3rd Report of the Market Access Ombudsman Council (March 18, 1996)

7-(1) Introduction of the Nationwide Common Bond for the Release of Imported Goods before (Formal) Permit

1. Complainant:Japan Foreign Trade Council, Tokyo Chamber of Commerce and Industry

2. Ministry concerned: Ministry of Finance

3. Background Information:

Article 73 of the Customs Law stipulates, "Any person who is to receive any foreign goods after import declaration but prior to import permit shall deposit security equivalent to an amount of customs duty payable and shall obtain the approval of the Director-General of Customs".

This article allows cargo to be picked up before import permit for the users' convenience and smooth operation of tariff administration. This is because, otherwise, an importer may miss his business opportunity if the cargo is left too long in the bonded area under the following conditions:

* The product has never been imported and so some time will be required for the examination of tax assessment standard.
* There is a danger that the imported cargo may vanish, leak, deform, or become damaged.

This system allows the imported cargo to be withdrawn from the bonded area into Japan without paying for the tariff. Instead, it is necessary for the importer to place a collateral ('Before Permission' collateral, or BP collateral hereafter) equal in value to the tariff to guarantee the payment of the tariff. For users' convenience in placing collateral, they are allowed to utilize a fixed collateral (collateral for tariff payments with different due dates) deposited with the customs office. However, this system can be applied only to cargo whose import is declared at the customs office where the fixed collateral is placed and not to cargo whose import is declared at any other customs offices.

In addition, as for the payment of the tariff for the imported cargo, the payment may be extended by up to three months, provided collateral is placed. Based on the Deregulation Action Program (March 1995), a revision was made so that the bond for the comprehensive deferred payment for Custom duties and taxes can be utilized anywhere in Japan. The improved Customs entry processing system for sea cargo (Sea-NACCS) has been in effect since April 1995 and the improved Customs entry processing system for air cargo (Air-NACCS) also has been in effect since November 1995.

4. Complaint:

The complainant utilizes the fixed collateral system because he needs to receive his cargo before the import is permitted. Under the current system, however, when applications for approval are concentrated at one customs office and the collateral becomes deficient, even though there is sufficient collateral placed with other customs offices within the same customs jurisdiction, additional collateral must be placed.

The system should be changed so that when one places BP collateral with a customs, it can be used at all customs office under the same jurisdiction. Ultimately, as with Bond system for the comprehensive deferred payment for Customs duties and taxes, the BP collateral should be accepted nationwide.

5. Results of Deliberation:

As of November 1995, 52 companies place fixed collateral with more than one customs offices and 9 companies with more than one customs. While these numbers are fewer than those who utilize Bond system for the comprehensive deferred payment for Customs duties and taxes (approximately 1,100 companies), the ministry concerned plans to hear the opinions of importers and related organizations, study the matter including its legal factors, then conclude on the matter by around the end of this fiscal year.

To simplify import procedures, it is important to make BP collateral usable at any customs. Since Bond for the comprehensive deferred payment for Customs duties and taxes can already be utilized anywhere in Japan, it is necessary to consider making BP collateral usable nationwide as soon as possible, for users' convenience.

Government decision (March 26, 1996)

7-(1) Introduction of the Nationwide Common Bond for the Release of Imported Goods before (Formal) Permit

By the end of fiscal year 1996, collateral for release of imported goods before (formal) permit (BP collateral) that is now placed with each customs office may be used nationwide with Customs entry processing system for sea cargo (Sea-NACCS) and Customs entry processing system for air cargo (Air-NACCS).

Follow-up (May 12, 1997)

7-(1) Introduction of the Nationwide Common Bond for the Release of Imported Goods before (Formal) Permit

The basic directive to the Customs Law was amended on March 4, 1997, to make it possible to use BP collateral nationwide at Customs offices which use Sea-NACCS or Air-NACCS. (Implemented March 24, 1997.)