I. Text and Commentary

   -  Introduction     5
   -  Definitions      6
   -  Principle (provision 1)    7
   -  Classes of warehouses (provisions 2-4)    8
   -  Establishment of warehouses (provision 5)      9
   -  Management of warehouses (provisions 6-10)   10
   -  Goods allowed to be warehoused (provisions 11-15) 11
   -  Admission into warehouses (provision 16)     13
   -  Authorised operations (provisions 17-18)     14
   -  Duration of warehousing (provision 19)  14
   -  Transfer of ownership (provision 20)    15
   -  Deterioration, loss or destruction of goods (provisions 21-23) 15
   -  Removal from warehouse (provision 24)   16
   -  Goods taken into home use (provision 25)     17
   -  Goods not removed from warehouse (provisions 26-27)    17
   -  Information concerning warehouses (provision 28)  18

II.  Entry into force

   -  Contracting Parties having accepted the Annex     19
III. Reservations

   -  Contracting Parties having entered reservations   21
   -  Reservations entered (in alphabetical order of Contracting
      Parties)

IV.  Alphabetical index


I.-TEXT AND COMMENTARY *


* Annex E.3. was adopted by the Permanent Technical Committee at its
79th/80th Sessions, held in February/March 1973, and approved by the
Council at its 41st/42nd Sessions, held at Kyoto, Japan, in May 1973.
It entered into force on 25 September 1974. 

The Council published a Study (No. 7) on the Customs warehousing
procedure in 1965 and subsequently issued an international Customs
Norm on the Customs warehousing procedure. A definition of the
procedure was also included in the Glossary of International Customs
Terms.


Introduction

It is in the nature of international trade practice that in a great
many cases it is not known at the time of importation how imported
goods will finally be disposed of. This means that the importers are
obliged to store the goods for more or less long periods. 

Where it is intended to re-export the goods, it is in the importer's
interest to place them under a Customs procedure which obviates the
need to pay import duties and taxes. 

When goods are intended for outright importation, it is again in the
importer's interest to be able to delay payment of the import duties
and taxes until the goods are actually taken into home use. 

In order to make these facilities available to importers, most
countries have provided in their national legislations for the Customs
warehousing procedure. 

However, imported goods are not the only goods which may qualify for
Customs warehousing. 

For example, some countries allow goods that are liable to, or have
borne, internal duties and taxes (whether of national origin or
previously imported against payment of import duties and taxes) to be
stored in Customs warehouses in order that they may qualify for
exemption from, or repayment of, such internal duties and taxes.

Similarly, the deposit in a Customs warehouse of goods that have
previously been dealt with under another Customs procedure or that may
qualify, upon exportation, for repayment of import duties and taxes,
makes it possible for the Customs authorities to grant discharge of
such other Customs procedure or to repay the import duties and taxes,
as the case may be, before the goods are actually re-exported.

The provisions of this Annex do not apply to: 

- the storage of goods in temporary store (locked premises and
enclosed or unenclosed spaces approved by the Customs, in which goods
may be stored pending clearance), 

- the storage of goods in free ports and free zones, 

- the processing or manufacturing, under Customs supervision, of
goods conditionally relieved from import duties and taxes in premises
approved by the Customs (inward processing warehouses).


Definitions

For the purposes of this Annex: 

(a)  the term " Customs warehousing procedure " means the Customs
procedure under which imported goods are stored under Customs control
in a designated place (a Customs warehouse) without payment of import
duties and taxes (1);

(b)  the term " import duties and taxes " means Customs duties and all
other duties, taxes, fees or other charges which are collected on or
in connection with the importation of goods, but not including fees
and charges which are limited in amount to the approximate cost of
services rendered (2);

(c)  the term " Customs control " means measures applied to ensure
compliance with the laws and regulations which the Customs are
responsible for enforcing;

(d)  the term " security " means that which ensures to the
satisfaction of the Customs, that an obligation to the Customs will be
fulfilled. Security is described as " general " when it ensures that
the obligations arising from several operations will be fulfilled;
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(e)  the term " person " means both natural and legal persons, unless
the context otherwise requires.

COMMENTARY

(1)  The definition of the term " Customs warehousing procedure " does
not cover all cases and all possible uses of Customs warehouses. It
covers the warehousing of imported goods, this being, in fact, the use
generally authorised by all countries; the storage of goods of
national origin is a marginal case of use of warehouses. Moreover, so
far as the classes of warehouses (public and private Customs
warehouses) are concerned, it was considered preferable simply to
refer to these two classes of warehouses in Standards 2 and 4,
indicating the distinction between them from the point of view of the
users. 

(2)  The definition of the term " import duties and taxes " also
covers Value Added Tax collected in connection with the importation of
the goods.


Principle


1. Standard

The Customs warehousing (1) procedure shall be governed by the
provisions of this Annex (2).

