Re-export (code 11): if imported goods are returned to the supplier, how is the duty paid refunded and what is recorded in the accounts?

"Sirdaryo Qadoq" LLC brought in 20 rolls of laminating film from abroad for packing tea. At customs the goods were released for free circulation (import, code 40) and the duty was paid. When the roll labels were checked in the warehouse, it turned out that the thickness of four of them differed from the contract. They are still unopened. The supplier admitted the mistake: it will take the rolls back and return the money. The goods have to cross the border again, and this time their customs name is re-export, code 11 in the declaration (Instruction on the procedure for filling in the cargo customs declaration, Annex 3).

What is re-export and how does it differ from export?

Under Article 32 of the Customs Code, in re-export goods previously brought into the customs territory (or the processed product of goods under the procedure of processing within the customs territory) are taken out without customs duties and taxes and without economic policy measures. In the cases set out in Article 35, the duties and taxes paid on entry are also refunded.

Under the export procedure (Article 29), Uzbek goods are taken abroad without an obligation to bring them back. Re-export, by contrast, is meant precisely for goods brought in earlier: they go back "where they came from" or are sent to another country. The practical difference is money: the Code in Article 35 provides for a refund of the duties and taxes paid at import under the re-export procedure, when the conditions listed below are met.

One more practical requirement (Article 32): if the transit declaration for the goods is not submitted within three working days of the day they were placed under re-export, the goods must be placed under the temporary storage procedure. In other words, once the CCD is cleared, the transport should be ready in advance.

When can imported goods be re-exported?

The general condition for any re-export (Article 33): customs must be able to identify the goods or their processed product (except for the case in part three of Article 74 of the Code). Goods damaged by an accident or force majeure can also be re-exported, but this must be confirmed by the authorised body.

If the goods were previously cleared under the import procedure, part three of Article 33 requires three conditions to be met at the same time. Let us apply them to the case of "Sirdaryo Qadoq":

If the company had used one roll on the packing line, the second condition would be breached for that roll, and it could not be returned under this procedure.

Documents (Article 34): two things are submitted to customs: the CCD and the accompanying documents travelling with the goods. If the goods need a permit, there is no need to bring it on paper: customs checks that the permit exists in its own information system.

How is the duty paid refunded?

Under part one of Article 35, goods placed under re-export are exempt from customs duties and taxes. Amounts already paid at import are refunded for the part of the goods actually re-exported, only if both conditions are met together: 1. the re-export takes place within two years of the day the placement of the goods under the import procedure was declared; 2. the goods were not used or repaired in the customs territory (except use to identify the defect or the reason for return).

The refund procedure is in Chapter 49 of the Code: - the refund for re-export is made within the term set in Article 35 (part four of Article 353); - the application is filed with the customs body where the payment was made, together with documents confirming the right to a refund (Article 355); - customs decides within ten working days starting from the day after the application and documents arrive; if an additional check is needed, the review is extended by a further period of no more than ten working days (Article 356); - after a positive decision the applicant is notified in writing and a statement reconciling mutual settlements is drawn up with customs (Article 356); - no interest is paid on the amount refunded and it is not indexed (Article 357); - if the amount does not exceed twenty percent of the BCA (base calculation amount), it is not refunded (Article 353).

How is it recorded in the books?

Hypothetical figures: contract 20 rolls × 1 500 dollars = 30 000 dollars, exchange rate 12 500 soum throughout the period (taken as unchanged so the exchange difference does not distract). Duty hypothetically 18 750 000 soum. Under NAS No. 4 duty is included in the cost of materials, so the cost of the film is 375 000 000 + 18 750 000 = 393 750 000 soum, or 19 687 500 soum per roll.

The four rolls being returned: contract value 4 × 1 500 × 12 500 = 75 000 000 soum, the duty attributable to them 18 750 000 × 4 ÷ 20 = 3 750 000 soum.

The 3 750 000 soum share of the duty should also leave the cost in 1010 and be carried as an amount receivable from customs. The NAS No. 21 table has no specific line for this case, so write down in the accounting policy which receivables account is used. As a result 16 rolls remain in the warehouse: 393 750 000 − 75 000 000 − 3 750 000 = 315 000 000 soum, that is, still 19 687 500 soum per roll.