Container Examination, Documentary and Physical Controls (v4)

Container Examination, Documentary and Physical Controls _____________________ Guidelines for Customs Officers Guidelines for Customs Officers - December 2020

TABLE OF CONTENTS Introduction.................................................................................................... 2 1. Legislation ............................................................................................ 3 2. Documentary and Physical Controls .................................................... 4 3. Risk & Risk Management ................................................................... 39 4. Health & Safety Products ................................................................... 43 5. Containers - Marks and Numbers .................................................... 46 6. Types of Containers............................................................................ 49 7. Risk Warning Labels ........................................................................... 56 8. Customs Approval & CSC Plate .......................................................... 60 9. Physical Examination.......................................................................... 63 10. Sampling of Agricultural Products...................................................... 69 11. Security & Safety (1) Container Inspection ....................................... 74 12. Security & Safety (2) Seals and Door Mechanism ............................. 79 13. Share Your Information...................................................................... 86 1

INTRODUCTION Purpose The purpose of this document is to define and fine tune the releasing procedures and to serve as a user manual or guide book for the day to day practise. This document is intended for all officers who are presently performing documentary check, releasing duties or inspections on full load containers. Objectives The objectives of this document is to establish a clearer definition of the standard operating procedures and practices actually in use and to define the responsibilities of the officers who are involved in container examination. MISSION STATEMENT OF THE CUSTOMS DEPARTMENT To strengthen the Department’s position in fulfilling its role of promoting legitimate trade, while protecting the citizen the territory and its fiscal interest, today and in the future 2

1. LEGISTLATION 1.1 The Customs Department which forms part of the European Customs Union has to ensure that all Customs controls taking place at the border are in line with community, national and other legal provisions. The Department operates mainly with the parameters of the following legislative framework: i. The WCO SAFE/Framework of Standards to Secure and facilitate Global trade as adopted by the WCO council in June 2005; ii. The Union Customs Code [Regulation (EU) 952/2013]; iii. The Commission Delegated Regulation (Reg. 2015/2446); iv. The Commission Implementing Regulation (Reg. 2015/2447); v. The Commission (Transitional) Delegated Regulation (Reg. 2016/341); vi. The Commission (WP) Implementing Decision (EU) 2019/2151; vii. Excise Duty Act (CAP 382); viii. The Import Duties Act (CAP 337); ix. The Customs Ordinance (CAP 37); x. Intellectual Property Rights (Cross Border Measures (CAP 414); xi. International Conventions (e.g. CITES). 3

2. DOCUMENTARY AND PHYSICAL CONTROLS 2.1 General When Customs Officers are assigned to carry out documentary check and/ or physical inspection on a full load container, the following procedure must be followed:  Input the Movement Reference Number (MRN) in the National Import System (NIS) and perform verification analysis on the whole declaration. No of Packages S.A.D. Box No. Freight Delivery Terms 6 Description of Goods 20 Classification 31.5 Origin of Goods 33 Gross Weight 34 Value 35 Procedure Code 46 Supplementary Units 37 Currency Codes 41 Preference Codes (e.g. EUR 1) 44.7 36  Check with the TARIC database for classification purposes and other relevant measures that are applicable such as (anti-dumping, countervailing, quantitative, surveillance document, meursing code, additional code, etc). 4

 Verify if the consignment requires other departments’ endorsement or if any other competent authority needs to be present during release.  Note any specific details which may be relevant during the physical controls. Officers must ascertain that all the relevant documentation have been up- loaded in the NIS. These may be required for audit purposes. When a consignment declared by an AEO has been selected for a documentary or physical control, those controls should be carried out as a priority (article 24(4) DA). 2.2 Documentary Control 2.2.1 Legal authority for examination of documents Officers should examine the documents covering the declaration and the documents accompanying it. The customs authorities may require the declarant to present other documents for the purpose of verifying the accuracy of the particulars contained in the declaration. (Article 188 UCC). Documentary controls of full load containers and trailers are effected by the Customs Officers stationed at the Verification Unit. 2.2.2 Presentation of documents to Customs Economic Operators are requested to attach to the National Import System (NIS) electronic versions of the documents, rather than having to present them manually. However, the Department reserves the right to ask for original documents where deem necessary. 5

