I.   Text and Commentary

--   Introduction   5
--   Definitions    5
--   Principle (provision 1)  6
--   Scope (provisions 2-3)   7
--   Conditions to be fulfilled (provisions 4-5)  8
--   Duration of stay of the goods in the Customs territory (provisions 6-7)    9
--   Declaration on exportation and claim for drawback (provisions 8-12)  10
--   Payment of drawback (provisions 13-15)  12
--   Information concerning drawback (provision 16)    13

II.  Entry into force

--   Contracting Parties having accepted the Annex     15

III. Reservations

--   Contracting Parties having entered reservations   17
--   Reservations entered (in alphabetical order of Contracting Parties)

IV.  Alphabetical Index



I.--TEXT AND COMMENTARY *


* Annex E.4. 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 28 September 1974. Previous Council work on
this topic includes a Study (Study No. 9) and an international Customs
Norm, both published in 1968.



Introduction

When imported materials which have borne import duties and taxes are
subjected to manufacturing or processing (or, in certain
circumstances, repair) and are then exported, they can often be
offered for sale in foreign markets at more competitive prices if the
import duties and taxes are refunded at exportation. The drawback
procedure provides facilities for such a refund.

Since, however, such refunds may encourage the importation of foreign
goods for which equivalents are available from domestic sources, some
restriction on the granting of such refund may be considered necessary
in respect of particular categories of goods or particular processing
or manufacturing operations. The extent to which drawback may be
granted will have to be specified as necessary by individual
countries.

This Annex covers not only the granting of drawback in cases where the
goods have undergone processing, manufacture or repair, but also the
possibility of granting drawback in cases where goods have been
imported and are subsequently re-exported in the same state. The Annex
does not cover, however, repayment made on grounds of equity, for
example, when goods are returned to the supplier as being not in
accordance with contract. Neither does the Annex cover the repayment
on exportation of duties and taxes other than import duties and taxes.


Definitions

For the purposes of this Annex:

(a)  the term " drawback procedure " means the Customs procedure
which, when goods are exported, provides for a refund (total
or partial) to be made in respect of the import duties and taxes
charged on the goods, or on materials contained in them or used up in
their production;

(b)  the term " drawback " means the amount of import duties and taxes
repaid under the drawback procedure;

(c)  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 (1).

COMMENTARY

(1) The definition includes Value Added Tax collected in connection
with the importation of the goods (see also comment (4) on Standard
2).


Principle

1.   Standard

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

COMMENTARY

(1) From an economic point of view the purpose of the drawback
procedure is to facilitate the temporary stay of goods in a country in
order to encourage its productive industries and promote its export
trade. Where drawback is allowed on the re-exportation of goods in the
same state, the entrepot trade of the country is aided as goods are
attracted for ultimate distribution in other countries.

The drawback procedure is not the only Customs procedure providing
advantageous conditions for commercial interests wishing to increase
their exports by importing foreign goods or materials. In particular,
a similar purpose is achieved by both the temporary admission for
inward processing procedure (Annex E.6.) and the duty-free replacement
of goods procedure (Annex E.7.), and by the temporary admission
subject to re-exportation in the same state procedure (Annex E.5.).

(2) There is no obligation on States to accept all the provisions of
the Annex and reservations in respect of any Standards and Recommended
Practices that they are not yet in a position to apply may be entered
(see Article 5 of the Convention).

Customs authorities are free to enact rules on aspects of the drawback
procedure not covered by specific provisions of this Annex.

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


Scope

2.   Standard

National legislation (1) shall specify the cases (2) in which drawback
may be claimed and the conditions under which it is paid.

Notes     1.   The cases where drawback may be claimed may be
specified by reference to certain goods or classes of goods (3) or to
certain uses of goods. Drawback may also be restricted to certain
categories of import duties and taxes (4) or to cases where the goods
have undergone processing, manufacture or repair or other authorized
uses (5). Drawback in respect of goods used up in the production of
exported goods does not normally extend to mere aids to manufacture,
such as lubricants (6), but may apply to waste or loss resulting from
such manufacture.

     2.   Repayments under the drawback procedure are not granted in
cases where import duties and taxes have been, or will be, repaid
under other provisions (7).

COMMENTARY

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

(2) The scope of this Annex does not cover goods which, if exported,
would be eligible for drawback but which, rather than being exported,
are delivered to persons, bodies or organizations (e.g. diplomatic
missions) entitled under law to import such goods free of import
duties and taxes. Neither does the Annex extend to goods which are
sold at tax-free shops to tourists leaving the country or to goods
destroyed or rendered commercially valueless under Customs supervision
rather than being exported on drawback.

