Circular No. 13/2014/TT-BTC dated January 24, 2014 of the Ministry of Finance prescribing customs procedures for goods processed with foreign traders

CIRCULAR

Prescribing customs procedures for goods processed with foreign traders[1]

Pursuant to Customs Law No. 29/2001/QH10 of June 29, 2001, and Law No. 42/2005/QH11 of June 14, 2005, Amending and Supplementing a Number of Articles of the Customs Law;

Pursuant to Import Duty and Export Duty Law No. 45/2005/QH11 of June 14, 2005; Tax Administration Law No. 78/2006/QH11 of November 29, 2006; and Law No. 21/2012/QH13 of November 20, 2012, Amending and Supplementing a Number of Articles of the Tax Administration Law;

Pursuant to Commercial Law No. 36/2005/QH11 of June 14, 2005;

Pursuant to Civil Code No. 33/2005/QH11 of June 14, 2005;

Pursuant to Penal Code No. 15/1999/QH10 of December 21, 1999;

Pursuant to the Government’s Decree No. 154/2005/ND-CP of December 15, 2005, detailing a number of articles of the Customs Law on customs procedures and customs inspection and supervision;

Pursuant to the Government’s Decree No. 187/2013/ND-CP of November 20, 2013, detailing the Commercial Law’s provisions on international purchase and sale of goods and agency for purchase, sale, processing and transit of goods with foreign partners;

Pursuant to the Government’s Decree No. 87/2010/ND-CP of August 13, 2010, detailing a number of articles of the Import Duty and Export Duty Law;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of the General Director of Customs,

The Minister of Finance promulgates the Circular prescribing customs procedures for goods processed with foreign traders as follows:

Section 1

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular prescribes customs procedures for goods received for processing in Vietnam for foreign traders and customs procedures for goods ordered for overseas processing.

Article 2. Subjects of application

1. Subjects that are below collectively referred to as traders:

a/ Vietnamese enterprises established and having made business registration in accordance with the Enterprise Law;

b/ Foreign-invested enterprises established in accordance with the Investment Law;

c/ Cooperatives established and having made business registration in accordance with the Cooperative Law;

d/ Private business households allowed to make business registration under the Government’s Decree No. 43/2010/ND-CP of April 15, 2010.

2. Customs offices and customs officers.

3. Other state agencies involved in the state management of customs.

Article 3. Interpretation of terms

1. “Processing raw materials” include principal raw materials and auxiliary raw materials:

a/ “Principal raw materials” are raw materials constituting the principal component of a product.

b/ “Auxiliary raw materials” are raw materials used for the creation of a processed product but not constituting the principal component of the product.

2. “Processing supplies” means products and semi-finished products used in the process of producing a processed product but not directly constituting the product. Processing supplies include also packages or materials used for packaging processed products.

3. “Processing scraps” means raw materials, supplies, machines and equipment discarded in the process of processing but recovered and used as raw materials for another process of production.

4. “Processing wastes” means raw materials and supplies discarded in the process of processing and unusable.

5. “Defective processed products” means products and semi-finished products failing to meet technical standards (specifications, size, quality, etc.) agreed upon in the processing contract/annex and discarded in the process of processing.

6. Actual production norms of processed products (below referred to as norms) include:

a/ “Raw material use norm”, which is the necessary and reasonable amount of raw materials to produce a processed product unit;

b/ “Supplies consumption norm”, which is the amount of supplies consumed in order to produce a processed product unit;

c/ “Raw material or supplies wastage percentage”, which is the amount of raw material or supplies wastage, including natural wastage and wastage due to the creation of processing scraps, defective processed products and processing wastes (excluding scraps and wastes already included in use norms) calculated in a percentage (%) of the raw material use norm or supplies consumption norm.

7. “Norm of separation of component raw materials from original raw materials” means the amount of component raw materials separated from an original raw material;

8. “Machines, equipment and instruments directly used for processing” means those in a technological line to turn out processed products, which are leased or lent by the principal to the processor for the performance of a processing contract.

9. “Processed goods” referred to in Article 28 of the Government’s Decree No. 187/2013/ND-CP of November 20, 2013 (below referred to as Decree No. 187/2013/ND-CP) are finished products of a process of production or processing which satisfy the requirements of the principal agreed upon in a processing contract.

10. “Trader undertaking the processing for the first time” means a trader that has no processing contract ever received by a customs office by the time of notification of the processing contract.

Article 4. Forms of processing contracts

1. A processing contract must be made in writing or other forms of equivalent validity, including telegraph, telex, fax, data message and other forms provided by law.

2. Signatures and seals in contracts:

Foreign traders shall sign while Vietnamese traders shall sign and seal contracts in accordance with Vietnamese law; for traders being private business households, heads of households shall sign and write their full names and numbers and dates of issuance of their identity cards.

3. For electronic documents accompanying contracts issued by principals being foreign traders, the processors being Vietnamese traders shall sign and append their seals for certification.

Vietnamese traders being private business households shall comply with Clause 2 of this Article.

Article 5. Contents of processing contracts

The contents of a processing contract must comply with Article 29 of Decree No. 187/2013/ND-CP.

In case the principal and processor conduct transactions via a third party, e.g. the principal designates the processor to receive raw materials and supplies from a third partner or to deliver export processed products to a third partner, such must be expressed in the contract, contract annex or relevant document as proof.

Article 6. Annexes to processing contracts

1. For a processing contract which is valid for more than one year, different annexes may be made for performance. The period of performance of each annex must not exceed one year. In special cases in which the period of processing of a product lasts for more than one year, the processing contract/annex may be performed for each product (e.g., seagoing ship building or repair).

2. Annexes to a processing contract are an integral part of the processing contract.

3. Any modifications, supplementations or adjustments to the terms of a processing contract (including contract validity term extension) must be expressed in a contract annex made before the processing contract expires and notified to the customs office before or when the Vietnamese trader (below referred to as trader for short) carries out export or import procedures for the first goods shipment under such annex. Each annex to a processing contract must contain the signature and seal as the processing contract as provided in Article 4 of this Circular.

Upon the complete performance of a processing contract and export of all processed products, the trader may not extend the validity term of the processing contract which has expired.

Particularly for the value of raw materials and supplies imported for processing, when it is changed or added, the value indicated on the commercial invoice of the import dossier will be accepted and no adjustment annex is required.  

Article 7. Customs clearance places

Customs procedures for a specific processing contract shall be carried out at a Customs Branch under a provincial-level Customs Department chosen by the trader concerned. Specifically:

1. At the Customs Branch of the provincial-level Customs Department of the locality where the trader’s production establishment performing the processing contract (including sub-processing establishment) is based.

2. At the Customs Branch of the provincial-level Customs Department of the locality where the trader’s lawfully established head office is based.

3. At the Customs Branch of the provincial-level Customs Department of the locality where the trader’s branch, which has been lawfully established and has the function and task of carrying out customs procedures under regulations, is based. This locality has a border gate for actual import of raw materials and supplies for performance of the processing contract.

4. A trader that is organized as a business group or corporation (parent company-affiliated company) and has a specialized unit to import raw materials and supplies for supply to other attached units or has production establishments in different provinces or cities may choose a Customs Branch of the locality where a production establishment is based or where raw materials and supplies are imported for performance of the processing contract.

5. If there is no customs office in the locality where its production establishment or head office is based, the trader may choose a Customs Branch convenient for customs clearance registration.

Article 8. Responsibilities of traders and customs offices

1. Traders:

Traders or their at-law representatives shall take personal responsibility before law for:

a/ Using processing raw materials and supplies for proper purposes and according to norms under Article 30 of Decree No. 187/2013/ND-CP;

b/ Notifying their processing contracts; carrying out import procedures for raw materials and supplies; notifying and adjusting norms; carrying out procedures for intermediary processing; carrying out export procedures for processed products; and liquidating processing contracts and carrying out other procedures related to processing contracts with customs offices;

c/ Managing and monitoring raw materials and supplies on their accounting books from their importation to the complete liquidation of processing contracts and preserve such books for a duration prescribed by law;

d/ Coordinating with customs offices in applying information technology in managing processing contracts and carrying out import and export procedures for processed goods.

2. Customs offices shall:

a/ Carry out customs procedures, monitor, examine and supervise the performance of processing contracts by traders;

b/ Examine and ensure that the use of processing raw materials, supplies, machines and equipment by traders are for purposes registered with customs offices;

c/ Examine production establishments of traders in case it is necessary to examine production establishments;

d/ Apply appropriate coercive measures in case traders flee away or disperse property under Clause 26, Article 1 of the Law Amending and Supplementing a Number of Articles of the Tax Administration Law and relevant guiding documents;  

dd/ Apply information technology to facilitate and strictly manage the performance of processing contracts by traders.

