What do the procedure, transport and delivery terms codes in a cargo customs declaration tell an accountant?

Q: Which document does the transport code remind you of?

Annex 6 gives the types of transport with eight codes: According to the note in the instruction, river transport is carriage by vessels on natural (rivers, lakes) and artificial (canals, reservoirs) inland waterways. The practical benefit: from the code you check what should be in the document folder. The Code includes among transport documents the bill of lading, the waybill or another document confirming the contract of carriage (Article 9). If a CCD showing "30" has no road waybill next to it, or one showing "10" has no bill of lading, the evidence supporting inclusion of the carriage cost in cost will also be incomplete.

Q: Example: how did Shahnoza read one CCD?

The declaration is hypothetical, compiled by the author. Shahnoza asked the forwarder for the carriage bill and planned to add it to the cost of the incoming batch of goods. Had she not noticed "02 FCA", the carriage bill might have arrived a month later and ended up by mistake in another batch or in period expenses.

Shahnoza, chief accountant of "Zarafshon Mebel" LLC, received a copy of the cargo customs declaration (CCD, BYD in Uzbek) from the broker. It has more figures than words: "40", "30", "02 FCA", "840". Many people skip these columns as "customs business". In fact they answer three questions for accounting: will the goods stay in the country, which transport document should there be, and does the invoice price include the cost of carriage.

What does the procedure code mean?

Article 15 of the Customs Code defines a customs procedure as «a set of rules determining, for customs purposes, the status of goods and vehicles moved across the customs border». The Code lists 16 procedures (Article 25). The authorized person (the owner of the goods or a person acting on the owner's behalf under a contract or power of attorney) may choose any of them, and the declarant states the chosen procedure in the declaration (Articles 7 and 26). In the CCD the procedure is written as a two-digit code. The complete list (Instruction on the Procedure for Completing the CCD, Annex 3):

No.	Customs procedure	Code
1	Export	10
2	Re-export	11
3	Temporary export	12
4	Release for free circulation (import)	40
5	Re-import	41
6	Temporary admission	42
7	Processing within the customs territory	51
8	Processing outside the customs territory	61
9	Temporary storage	70
10	Free customs zone	71
11	Duty-free trade	72
12	Free warehouse	73
13	Customs warehouse	74
14	Abandonment in favour of the state	75
15	Destruction	76
16	Customs transit	80

Looking at the table, the codes can be remembered in groups (this grouping is the author's, it is not in the instruction): those starting with 1 (10, 11, 12) are for going out, those starting with 4 (40, 41, 42) are for coming in, 51 and 61 are processing, 70–76 are the remaining seven procedures, and 80 is transit.

The most important difference for the accountant: under procedure 40 the goods remain in free circulation in the country without an obligation to take them back out (Article 55). Under procedure 42 the goods are brought in for a certain period and used temporarily (Article 61). So if a CCD with code 42 arrives, read the contract before adding the goods to saleable stock in the warehouse and find out for what purpose and for how long the goods have come.

One subtle point: the procedure determines the customs status, not ownership for accounting purposes. Whether or not to recognise the goods on the balance sheet is decided by the contract and by the NAS.

Which document does the transport code remind you of?

Annex 6 gives the types of transport with eight codes:

No.	Type of transport	Code
1	Sea transport	10
2	Rail transport	20
3	Road transport	30
4	Air transport	40
5	Pipeline transport	71
6	Power transmission lines	72
7	River transport	80
8	Vehicle moving under its own power as goods	90

According to the note in the instruction, river transport is carriage by vessels on natural (rivers, lakes) and artificial (canals, reservoirs) inland waterways.

The practical benefit: from the code you check what should be in the document folder. The Code includes among transport documents the bill of lading, the waybill or another document confirming the contract of carriage (Article 9). If a CCD showing "30" has no road waybill next to it, or one showing "10" has no bill of lading, the evidence supporting inclusion of the carriage cost in cost will also be incomplete.

What does the delivery terms code say about the price?

Annex 7 contains 16 terms. A numeric and a letter code is written for each:

No.	Name of the term (as in the instruction)	Numeric code	Letter code
1	Ex works	01	EXW
2	Free carrier	02	FCA
3	Free alongside ship	03	FAS
4	Free on board	04	FOB
5	Cost and freight	05	CFR
6	Cost, insurance and freight	06	CIF
7	Carriage paid to ...	07	CPT
8	Carriage and insurance paid to ...	08	CIP
9	Delivered at frontier	09	DAF
10	Delivered ex ship	10	DES
11	Delivered ex quay	11	DEQ
12	Delivered duty unpaid	12	DDU
13	Delivered duty paid	13	DDP
14	Delivered at ...	14	DAP
15	Delivered at terminal	15	DAT
16	Delivery term with another name	99	the letter code of the term is written

Note: the classifier places codes from different editions of the Incoterms rules side by side. The current Incoterms 2020 edition of the International Chamber of Commerce (ICC) does not contain DAF, DES, DEQ, DDU and DAT. DPU is now used in place of DAT (ICC Academy). For this reason, establish from the contract text which edition the rule in the contract relies on (for example, "Incoterms 2020").

The main benefit for the accountant: the terms code forces you to ask in advance whether the carriage cost is included in the invoice or comes with a separate bill. Names such as "Cost and freight" and "Carriage paid" themselves hint at carriage. But the exact allocation of costs is checked against the contract text and the Incoterms edition stated in it. Whether carriage is included in the invoice or comes with a separate bill, this cost goes into the cost of the goods under paragraph 15 of NAS No. 4. Only the number of entries and the set of documents will differ. The exception: if, for goods acquired for resale, the method in paragraph 30 of NAS No. 4 has been chosen in the accounting policy, such costs are charged not to cost but to period expenses (selling expenses).

This column also matters for customs. If carriage and insurance to the place of importation are not included in the price, they are added to the transaction price when determining the customs value (Customs Code, Article 304, item "a").

Example: how did Shahnoza read one CCD?

The declaration is hypothetical, compiled by the author.

Column	Entry	Shahnoza's conclusion
Procedure	40	The goods remain in free circulation and are received as goods for sale
Transport	30	There should be a road waybill in the folder
Delivery terms	02 FCA	Under the contract the carriage charge is not included in the invoice; the forwarder's bill must be awaited
Currency	840	The contract is in US dollars (Annex 8: 840 = USD)

Shahnoza asked the forwarder for the carriage bill and planned to add it to the cost of the incoming batch of goods. Had she not noticed "02 FCA", the carriage bill might have arrived a month later and ended up by mistake in another batch or in period expenses.

Practical tips

As soon as the CCD arrives, compare three columns (procedure, transport, terms) with the contract. If they do not match, write to the broker immediately
If the CCD shows not 40 or 41 but another importation or storage procedure (42, 51, 70, 71, 73, 74), remember that the goods have not been released for free circulation. Determine their next procedure before selling them
Based on the terms code, draw up a list of "expected bills" for the batch (carriage, insurance, forwarder). Then the cost will be collected in full