CHAPTER 3Outward Processing Procedure
Economic condition – outward processing procedure
27.—(1) Where paragraph (2) applies, HMRC must not grant an application for authorisation to declare goods for an outward processing procedure unless HMRC are satisfied that the essential interests of producers of goods in the United Kingdom would not be adversely affected by the granting of that authorisation.
(2) This paragraph applies where—
(a)the goods are sensitive goods;
(b)the processing of the goods under the outward processing procedure does not consist in their repair; and
(c)HMRC are aware of evidence that indicates that the essential interests of producers of goods in the United Kingdom would be adversely affected by the granting of authorisation to declare the goods for an outward processing procedure.
Authorisation to declare goods for an outward processing procedure
28.—(1) An approval notification issued in relation to an authorisation to declare goods for an outward processing procedure must specify the period within which goods released to the procedure must be imported as processed goods and declared for the free-circulation procedure.
(2) An authorisation to declare goods for an outward processing procedure is subject to the condition that—
(a)no evidence is presented to HMRC that the essential interests of producers of goods in the United Kingdom are likely to be adversely affected by—
(i)where the authorisation has been used to declare the goods, the further use of the authorisation;
(ii)in all other cases, the use of the authorisation; or
(b)where such evidence is presented to HMRC, an HMRC officer is satisfied, on the basis of an examination of the available evidence, that the essential interests of producers of goods in the United Kingdom would not be adversely affected by—
(i)where the authorisation has been used to declare the goods, the further use of the authorisation;
(ii)in all other cases, the use of the authorisation.
(3) A person must not use the standard exchange system in relation to goods declared for an outward processing procedure unless authorised to do so in accordance with regulation 29.
(4) Where an authorisation to declare goods for an outward processing procedure is granted the following requirements apply—
(a)the goods must not be declared for the free-circulation procedure by any person other than the authorised person, unless the authorised person has given their consent for the goods to be so declared; and
(b)where the processing of the goods results in the production or manufacture of other goods in which the goods declared can be identified, the processing, or each individual processing operation, must result in the production or manufacture of the approved quantity of the other goods.
(5) For the purposes of paragraph (4)(b), the methodology by which the approved quantity of the other goods is to be determined—
(a)is to be specified in the approval notification; and
(b)is to be—
(i)chosen by the applicant, if an HMRC officer approves that choice; or
(ii)in all other cases, set by an HMRC officer.
(6) This paragraph applies where—
(a)goods (“intended exported goods”) are to be exported in order to be used in a process;
(b)the intended exported goods are to be declared for an outward processing procedure;
(c)the process takes place using equivalent chargeable goods in place of the intended exported goods; and
(d)the processed goods resulting from the processing are imported before the intended exported goods are exported.
(7) Where paragraph (6) applies, the approval notification issued in relation to the authorisation to declare the intended exported goods for an outward processing procedure must specify the period within which the domestic goods that are replaced by equivalent chargeable goods must be declared for the procedure.
(8) Subject to paragraph (9), the period within which the domestic goods must be declared for the procedure must not be longer than 6 months beginning with the date after the date on which the equivalent chargeable goods are imported.
(9) The period within which the domestic goods must be declared for the procedure may be longer than 6 months, but not longer than 12 months, beginning with the date after the date on which the equivalent chargeable goods are imported where—
(a)the applicant for authorisation so requests; or
(b)the holder of the procedure requests an extension of the period specified in the approval to that effect.
(10) An authorisation to declare goods for an outward processing procedure is granted subject to such other conditions as may be specified in the approval notification issued in relation to the authorisation.