Section 2

CUSTOMS PROCEDURES FOR GOODS RECEIVED FOR PROCESSING IN VIETNAM FOR FOREIGN TRADERS

Article 9. Procedures for notification of processing contracts

1. Responsibilities of traders:

At least 1 working day, for cases not subject to examination of production establishments, or 8 working days for cases subject to examination of production establishments, before carrying out import procedures for the first goods shipment under the processing contract, the trader shall notify the processing contract to the customs office. A dossier comprises:

a/ The processing contract and its annexes (if any): To submit 2 originals (1 to be kept by the customs office and 1 to be returned to the trader after the contract is received) and 1 Vietnamese version (if the contract is made in a foreign language other than English);

b/ The business registration certificate or enterprise registration certificate or investment license or investment certificate, for traders being foreign-invested enterprises (if carrying out procedures for notification of processing contracts for the first time): To submit 1 copy certified by the trader;

c/ The tax identification number registration certificate (if carrying out registration procedures for the first time): To submit 1 copy certified by the trader;

d/ The permit of the Ministry of Industry and Trade, for processed products on the list of imports and exports subject to permits: To submit 1 copy certified by the trader and produce the original for comparison;

dd/ The certificate of eligibility for scrap import (in case of importing scraps for use as processing raw materials) as provided by law: To submit 1 copy certified by the trader and produce the original for comparison;

e/ A document notifying the production establishment, for traders undertaking the processing for the first time, indicating the address of the trader’s head office, the address of the production establishment, goods items and equipment line (including types and quantities of existing machines and equipment), design capacity of the machinery and equipment line, production capacity (the maximum quantity of products which may be produced in a month/quarter/year; workforce, etc. (even for cases of processing outsourcing); the account number and the name of the bank with which the trader deposits its money: To submit 1 original.

The trader is required to make notification only once and make additional notification when there are any changes in the explained contents. In case of change in the legal person status, address of its working office or production establishment (from the time of submitting the processing contract to the time of completing the liquidation of the contract), before the time of commencement of operation of the new legal person or the time of commencement of operation at the address of the new working office or production establishment, the trader shall notify such changes in writing to the Customs Branch managing the processing contract.

g/ The processing outsourcing contract (for the case of outsourcing the processing of some or all products): To submit 1 copy certified by the trader and produce the original for comparison;

h/ The workshop or production ground rent contract, for the case of rent of workshops or production grounds: To submit 1 copy certified by the trader and produce the original for comparison.

2. Tasks of customs offices when carrying out procedures for receiving processing contracts/annexes:

2.1. For the receipt of processing contracts:

a/ For cases in which inspection of production establishments is not conducted before receiving processing contracts:

a1/ To examine the conditions for the receipt of the processing contract;

a2/ To check the completeness, consistency and validity of the processing contract;

a3/ To enter in a computer system information related to the processing contract; return to the trader 1 original of the processing contract and original documents already produced;

a4/ If a dossier is invalid, the customs office shall immediately notify such in an operational requirement card to the trader for dossier completion. In case of receiving multiple dossiers at a time and it is unable to immediately make such notification to the trader, within 2 working hours after receiving an invalid dossier, the customs office shall notify such in an operational request card to the trader for dossier completion;

a5/ Within 8 working hours after the trader submits a complete and valid dossier, the customs office shall complete the procedures for receiving the processing contract.

b/ For cases in which inspection of production establishments is conducted before receiving processing contracts:

b1/ To perform the jobs specified at Points a1, a2, a3 and a4, Clause 2 of this Article;

b2/ Within 5 working days after the trader submits a complete and valid dossier, the customs office shall complete the inspection of its production establishments and the receipt of the processing contract (or it shall state its refusal to receive the contract in an operational request card if conditions are not fully met).

For a trader having a production establishment in a province or city other than the locality in which it notifies its processing contract, within 8 working days after the trader submits a complete and valid dossier, the customs office shall complete the inspection of the production establishment and the receipt of the processing contract (or it shall state its refusal to receive the contract in an operational request card if conditions are not fully met).

Inspection of production establishments shall be conducted according to Article 10 of this Circular.

c/ If the customs office gives no feedback within the time limit specified at Point 2.1, Clause 2 of this Article, the trader will be automatically permitted to perform the processing contract.

2.2. For the receipt of processing contract annexes:

When receiving a processing contract annex, the customs office shall examine and compare its contents with the processing contract. If their terms are consistent, it shall receive the annex, enter information notified therein in a computer system and return to the trader the original annex and the original documents (if any).

2.3. Issuance of receipt numbers of processing contracts/processing contract annexes:

After receiving a processing contract/processing contract annex and examining the conditions specified in Clause 2 of this Article, the customs officer shall issue a receipt number, clearly writing the date of receipt, sign and append a stamp showing his/her officer identification number on the first page of the processing contract/processing contract annex and accompanying documents (if any); and enter such receipt number into the system for monitoring and management.

Article 10. Inspection of production establishments

1. Cases in which inspection of production establishments is required:

a/ Traders notify the performance of processing contracts for the first time to customs offices or traders have notified their processing contracts to other Customs Branches but the Customs Branches that have received such processing contracts have not yet conducted the inspection of production establishments;

b/ Traders undertake the processing but outsource a part of or the entire processing under the processing contract/processing contract annex to other traders;

c/ Traders rent all workshops, production grounds, machines and equipment of other traders for the performance of processing contracts;

d/ No product is exported after 2 months (or after the cycle of production of a product for processing special products like ships, mechanical engineering products, etc.) from the date of clearance of the import procedures for the first shipment of raw materials and supplies under the processing contract/processing contract annex;

dd/ Traders have had their processing contracts received by Customs Branches and are performing such processing contracts but keep notifying many other processing contracts in excess of their own actual production capacity and/or the actual production capacity of traders subcontracted with the processing;  

e/ Customs offices conduct inspection on the basis of results of risk management and probability examination to assess the law observance by traders.

2. Time of inspection of production establishments:

a/ After the trader submits a complete dossier of notification of the processing contract; or

b/ During the production process.

3. The leaders of Customs Branches managing the processing contracts are competent to decide on the inspection of the traders’ production establishments and shall notify in writing the traders of inspection contents within 3 working days before the inspection. In case traders notify their processing contracts for the first time or are performing processing contracts but customs offices have doubts over the production capacity, the inspection may be conducted immediately right after the leaders of Customs Branches managing the processing contracts decide on the inspection.

4. Contents of inspection of production establishments:

a/ Checking addresses of production establishments: Checking at the addresses declared by traders in their written explanations, for traders undertaking the processing for the first time or at the addresses of production establishments provided by traders; direct checking at the addresses of production establishments in combination with checking of information about the addresses of production establishments through local authorities, such as provincial-level Planning and Investment Departments, Police Departments, tax offices, street quarter groups, etc.

b/ Checking the lawful right to own or use workshops, production grounds, machines and equipment at production establishments:

b1/ Checking papers proving the lawful right to use workshops and production grounds. In case of rent of workshops, production grounds, machines and equipment, the validity term of rent contracts must be equal to or longer than the validity term of the processing contracts;

b2/ Checking the right to own or use machines and equipment at production establishments against the traders’ declarations in their written notifications in order to determine the traders’ lawful right to own or use such machines and equipment at production establishments. Checking contents: checking import declarations (for imported machines and equipment); purchase invoices and documents (for locally procured machines and equipment); or financial leasing contracts (for financially leased machines and equipment). For financial leasing contracts, their validity term must be equal to or longer than that of the processing contracts;

c/ Checking the state of the workforce to perform the processing contracts;

If unable to check through information provided by the provincial-level Labor, Ward Invalids and Social Affairs Department, the customs office shall:

c1/ For traders having operated for 2 months or longer:

c1.1/ Checking labor contracts; or

c1.2/ Checking workers’ payroll of the month preceding the inspection.

c2/ For traders having commenced production for less than 2 months, checking the state of the workforce during the process of production.

d/ Checking the production capacity of traders:

d1/ Checking the number of existing machines, production lines and equipment at production establishments;

d2/ Checking the state of machines and equipment (brand-new, used, etc.);

Comparing the number and operation capacity of existing machines, equipment and production lines at production establishments with the state of the workforce at the time of inspection to assess the maximum quantity of products which can be produced by traders in a month/quarter/year, and concurrently to determine the compatibility of these products with the items and quantity of raw materials and supplies imported for the processing of exports.

Upon completion of the inspection, customs officers shall make written inspection records which must fully and truthfully reflect what has been actually inspected and bear the signatures of customs officers conducting the inspection and the at-law representative of the inspected trader. The form of written record of inspection of production establishment shall be guided by the General Department of Customs.

6. On the basis of written records of inspection of production establishments, to make conclusions on inspection of production establishments (2 copies), which shall be signed by a leader of the Customs Branch and sent (1 copy) to the trader for compliance. The form of this conclusion shall be guided by the General Department of Customs.

7. Handling of results of inspection of a production establishment which show that the conditions for the performance of the processing contract are not satisfied:

a/ If the processing contract is not yet received, the customs office shall return the dossier of notification of the processing contract and clearly state the reason.

b/ If the processing contract has been received by the customs office:

b1/ If the production establishment does exist but fails to satisfy all the production conditions according to the required production process, the customs office shall request the trader to make a written commitment to redress the problem within a specified period. It shall concurrently suspend import procedures for subsequent shipments of raw materials and supplies under the processing contract until the trader satisfies all conditions on the production establishment required for processed goods and conformable with the trader’s written explanations on the production establishment.

b2/ If no establishment production exists, the customs office shall stop carrying out import procedures for raw materials and supplies for the performance of the processing contract and request explanations from the trader. Depending on the nature and severity of the violation, it shall forward the dossier to an anti-smuggling or post-customs clearance inspection customs unit for verification, investigation and handling in accordance with law.