COMMENTARY 

(1)  The Introduction also stresses the economic and practical
advantages of being able to warehouse goods prior to their final
disposal. It gives the person warehousing the goods time to negotiate
their sale, either on the home market or abroad, or to arrange for
them to be processed or manufactured, transferred to another Customs
procedure or otherwise disposed of in an authorised manner. It also
enables the payment of import duties and taxes on imported goods to be
deferred until the goods are cleared for home use, or to be waived
altogether if the goods are re-exported. If so authorised by national
legislation, it further permits temporary suspension of any economic
prohibitions, quotas, etc. which may be applicable to the goods.

(2)  This Standard sets out the general principle that, in order to
achieve simplification and harmonization, the provisions of this Annex
should be applied. This does not mean that all must necessarily be
accepted: in fact Article 5 of the Convention provides that
Contracting Parties may enter reservations in respect of any Standards
and Recommended Practices that they are not yet in a position to
apply. 

     Moreover, Customs authorities are completely free to enact rules
on aspects of warehousing not covered by specific provisions of this
Annex. 

     Finally, Customs authorities may grant greater facilities than
are provided for in the Annex. The granting of such greater facilities
is recommended in Article 2 of the Convention.


Classes of warehouses


2.   Standard

National legislation (1) shall provide for Customs warehouses open to
all importers (public Customs warehouses) (2).

Note In accordance with the provisions of national legislation, public
Customs warehouses may be managed either by the Customs authorities or
by other authorities or by natural or legal persons.

COMMENTARY

(1)  See commentary on Article 3 of the Convention.

(2)  Individual States are not required to bring their terminology for
describing the different classes of warehouses into line with that
used in the Annex. What is essential is that national legislation
shall not conflict with the provisions of the Annex which the State
has accepted and that it shall provide for the two classes of
warehouse, which are described in the Annex, in accordance with the
terminology used in most countries, as public and private warehouses.


3.   Standard

The right to store imported goods in public Customs warehouses shall
not be restricted only to importers but shall be extended to any other
persons interested (1).

COMMENTARY 

(1)  The scope of the term " any other persons interested " is to be
determined by national provisions. The term may include, for example
persons to whom the goods have been sold while in the warehouse, or
other persons, natural or legal, having title to the goods or the
legal right to dispose of them.


4.   Standard

National legislation shall provide for Customs warehouses to be used
solely by specified persons (private Customs warehouses) (1) when this
is necessary to meet the special requirements of trade or industry
(2)(3).

COMMENTARY 

(1)  See commentary No. 2 to Standard 2. 

(2)  It is for the national authorities to determine whether the
establishment of private Customs warehouses is justified, having
regard to the special requirements of trade or industry and economic
circumstances.

(3)  The categories of goods which may be stored in private Customs
warehouses is not generally restricted. (But see Standard 12 as to the
specification of goods for storage in any particular warehouse.)


Establishment of warehouses (1)


5.   Standard

The requirements as regards the construction and layout of Customs
warehouses (2) and the arrangements for Customs control shall be laid
down by the Customs authorities. 

Note For the purpose of control, the Customs authorities may, in
particular (3):

     -    require that Customs warehouses be double-locked (secured by
the lock of the person concerned and by the Customs lock),

     -    keep the premises under permanent or intermittent
supervision,

     -    keep, or require to be kept, accounts of goods warehoused
(by using either special registers or the relevant declarations), and

     -    take stock of the goods in the warehouse from time to time.

COMMENTARY 

(1)  Although the establishment of warehouses is normally subject to
the approval of the Customs authorities, the Standard does not deal
with this point since in many cases the Customs are not the only
authorities competent in the matter. 

(2)  Obviously, the requirements of the Customs authorities will
differ according to whether the warehouses are operated by them, by
other authorities or by natural or legal persons. They will also
depend on the risk for the Customs of fraudulent removal or
substitution of goods and on the amount of the import duties and taxes
chargeable on the goods allowed to be stored. In certain
circumstances, enclosed sites may also be used for the storage of
goods under the Customs warehousing procedure.

(3)  The Note lists some of the requirements which Customs authorities
may impose for control purposes; this list is not, of course,
exhaustive. The Note would cover a requirement that suitable premises
be made available to the Customs in private Customs warehouses or that
charges be paid for special services rendered by the Customs. However,
for the Customs and the public alike it would be superfluous and
detrimental to smooth operation to impose requirements or measures of
no practical value or not commensurate with the actual risks involved.
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Management of warehouses


6.   Standard

National legislation shall specify the person or persons (1) held
responsible (2) for the payment of any import duties and taxes
chargeable on goods placed under the Customs warehousing procedure
that are not accounted for to the satisfaction of the Customs
authorities.