2.2.3 Examination of documents Before examining documents, the Custom officer has to establish the reason for yellow routing, i.e. by risk profile or randomly. The declaration and documents are then to be examined for compliance with the requirements. Officers are to check that the appropriate documents are available. If the Customs officer is satisfied with the declaration against the accompa- nying documents, the declaration may be re-routed green. If, for any rea- son the Custom officer is not satisfied, the declaration is re-routed red and the container sent for physical inspection. 2.2.4 Time limits The examination of documents should be undertaken without delay to ensure minimum interference with trade flows. In any event, examination should be undertaken within a maximum period of two hours from receipt of the complete documents. CES INFORMATION SHEETS https://customs.gov.mt/electronic-systems/custom- electronic-system 6

2.3 Physical Control Perform a thorough examination and make sure that all relevant documentation is in hand prior to opening the container, whether the release is effected at the Containers & Groupage Unit in Hal Far or at im- porter’s premises. 2.3.1. Relevant documents  The Customs declaration (SAD)  The suspense payment receipt endorsed by the cashier  The Gate Pass  Certified commercial invoices  Bill of Lading  Packing list  Notice of arrival  Original preference certificates e.g. EUR 1, GSP Form A *  Clearance from other departments e.g. Plant Protection Directorate, Environmental Health *  Trade Import Licence, AGRIM Licence and surveillance document (where applicable) *  Customs control form *  Material safety data sheet used for hazardous chemical substance *  Declaration of CE conformity re product safety *  VAT deferment certificate *  Any other documentation 7

2.3.2 Scrutinise the submitted documentation  Examine the details on the Customs declaration (SAD) against the collected documents such as:  Classification  Origin/preference  Values  Currency  Freight and insurance  Supplementary units  Weight  Number of packages  Transport details  Procedure code  Description of goods  Check thoroughly the common data or information found on most of the different types of documents and verify if certain details are common.  When a partial examination of the goods is insufficient to ensure customs requirements have been met, a full examination is to be undertaken. All cargo should be removed in the presence of the customs officer/s. The cargo is to be examined thoroughly using any available resources. 8

Document Comparison Matrix VALUE SUPP. GOODS WEIGHT NO. OF DEL. ORIGIN UNITS DESC. PKGS TERMS COMMERCIAL INOVICES BILL OF X X LADING XX X PACKING OR X X LOADING LIST PREFERENCE X & ORIGIN X DOCS NOTICE OF ARRIVAL 9

2.4 Classification Releasing officers must focus their attention on these fundamental principles:  Classification  Origin/Preference  Valuation 2.4.1 The Basic Principles Always be satisfied with the classification of goods that are being inspected. Consult the TARIC website and General Rules of Interpretation to classify properly the imported commodities. The European Binding Tariff Information (EBTI) system may also be useful in obtaining the correct classification information. If there is doubt related to classification issues, contact the Binding Tariff Information Unit for assistance. In some circumstances sample/s or literature may be required for classification purposes. Risks related to tariff classification • Reduction of duty paid • Over payment of duty • Evasion of anti-dumping or countervailing duties • Avoid restrictions or prohibitions, e.g. licences on specific goods • Avoid and abuse of tariff quotas 10

General rules of interpretation  There are 6 general rules of interpretation (GIR)  Rules 1 to 4 are interrelated and must be applied in sequence to establish the appropriate classification  Rules 5 & 6 can stand on their own and must be applied separately Rule 1— Explanation This clearly states that the product or commodity must be specifically mentioned at tariff level which is legally binding. Please note that chapters, sub-chapters, heading and sub-heading titles can only be used as guidelines to establish the tariff classification for ease of reference only, because these are not legally binding. First of all you must always refer to the section or chapter notes to verify what is included or excluded. Then it is necessary to go down to heading level and find a heading that is worded in such a way to include the commodity in question. Please note that many products are correctly classifiable by reference to rule 1. However, if the result of rule 1 is ambiguous, then rule 2 should be applied. Example 1 - Direct application of rule 1 Medicine containing antibiotics for human consumption is specifically mentioned in Chapter 30 under tariff code 300430. Example 2 - Always consult notes to relevant Chapter Where would you classify Christmas tree candles? 11