Article 11. Procedures for norm notification

1. General principles:

a/ The notification of actual norms of export products shall be made for each category of product. Norms of separation of component raw materials from original raw materials shall be notified for each category of original raw material.

For a raw material used for the production of different types of products, the amount of such raw material discarded from the production of a type of product which is used for the production of another type of product must neither be regarded as scraps nor included in the wastage percentage, and must be regarded as component raw material.

b/ For categories of goods of various sizes, traders shall declare either norms applicable to each size or the average norms for each category of goods. Traders shall calculate average norms by the method guided in Form No. 03/TBDM-GC/2014 in Appendix I to this Circular, and give explanations.

In case traders notify average norms for each category of goods but in the process of exportation of processed products they adjust the quantity of exported products of each size compared to the quantity of products of each size in the table explaining the parameters used for calculating the average norms in the initial notification, they shall recalculate the average norms based on the real conditions of exported goods and notify them to the customs offices which have received the initial norms.

c/ Units of calculation used in the notified table of norms are those used in Vietnam’s list of imports and exports promulgated together with the Ministry of Finance’s Circular No. 156/2011/TT-BTC of January 14, 2011, and must be the same as those used in the notified processing contract/processing contract annex, import/export declarations and relevant documents.

In case the units of calculation used in the notified table of norms cannot accord with those used in the list promulgated together with the Ministry of Finance’s Circular No. 156/2011/TT-BTC of January 14, 2011, traders shall convert the quantities of goods stated in import/export declarations into the units of calculation used in the notified table of norms which accord with those used in the processing contract/processing contract annex and relevant documents.

d/ When adjusting norms of a category of goods, a trader is not required to modify the category heading notified to the customs office. The trader and customs office carrying out procedures for the processing contract shall agree to add sub-headings for such category in the modified table of norms and import/export declarations for the category with adjusted norms. Particularly for the adjustment of norms after the exportation of products, the trader and customs office carrying out procedures for the processing contract shall agree to add sub-headings for such category in the modified table of norms;

dd/ Norms notified to, adjusted or re-calculated with customs offices are those serving the liquidation of processing contracts.

2. Norm notification

a/ Responsibilities of traders:

a1/ To elaborate norms for production of processed products for export;

a2/ To make notifications of actually used norms to customs offices according to Form No. 03/TBDM-GC/2014 in Appendix I to this Circular, fully showing technical specifications of products related to the determination of norms;

a3/ To preserve actual norms; and diagrams of product model designs or production processes (if any), diagrams of modeling patterns or imprinted patterns (for textile and garment and leather footwear) at head offices of enterprises. The duration of preservation is as prescribed in the Customs Law and preserved items shall be produced at the request of customs offices.

b/ Responsibilities of customs offices:

b1/ Within 1 hour after the trader submits the notification of the table of norms, to complete the receipt of the norm notification. In case the trader fails to fully show technical specifications specified at Point a2 of this Clause in the notified table of norms, the customs office shall refuse to receive it and request the trader to supplement;

b2/ To preserve the notified norms together with the customs dossier in accordance with the Customs Law;

b3/ To periodically inspect norms notified by traders; to conduct extraordinary inspection in case they a doubt that the notified norms are not consistent with those used in actual production.

The General Department of Customs shall specifically guide the receipt and inspection of norms prescribed in this Article.

3. Time of norm notification:

a/ For a category of goods the quantity of which indicated in the contract/contract annex is wholly exported at a time: At least 5 days before the date of registration of the declaration for the exportation of such category of goods;

b/ For a category of goods the quantity of which indicated in the contract/contract annex is exported in multiple times: Before or at the time of registration of the declaration for the first exportation of such category of goods.

Article 12. Procedures for norm adjustment

1. Cases of norm adjustment:

a/ Due to calculation errors (e.g. errors in the methods of calculation; units of calculation; commas and points; and calculation results).

b/ In the course of performing a processing contract, if its actual norms are changed because of change in raw material characteristics, processing conditions or requirements of each export order (as agreed in a processing contract annex), the trader shall submit a table of adjusted norms of the related goods category, enclosed with a document clearly stating the reason, to the Customs Branch managing the processing contract for consideration and decision on a case-by-case basis.

2. Time of norm adjustment:

a/ For a category of goods the quantity of which indicated in the contract/annex is wholly exported at a time: At least 2 days before the date of registration of the export declaration; 

b/ For a category of goods the quantity of which indicated in the contract/annex is exported in multiple times: At least 2 days before the time of registration of the declaration for the last exportation of such category of goods (for adjustment due to calculation errors) or at least 2 days before the time of registration of the declaration for export of products with adjusted norms (for adjustments for a reason stated at Point b, Clause 1, Article 12 of this Circular);

c/ The time limit for notification of average norms recalculated under Point b, Clause 1, Article 11 of this Circular is 15 days after the whole quantity of goods of a category with average norms is exported.

3. Norm adjustment after the exportation of products:

a/ Cases of norm adjustment shall comply with Clause 1 of this Article.

b/ Conditions for norm adjustment:

b1/ Traders still preserve actually used norms together with technical specifications, diagrams of product model designs or production processes (if any), diagrams of modeling patterns or imprinted patterns (for textile and garment and leather footwear);

b2/ Traders have adequate grounds (discarded materials, defective products or invoices, documents and technical documents) to prove and customs offices have adequate grounds and conditions to inspect and determine the truthfulness, accuracy and lawfulness of the proposed norm adjustment;

c/ Time of norm adjustment: Before the trader submits a dossier for liquidation of the processing contract/processing contract annex.

d/ Responsibilities of traders:

d1/ To send to customs offices written requests for norm adjustment, clearly stating the reason for adjustment.

d2/ To produce adequate proving grounds specified at Point b2, Clause 3 of this Article for customs offices to conduct checking and comparison.

d3/ To adjust norms according to results of inspection by the customs offices.

dd/ Responsibilities of customs offices:

dd1/ To receive dossiers of request for norm adjustment;

dd2/ To check conditions for norm adjustment;

dd3/ To accept adjusted norms of traders in case of satisfaction of the conditions for norm adjustment after the exportation of products.

dd4/ To conduct norm inspection: To inspect all cases of declaration of norms higher than those notified to customs offices; to inspect when having doubts about cases of declaration of norms lower than those notified to customs offices. In case customs offices cannot identify norms, they may solicit expertise opinions of specialized assessment organizations.

Article 13. Procedures for norm inspection       

1. Cases of norm inspection:

a/ The trader notifies the increase of norms;

b/ There is a suspected sign of norm fraud;

c/ The trader is sanctioned for norm fraud within 365 days after the issuance of the sanctioning decision. Past that time limit, the norm inspection shall be conducted under Points a and b of this Clause.

2. Competence to decide on norm inspection: The leaders of Customs Branches managing processing contracts, post-customs clearance inspection sub-departments and the Post-Customs Clearance Inspection Department.

3. Places of norm inspection:

a/ Inspection at customs offices and/or

b/ Inspection at traders’ production establishments.

4. Methods of norm inspection:

a/ Direct inspection by customs offices;

b/ Inspection by specialized assessment organizations.

5. Time of norm inspection:

a/ After the trader submits the notified table of norms or the written notification of adjusted norms, or

b/ Upon liquidation of the processing contract, or

c/ Upon post-customs clearance inspection.

6. Principles of norm inspection:

The principles of inspection must comply with Article 3 of the Government’s Decree No. 154/2005/ND-CP of December 15, 2005 (below referred to as Decree No. 154/2005/ND-CP). The inspection must be limited to a level suitable to results of information analysis, assessment of law observance by goods owners and risks of violation of the customs law.

7. Responsibilities of traders in the course of norm inspection:

a/ To give detailed explanations about the grounds and methods of elaboration of norms of goods categories notified to customs offices, enclosed with product samples and their technical design documents (e.g. cutting diagrams, diagrams of modeling patterns or imprinted patterns for textile, garment and leather footwear) or production processes (if any);

b/ To produce accounting books and documents to customs offices upon request and create favorable conditions for customs offices to quickly and accurately inspect norms;

c/ To comply with customs offices’ decisions on norm inspection.

8. Tasks of inspecting customs officers:

a/ To conduct inspection according to the prescribed process without obstructing traders’ production;

b/ To comply with the time limit for inspection:

b.1/ For documentary examination at customs offices: Norm inspection must be completed within 8 working hours after it commences.

