I.   Text and Commentary

     - Introduction     5
     - Definitions      5
     - Principle (provision 1)    6
     - Field of application (provisions 2-4)     7
     - Temporary exportation of the goods:
       a) Formalities prior to temporary exportation of the
          goods (provisions 5-7)     8
       b) Declaration for temporary exportation (provisions 8-10) 9
       c) Examination of the goods (provision 11) 10
       d) Identification measures (provisions 12-13)   10
     - Duration of temporary exportation (provisions 14-15)   12
     - Importation of compensating products (provisions 16-21)     12
     - Import duties and taxes applicable to compensating products
       (provisions 22-27)  14
     - Information concerning temporary exportation for
       outward processing (provision 28)  16

     Appendices:

     - Information Document (Appendix I)  17
     - Principles governing the use of the Information Document
       (Appendix II)  21

II.  Entry into force

     - Contracting Parties having accepted the Annex     23

III. Reservations

     - Contracting Parties having entered reservations   25
     - Reservations entered (in alphabetical order of Contracting
       Parties)

IV.  Alphabetical Index



I.-TEXT AND COMMENTARY *


* Annex E.8. was adopted by the Permanent Technical Committee at its
87th/88th Sessions in March 1975. The Annex has been incorporated in
the Kyoto Convention by decision of the Council, taken on 22 May 1975,
at its 45th/46th Sessions held in Buenos Aires (Argentina). It entered
into force on 20 April 1978.


Introduction

Most States have made provision in their national legislation for
total or partial exemption from import duties and taxes when goods
which are reimported after manufacturing, processing or repair abroad
are declared for home use. The Customs procedure which provides for
this exemption is that of temporary exportation for outward
processing. 

The application of this procedure may be made subject to the condition
that the processing operations envisaged are regarded by the competent
authorities as not detrimental to national interests. 

The exemption granted on the reimportation of the goods processed
abroad is usually partial; however, it may be total, in particular
where repairs have been carried out abroad free of charge. 


Definitions

For the purposes of this Annex:

(a)  the term " temporary exportation for outward processing " means
the Customs procedure under which goods which are in free circulation
in a Customs territory may be temporarily exported for manufacturing,
processing (1) or repair (2) abroad and then reimported with total or
partial exemption from import duties and taxes (3)(4);

(b)  the term " goods in free circulation " means goods which may be
disposed of without Customs restriction;

(c)  the term " import duties and taxes " means the 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 (5);

(d)  the term " compensating products " means the products obtained
abroad during or as a result of the manufacturing, processing or
repair of the goods temporarily exported for outward processing;

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

(f)  the term " person " means both natural and legal persons, unless
the context otherwise requires.

COMMENTARY 

(1)  The term " processing " may be interpreted by Contracting Parties
as covering the packaging, industrial packing or repacking of goods. 

(2)  The case of goods that are to undergo minor operations may also
be covered. 

(3)  Temporary exportation under the conditions laid down by the
present Annex may be authorised also in the case of goods which, while
under an inward processing procedure, have to be sent abroad
temporarily for supplementary processing. The Note to Standard 38 of
Annex E.6. concerning temporary admission for inward processing
provides guidance for the calculation of the import duties and taxes
chargeable on compensating products that have been sent abroad for
supplementary processing.

(4)  The question of the applicability of export duties and taxes to
goods temporarily exported for outward processing is left to the
discretion of the Contracting Parties.

(5)  The definition also covers the Value Added Tax collected in
connection with the importation of goods.


Principle


1.   Standard

Temporary exportation for outward processing shall be governed by the
provisions of this Annex (1).

COMMENTARY

(1)  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 in a position to apply may be entered (see
Article 5 of the Convention).

     Customs authorities are free to enact rules on aspects of
temporary admission for outward processing not covered by specific
provisions of this Annex.

     Cusuoms [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.


Field of application


2.   Standard

National legislation (1) shall specify the circumstances in which
temporary exportation for outward processing may be allowed and shall
lay down the requirements which must be met (2).

Notes     1.   The circumstances in which temporary exportation for
outward processing is allowed may be set out in general terms and/or
in detail.

     2.   Temporary exportation for outward processing may be made
subject to the condition that the processing operations envisaged are
not detrimental to national interests.

     3.   The Customs authorities may require a person exporting goods
temporarily for outward processing to specify the processing or
manufacturing operation which the goods are to undergo abroad.

COMMENTARY

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

(2)  The benefit of the temporary exportation for outward processing
procedure may be restricted to persons established in the Customs
territory.


3.   Recommended Practice

Temporary exportation for outward processing should not be refused
solely on the grounds that the goods are to be processed in a given
country. 


4.   Standard

Temporary exportation of goods for outward processing shall not be
restricted to the owner of the goods.


Temporary exportation of the goods


a) Formalities prior to temporary exportation of the goods


5.   Standard

Where temporary exportation for outward processing is subject to prior
authority (1), national legislation shall specify the circumstances in
which such authority is required and the authorities empowered to
grant it (2).

COMMENTARY

(1)  To facilitate the control of certain outward processing
operations Contracting Parties may require that authorisation be
obtained from a competent authority before the goods can be placed
under temporary exportation for outward processing. 