I think that prima facie most of you would immediately go to tariff heading 9505 - articles for Christmas festivities, but this is not the correct answer. Because in this case, Notes to Chapter 95 exclude these types of candles and re-directs you to tariff heading 3406 which is the proper classification. Rule 2A - Explanation The rule shall include any reference to an article that is presented in an unfinished or incomplete state but has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished presented as unassembled or disassembled. This rule is not applicable if the text of the heading or relevant Legal Notes exclude the unfinished or unassembled product in question. Example 1 - Bicycle frame without wheels Example 2 - Disassembled or unassembled bicycle Rule 2B - Explanation Deals with products composed of a mixture of material or substances in which classification was not established by Rule 1 and Rule 2A. It basically states that a heading referring to given material or substance includes mixtures of that substance with others. Similarly, a reference to a commodity composed of a given material or substance includes products produced either wholly or partly of the material or substance. This means that a mixed product may seem to fall under two or more tariff headings. However Rule 3 must be used to decide between alternate Headings. 12

Example: What is the correct classification for Dicalcium Citrate? We are aware that the Tariff does not mention specifically this product so we have a condition of two substances forming a finished compound. In this case the essential character is the salt of citric acid and so the appropriate tariff code should be 2918159000 - salts and esters of citric acid Rule 3A - Explanation This states that when two or more headings seem to apply, then the heading with the most specific description of the product in question should be used. The heading which names the actual product precedes another heading which only mentions the category of the product to which the product could belong. Similarly a heading which describes the whole commodity should be in preference to another heading which only describes part of that specific commodity. However, if both heading describe part of the product, then this rule cannot be applied even if one heading is more specific of retailed than the other. Example - What is the correct HS code for mint tea? Mint tea is not specifically mentioned as a product in the tariff and there are two product descriptions in one item. By Rule 3A the most specific description is tea and mint is just a flavour added to the tea. Rule 3B - Explanation The rule applies to mixtures, composite goods consisting of different materials or made up of different components and goods put up in sets for retail sale which cannot be classified by the previous rule. These should be classified as if they consisted of the material or component which gives them their essential character. 13

Example - A trader asks for a classification of a set consisting of a bottle of sparkling wine with two glasses presented in a wooden box. What would be your answer? By virtue of the above mentioned rule, the bottle of wine dominates the essential character in the set and hence must be classified under HS Code 220410. Rule 3C - Explanation When goods cannot be classified by reference to Rule 3A or 3B, they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration Example - A gift set consisting of a tie and a pair of socks This product cannot be classified by the previous rules since neither item gives the set its essential character. The gift set must be classified under the tariff number which is last in numerical order. Rule 4 - Explanation Products or commodities which cannot be classified in accordance with the above mentioned rules shall be classified under the heading appropriate to the goods to which they are most akin. This is a ‘last resort’ rule often applied to new products. 14

Rule 5 A - Explanation Rule 5 specifies how to classify containers. Rule 5A deals with containers which:  Are shaped or fitted for the article they will contain  Are suitable for long-term use  Protect the article when not in use  Are of a kind normally sold with such articles  Are presented with the articles they are designed to contain Containers which have these characteristics can be classified with the products which they contain. However, in cases where the container gives the product its essential character, it would be the container which would have to be classified Example - Rule 5A would apply to flute cases because flutes are normally sold with their cases (due to their specific shape) and are intended for long term use. Rule 5 B - Explanation Deals with other types of containers and packing materials. These should be classified with the goods they contain if they are of a kind normally used for packing such goods and are not suitable for repetitive use. Example - An importer bringing in goods and using Styrofoam chips for padding fits well into Rule 5B. Styrofoam chips are normally used for the padding and insulation however, they are rarely re-used and therefore should be classified with the goods when they enter the country. Guidelines for Customs Officers - December 2020

