Before goods are brought into the customs territory of the European Union, an Entry Summary Declaration (ENS) must be lodged for entry. In short, the ENS should be lodged by the airline and aims to give Customs an opportunity to undertake risk analyses primarily for security purposes. The risk analysis must be completed before the actual arrival of the aircraft.
As soon as goods are placed with Customs, a Temporary Storage Declaration (TSD) must be lodged. Within 90 days of the submission of the TSD the goods must either be placed under a customs procedure or be re-exported. Until this time the goods may be stored in a space for temporary storage (STS).
Discrepancies at clearing / Irregularities on the TSD
As soon as the TSD has been lodged and the goods transferred to the STS the goods are checked on the basis of the available manifest. Given the nature of airfreight logistics and administrative processes, it can frequently be the case that the number of packages detailed on the manifest does not correspond to the quantity of goods actually present. The variation, whether more or less goods, is subsequently incorporated into the administration by the STS holder.
The Netherlands Customs has, since the entry into force of the Community Customs Code in 1993, taken the view that when fewer goods are found than shown on the manifest these goods have been withdrawn from Customs supervision. The viewpoint of Customs currently is that, between the moment of unloading from the aircraft and the placing in the STS, these goods have been withdrawn from Customs supervision and this results in a Customs debt arising for both import duty and value added tax. On the basis of this theory the Netherlands Customs presented in 1993 a “shortfall in clearance” policy whereby the airline must prove upon arrival that the goods ‘not found’ had not been loaded in the country of departure or had in some other way been placed under Customs control.
Are collections on goods “not found” upon arrival lafwul?
The question is: is it justifiable that the Netherlands Customs consider that goods not found to be present upon arrival have been withdrawn from Customs supervision? Is it plausible that large amounts of goods are being withdrawn from Customs supervision on a daily basis after having been unloaded from aircraft onto the platform when the platform is totally under the control of government authorities? The answer is obviously negative as security measures are at a level that rules out malicious parties being able to misappropriate goods without impediment 365 days per year, 24/7.
Furthermore, after collecting data for many years and having undertaken numerous physical checks, Customs should be able to conclude that 99% of the identified shortfalls were declared and that therefore the information on the manifest is not always correct. Moreover, a significant percentage of airfreight is built up on pallets and, in relation to air security, completely swathed in plastic and fastened with straps. If, upon opening the packaging of the pallet and counting the packages built on the pallet, a shortfall in the number of packages is detected, you can assume that a package is not actually present, was intentionally not included on the pallet and therefore was not on board the aircraft.
Last but not least, how do other Member States interpret the formalities upon arrival and the moment that customs supervision begins for arriving goods? Does the Netherlands stand alone in Europe in its interpretation and, if so, what are the consequences if it is determined that community law has been incorrectly interpreted?
Ruling in relation to shortfalls of goods in temporary storage
A Supreme Court judgment from 2009 (HR43143 16-01-2009) states that if a detected shortfall cannot be explained to the satisfaction of Customs then Customs will consider that the goods, between the moment of unloading the aircraft and depositing in the customs warehouse, have been withdrawn from Customs supervision resulting in the levying of duty upon importation by the relevant party. I believe that this position is only correct if Customs, during a physical check, were able to establish that the goods were present during the unloading of the aircraft but were not present upon placing in the customs warehouse.
As an actual check of goods being unloaded from an aircraft hardly ever occurs, it cannot be established that the goods were left on the aircraft and therefore were not brought into the customs area of the European Union. Thus the right to levy customs duty and value added tax upon importation would also lapse, as the General Prosecutor of the Supreme Court of the Netherlands concluded in the above-mentioned ruling.
Changing a TSD, the UCC offers a solution
Indeed much can be discussed and written, but it is now possibly the right moment for Customs and the business world to seize upon the opportunity presented by the entering into force on 1 May 2015 of the Union Customs Code (UCC) for changing a Temporary Storage Declaration. A change is possible until 30 days after the submission of a TSD. Article 146 of the UCC offers this possibility and allows for Customs supervision of goods brought to Customs to commence from the moment that the goods have been counted, or ‘ticked off’ as one would say in Belgium. It will therefore not surprise you that in Belgium no customs duty and value added tax is levied on goods that have not been ‘ticked off’. A request to change the manifest has been common practice in Belgium for years.
Efficient implementation of a request for a change to a TSD will contribute the most significant reduction in the administrative burden for handling agents, airlines and Netherlands Customs since the implementation of the electronic ENS.
Raoul Paul | Linkedin