In case a contract/contract annex covers more than 20 categories of goods subject to norm inspection or a category of goods covers more than 20 materials and auxiliary materials constituting the product, the inspection duration shall be considered and decided by the director of the Customs Branch to suit the number of categories of goods and quantity of materials and auxiliary materials constituting the product in the trader’s notified table of norms.

b.2/ For documentary examination in combination with field inspection at the trader’s production establishment: Norm inspection must be completed within 3 working days after it commences. For products with particular characteristics for which their norm inspection requires coordination among specialized agencies, the inspection duration must not exceed 2 working days after the assessment results are received from specialized assessment agencies;

c/ To seal up product samples for which norm inspection has been conducted (in case product samples are retained) and assign them to traders for preservation, and write the seal numbers on the written records of norm inspection;

d/ To make a written record certifying results of the inspection upon completion of the inspection, which fully and truthfully reflects actual inspection activities and bears the signatures of the inspecting customs officer and an at-law representative of the inspected trader. The form of written record of norm inspection shall be guided by the General Department of Customs;

dd/ Based on the written record of norm inspection, to make a written conclusion on norm inspection (2 copies), which shall be signed by the leader of the Customs Branch and sent (1 copy) to the inspected trader for compliance. The form of written conclusion on norm inspection shall be guided by the General Department of Customs; 

e/ Measures to be taken when the conclusion states that the norms notified or adjusted by the trader are not true to reality:

e1/ To make a written record of the violation and administratively sanction the violator according to regulations;

e2/ If the processing contract/processing contract annex has not yet been liquidated, the norms identified through inspection shall be used for liquidation;

e3/ If the processing contract/processing contract annex has been liquidated, the norms identified through inspection shall be used for the tax assessment or the collection of tax arrears.

Article 14. Notification of headings of raw materials and supplies

1. For units having applied information technology ­to managing and liquidating processing contracts before or at the time of carrying out import procedures for raw materials and supplies, traders shall notify headings of raw materials and supplies according to form No. 01/TBNVL-GC/2014 - Appendix I to this Circular: To submit 2 originals. These headings of raw materials and supplies shall be shown in import customs declarations to serve the liquidation on the system.

In case an original raw material is divided into many raw materials for the production of different types of products and final finished products are those created from component materials or from the combination of component materials and others, both the original and component raw materials shall be registered on the list of imported raw materials.

Customs Branches managing processing contracts shall preserve form No. 01/TBNVL-GC/2014 together with relevant contracts for convenient monitoring and management.

2. In case a new category arises in the course of performance of a processing contract/processing contract annex, the trader shall make additional notification to the customs office.

3. For units having not yet applied information technology to managing and liquidating processing contracts, traders shall use consecutive natural numbers starting from 01 as headings of raw materials and supplies.

Article 15. Procedures for importation of processing raw materials and supplies

1. For processing raw materials and supplies provided by the overseas principal:

a/ To follow the guidance on customs procedures applicable to commercial imports specified in Part II of the Ministry of Finance’s Circular No. 182/2013/TT-BTC of September 10, 2013 (below referred to as Circular No. 128/2013/TT-BTC);

b/ For raw materials and supplies purchased by the principal and sent by a third party designated by the principal to the processor, the customs dossier of the imported shipment must also contain a document of the principal notifying the processor of the receipt of such goods from the third party;

c/ For finished products supplied by the principal for attachment to or packaging together with processed products into complete goods for export, customs procedures are the same as those applicable to processing raw materials, provided that the following conditions are satisfied:

c1/ The name of the finished product and the purpose of its supply for attachment to or packaging together with processed products into complete goods for export, are clearly indicated in the processing contract/processing contract annex;

c2/ They are managed like raw materials and supplies imported for processing;

c3/ When carrying out import procedures, the name and quantity of the finished product attached to or packaged together with processed products are clearly declared in the import customs declaration.

2. For processing raw materials and supplies supplied by the principal in the form of on-spot import and export, customs procedures shall be carried out under Article 15 of Decree No. 154/2005/ND-CP of December 15, 2005, and Article 45 of Circular No. 128/2013/TT-BTC. Particularly, import and export declarations and on-spot import and export procedures must comply with Clause 3, Article 20 of this Circular.

3. In case processing raw materials and supplies are imported via the express delivery service and the express delivery service provider has registered a declaration according to the form subject to tax payment, at the goods owner’s request, the Customs Branch managing the processing contract shall re-register the declaration for the goods owner on the basis of the declaration unsuitable to the form of importation, and issue a written notice to the Customs Branch managing goods imported through the express delivery service for refunding the paid tax money (if any) to the trader. The procedures and dossier of refund of the paid tax money to traders must comply with Circular No. 128/2013/TT-BTC.

If the goods owner knows in advance that its/his/her goods have arrived in Vietnam, it/he/she shall register a customs declaration suitable to the form of importation with the Customs Branch managing the processing contract then transfer the dossier to the express delivery service provider for carrying out customs procedures at the Customs Branch managing goods imported via this service. Border-gate transfer procedures are the same as those for goods imported via the express delivery service. If the owner of the imported goods shipment subject to physical inspection makes a written request for physical inspection at the place of inspection of goods imported via the express delivery service, the Customs Branch managing these goods shall conduct inspection at the request of the trader and the Customs Branch managing the processing contract.

Article 16. Customs procedures for raw materials and supplies supplied by processors for processing contracts

1. For raw materials and supplies produced or purchased in the Vietnamese market by the processors:

a/ The names, norms, wastage percentages, quantity of goods, unit price, payment method and time must be agreed upon in the processing contract/processing contract annex.

It is prohibited to supply raw materials and supplies on the list of goods banned or suspended from export;

b/ For supplied raw materials and supplies on the list of goods subject to export permits: To submit 1 copy certified by the trader and produce the original for comparison.

c/ Customs procedures:

Processors other than export processing enterprises are not required to carry out customs procedures for raw materials and supplies supplied or purchased by themselves in the Vietnamese market (including also raw materials and supplies of import origin). When carrying out export procedures for processed products, they shall declare and calculate export duty and other taxes (if any) in an annex to the export goods declaration.

Customs offices may not liquidate raw materials and supplies produced or purchased by the processors themselves in the Vietnamese market for which traders, when exporting processed products, declare in form No. 02/NVLCU-GC/2014 in Appendix I to this Circular. In this case, the tax policy shall be implemented under the Government’s Decree No. 87/2010/ND-CP of August 13, 2010, and Circular No. 128/2013/TT-BTC.

2. For raw materials and supplies directly purchased by processors from overseas for processing contracts:  

a/ Their names, norms, wastage percentages, quantities, unit prices and payment method and time must be agreed upon in the processing contract/ processing contract annex;

b/ Permission of a competent agency must be obtained, for raw materials and supplies on the list of imports subject to permits; it is prohibited to supply raw materials and supplies on the list of goods banned or suspended from export or import;

c/ Customs procedures and tax policy and refund procedures are as follows:

c1/ For raw materials and supplies supplied by processors which are imported after it is so agreed in the processing contract/ processing contract annex: To register the import declaration suitable to the form of processing; the way of writing on the import declaration is as follows: declaration No.…./NK/GC-CU/…

When carrying out import procedures, processors shall submit 1 copy of the contract on goods purchase and sale. In this case, the applicable tax policy shall be based on the form of processing.

c2/ For raw materials and supplies imported in the form of importation for export production before signing processing contracts: Traders may supply them for processing contracts; the tax policy and tax refund procedures are those applicable to the form of importation of raw materials for export production guided in Circular No. 128/2013/TT-BTC, provided that the following conditions are fully met:

c2.1/ Being compatible with raw materials and supplies to be supplied as agreed in the processing contract/ processing contract annex in terms of quantity, specifications and categories.

c2.2/ The time of importation is within 2 years from the time of registration of the import declaration to the time of registration of the export declaration for products using supplied raw materials and supplies.

For products for export with the production cycle of more than 2 years, export declaration shall be made according to each product. Traders shall make written explanations and produce documents proving the production cycle approved by the leadership of the Customs Branch to which the processing contract has been notified. The tax policy complies with the Law on Tax Administration, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration and the Government’s Decree No. 83/2013/ND-CP of July 22, 2013. 

d/ When carrying out export procedures for processed products, the processor shall declare in form No. 02/NVLCU-GC/2011 in Appendix I to this Circular; this form shall be filed together with the export declaration.

3. For cases of purchase of goods between the inland and export processing enterprises for supply: Customs procedures shall be carried out under the guidance in Article 49 of Circular No. 128/2013/TT-BTC and Points a, b and d, Clause 2 of this Article.

Article 17. Customs procedures for imported machines and equipment for the performance of processing contracts

1. The import of leased or borrowed machines and equipment for the performance of a processing contract must comply with regulations on policies on import and export management.

2. For foreign-invested enterprises, the import of leased or borrowed machines and equipment for the performance of a processing contract complies with the guidance in Circular No. 04/2007/TT-BTM of April 4, 2007, of the Ministry of Trade (now the Ministry of Industry and Trade).

3. Customs procedures:

a/ For leased or borrowed machines and equipment to be directly used for processing which are exempt from import duty, customs procedures applicable to goods temporarily imported for re-export shall be carried out at the Customs Branch managing the processing contract;

b/ For machines and equipment leased or lent by the principal but not directly used for processing, customs procedures applicable to goods temporarily imported for re-export shall be carried out, and the tax policy shall be implemented under the guidance in Circular No. 128/2013/TT-BTC.

Article 18. Customs procedures for goods imported or exported for use as processing samples (samples not for sale)

1. For goods imported or exported for use as processing samples, customs procedures shall be carried out as for non-commercial imports and exports guided in Part III of Circular No. 128/2013/TT-BTC.