(3) This could be achieved, for example, by reference in national
legislation to certain tariff headings, or to specific descriptions of
goods or classes of goods, as being eligible for the payment of
drawback.

(4) Some countries may need to exclude such taxes as Value Added Tax
from the scope of the drawback procedure.

(5) Goods exported in the same state as imported would normally be
eligible for the payment of drawback unless national legislation
provided otherwise. This might be done by means of a provision
restricting the payment of drawback to goods which have undergone
processing, manufacture, repair, or other authorized uses.

(6) However, drawback may be allowed for goods, such as catalysts and
accelerators or retarders of chemical reactions, that are used up
during a manufacturing process and are essential to it.

(7) Refunds are sometimes allowed in respect of certain import duties
and taxes (e.g. Value Added Tax and agricultural levies), under more
than one procedure.


3.   Recommended Practice

The drawback procedure should also be applied in cases where the goods
or materials which have borne import duties and taxes have been
replaced by equivalent goods or materials (1) used in the manufacture
or production of exported goods (2).

COMMENTARY

(1) No definition of " equivalent goods or materials " is contained in
the Annex, this being a question to be determined at national level.
However considerations of quality and price would normally be taken
into account in determining whether or not goods or materials would be
accepted as being equivalent.

(2) In principle imported goods or materials which have borne import
duties and taxes must be exported in order to qualify for the payment
of draw-back. However, as a facility to traders, where such goods have
been replaced by equivalent goods or materials in the manufacture or
production of exported goods, the drawback procedure should
nevertheless be applied. The equivalent goods or materials may be
imported or of domestic origin.

Recommended Practice 3 applies, whether or not it is possible to
distinguish the imported goods or materials in question from
equivalent goods or materials, for example where they have not been
segregated for storage, as the question of equivalence is related to
the quantity of goods rather than to the identification of precisely
which goods had borne the import duties and taxes.


Conditions to be fulfilled

4.   Standard

The interested parties shall maintain records or stock accounts
enabling the validity of the claim for drawback to be verified (1)
(2).

COMMENTARY

(1) The Annex does not include any condition that the ownership of the
goods should not change hands as it is considered that control of
transfers of ownership is not important, the emphasis being on
adequate control of the goods themselves.

Nor is a condition imposed that the goods should have been declared
for home use, it being implicit that, if import duties and taxes have
been paid, the goods have been declared for home use.

(2) The availability of records or stock accounts may not in all
instances be necessary for the verification of entitlement to drawback
and in such cases the keeping of records can be waived under the
greater facilities clause (Article 2 of the Convention).


5.   Standard

When it is known or anticipated at the time of importation of the
goods for home use that drawback will be claimed, the declarant may be
required, in order to facilitate a later claim, to state this
intention; however, payment of drawback shall not be withheld solely
because such a statement has not been made, nor shall exportation be
required because of such a statement.

Note The Customs may require that goods on which drawback is to be
claimed be segregated from other goods or be processed or manufactured
under Customs supervision (1).

COMMENTARY

(1) If it is not known or stated at the time of importation that
drawback is to be subsequently claimed it may be impossible to impose
such a requirement. However, as the onus for establishing entitlement
to drawback remains with the claimant, it is in his interests to
ensure that Customs requirements in connection with the claim are
fully complied with.


Duration of stay of the goods in the Customs territory

6.   Standard

Where a time limit (1) for the exportation of the goods is fixed
beyond which they no longer qualify for drawback, due account shall be
taken in fixing such limit of the nature of the process or manufacture
to which the goods may be subjected, and of the commercial or other
factors involved (2) (3).

COMMENTARY

(1) No suggestion is made that a time limit for the exportation of
goods beyond which they no longer qualify for drawback should be
fixed.

(2) In effect this means that countries which impose a time limit must
do so either by reference to certain categories of goods, specific
types of process or manufacture, etc., or by setting the time limit on
an ad hoc basis.

No reference is made to the actual point from which the time limit, if
any, is calculated, but in most cases this would presumably be either
the date of importation or the date on which the goods were taken into
home use.

(3) There is a distinction between this provision, which is concerned
with a possible time limit for the exportation of goods under the
drawback procedure, and Recommended Practice 12 which relates to a
possible time limit for the lodgement of a claim for drawback.


7.   Recommended Practice

Where a time limit for the exportation of the goods is fixed, this
should, upon request, be extended if the reasons are deemed by the
Customs authorities to be valid.


