarded as identical.

The transaction value of identical goods can be adjusted upwards or downwards to account
for demonstrated differences between the goods being valued and the identical goods, to take
account of:

- trade level differences,

- quantity differences, and
- commercially significant differences for transportation costs due to variances in
the mode and/or distance of transport.

When this method is used, the identical goods must have been exported to Montenegro at or
about the same time as the goods being valued. Where there is more than one transaction
value of identical goods which meets all requirements, the lowest such value is to be used.

METHOD 3: THE TRANSACTION VALUE OF SIMILAR GOODS

Definition of similar goods:

a) similar goods are defined as goods which:

- closely resemble the goods being valued in terms of component materials and
characteristics,
- are capable of performing the same functions and are commercially
interchangeable with the goods being valued,
- are produced in the same country as the goods being valued,
- are produced by the producer of the goods being valued;

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b) the definition of similar goods excludes imported goods for which engineering, artwork,
etc. is undertaken in the country of importation and is provided by the buyer to the
producer of the goods free of charge or at a reduced cost;

c) where there are no similar goods produced by the same person in the country of
production of the goods being valued, similar goods produced by a different person in the
same country may be taken into account.

The same adjustments as in the above article 19 are to be made where appropriate.

The similar goods used must have been exported to Montenegro at or about the same time as
the goods being valued. Where this is more than one transaction value of similar goods which
meets all the requirements, the lowest such value is to be used.

METHOD 4: THE DEDUCTIVE METHOD (PRICE PER UNIT)

By this method the Customs value is determined on the basis of sales price in Montenegro of
the goods being valued or of identical or similar imported goods, less certain specified
expenses resulting from the importation and sale of the goods.

The sales in Montenegro must meet the following conditions:

a) the goods have been resold in Montenegro in the same condition as imported;
b) sales of the goods being valued or of identical or similar goods have taken place at the
same or substantially the same time as the time of importation of the goods being valued;
c) if no sales took place at or about the time of importation, it is permitted to use sales up to
90 days after importation of the goods being valued;
d) if there are no sales of identical or similar imported goods in the condition as imported
that meet all the above requirements, the importer may choose to use sales of the goods
being valued after further processing, provided that the value is deducted for the
processing added value;
e) the purchaser must not be related to the importer from whom he buys goods at the first
commercial level after importation.
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The unit price at which the greatest number of units is sold must be established. Commercial
invoices will serve as the primary basis for establishing the price per unit.

A deductive value is determined by making a deduction from the established price per unit for
the aggregate of the following elements:

a) Commissions generally earned on a unit basis in connection with sales in the country of
importation form goods of the same class or kind; or
b) Profit and general expenses generally reflected on a unit basis in sales in the country of
importation form goods of the same class or kind; i
c) The usual transport, insurance and associated costs incurred within the county of
importation;
d) Customs duties and taxes of the importing country;
e) Value added by assembly or further processing, when applicable.
METHOD 5: THE COMPUTED VALUE (CONSTRUCTION VALUE)

Under this Method, the Customs value is determined on a basis of the cost of production of
the goods being valued, plus an amount for profit and general expenses usually reflected in
sales from the country of exportation to Montenegro of goods of the same class or kind.

The customs value may be calculated as follows:

a) first, determine the aggregate of the relevant costs, charges and expenses or the value of:
I. materials employed in producing the imported goods, and
II. production or other processing costs for the imported goods (direct and indirect
labour, factory overheads);

b) the following are to be added if not included under I and II above:

I. packing costs and charges,
II. assists (apportioned in a reasonable manner in accordance with generally accepted
accounting principles),
III. engineering work, artwork, etc., undertaken in the country of importation and
charged to the producer;
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c) add amounts for profit and general expenses, usually reflected in export sales to
Montenegro, by producers in the country of export of goods of the same class or kind;

d) add the cost of transport, insurance and related charge to the port or place of importation.

Note:

The order between methods 4 and 5 may be switched, but only upon the importer’s request,
while the customs office may not decide on such switching.

METHOD 6: THE FALLBACK OR FLEXIBLE METHOD

When Customs value can not be determined under any of the previous methods of valuation,
it may be determined by applying in a flexible manner which ever of the previous methods
most readily enables calculation of the Customs value. In determining Customs value under
this method, no arbitrary, fictitious or prohibited methods of valuation are to be used. The
Customs value should be fair, reasonable, uniform and neutral, and should reflect commercial
reality to the extent possible.

Under this method, the Customs value may not be based on:

a) the selling price of goods produced in Montenegro;

b) the higher of two alternative values;
c) the price of goods on the domestic market of the country of exportation;
d) the cost of production except under the computed value method;
e) the price of goods for export to a third country;
f) minimum Customs values; and
g) arbitrary or fictitious values.

The following cases of various uses of the fallback method may arise:

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a) Article 30 of the Customs Law
Buyer and seller are related and the price is reduced due to this circumstance. The amount
of reduction can be determined and the transaction value is adjusted accordingly.

b) Identical goods
The requirement that the identical goods should be exported at or about the same time as
the goods being valued could be flexibly interpreted; identical imported goods produced
in a country other than the country of exportation of the goods being valued could be the
basis for customs valuation; customs values of identical imported goods already
determined under the provisions of Article 32of the Customs Law could be used.

c) Similar goods
The requirement that the similar goods should be exported at or about the same time as
the goods being valued could be flexibly interpreted; similar imported goods produced in
a country other than the country of exportation of the goods being valued could be the
basis for customs valuation; customs values of similar imported goods already determined
under the provisions of Article 33 of the Customs Law could be used.

d) Deductive method
The requirement that the goods shall have been sold in the "condition as imported" in
article 35 of the Customs Law could be flexibly interpreted; the "90 days" requirement
could be administered flexibly.

e) In particular, transaction value may not be used to value merchandise imported pursuant
to a lease or rent agreement, with an option to buy. However, where other bases of
valuation may also not be used, a value may be based on the transaction value approach
using the “option to buy” price in the lease agreement, reasonably adjusted to arrive at a
value.

f) Price dependent on resale price

The price has been only provisionally fixed and will be adjusted either up or down,
depending on the profit margin realized on the resale of the goods. Basically, in cases,

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 where the price is payable to the seller not prior to reselling of the goods on the domestic
market the transaction value method may be applicable if suitable documentation (e.g.
price list) is available. If this is not the case and all other successive methods of valuation
are also not applicable, the customs value must be determined following the flexible
method.

In applying the fallback method, if more than one method can be applied flexibly, the normal
sequence for using methods 1 to 5 must be taken into account.

In a case of a customs offence, for example, if the declarant attempts to understate the
transaction value, this action may not necessary lead directly to the flexible method as a sole
sanction. In these cases the customs authorities shall initiate offence procedure against the
suspicious. In the course of those procedures the customs authorities shall also try to
investigate the price really paid to the seller (or to reveal data supporting the successive
methods) in order to determine the customs value.

REFERENCES

ABGRALL-LEVY (M.), Cas pratique transport multimodal, Master 2, Université de Paris 1

Panthéon-Sorbonne, 2011.

BOYA (J.L), Pratique de la douane et du transit, éd. afredit, Yaoundé, 2017.

Customs Procedure Manual (Code) manual 2012.

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DINANGUE (G), Management des contraintes du maillon portuaire dans la supply chain, la
Maison de l’Imprimeur, Douala, 2016 et éd. Edilivre, Paris 2017.

The revised kyoto convention: a pathway to accession and implementation, APEC Sub-
Committee on Customs Procedures, September 2003.

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