2. Goods used as processing samples must meet the following conditions:

a/ They may only be used as processing samples and are of no commercial value (e.g., perforated goods or goods bearing the “sample product” mark, single shoes, one-sleeved shirts);

b/ The goods shipment documents evidence that they are sample goods;

c/ For each sample goods category, only 10 product units may be imported or exported.

Article 19. Procedures for exportation of processed products

1. The customs dossier:

a/ The customs declaration: To submit 2 originals;

b/ The detailed list of goods, for goods of different types or packages: To submit 1 original;

c/ The export permit, for goods subject to export permits as prescribed by law: To submit 1 original, for cases of single exportation, or to submit 1 copy and produce the original for comparison and making of a conciliation slip, for cases of multiple exportation;

d/ Other relevant documents as required by law: To submit 1 original.

2. Export customs procedures shall be carried out by the Customs Branch to which the processing contract has been notified and are the same as those for commercial exports guided in Part II of Circular No. 128/2013/TT-BTC but tax declaration and tax calculation checking with regard to exported products will not be carried out; in addition, the following shall be complied with:

a/ If processed products for export are made of raw materials and supplies supplied by the processor, customs procedures comply with the guidance in Article 16 of this Circular;

b/ If the processing contract/processing contract annex states that finished processed products will be imported for attachment to processed products for export, such must be clearly declared in the export customs declaration;

c/ If processed products are exported to a third partner whose name and address, however, are not yet indicated in the processing contract, when registering the export declaration, the trader shall submit to the customs office a copy of the principal’s document designating the delivery of goods to a third party; 

d/ For an export goods shipment subject to physical inspection, the trader shall produce, upon request, to the customs office the notified table of norms.

dd/ The customs office shall carry out procedures for registration of export declarations only for goods categories for which norms have been notified by traders.

3. Customs procedures for processed export goods shipments transported from/to border gates under customs supervision are the same as those applicable to goods transported from/to border gates under customs supervision provided in Articles 16 and 18 of the Government’s Decree No. 154/2005/ND-CP and Article 61 of Circular No 128/2013/TT-BTC.

4. Customs procedures applicable to exported processed goods which are returned for repair or re-processing comply with Article 55 of Circular No 128/2013/TT-BTC.

Article 20. Customs procedures for on-spot import and export of processed products

1. The conditions for on-spot export and import comply with Article 32 of Decree No. 187/2013/ND-CP.

2. Within 15 (fifteen) days after the on-spot export trader completes customs procedures and delivers goods, the on-spot import trader shall carry out customs procedures. Past that time limit, if the on-spot import trader fails to carry out customs procedures, the customs office where import procedures are carried out shall make a written record of and sanction the customs-related administrative violation and continue to carry out customs procedures.

3. Customs procedures shall be carried out as follows:

3.1. For processed products imported on spot for use as production raw materials:

a/ On-spot export procedures:

a1/ Responsibilities of traders carrying out on-spot export procedures:

a1.1/ To fill in all items of the export declaration according to the form provided in the Ministry of Finance’s Circular No. 15/2012/TT-BTC of February 8, 2012, promulgating import and export declaration forms (below referred to as Circular No. 15/2012/TT-BTC). The name of the designated deliverer of goods must be stated in box No. 3 of the export declaration; the number and date of the export or value-added invoice (in case of use of value-added invoices) must be stated in Box No. 8; the place of receipt of goods and Customs Branch expected to carry out on-spot import procedures must be stated in Box No. 9.

a1.2/ To submit to the Customs Branch where on-spot export procedures are carried out the customs dossier which comprises:

a1.2.1/ Export declaration: 2 originals;

a1.2.2/ Export invoice or value-added invoice: 1 copy;

a1.2.3/ Delivery of goods as designated by the principal;

a1.2.4/ Export permit (applicable to goods subject to permit).

a2/ Responsibilities of the Customs Branch carrying out on-spot export procedures:

a2.1/ To receive and register the declaration; to conduct the physical inspection of goods in case goods are subject to inspection; to check tax calculation for supplied raw materials and supplies supplied by the processor (if any);

a2.2/ To preserve one declaration copy and documents submitted by the trader, and return to the export trader one declaration copy and documents produced by the trader;

a2.3/ To facsimile to the on-spot import Customs Branch (Customs Branch expected to carry out on-spot import procedures declared by the enterprise in the export customs declaration) the customs declaration for which on-spot export procedures have been carried out for monitoring, and continue to carry out customs procedures.

a2.4/ To coordinate with the Customs Branch where on-spot import procedures are carried out in verifying the case in which past the time limit prescribed in Clause 2 of this Article, the trader carrying out on-spot procedures still fails to carry out customs procedures.

b/ On-sport import procedures:

b1/ Responsibilities of traders carrying out on-spot import procedures:

b1.1/ To fill in all items of the import declaration according to the form provided in the Ministry of Finance’s Circular No. 15/2012/TT-BTC. The name of the designated recipient of goods must be stated in box No. 3 of the import declaration.

b1.2/ To provide information on the place of receipt of goods and the Customs Branch expected to carry out on-spot import procedures to the on-spot export trader for filling the export customs declaration;

b1.3/ To submit to the Customs Branch carrying out on-spot export procedures the customs dossier which comprises:

b1.3.1/ On-spot import declaration: 2 originals;

b1.3.2/ The purchase and sale contract with the principal which a term of receipt of goods from the processor;

b1.3.3/ Other papers required for each type of import (except bill of lading);

b2/ Responsibilities of the Customs Branch carrying out on-spot import procedures:

b2.1/ To receive the facsimiled on-spot export customs declaration for which customs procedures have been completed sent by the Customs Branch carrying out export procedures. Past the time limit for completion of customs procedures prescribed in Clause 2 of this Article, to coordinate with the Customs Branch carrying out on-spot export procedures in conducting verification;

b2.2/ To receive the customs dossier as prescribed;

b2.3/ To proceed with the steps of registration of the declaration and check tax calculation (for taxable goods); to conduct physical inspection of goods when having a doubt that the trader delivers or receives goods at variance with the customs declaration. In case the trader has put goods into production, to check accounting books and documents and documents related to the goods shipment; in box No. 35 (other notes) of the import declaration, write: On-spot import under the on-export declaration No....., dated......; under delivery contract No......, dated........; and certify the completion of customs procedures, sign and append the officer stamp on the customs declaration;

b2.4/ To preserve one declaration copy together with documents submitted by the trader, and return to the trader the other declaration copy and documents produced by the trader;

b2.5/ To send a written notice to the tax office directly managing the on-spot import trader for monitoring and send a notice through the computer network if the Customs Branch carrying out import procedures and the local tax office are electronically connected.

c/ In case the trader delivers or receives processed products which are imported on spot for use as raw materials for processing of export products for many times a day, week or month, it/he/she may declare them in only one on-spot export declaration based on delivery and receipt documents, such as export invoices or value-added invoices, ex-warehousing-cum-internal transport bills, provided that such invoices and bills are consolidated for declaration within the day, week or month in a single declaration for such day, week or month. In case having a change in tax policy or exchange rate at the time of delivery or receipt of goods, an on-spot import/export declaration shall be filled separately without being consolidated with documents not related to the tax policy or exchange rate change.

The deadline for registration of a day’s consolidated customs declaration is the last working hour of the day. The deadline for registration of a week’s or a month’s consolidated customs declaration is the last working day of the week or month.          

3.2. For completely processed products imported on spot for local sale:

a/ Place of customs clearance: At the Customs Branch managing the processed goods for on-spot export.

b/ Customs dossiers and procedures: As guided in Article 45 of Circular No. 128/2013/TT-BTC. Particularly, customs declarations and procedures must comply with Clause 3.1 of this Article; the tax and import and export management policies must comply with current regulations;

c/ Completely processed products imported on spot for local sale must comply with the Government’s Decree No. 89/2006/ND-CP of August 30, 2006, on goods labels.

3.3. On-spot import and export procedures are applicable to traders undertaking processing for foreign traders that are also traders importing on spot processed products. These traders shall carry out both on-spot import and export procedures for these processed products.

3.4. For processed products used for paying processing charges:

Customs procedures shall be carried out as for completely processed products imported on the spot for local sale, with the purchase and sale contract replaced by a written agreement between the principal and processor on the payment of processing charges in the form of processed products.

The traders shall fully comply with the policies on import and export management and taxation applicable to goods imported from overseas and the provisions of the Government’s Decree No. 89/2006/ND-CP of August 30, 2006, on goods labels. These processed products are allowed to be used for liquidating the processing contracts.

3.5. On-spot import and export declarations are valid for liquidation when:

The customs declaration has been fully filled in and bears the certification, signatures and seals of the exporting trader, importing trader, customs office carrying out export procedures and customs office carrying out import procedures.

Article 21. Customs procedures for hiring processing

Vietnamese traders that sign processing contracts with foreign traders but do not conduct the processing and hire other traders to do so (hiring of processing) under Point b, Clause 2, Article 32 of Decree No. 187/2013/ND-CP, shall carry out procedures for export, import or liquidation of processing contracts with customs offices and take responsibility before law for the performance of these contracts. They shall also notify in writing the names and addresses of offices and production establishments of traders that undertake the processing to customs offices for inspection when necessary.