COMMENTARY

(1)  In some countries, the person or persons held responsible for the
payment of any import duties and taxes chargeable may be the person
warehousing the goods; in others, it may be the manager or owner of
the warehouse for example if the goods are lost through no fault of
the importer or the person warehousing the goods.

(2)  This Standard does not prevent two or more persons from being
held jointly responsible. 


7.   Standard

When security (1) is required to ensure that the obligations arising
from several operations will be fulfilled, the Customs authorities
shall accept a general security (2).

COMMENTARY

(1)  Security is frequently required by the Customs authorities to
ensure that the obligations deriving from the warehousing of the goods
will be fulfilled. The Annex specifies neither the form the security
should take nor the person(s) called upon to provide it; consequently,
these are matters for each country to decide.

     Where security is required, it may be required from the owner or
manager of the warehouse or from the person(s) warehousing the goods.
It is usually provided by depositing cash or negotiable securities or
is given by an approved surety (natural or legal person, generally a
bank or an insurance company). It may also take the form of a bond or
(e.g. where the warehouse is managed by an administrative authority)
be given as a simple undertaking.

(2)  See Definition, (d) above. 


8.   Recommended Practice

The amount of any security should be set as low as possible (1) having
regard to the import duties and taxes potentially chargeable.

COMMENTARY

(1)  This does not deal with the amount of the security, whether
general or specific, which Customs authorities should require. Because
the needs of administrations in this field vary from one country to
another, it is recommended that the amount of any security should be
set as low as possible. It will be clear that States which, in fixing
the amount of the security, take into account any penalties
potentially chargeable, or use other bases whose effect is to raise
this amount considerably, will have to enter reservations to this
Recommended Practice.


9.   Recommended Practice

The Customs authorities should waive security where the warehouse is
under adequate Customs supervision, in particular where it is
Customs-locked (1).

COMMENTARY

(1)  Security need not be required where the physical characteristics
of the warehouse or the Customs control measures applied make it
practically impossible to remove or substitute goods without
authorisation by the Customs.


10.  Standard

The Customs authorities shall lay down the requirements as regards the
management of Customs warehouses (1), and arrangements for storage of
goods in Customs warehouses and for stock-keeping and accounting shall
be subject to the approval of the Customs authorities.

COMMENTARY

(1)  It is not practicable to describe in the Convention all the
requirements concerning the management of Customs warehouses.
Moreover, the Customs authorities are not always empowered to lay down
all these requirements themselves. The requirements may vary according
to whether the warehouse is managed by the Customs authorities, by
other authorities or by private persons, etc. The Customs authorities
may also lay down certain requirements under other provisions of the
Annex.


Goods allowed to be warehoused


11.  Recommended Practice

Storage in public Customs warehouses should be allowed for all kinds
of imported goods liable to import duties and taxes or to restrictions
or prohibitions other (1) than those imposed on grounds of public
morality or order, public security, public hygiene or health, or for
veterinary or phytopathological considerations, or relating to the
protection of patents, trade marks and copyrights, irrespective of
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quantity, country of origin, country whence arrived or country of
destination.

Goods which constitute a hazard, which are likely to affect other
goods or which require special installations should be accepted only
by Customs warehouses specially designed to receive them.

COMMENTARY

(1)  In principle, goods subject to economic prohibitions or
restrictions should be allowed to be stored in public Customs
warehouses. 

     States that do not allow this should enter a reservation (if
necessary, in general terms) in respect of this Recommended Practice.


12.  Standard

The kinds of goods which may be stored in private Customs warehouses
shall be specified (1) by the competent authorities in the authority
granting the benefit of the Customs warehousing procedure or in an
appropriate provision (2).

COMMENTARY

(1)  Private Customs warehouses are in a different category, as will
be clear from the definition of such warehouses given in Standard 4 of
the Annex and only those goods for which specific approval has been
given can be stored in them.

(2)  This Standard should not give rise to reservations on the part of
States that have accepted the Annex as it leaves the competent
authorities free to specify the classes of goods which may be stored
in these warehouses in the authority granting the benefit of this
procedure or in another appropriate provision.


13.  Recommended Practice

Storage in Customs warehouses should be allowed for goods which are
entitled to repayment of import duties and taxes (1) when exported, so
that they may qualify for such repayment immediately, on condition
that they are to be exported subsequently (2).

COMMENTARY 

(1)  These are goods on which drawback is claimed or which are
re-exported as not in accordance with contract or for any other reason
of equity recognised by national legislation (see also Annex E.4.
concerning drawback and Annex F.6. concerning the repayment of import
duties and taxes).

(2)  Warehousing is treated as equivalent to exportation, and
repayment of (or exemption from) import duties and taxes or internal
taxes can be granted without awaiting actual exportation of the goods. The Customs
authorities should therefore make such repayment as soon as the goods
enter the warehouse although it remains possible to make it
conditional, in certain cases, on actual exportation. 

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