Standard exchange system
29.—(1) An authorisation to declare goods for an outward processing procedure may authorise the standard exchange system to be used only if—
(a)the processing consists of the repair of the domestic goods declared for the procedure;
(b)none of the domestic goods are subject to—
(i)an additional amount of import duty under section 14 of the Act; or
(ii)insofar as it is retained EU law under the European Union (Withdrawal) Act 2018(1)—
(aa)a measure provided for under Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products; or
(bb)an arrangement relating to goods resulting from the processing of agricultural products provided for under Regulation (EU) No 510/2014 of the European Parliament and of the Council of 16 April 2014 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products;
(c)the replacement goods have the same—
(i)classification code,
(ii)commercial quality, and
(iii)technical characteristics,
as the domestic goods would have when repaired; and
(d)where the domestic goods have been used prior to export, the replacement goods have been subject to the same use.
(2) For the purposes of paragraph (1)(c), the replacement goods have the same commercial quality as the domestic goods which they are replacing would have when repaired if a reasonable purchaser would consider the replacement goods to be of the same standard as the domestic goods would be when repaired.
(3) The condition in paragraph (1)(c) does not apply where the replacement goods have been supplied to the person who will use them without charge as a result of a contractual or statutory obligation arising from a guarantee or from a manufacturing defect.
(4) Where replacement goods are supplied without charge to the person who will use them—
(a)the replacement goods are to be regarded as domestic goods from the date on which they are imported into the United Kingdom; and
(b)the domestic goods are not to be regarded as domestic goods from the date on which they are exported from the United Kingdom.
(5) This paragraph applies where replacement goods—
(a)are imported after the domestic goods are exported; and
(b)are supplied with a charge to the person who will use them.
(6) Where paragraph (5) applies—
(a)the value of the replacement goods is to be determined in accordance with regulation 31(2); and
(b)domestic goods repaired outside the United Kingdom and then imported into the United Kingdom are not to be treated as imported in accordance with the outward processing procedure.
(7) Subject to paragraph (8), where an authorisation to declare goods for an outward processing procedure authorises the import of replacement goods before the domestic goods are exported—
(a)the domestic goods must be exported within the period of two months beginning with the date on which the replacement goods are imported (“the required export period”);
(b)where paragraph (4) applies, if the domestic goods are not exported within the required export period—
(i)the replacement goods—
(aa)are not to be regarded as domestic goods from the date the required export period expired;
(bb)are to be treated as imported into the United Kingdom on that date;
(cc)are to be treated as if, on that date, they had been declared for the free-circulation procedure and HMRC had accepted that declaration; and
(ii)for the purposes of section 34(1)(b) of the Act, a notification of importation is to be treated as having been given in relation to the replacement goods on that date; and
(c)the authorised person must give a guarantee in accordance with Part 10 of the import duty regulations.
(8) HMRC may grant an extension to the required export period where—
(a)the authorised person makes an application to HMRC for an extension; and
(b)in the opinion of an HMRC officer exceptional circumstances justify the extension.
Cases in which goods may not be declared for an outward processing procedure
30. Goods must not be declared for an outward processing procedure where their export would give rise to—
(a)remission or repayment of import duty under Part 7 of the import duty regulations; or
(b)an export refund under Articles 196 to 204 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products.
Valuation of goods regarded as chargeable goods
31.—(1) For the purposes of section 36(7) of the Act, the value of the goods regarded as chargeable goods is to be the greater of—
(a)zero; and
(b)an amount equal to—
A − B
where—
A is the value of the processed goods at the time of acceptance of the customs declaration of those goods for the free-circulation procedure; and
B is the statistical value of the goods at the time when they were released to an outward processing procedure.
(2) For the purposes of regulation 29(6)(a), the value of the replacement goods is to be the greater of—
(a)zero; and
(b)an amount equal to—
C − D
where—
C is the value of the replacement goods at the time of acceptance of the customs declaration of those goods for the free-circulation procedure; and
D is the statistical value of the domestic goods which the replacement goods replaced at the time when the domestic goods were released to an outward processing procedure.
(3) In this regulation “the statistical value” has the meaning given in Article 4 of Commission Regulation (EU) No 113/2010 of 9 February 2010 implementing Regulation (EC) No 471/2009 of the European Parliament and of the Council on Community statistics relating to external trade with non-member countries.