Customs procedures are not required for goods delivered and received between Vietnamese traders.

Article 22. Procedures for delivery and receipt of intermediary processed products

1. Responsibilities of traders:

a/ Based on designation documents of principals, a trader that delivers intermediary processed products (deliverer) shall send a written request for permission for carrying out intermediary procedures for processed products to the Customs Branch managing the deliverer’s processing contract, clearly stating goods items and quantities under processing contract No..... transferred to processing contract No...., and the processor. After obtaining approval of this Customs Branch this, the trader that delivers the intermediary processed products and the trader that receives these products (the recipient) shall carry out customs procedures under Clause 2 of this Article;

b/ At-law representatives of the deliverer and recipient shall take responsibility before law for the production of intermediary processed products from raw materials and auxiliary materials of the processing contract and the use thereof for the proper processing purpose under Article 33 of Decree No. 187/2013/ND-CP;

c/ If the processing contract involving intermediary processed products (deliverer’s processing contract) and the processing contract on the use of intermediary processed products as processing raw materials (recipient’s processing contract) are performed by the same processing trader, such trader shall perform the tasks of both deliverer and recipient.

2. Customs procedures: As prescribed in Clause 3, Article 20 of this Circular.

Article 23. Procedures for transfer of raw materials, supplies; machines and equipment leased or borrowed according to designation by principals from a processing contract to another during the performance of the processing contract

1. Cases in which transfer is allowed:

a/ Machines and equipment which have been used to complete a stage of a processing contract may be transferred for performing a stage of a subsequent processing contract or to another processor or principal of the same contract;

b/ Raw materials and supplies which have been imported for a processing contract but are found unsuitable for the performance of this processing contract (due to a change in product model), may be transferred for performing another processing contract with the same or different processor or principal at the request of the principal;            

c/ Raw materials and supplies of a processing contract/processing contract annex which have been incorrectly delivered by the principal to another processing contract/processing contract annex of the same principal;

d/ Other cases in which traders give in writing plausible reasons for the transfer and the transfer approved by directors of Customs Branches managing processing contracts, except the cases specified at Point c2, Clause 2, Article 27 of this Circular.

2. Customs procedures:

Customs procedures for transfer specified in this Article are the same as those for on-spot import or export of processed products for use as production materials under Clause 3, Article 20 of this Circular, except for requesting production of export or value-added invoices by traders.

Article 24. Procedures for re-export of temporarily imported processing raw materials, supplies, machines and equipment during the performance of processing contracts

1. A customs dossier comprises:

a/ The export declaration: To submit 2 originals;

b/ The trader’s written explanation (stating the reason for re-export; numbers and dates of the import declaration and the processing contract involving returned goods): To submit one original enclosed with a copy of the relevant import declaration;

c/ The principal’s written request for the return of goods: To submit one original.

2. Customs procedures are the same as those applicable to re-export of redundant processing raw materials and supplies prescribed at Point b, Clause 2, Article 27 of this Circular.

Article 25. Liquidation of processing contracts

1. Time limit and extension of time limit for submission of liquidation dossiers:

a/ Time limit for submission of liquidation dossiers:

a1/ Within 15 working days from the date of completion or expiration of a processing contract, the trader shall submit to the Customs Branch managing the processing contract a dossier of request for processing contract liquidation, comprising also a plan to dispose of redundant raw materials and supplies, leased or borrowed machines and equipment, scraps, defective products and discarded materials (made according to a form provided in Appendix II to this Circular) for consideration and approval.

a2/ Within 30 working days after the Customs Branch managing the processing contract approves the plan to dispose of redundant raw materials and supplies, leased or borrowed machines and equipment, scraps, defective products and discarded materials in the trader’s written request, the trader shall complete customs procedures for disposal of redundant raw materials and supplies, leased or borrowed machines and equipment, scraps, defective products and discarded materials (if any) and submit a complete dossier of liquidation of the processing contract to the customs office. 

a3/ For a processing contract with different annexes to be performed separately, the time limit for submission of the liquidation dossier for each annex is the same as for submission of the processing contract liquidation dossier.

b/ Extension of the time limit for submission of liquidation dossiers:

b1/ Cases eligible for extension of the time limit for submission of liquidation dossiers:

b1.1/ A trader that concurrently performs many processing contracts which all expire at the same point of time is unable to prepare liquidation dossiers on time;

b1.2/ There is a dispute related to the processing contract between the principal and processor;

b1.3/ Cases in which the trader, for force majeure events, fails to conduct the liquidation on time.

b2/ Competence to extend the time limit and extended time limit:

Based on the trader’s written explanation, the director of the Customs Branch managing the processing contract shall consider and extend the time limit for submission of the liquidation dossier guided at Point a, Clause 1 of this Article. The time limit may be extended only once for not more than 30 days.  

1. A liquidation dossier comprises:

a/ A written request for liquidation, made according to form DNTK-GC/2014 – Appendix II to this Circular: To submit 2 originals;

b/ A general table of imported raw materials and supplies, made according to form 01/HSTK-GC/2014 - Appendix II to this Circular: To submit 1 original;

c/ A general table of exported processed products, made according to form 02/HSTK-GC/2014 - Appendix II to this Circular: To submit one original;

d/ A general table of raw materials and supplies re-exported back to the foreign partner and transferred to another processing contract during the performance of the processing contract, made according to form No. 03/HSTK-GC/2014 - Appendix II to this Circular: To submit one original;

dd/ A general table of raw materials and supplies supplied by the processor (if any), made according to form No. 04/HSTK-GC/2014 - Appendix II to this Circular: To submit one original;

In case the customs office doubts that the declaration of raw materials domestically purchased for supply is untruthful, it shall request production of purchase invoices and payment documents for raw materials supplied by the principal;

e/ A general table of raw materials and supplies already used to produce exported products, made according to form No. 05/HSTK-GC/2014 - Appendix II to this Circular: To submit one original;

g/ A processing contract liquidation sheet, made according to form No. 06/HSTK-GC/2014 - Appendix II to this Circular: To submit 2 originals (one to be returned to the trader after liquidation);

h/ A general table of machines and equipment temporarily imported for re-export, made according to form No. 07/HSTK-GC/2014 - Appendix II to this Circular: To submit 2 originals (one to be returned to the trader after liquidation);

i/ A list of finished products imported for attachment to or packaging together with exported processed products (if any), made according to form No. 08/SPHC-GC/2014 - Appendix II to this Circular: To submit 2 originals (one to be returned to the trader after liquidation);

k/ A list of processed product export declarations (including also on-spot import/export declarations; intermediary processed product delivery and receipt declarations) for which customs procedures have been completed and there are sufficient grounds for determining that goods have been exported under Article 30 of Circular No. 128/2013/TT-BTC, made according to form No. 09/HSTK-GC/2014 - Appendix II to this Circular: To submit one original;

The trader’s at-law representative shall sign and seal (for private business households, sign and write their full names and number, date and place of issue of their identity cards) the above tables and list and take responsibility before law for the accuracy and truthfulness of liquidation data.

3. Responsibilities of traders:

a/ To submit a complete liquidation dossier within the prescribed time limit;

b/ To take responsibility before law for all data included in the dossier for liquidation;

c/ To handle raw materials and supplies; surplus machines and equipment; discarded materials and defective products in accordance with law;

d/ To coordinate with customs offices in case it is necessary to clarify liquidation data.

4. Responsibilities of customs offices:

4.1. To receive liquidation dossiers:

a/ To receive dossiers for liquidation of processing contracts from traders;

b/ To check the completeness, consistency, validity, and submission time of liquidation dossier sets;

b1/ In case a liquidation dossier set is complete, consistent, valid and submitted with the prescribed time limit:

b1.1/ To check the unliquidated processing contracts. If detecting that a trader has an unliquidated processing contract, to request the trader to complete the liquidation of such contract and fulfill the tax obligations (if any);

b1.2/ To certify 2 copies of the trader’s written request (according to form DNTK-GC/2014 - Appendix II to this Circular), keep one and return the other to the trader for preservation;

b2/ In case a liquidation dossier is complete, consistent and valid but submitted beyond the prescribed time limit:

b2.1/ To make a written record of the violation of the submission time limit and handle the violation under regulations;

b2.2/ To perform the jobs specified in Items b1.1 and b1.2, Clause 4 of this Article.

b3/ In case a liquidation dossier is incomplete and invalid: To reject the dossier with a professional request card, clearly stating the reason for rejection or requesting the addition of documents.

b4/ Time for the customs office to count the time limit for fining the late submission of a liquidation dossier and handle redundant raw materials and supplies, leased or borrowed machines and equipment is when the trader submits a complete and valid liquidation dossier.