Rule 6 - Explanation For legal purposes, the classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purpose of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. Once goods have been classified to the Heading level by the use of level international Rules 1 to 5, then classification to the Subheading can now take place by repeating international Rules 1 to 5 and taking into account any related Legal Notes. Useful information for Customs Officers • Tariff and CNEN’s - http://eur-lex.europa.eu/legal- content/EN/TXT/? uri=uriserv:OJ.L_.2016.294.01.0001.01.ENG&toc=OJ:L:2016 :294:TOC. Download EN pdf file • WCO to be used only by Customs personnel. http:// harmonizedsystem.wcoomdpublications.org/ • Guidelines on the classification of sets. http://eur- lex.europa.eu/LexUriServ/LexUriServ.do? uri=OJ:C:2013:105:0001:0006:EN:PDF • CROSS rulings through Google • Commission Regulations and Explanatory Notes to the Combined Nomenclature issued monthly 16

2.4.2 Origin & Preference EUR 1, GSP Form A, REX system, Certificate of Origin & ATR EUR 1 is a certificate used in international commodity traffic. The application of this form is based on application of various bi and multilateral agreements within the Pan-European preference system (the European Union Association Agreement). The EU’s Generalises System of Preference (GSP) allows developing country exporters to pay lower duties on their exports to the EU. This gives them vital access to EU markets and contributes to their economic growth. The reformed GSP, which was applied in 2014, will further focus support on countries most in need. The GSP is currently being replaced by the REX (Registered Exporter) number. Henceforth, all Customs Officers are being requested to get acquainted with the REX system (system of certification of origin of goods based on a princi- ple of self-certification); the INVOICE DECLARATION (declaration made by the exporter on a commercial document with sufficient details that identify the goods confirming the goods are originating) and the CUSTOMS AUTORISATION NUMBER, also known as the approved exporter authorisation number A Certificate of Origin is a document used international trade. It is a printed form, completed by the exporter or its agent and certified by an issuing body, attesting that the goods in a particular export shipment have been wholly produced, manufactured or processed in a particular country. The ATR Certificate is a customs document used in trade between EU members and Turkey to benefit from cheaper rates of duty. The legal basis for the use of the certificate is the EU-Turkey Customs Union. It is important to remember that not all products are included in the Customs Union. Products not included in the Customs Union are steel, coal and some agricultural products. Many of these are instead included in the EU-Turkey FTA. 17

EUR 1 certificate may be rejected for technical reasons A movement certificate EUR 1 may be rejected for technical reasons because it was not made out in the prescribed manner. These are cases which may give rise to subsequent presentation of a retrospectively endorsed certificate and these include by way of example, the following:  The movement certificate EUR 1 has been made out on a form other than the prescribed one (e.g. no guilloche background, differs significantly from the model in size or colour, no serial number, not printed in one of the official languages).  One of the mandatory boxes (e.g. Box 4) has not been filled in, except for Box 8.  The movement certificate EUR 1 has not been stamped and signed in Box 11.  The certificate is endorsed by a non-authorised authority.  The stamp is a new one which has not yet been registered.  The movement certificate EUR 1 presented is a copy or photocopy rather than the original.  The entry in Box 5 refers to a country that does not belong to the agreement (e.g. Israel or Cuba). Action to be taken The document should be marked ‘Document not accepted’ stating the reason/s and then returned to the importer in order to enable him to get a new document issued retrospectively. The Customs authorities may keep a photocopy of the rejected document for the purpose of post clearance verification or if they have grounds of suspected fraud. 18

Refusal of preferential treatment without verification This covers cases, in which the proof of origin is considered inapplicable, inter alia, for the following reasons:  The goods description Box 8 on the EUR 1 is not filled in or it refers to goods other than those presented.  The proof of origin has been issued by a country which does not belong to the agreement.  One of the mandatory boxes on the movement certificate EUR 1 bears traces of non-authenticated erasures or alterations (e.g. the boxes describing the goods or stating the number of packages, the country of destination or the country of origin.  The time limit on the movement certificate EUR 1 has expired for reasons other than those covered by the regulations (e.g. exceptional circumstances), except when the goods were presented before expiry of the time limit.  The proof of origin is produced subsequently for goods that were initially imported fraudulently.  Box 4 on the movement certificate EUR1 names a country not party to the agreement under which preferential treatment is being sought. The same criteria should be applied on GSP Certificates Form A - General Systems of Preference, ATR certificates and other similar documents. Websites - General Scheme of Preference (GSP) http://ec.europa.eu/trade/policy/countries-and-regions/development/ 19