(2)  The authority competent to grant " prior authority " may be a
Customs authority. In designating the service empowered to issue such
authorisations (for example the central administration, a regional or
interregional service or the office of exportation) account may be
taken of the scale of the proposed processing operations. An authority
other than the Customs may also be empowered to issue authorisations
of this kind, for example the government department responsible for
economic affairs or external trade.


6.   Recommended Practice

Persons who carry on large-scale and continuous temporary exportation
for outward processing operations involving the same type of goods
should be granted a general authorisation covering such operations. 


7.   Recommended Practice

Where such action will facilitate a temporary exportation for outward
processing operation or the competent authorities deem it necessary,
these authorities should fix a rate of yield (1) for that operation.
The description, quality and quantity of the various compensating
products shall be specified upon fixing that rate.

Notes     1.   In order to fix the rate of yield (2), the Customs
authorities may take as a basis the conditions under which the
operation is carried out, insofar as these are known. They may require
production of the contracts with the foreign undertaking which is to carry
out the processing or manufacturing. They may also take as a basis the
rates of yield fixed by the Customs authorities in the country in
which the processing operations are to be carried out.

     2.   Standard rates of yield may be fixed where the outward
processing operations:

     - relate to goods whose characteristics remain reasonably constant;

     - are customarily carried out under clearly defined technical
       conditions; and

     - give compensating products of constant quality.

COMMENTARY

(1)  The rate of yield indicates the quantity of compensating products
normally obtainable from the goods temporarily exported. In fixing
this rate, account may be taken of losses resulting from the nature of
the goods used.

     When a rate of yield is fixed, the exporter knows what quantities
can be reimported under the procedure, or are required to be so
reimported. The latter case may arise if temporary exportation is
conditional upon reimportation of all the compensating products
obtained.

(2)  It may be useful to fix the rate of yield at the time of
temporary exportation of the goods. If all the facts are not known at
that time, it ought nevertheless to be possible to fix a provisional
rate. 


b) Declaration for temporary exportation 


8.   Standard

National legislation shall specify the conditions under which goods to
be temporarily exported for outward processing shall be produced at
the competent Customs office (1) and a Goods declaration (outwards)
shall be lodged.

COMMENTARY

(1)  Generally speaking the declarant may produce the goods at any
competent Customs office of his choice. Cases may, however occur in
which the Customs authorities require the exporter to produce the
goods at a particular Customs office.


9.   Recommended Practice

Customs authorities should allow the Goods declaration (outwards) form
(1) to be used for making out the declaration for the temporary
exportation of goods for outward processing (2).

COMMENTARY

(1)  A lay-out key for the Goods declaration (outwards) has been
established by the Council. It is given in Annex 1 to the Customs
Co-operation Council Recommendation of 1 June 1965 concerning the
adoption of a lay-out key for the Goods declaration (outwards).

(2)  The use of the Goods declaration (outwards) form to cover the
temporary exportation of goods is to be regarded as a more advanced
simplification measure than the use of special forms as described in
Recommended Practice 10. 


10.  Recommended Practice

If special forms are used for making out the declaration for the
temporary exportation of goods for outward processing (1), they should
be harmonised with the form used for the Goods declaration (outwards).

COMMENTARY

(1)  The use of special forms obviously entails a reservation in
respect of Recommended Practice 9.


c) Examination of the goods 


11.  Recommended Practice

At the request of the declarant, and for reasons deemed valid by the
Customs authorities, the latter should, so far as possible, allow
goods that are to be temporarily exported for outward processing to be
examined on private premises (1); the expenses entailed by such
examination may be charged to the declarant.

COMMENTARY

(1)  The examination of goods on the premises of the person concerned
should be allowed, for example, when it would facilitate examination
of the goods or when the nature of the goods is such that examination
at the Customs office would be inconvenient. Obviously, the Customs
will be able to allow inspection on private premises only to the
extent that examining officers can be made available for the work. 


d) Identification measures


12.  Standard

The requirements relating to the identification of goods (1) to be
temporarily exported for outward processing shall be laid down
by the Customs authorities, due account being taken, for example, of
the nature of the goods (2) and of the operation to be carried out.

Notes     1.   For the identification of goods to be temporarily
exported for outward processing, the Customs authorities may affix
Customs marks (seals, stamps, perforations, etc.), or rely on marks,
numbers or other indications permanently affixed to the goods or on
the description of the goods, scale plans or photographs, or take
samples.

     2.   The Customs authorities may also allow identification of the
goods to be ensured by production, at the time of importation of the
compensating products, of a written declaration by the importer
concerning the identity of the goods contained in those products
supported, as appropriate, by the commercial documents relating to the
operation in question.

COMMENTARY

(1)  This Standard should not be interpreted as implying that the
requirements with respect to the identification of goods must be such
as to allow their total identification (see also Recommended Practice
13 and the commentary on Note 2 to Recommended Practice 16).

(2)  The obligation that the Contracting Parties shall rake due
account of the nature of the goods in laying down their requirements
relating to identification implies that care must be taken to choose
methods of identification which do not damage the goods.

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