4.2. To examine liquidation dossiers after completing receipt procedures:

Within 30 working days after the completion of procedures for receiving a liquidation dossier submitted by a trader, based on the assessment of the law observance by the trader, the customs office shall classify such liquidation dossier for application of appropriate examination measures; examination and comparison of details of the liquidation dossier shall apply to the following cases:

a/ The trader’s liquidation dossier is incompliant with customs and tax laws;

b/ The trader’s liquidation dossier is compliant with customs and tax laws but shows signs of violation in the import of raw materials and supplies; norms; export of products; or other doubtful signs upon receipt of the liquidation dossier;

c/ Probability examination of 5% of the processing contract of the trader that has strictly observed the customs and tax laws to assess the trader’s law observance. The percentage of 5% of the contracts to be examined is based on the total number of liquidated processing contracts of the trader that strictly observed the customs law in the preceding year. If the result is under 1, it shall be rounded up to 1.

4.3. To transfer the liquidation dossier to the post-customs clearance sub-department for conducting post-customs clearance inspection under regulations when detecting through examination and comparison of details of the liquidation dossier doubtful signs which require thorough examination for detection of violations.

4.4. To check inventories:

a/ Cases subject to checking of inventories:

a1/ When there is information that the trader sells imported raw materials and supplies for processing of products for export into the inland;

a2/ When a norm violation is identified;

a3/ When there is doubt about the correctness of the quantity of raw materials and supplies or the quantity of intermediary processed products requested to be transferred to another processing contract;

a4/ When liquidation data of the trader have an abnormal divergence from those on the customs office’s system.

b/ The checking of inventories is as follows:

b1/ Before deciding to check inventories, the Customs Branch managing the processing contract shall request in writing the trader to specifically explain doubtful contents related to the determination of the actual inventory quantity and concurrently produce all relevant documents for proving.

b2/ In case the trader cannot explain and prove doubtful contents related to the determination of the actual inventory quantity, checking shall be conducted to determine it. The checking covers:

b2.1/ Checking of the system of accounting books and documents monitoring the import, export, warehousing and ex-warehousing; and use norms of raw materials and supplies;

b2.2/ Physical inspection of goods in stock;

b2.3/ Comparison of data of actual inventories with data recorded in accounting books and documents monitoring the import and export and in the trader’s dossier of liquidation of raw materials and supplies.

c/ Handling of checking results: Based on the nature and severity of violations, the handling measures prescribed in the Government’s Decree No. 127/2013/ND-CP of October 15, 2013, on sanctioning of administrative violations and forcible compliance with administrative decisions in the field of customs, shall be applied.               

 Article 26. Handling of cases of late submission of liquidation dossiers and cases of failure to carry out procedures for redundant raw materials and supplies and leased or borrowed machines and equipment within the prescribed time limit

1. Handling of cases of late submission of liquidation dossiers:

a/ Within 90 days from the expiration of the time limit for submission of liquidation dossiers (including the extension), the Customs Branch managing the processing contract shall:

a1/ Send an invitation to the trader to come to the customs office for making a written record of the violation for handling under regulations: To send the invitation twice;

a2/ Take measures to urge and request the trader to liquidate the processing contract;

a3/ Coordinate with functional agencies in investigating, identifying and pursuing the trader in case the trader shows signs to flee from the registered business address. 

b/ Handling measures to be taken after the customs office urges the liquidation of the processing contract, investigates, identifies or pursues the trader:

b1/ If the trader still fails to liquidate the processing dossier but is still operating: To transfer the dossier to the post-customs clearance inspection sub-department for conducting post-customs inspection under regulations;

b2/ For a fleeing or missing trader: To complete and transfer the whole customs dossier to a competent agency for investigation into the crime of smuggling or tax evasion under the Penal Code.

2. Handling of cases of failure to carry out procedures for redundant raw materials and supplies and leased or borrowed machines and equipment within the prescribed time limit:

The Customs Branch managing the processing contract shall:

a/ Make a written record of the violation for handling under regulations;

b/ Transfer the dossier to the post-customs clearance inspection sub-department for conducting post-customs clearance inspection under regulations.

Article 27. Customs procedures for disposing of redundant raw materials and supplies; scraps and defective products (outside use norms of raw materials and consumption norms of supplies and wastage rate), discarded materials; leased or borrowed machines and equipment

1. Forms of disposal:

Pursuant to agreements in the processing contract and Vietnamese laws, redundant raw materials and supplies, scraps, defective products, discarded materials, leased or borrowed machines and equipment for processing shall be disposed of as follows:

a/ Sale on the Vietnamese market (on-spot import and export);

b/ Re-export to abroad;

c/ Transfer to another processing contract in Vietnam;

d/ Donation in Vietnam;

dd/ Destruction in Vietnam.

2. Customs procedures:

a/ Customs procedures for selling redundant raw materials and supplies, scraps, defective products, leased or borrowed machinery and equipment in the Vietnamese market must comply with Article 20 of this Circular;

b/ Customs procedures for re-export according to the principal’s designation are the same as those applicable to commercial export shipments. When carrying out customs procedures, customs officers shall physically inspect goods shipments, and compare categories and codes of machines and equipment shown on the temporary import declaration with those of re-exported machines and equipment;

c/ Customs procedures for transferring redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract according to the principal’s designation are the same as those applicable to the on-spot import or export of processed products for use as raw materials for production under Article 20 of this Circular, except for requesting the trader to produce export or value-added invoices. In addition, the following shall be conducted:

c1/ Procedures for transferring redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract may be carried out after a leader of the Customs Branch managing the processing contract gives certification in the trader’s written request under Item a1, Point a, Clause 1, Article 25 of this Circular;

c2/ Transfer of raw materials and supplies to another processing contract is disallowed in the following cases:

c2.1/ The trader has imported raw materials and supplies but does not perform any processing contract and applies for permission to transfer these raw materials and supplies to another trader;

c2.2/ The trader has received raw materials and supplies from the previous processing contract but does not put them into processing and further applies for permission to transfer them to another processing contract. In case raw materials and supplies received from the previous processing contract have been put into processing but not yet been used up for the previous processing contract, they may be further transferred for use under a subsequent processing contract but are not allowed to be further transferred to another processing contract.

d/ Customs procedures for donation of leased or borrowed machines and equipment; redundant raw materials and supplies; scraps and defective products:

A customs dossier comprises:

d1/ The customs declaration (made according to the non-commercial goods declaration form), clearly stating “goods are under processing contract No.... dated.... processing trader...”: To submit 2 originals;

d2/ The principal’s donation document: To submit one original;

d3/ The Industry and Trade Ministry’s written consent, if the donated goods are on the list of imports subject to the Ministry’s permission, or a specialized agency’s permission, if the imported goods are subject to such agency’s permission: To submit one original.

The customs procedures and tax policy are the same as those applicable to donated goods. After completing customs procedures, the customs office shall duplicate the declaration, keep one duplicate and hand over the other to the processing trader (if the donee is not the processor).

dd/ Customs procedures for supervising the destruction of scraps, defective products and discarded materials in Vietnam:       

dd1/ The destruction of scraps, defective products and discarded materials may be conducted during the performance or after the expiration of the processing contract/processing contract annex;

dd2/ Customs procedures for supervising the destruction:

dd2.1/ The trader shall send to the Customs Branch managing the processing contract a notice of the destruction time and place, clearly stating destruction methods and measures, enclosed with a written agreement of the principal and, if the trader directly destroys its products, a written approval of a competent environmental management agency.

If the trader hires another trader with the function of disposing of scraps, defective products and discarded materials, there must be a destruction contract (the original) and a competent agency’s written permission of this trader (one copy).

dd2.2/ The trader shall take the initiative in organizing the destruction and take responsibility before law for any environmental impacts of the destruction process;

dd2.3/ The Customs Branch managing the processing contract shall send two customs officers to supervise the destruction process;

dd2.4/ Upon completion of the destruction, the involved parties shall make a written record certifying that the destruction has been conducted under regulations. Such a written record must bear the signature of the trader’s at-law representative and the seal of the trader having goods destroyed; and the full names and signatures of the customs officers supervising the destruction and persons assigned by the at-law representative to conduct the destruction;

dd3/ In case scraps, defective products and discarded materials are not destroyed at the place of the trader generating such scraps, defective products and discarded materials but must be transported to another place for destruction, then:

dd3.1/ The transportation of scraps, defective products and discarded materials to the place of destruction must comply with the Law on Environmental Protection.

dd3.2/ The Customs Branch managing the processing contract shall affix the customs seal on vehicles carrying scraps, defective products and discarded materials to places of destruction. In case places of destruction in the same province/city, the Customs Branch managing the processing contract shall supervise the destruction.

In case the place of destruction is managed by another provincial-level Customs Department, the Customs Branch managing the processing contract shall request in writing the customs office in the locality where the destruction takes place to supervise the destruction under Item dd2, Point dd, Clause 2 of this Article. Upon the completion of the destruction, the Customs Branch supervising the destruction shall send to the Customs Branch managing the processing contract a written record of destruction (with all signatures of involved parties).

Procedures for supervision and assignment of the supervision task shall comply with regulations on goods in border-gate transfer guided in the operational process of customs procedures for imports and exports in border-gate transfer.

3. For redundant raw materials and supplies supplied by traders themselves by mode of importation from overseas according to types of processing:

a/ In case the principal has paid for these raw materials and supplies, the guidance in Clauses 1 and 2 of this Article shall be complied with;

b/ In case the principal has not yet paid for these raw materials and supplies, these raw materials and supplies may be supplied for a subsequent processing contract if the supply conditions guided in Clause 2, Article 16 of this Circular are satisfied.