Declaration on exportation and claim for drawback

8.   Standard

A declaration of exportation on drawback accompanied by supporting
documents shall be lodged at a competent Customs office (1).

COMMENTARY

(1) In cases where not all Customs offices are competent to accept
declarations of exportation on drawback, the Customs authorities
should designate those which are competent for this purpose.


9.   Recommended Practice

At the request of the exporter, and for reasons deemed to be valid,
the Customs authorities should, so far as possible, allow goods for
exportation to be examined (1) on private premises (2), the expenses
entailed by such examination being borne by the exporter (3).

The Customs authorities may themselves require goods for exportation
to be produced for examination at private premises.

COMMENTARY

(1) The provision applies only to the examination of goods for the
purposes of the drawback procedure and there is no necessity for the
private premises to be legal Customs areas. In cases where goods have
been examined on private premises, the Customs, of course, always
retain the right to examine them again at exportation.

(2) The reference in this provision to " private ", rather than "
exporter's " premises, allows for flexibility in situations where the
goods are located at premises other than those of the actual exporter,
for example, at the premises of the manufacturer, packer or export
shipper.

(3) The expenses for examination of goods on private premises are to
be borne by the exporter, but of course, under the greater facilities
clause, this provision need not be applied by countries who do not
wish to charge for this service.


10.  Recommended Practice

Where the exportation of goods under the drawback procedure is
controlled through the exporter's records, production of the goods at
exportation should normally be dispensed with (1).

COMMENTARY

(1) Although the production of goods at exportation should not
normally be required under these circumstances, the Customs
authorities always retain the right to examine the goods and to verify
exportation whenever they consider it necessary.


11.  Standard

The claim for drawback (1) shall contain (or provide in the
accompanying documents) such proof as is required to show that the
conditions laid down for the payment of drawback have been fulfilled
(2).

Note The particulars that may be required (3) by the Customs
authorities for the payment of drawback include the following:
     (a) the claimant,
     (b) the initial clearance of the goods for home use (for
         example, the number and date of the Goods declaration for home use),
     (c) the import duties and taxes paid,
     (d) the nature or tariff description, and the quantity, of the goods,
     (e) the use, process or manufacture to which the goods have been
         subjected,
     (f) details of exportation.

COMMENTARY

(1) In appropriate circumstances a degree of facilitation might be
achieved by combining the declaration on exportation and the claim for
drawback so as to comprise one form.

(2) The onus is, of course, on the claimant to justify the claim and
the Customs retain the right to take whatever action they consider
necessary to establish the validity of the claim.

(3) The Note mentions the main details which may be required by the
Customs authorities in verifying the accuracy of a claim for drawback.
The list is for the purposes of guidance only, and it is not suggested
that all particulars mentioned therein would necessarily be required
for each, or any, claim for drawback.


12.  Recommended Practice

Where a time limit (1) is fixed beyond which claims for drawback will
not be accepted, provision should be made for its extension for
commercial or other reasons deemed by the Customs authorities to be
valid (2) (3).

COMMENTARY

(1) No suggestion is made for the fixing of a time limit beyond which
claims for drawback will not be accepted by the Customs authorities.

(2) No reference is made to the actual point in time from which the
time limit if any, is calculated, but the most suitable point would
probably be the date of exportation of the goods.

(3) There is a distinction between this provision which is concerned
with a possible time limit for the lodgement of a claim for drawback,
and Standard 6 which relates to a possible time limit within which the
goods in question must be exported in order to qualify for the payment
of draw-back.


Payment of drawback

13.  Standard

Drawback shall be paid (1) as soon as possible after the claim has
been verified (2) (3).

COMMENTARY

(1) No provision is made in the Annex for the payment of drawback at a
flat rate, this being a practice which is not in common use.

No minimum amount is specified below which a claim for drawback will
not be accepted, this being a question which should be determined, if
necessary, at national level.

(2) It is not normally considered necessary to make the payment of
drawback subject to the production of evidence that the goods have
arrived in the country of destination. However, so that the necessary
checks can be made, this may be necessary in cases where the claim for
drawback is not made at the time of exportation.

(3) This provision does not, of course, restrict the making of mutual
arrangements for periodical payments to claimants (see Recommended
Practice 15).


14.  Recommended Practice

Drawback should also be paid on deposit of the goods in a Customs
warehouse on condition that they are to be exported subsequently (1).