Sample of EUR 1 Certificate 20

Sample of GSP Form A Certificate 21

Sample of ATR Certificate 22

Sample of Certificate of Origin 23

2.4.3 Valuation The World Trade Organisation (WTO) Valuation Agreement (1994) establishes a Customs valuation system that primarily bases the customs value on the transaction value of the imported goods, which is the price actually paid or payable for the goods when sold for export to the country of importation, plus certain adjustments. Under-invoicing: Producing one invoice for country of export and another invoice for the country of import. Another possibility may be having a shipping invoice to accompany the goods and another invoice used for payment. Over-invoicing: This method is used to move financial assets out of a country, for instance where there are restrictions on foreign currencies. It could also be used by businessmen to move their profit from a high tax point to a low tax point country. Small consignments: the main objective is to declare the value of the goods under a certain threshold value to avoid taxes or by pass certain restrictions. Methods to determine the customs value have to be applied in the pre- scribed order as shown below: • Primary method - transaction value method • Secondary methods - i) transaction value of identical goods; ii) transaction value of similar goods; iii) value based on unit price or deductive value method; iv) computed value • Fall back method For more information on this topic, visit https://ec.europa.eu/taxation_customs/eu- training/general-overview/ucc-elearning-programme_en 24

2.5 Information on the Single Administrative Document (SAD) 25

The Customs declaration known as the Single Administrative Document (SAD) contains about 50 numbered boxes which are used for different functions. Some of these boxes are mandatory. BOX TYPE DESCRIPTION NO Declaration Type of declaration 1 Consignor/ 2 Exporter Full name and address of the last seller of the goods 3 Forms prior to their importation into the community 4 Loading lists Number of the subset in relation to the total number of subsets of forms and continuation used 5 Items The number of any loading lists attached, or of commercial descriptive lists where these are 6 Total packages authorised by the competent authority 7 Reference Total number in figures of different items declared. number The number must correspond to the number of 8 different commodity codes (boxes 31) Consignee 12 Total number in figures of packages making up the Value details consignment The commercial reference number assigned by the person concerned to the consignment in question. It may take the form of a Unique Consignment Reference Number (MRN) The full name and address of the person(s) to whom the goods are to be delivered. Box information on value 26

BOX TYPE DESCRIPTION NO Declarant/ Identification number assigned to the person who is 14 Representative acting on behalf of the consignee. i.e. owner of the goods. 15 17 (Select from direct or indirect representation) 18 Country of The country from which the goods were initially 19 dispatch/export dispatched to the member state of import 20 22 Country of The final destination of the goods destination 24 Identity of the means of transport on which the 25 Identity and goods are directly loaded at the time of presentation 26 nationality of at the Customs office where the destination . means of formalities are completed transport on arrival Container Using the relevant community code from annex 38, enter the situation when crossing the external community frontier Delivery terms Terms of the commercial contract e.g. Freight on Board (FOB), Cost and Freight (C & F) Currency and The currency in which the commercial invoice is total amount drawn up and the invoiced price for goods declared invoiced Nature of Type of the transaction concerned transaction Mode of Active means of transport with which the goods transport entered the customs territory of the Community Inland mode of Mode of transport upon arrival transport 27

BOX TYPE DESCRIPTION NO Office of entry Customs office by which the goods entered the 29 customs territory of the Community 30 Location of goods Precise location where the goods may be examined 31 Packages and Marks, numbers, quantity and kind of packages or, in description of the case of unpackaged goods, enter the number of goods such goods covered by the declaration 32 Item number Number of the item in relation to the number of items declared 33 Commodity code Code number corresponding to the item in question 34 Country of origin Country of origin of the goods 35 Gross mass (kg) Gross mass, expressed in kilograms, of the goods described in the relevant Box 31 36 Preference Information on the preferential treatment of the goods 37 Procedure Procedure for which the goods are declared 38 Net mass (kg) Net mass, expressed in kilograms, of the goods described in relevant Box 31 39 Quota Order number of the tariff quota for which the declarant is applying 40 Summary Reference particulars of any summary declaration declaration/ used in the member state of import or of any Previous previous document document . 28