4. For processing contracts with the same principal and processor, the trader may offset raw materials of the same type, specifications, properties or unit prices.

Article 28. Disposal of redundant raw materials and supplies; leased or borrowed machines and equipment; or processed products which cannot be re-exported because they are abandoned by the principal

The processing trader shall pay taxes for domestic sale on redundant raw materials and supplies; leased or borrowed machines and equipment; or processed products which cannot be re-exported because they are abandoned by the principal under Clause 2, Article 43 of Circular No. 128/2013/TT-BTC or carry out procedures for their destruction under Point dd, Clause 2, Article 27 of this Circular. Tax bases shall be determined at the time of change of the use purpose under Circular No. 128/2013/TT-BTC.

Section 3

CUSTOMS PROCEDURES FOR GOODS ORDERED FOR PROCESSING OVERSEAS

Article 29. Procedures for notifying processing contracts

1. Responsibilities of traders:

Before carrying out procedures for exporting the first goods shipment under the processing contract, the trader shall notify the contract. A dossier of notification comprises:

a/ The processing contract and annexes (if any): To submit 2 originals;

b/ The business registration certificate or investment license or investment certificate (in case procedures are carried out for the first time): To submit 1 copy;

c/ The tax identification number registration certificate (in case procedures are carried out for the first time): 1 copy;

d/ The permit of a competent agency, if the goods exported for the performance of the processing contract and the imported processed products are on the list of imports and exports subject to permit: To submit 1 copy and produce the original.

2. Tasks of the customs office: As guided in Clause 2, Article 10 of this Circular, except inspecting production establishments.

Article 30. Procedures for exporting raw materials and supplies for production of goods ordered for processing overseas

1. Customs dossiers are the same as those of exported processed products. In addition, if raw materials and supplies are on the list of exports subject to permits of the Ministry of Industry and Trade or a specialized management agency, a permit of the relevant competent agency must be produced to the customs office for the reconciliation purpose.

2. The customs procedures are the same as those applicable to commercial exports guided in Part II of Circular No. 128/2013/TT-BTC, except for tax declaration and tax calculation inspection.

Article 31. Procedures for notification, adjustment and inspection of norms

Procedures for notification, adjustment and inspection of norms are the same as those applicable to undertaking the processing for foreign traders prescribed in Articles 11, 12 and 13 of this Circular. 

Article 32. Procedures for import of products ordered for processing overseas

1. Customs dossiers are the same as those required for commercial imports while customs declarations shall be registered like those required for goods imported for processing.

2. Customs procedures are the same as those applicable to commercial imports:

a/ Tax calculation and tax calculation inspection:

a1/ The determination of taxable prices, tax rates and origin of goods must comply with Circular No. 128/2013/TT-BTC.

a2/ Based on norms already notified to the customs office and physical state of imports, the quantity of raw materials and supplies already exported from Vietnam for processing imported products shall be determined.

Article 33. Procedures for temporary export of processed products overseas for reprocessing and subsequent re-import into Vietnam

1. Products eligible for temporary export for reprocessing and subsequent re-import into Vietnam:

a/ Processed products which are temporarily exported for reprocessing within three hundred and sixty five (365) days after the registration of the import declaration;

b/ Products which have not yet gone through production, processing, repair or use in Vietnam.

2. Customs procedures shall be carried out at the Customs Branch managing the processing contract.

3. Procedures for temporary export of processed products for reprocessing:

a/ A customs dossier comprises:

a1/ A written request for temporary export of goods, clearly stating the import declaration of these goods, the reason for temporary export for reprocessing, and reprocessing activities: To submit 1 original;

a2/ The customs declaration of exports; a detailed list of goods as for commercial exports;

a3/ The customs declaration of imported processed products of the goods shipment for reprocessing: 1 copy;

a4/ The foreign partner’s document on receipt of goods for reprocessing: 1 original.

b/ Customs procedures for temporary export of processed products for reprocessing are the same as those for commercial exports and involve physical inspection of goods;

c/ The time limit for reprocessing shall be registered by the trader with the customs office but must not exceed 275 days counting from the date of temporary export.

4. Procedures for re-import of reprocessed processed product:

a/ A customs dossier comprises:

a1/ The import declaration: To submit 2 originals;

a2/ The export declaration: To submit 1 copy;

a3/ Customs procedures for re-import of reprocessed processed products are the same as those for commercial imports (except import permit, tax declaration and tax calculation inspection).

In case reprocessed processed products are sold overseas, Clause 2, Article 36 of this Circular must be complied with.             

Article 34. Procedures for overseas intermediary processing

For overseas intermediary processing, Vietnamese traders are not required to carry out intermediary processing procedures with Vietnamese customs offices.

Article 35. Liquidation of processing contracts

1. A liquidation dossier comprises:

a/ A list of export and import declarations: To submit 1 original;

b/ A general table of exported raw materials and supplies: To submit 1 original;

c/ A general table of imported processed products: To submit 1 original;

d/ A general table of processed products sold, donated, given as gifts or destroyed overseas (if any): To submit 1 original;

dd/ A general table of raw materials and supplies used for production of imported processed products: To submit 1 original;

e/ A general table of raw materials purchased overseas (if any) for production of imported processed products: To submit 1 original;

g/ A sheet of liquidation of the processing contract: To submit 2 originals (one to be returned to the trader after the liquidation);

The contents of these tables and sheet are similar to those of corresponding tables and sheet of a dossier for liquidation of contracts on processing for foreign traders guided in Clause 2, Article 25 of this Circular.

2. Liquidation procedures:

The time limit and extension of the time limit for submission of liquidation dossiers; methods of examination and comparison of liquidation dossiers; the time limit for examination and certification of liquidation dossiers; handling of cases of late submission of liquidation dossiers are the same as those for contracts on processing for foreign traders.

Article 36. Customs procedures for disposal of redundant raw materials and supplies; scraps, defective products and discarded materials; machines and equipment temporarily exported for processing

1. Forms of disposal:

Pursuant to agreements in processing contracts and Vietnamese laws, redundant raw materials and supplies; scraps, defective products and discarded materials; machines and equipment leased or borrowed for processing shall be disposed of as follows:

a/ Sale, donation, destruction in overseas markets;

b/ Import into Vietnam;

c/ Transfer to other processing contracts overseas;

2. Customs procedures:

a/ Customs procedures for sale, donation or destruction of redundant raw materials and supplies; scraps, defective products and discarded materials; leased or borrowed machines and equipment in overseas markets comply with regulations of countries of processors; customs declarations will not be registered with Vietnamese customs but export duty (if any) shall be declared and paid for raw materials, supplies, machines and equipment brought overseas from Vietnam for processing.

b/ Customs procedures for re-import into Vietnam:

b1/ For redundant raw materials and supplies, machines and equipment exported from Vietnam; scraps and defective products derived from raw materials and supplies exported from Vietnam, re-import procedures shall be carried out;

b2/ For redundant raw materials and supplies, machines and equipment purchased overseas; scraps and defective products derived from raw materials and supplies purchased from overseas, customs procedures shall be carried out as for commercial imports;

b3/ Upon carrying out customs procedures, customs officers shall conduct physical inspection of goods shipments; and compare types, codes and marks of machines and equipment indicated in temporary export declarations with re-imported ones.

c/ Procedures for transfer of redundant raw materials and supplies, leased or borrowed machines and equipment to another processing contract:

c1/ The trader shall notify in writing the Customs Branch managing the processing contract of names and quality specifications of raw materials and supplies; quantities of redundant raw materials and supplies; leased or borrowed machines and equipment under a processing contract/processing contract annex (number and date) to another (number and date) signed with foreign partners (clearly stating the name of the overseas processor);

c2/ The trader may carry out procedures for transfer of redundant raw materials and supplies, leased or borrowed machines and equipment from one processing contract to another only after a leader of the Customs Branch managing the processing contract gives a certification in the trader’s written request upon liquidation of the processing contract/processing contract annex.

Section 4

ORGANIZATION OF IMPLEMENTATION

Article 37. Effect 

1. This Circular takes effect on March 10, 2014, replacing the Ministry of Finance’s Circular No. 117/2011/TT-BTC of August 15, 2011, and previous guiding documents which are contrary to this Circular.

2. For traders carrying out e-customs procedures for goods processed for foreign traders, e-customs procedures must comply with the Ministry of Finance’s Circular No. 196/2012/TT-BTC of November 15, 2012. Relevant policies, management regime and documented dossiers must comply with this Circular.

3. For processing contracts/processing contract annexes notified and received on the effective date of Circular No. 117/2011/TT-BTC of August 15, 2011, but liquidated when this Circular takes effect, traders may choose to liquidate them under the guidance of Circular No. 117/2011/TT-BTC or this Circular.

Article 38. Implementation responsibility 

1. The General Director of Customs shall promulgate, and guide customs offices in uniformly implementing, customs procedures in pursuance to this Circular, with a view to concurrently facilitating and strictly managing export processing and import activities in accordance with law.

2. The General Director of Customs, heads of units of or attached to the Ministry of Finance, and related organizations and individuals shall implement this Circular.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN

* All appendices to this Circular are not translated.