Penalties |
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Provision that specifies the legal consequences of submitting an origin documentation based on incorrect or falsified information. These can relate to criminal, civil and administrative penalties.
Penalties are usually determined under the local customs legislation of FTA parties. Penalties relating to origin documentation are usually in line with penalties issued for non-compliance in other areas of customs and may depend on whether the customs authorities determine that the errors were intentional or not.
As a result, penalties can differ between the parties of one FTA.
Any penalties relating to the correctness of import documentation would normally be imposed on the importer who claimed preferential tariffs. Many FTAs and local customs legislations do not apply and enforce penalties on exporters who knowingly or unknowingly provided incorrect origin documentation.
Example:
An exporter located in country A uses self-certification when exporting goods to country B and is familiar with the rules of origin under A-B FTA. As a one-off the exporter decides to sell goods to country C under an A-C FTA which also allows self-certification. The exporter provides an origin declaration on a commercial invoice to a client in country C. Due to the exporter’s mistake the origin statement is issued based on the A-B FTA rules of origin instead of A-C FTA. The product is not originating under A-C FTA. A year later the customs authorities in country C audit the importer and request further verification of the origin of goods for this shipment. The origin declaration is found to be incorrect and the importer needs to repay the full duty rate. Depending on the FTA and local customs legislation provision, the importer can face additional penalties. The authorities can take a number of mitigating factors into account, for example: whether or not this was the first instance, whether the importer cooperated with the authorities during the verification process and whether or not the importer puts in place an internal process to prevent similar situations occurring in the future.
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