BOX TYPE DESCRIPTION NO Supplementary The quantity of the item, expressed in the unit laid 41 units down in the goods nomenclature 42 Item price Price of the item 44 Additional Details required by any specific rules applicable information together with reference particulars of the documents produced in support of the declaration 46 Statistical value Expressed in the currency unit the code for which may appear in box 44 or, in the absence of such a code in Box 44, in the currency of the member state where the import formalities are completed 48 Deferred The reference particulars of the authorisation in payment question (where applicable) 49 Identification of Reference particulars of the warehouse warehouse 54 Place and date, Place, date of the completion of the declaration, signature signature and name of the declarant or his representative . Commission Regulation (EC) No 2286/2003 https://eur-lex.europa.eu/eli/reg/2003/2286/oj 29

2.5.1 Preference codes used in Box 36 of the SAD CODE DESCRIPTION 100 Erga omnes third country duty rates 110 Erga omnes autonomous tariff suspension 115 Erga omnes autonomous tariff suspension subject to an end-use 119 Erga omnes autonomous tariff suspension subject to an airworthiness certificate 120 Erga omnes WTO tariff quotas 123 Erga omnes WTO tariff quotas subject to an end-use authorisation 125 Erga omnes WTO tariff quotas subject to a special certificate 128 Erga omnes tariff quotas following outward processing 140 Special end-use resulting from Common Customs Tariff 150 Admission to CN codes subject to special certificates 200 GSP duty rates without conditions or limits 220 GSP tariff quotas 223 GSP triff quota subject to an end use 225 GSP tariff quotas subject to a special certificate 240 GSP preferential duty rates subject to an end use 300 Preferential duty rate without conditions or limits 310 Preferential agreement; tariff suspensions 315 Preferential suspension subject to an end use 30

2.5.1 Preference codes used in Box 36 of the SAD CODE DESCRIPTION 320 Preferential tariff quotas 323 Preferential tariff quotas subject to an end-use 325 Preferential tariff quotas subject to a special certificate 340 Preferential duty rates subject to an end use 400 Non-imposition of customs duties under the provisions of Customs Union Agreement concluded by the Community 420 Customs Union Quota NB: All traders and economic operators must declare the Preference Code in Box 36 of the SAD 31

2.6 Bill of Lading The Bill of Lading in Sea Freight Industry is referred as a B/L or BOL. This document issued by an ocean freight carrier acknowledging that specified goods have been received on board as cargo for conveyance to a named place, for delivery to the consignee. 32

The ocean freight bill of lading serves the following purposes:  It is an evidence of a contract of carriage between carrier and shipper;  It is a receipt for goods  It is a document of title of shipped goods Details found on a Bill of Lading • Shipper • Consignee • Notify Party Address • Vessel & voyage number • Port of loading • Port of destination • Container & seal numbers • Number of cartons or packages • Description of goods • Weight & volume of goods • Freight - prepaid or collect 33

2.7 Commercial Invoice A commercial invoice is a document that itemises a transaction between a buyer and a seller. An invoice will usually include the quantity, description of goods, prices and/or services, date, parties involved, unique invoice number and other information. 34

2.7.1 Proforma Invoice A proforma invoice is a document that states a commitment on part of the seller to deliver the products or services as notified to the buyer for a specific price. It is thus not a true invoice because the transaction details between the buyer and the seller are not completely finalised and therefore both the value and quantities amongst other details might change. Proforma invoices should not be accepted for Customs purposes. 35

2.8 Packing List A packing list is an itemised list of articles usually included in each shipping package, giving the quantity, description and weight of the contents. It is required for accurate tallying of the delivered goods. The shipper or exporter prepares the packing list which is submitted to the consignee. 36

2.9 Incoterms & Freight Delivery Terms These are internationally recognised codes used in import and export trans- actions. Each of the three-letter codes describes the responsibilities of each party and sets the point at which ownership and liability for the goods changes. Whenever traders are importing or exporting, they must specify the Incoterm’s code for the transaction. It is also a piece of information a freight forwarder would ask for in order to quote for shipping and related services. EXW (Ex Works—Freight Collect) The seller makes the goods available to be collected at their premises and the buyer is responsible for all other risks, transportation costs, taxes and duties from the point onwards. FCA (Free Carrier—Freight Collect) The seller gives the goods, cleared for export, to the buyer’s carrier at a specified place. The buyer is then responsible for getting transported to the specified place of final delivery. This term is commonly used for containers travelling by more than one mode of transport. CPT (Carriage Paid To—Freight Prepaid) The seller pays to transport the goods to the specified destination. Responsibility for the goods transfers to the buyer when the seller passes them to the first carrier. CIP (Carriage and Insurance Paid—Freight Prepaid) The seller pays for insurance as well as transport to the specified destination. Responsibility for the goods transfers to the buyer when the seller passes them to the first carrier. 37