COMMENTARY

(1) The situation can arise where goods are intended to be exported on
draw-back but, for valid reasons, such as the non-availability of a
vessel, there is a delay in the actual exportation of the goods. The
provision constitutes a useful facility for traders by providing for
the immediate payment of drawback where goods are placed in a Customs
warehouse on condition that they are to be subsequently exported.

Where it happens that, for some reason, the goods are not subsequently
exported the revenue is not endangered as the goods remain under
Customs control in a Customs warehouse. Therefore although there must
be an intention to export the goods there is no obligation to actually
do so, as, after payment of drawback, the goods have the same status
as other goods stored in a Customs warehouse.

It should be noted that, in applying this provision, the Customs would
be permitting the entry into a Customs warehouse of goods having
previously borne import duties and taxes.


15.  Recommended Practice

The Customs authorities should, if so requested, pay drawback
periodically (1) on goods exported during a specified period.

COMMENTARY

(1) Periodical payments are intended to simplify the work of both the
Customs and the claimant in cases where a substantial number of claims
are regularly submitted by a trader.

Where the claimant does not request periodical payment, Standard 13
provides for drawback to be paid as soon as possible after the claim
has been verified.


Information concerning drawback

16.  Standard

The Customs authorities shall ensure that all relevant information
regarding the drawback procedure is readily available (1) to any
person interested.

COMMENTARY

(1) The information can be made available through the usual
information media such as regular publications (official gazettes and
notices) and by arranging for it to be given at all Customs offices
where it can be furnished promptly upon request.




II.--ENTRY INTO FORCE

Contracting Parties having accepted the Annex, with dates of entry
into force

        Algeria                   12 January 1977
        Australia                 13 February 1976
        Austria                   28 September 1974
        Belgium                   18 January 1992
        Botswana                  05 October 1991
        Bulgaria                  20 July 1982
        Burundi                   28 September 1974
        Cameroon                  12 April 1977
        Canada                    28 September 1974
        Cyprus                    25 January 1977
        Finland                   08 September 1983
        France                    03 June 1989
        Gambia                    28 September 1974
        Germany (Fed. Rep. of)    ?? May 1989
        India                     30 August 1985
        Israel                    30 June 1977
        Kenya                     01 December 1983
        Lesotho                   13 November 1985
        Morocco                   02 September 1987
        Netherlands               27 October 1989
        New Zealand               20 November 1975
        Norway                    05 November 1975
        Pakistan                  04 September 1982
        Poland                    26 April 1989
        Senegal                   18 August 1983
        South Africa              07 June 1986
        Spain                     21 September 1991
        Sweden                    30 November 1976
        Switzerland               13 July 1977
        United Kingdom            10 December 1991
        United States             28 January 1984
        Zimbabwe                  20 September 1988
        EEC                       28 January 1989



III.--RESERVATIONS

Contracting Parties having entered reservations

Contracting Parties Provisions reserved

        Australia                 3 - 14
        Austria                   10 - 14
        Belgium                   5
        Botswana                  12 - 14
        Canada                    14
        Cyprus                    3
        France                    5
        Germany (Fed. Rep. of)    5
        India                     2 - 3 - 10 - 14
        Israel                    10 - 14
        Kenya                     3 - 14
        Lesotho                   12 - 14
        Netherlands               5
        Pakistan                  3
        Senegal                   14
        South Africa              12 - 14
        Spain                     5
        Sweden                    14
        Switzerland (1)           2 - 12
        United Kingdom (2)        5
        United States             6 - 7 - 12 - 14
        Zimbabwe                  3 - 7 - 14
        EEC                       5
                     

(1) Also applicable to the Liechtenstein.
(2) Also applicable to the Channel Islands and the Isle of Man.



IV. --ALPHABETICAL INDEX


               Provisions

Cases in which drawback may be claimed  2, 3
Claim for drawback  4, 5, 11, 12
Conditions to be fulfilled    2, 4, 5
Customs supervision 5
Declaration
--   on exportation 8
--   for home use   11
Documents      8, 11
Duties and taxes--import 2, 3, 11
Equivalent goods or materials 3
Examination of goods     9
Exportation -- control of     10, 11
Goods
   -- deposited in Customs warehouse    14
   -- production to Customs   9,10
   -- used up in the production of exported goods 2
Information concerning drawback    11, 16
Manufacture         2, 5, 6, 11
Payment of drawback 5, 11, 13, 14, 15
Principle      1
Processing          2, 5, 6, 11
Repairs        2
Repayments          2
[page unnumbered]
Replacement by equivalent goods or materials 3
Segregation of drawback goods 5
Time limit
--   extension 6
--   fixing of 7, 12
Waste or losses     2

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