DAT (Delivered at Terminal—Freight Prepaid) The seller pays for transport to a specified terminal at the agreed destination. The buyer is responsible for the cost of importing the goods once unloaded at the terminal. DAP (Delivered at Place—Freight Prepaid) The seller pays for transport to the specified destination, but the buyer pays the cost of importing the goods. The seller takes responsibility for the goods until they’re ready to be unloaded by the buyer. DDP/DTP (Delivered Duty Paid—Freight Prepaid) The seller is responsible for delivering the goods to the named destination in the buyer’s country, including all costs involved. FAS (Free Alongside Ship—Freight Collect) The seller puts the goods alongside the ship at the specified port they’re going to be shipped from. The seller must get the goods ready for export, but the buyer is responsible for the cost and risk involved in loading them. FOB (Free on Board– Frieght Collect) The seller must get the goods ready for export and load them onto the specified ship. The buyer and seller share the costs and risks when the goods are on board. CFR (Cost & Freight—Freight Prepaid) The seller must pay the costs of bringing the goods to the specified port. The buyer is responsible for risks when the goods are loaded onto the ship. CIF (Cost, Insurance and Freight—Freight Prepaid) The seller must pay the costs of bringing the goods to the specified port. They also pay for insurance. 38

3. Risk & Risk Management  Risk can be defined as the combination of the probability of an event and its consequences (ISO/IEC Guide 73)  The Risk Management System attempts to control and manage risk, in order to acquire the best possible results 3.1 The main threats are:  Fiscal - detecting evasion of customs duty payment in relation to goods entering into the EU  Security & Safety - detecting prohibited, sanctioned or restricted goods 3.2 The main roles are to protect:  The EU citizens - counterfeit goods, health & safety issues  The EU territory - dual use, weapons & ammunition, other prohibited, restricted or sanctioned goods  The EU economies - the revenue collection 39

3.3 Risk Category Distinguish between fiscal, security & safety risks to target directly your main objective/s. FISCAL RISKS NON FISCAL RISKS Classification Intellectual Property Rights (IPR) Freight & Insurance CITES, PHO, BIP, MCCAA, etc Royalties Hazardous Chemicals Other Charges (DV1) Dual use items Import Duty & VAT Weapons & ammunition Excise Duty Trade Import Licence Anti-Dumping Duty Surveillance Document Countervailing Duty FLEGT licence Additional Duty AGRIM re surveillance Tariff Quotas Illicit Drugs AGRIM re Quota 40

3.3 Risk Scenarios Scenario 1 - Full load container STC bicycles declared as originating in Taiwan. According to details on the Bill of Lading, the shipment was dispatched from a major port in China Question: What is the primary risk factor related to this shipment? Answer: Incorrect country of origin declared to avoid payment of anti-dumping duties . The attention must mainly be focused on origin and anti-dumping duty especially when no such duty is applicable on bicycles originating from Taiwan. This is the whole concept of risk-based methodology in considering all the possibilities that may happen in terms of likelihood against consequence. In the above example the releasing officer must be satisfied with the origin of the goods by:  Examining the documents - invoices, bill of lading, certificate of origin Form B  Physically checking for marks of origin on the product itself  Browse the internet to gather relevant information on the product and the manufacturing company Result: The bicycles were found of Chinese origin subject to anti- dumping duty. 41

Scenario 2 - Full load container STC 170 packages ceramic ware, weighing 3000 Kgs (gross weight) and declared of Singapore origin. Question: What are the main risk indicators in this case scenario? Answer: The gross weight seems to be incorrect since a container carrying this type of cargo weights over 10 tons. The origin of the goods is also doubtful because Singapore serves as a dispatch hub and it not considered as a manufacturing country. Result: In fact the ceramic ware served as a cover load to conceal contraband cigarettes. Scenario 3 - Consignment of sweaters originating in Turkey and classified under HS Code 6110909090. The box of the supplementary units on the TDID shows 120 and the CIF values is 1000 Euros. During the release of the consignment it resulted that there were 120 packages packed in dozens. Question: What is the response to this situation? Answer: If the sweaters are calculated as declared, each unit costs 8.33 Euros, which is a reasonable price for a sweater manufactured in Turkey. After the inspection the supplementary quantity was found to be 120 packages by 12 which equals to 1440 units and now each unit will cost much less for valuation purposes, i.e. 0.69 euros (69c). Result: The values of the sweater were subject to a valuation exercise. 42

4. Health & Safety Procedures 4.1 Health & Safety procedures are significant and must be fol- lowed before opening the container i) Personal Protective Equipment that must be worn ii) Perform a general risk assessment on the environment and ensure that it is safe for your work iii) inspect the container and check if there are any smells, smoke or spill. Use your senses iv) Examine if there are any risk or fumigation labels affixed on the container v) Verify if there is any tape sealing the container’s doors and vent re fumigation 43

4.2 Fumigation Fumigation is a method of pest control that completely fills an area with gaseous pesticides or fumigants, to suffocate or poison the pests within The fumigation sign may be found affixed between the doors of the container. There may be instances that no fumigation sign is affixed on the container or it may have been removed, but the doors and air vents are sealed with tape. This is a clear indication that the container has been fumigated. A fumigation certificate may also be presented with the documents. The container may be sealed with a fumigation seal. 44

4.3 Vaporisation Vaporisation is the emission of gases by the cargo during the voyage due to various temperatures and humidity levels. The problem was first discovered in Europe, in the ports of Hamburg and Rotterdam. Research points out that some 10 to 20 per cent of all import containers may have too high concentration of dangerous gases or vapours. Most of the containers in question come from Asia, Africa or South America. In some cases, the gases they hold are the result of fumigation, for example to combat pests; increasingly, it however turns out that they were used in the production process or emitted by the cargo during the voyage. One example is the vapours released by glue used to manufacture sports shoes. Sometimes the concentrations of these undesirable gases and vapours is so high that they can have acute or chronic health effects on humans and pose a serious threat to the environment. Anyone opening and working in a container with an excess concentration of gases or vapours runs the risk of falling seriously ill. 45

5. Containers - Marks and Numbers 5.1 Container marks and numbers should be checked during the external examination i) Container number ii) Size & Type Code iii) Tare Mass and Payload of a Container iv) Owner’s Logo v) Risk Warning Labels vi) Customs Approval & CSC Plate 4. Company Logo 1. Container No. 2. Size & Type 5. Risk labels 6. CSC Plate 3. Tare Mass 46

5.2 ISO 6346 is an international standard covering the coding, identification and marking of intermodal (shipping) containers used within containerised intermodal freight transport. The standard established a visual identification system for every container that includes a unique serial number (with check digit), the owner, a country code, a size, type and equipment category as well as any operational marks. The standard is managed by the International Container Bureau (BIC). Identification System - Example of an ISO 6346 container number 47

i. The first digit of the size code indicates the length of the container, with the number 4 standing for a 40 foot container ii. The second digit indicates height and whether or not a gooseneck tunnel is present. In our example, the number 3 stands for a height of 8 foot 6 inches (8’ 6”) with gooseneck tunnel iii. The third digit of the type code indicates container type. Here, 1 means that the container is a closed container with ventilation openings iv. The fourth digit of the type code relates to special features. The 0 used here means opening at the end 48

6. Types of Containers 6.1. Different types of containers Dry Cargo 20’ DC, 40’ DC, 40’ DC High Cube & 45’ DC High Cube Reefer Cargo 20’ RF & 40’ RF High Cube Open Top 20’ OT & 40’ OT Flat Rack 20’ FR & 40’ FR Tank Containers 20’ & 40’ Other types of containers:  Bulk containers have three round hatches at the top and may have doors or not  Insulated containers are built to ventilate air between the insulated walls of the container  Ventilated containers  Other 49