4th Report of the Market Access Ombudsman Council (March 17, 1997)

7-(3) Simplification of procedures for extension of payment date for Customs duties and consumption tax on imported cargo

1. Complainant: Tokyo Chamber of Commerce

2. Ministry concerned: Ministry of Finance

3. Background:

Customs duties and consumption tax due on foreign cargoes must be paid before an import permit is issued; cargoes may not be removed from bonded warehouses until payment is made (Article 9, Clause 1 and Article 72 of the Customs Duties Law and Article 50 of the Consumption Tax Law). When the consumption tax was implemented in 1989, a new method of payment for Customs duties and consumption tax owed on imported cargoes was introduced, in addition to the existing immediate payment method. Under the new payment method, importers are allowed to extend the period of payment for up to three months after importation of goods by putting up collateral of equal or greater value than the amount of Customs duties owed. As an added convenience to users, the use of delayed collateral (collateral for Customs duties due at different periods) is also allowed (Article 9-2 of the Customs Duty Law, Article 51 of the Consumption Tax Law).

The collateral is administered using the NACCS (Nippon Automated Cargo Clearance System), at Customs houses where the system is in use. NACCS includes two systems, Air-NACCS (Air Nippon Automated Cargo Clearance System) and Sea-NACCS (Sea Nippon Automated Cargo Clearance System). As a result of the rapid growth of air cargo after the 1970s and the need for speedier Customs processing, Air-NACCS was computerized in 1978 and Sea-NACCS in 1991. Because the systems developed in this way, they currently operate independently from each other, and collateral must be registered separately in each system.

A nationwide collateral system, in use at Customs houses which have computerized systems, was introduced in April 1995 for Sea-NACCS and in November 1995 for Air-NACCS.

4. Complaint:

Under the current system, collateral for payment extension (three months) must be established separately for air and sea cargo, and procedures carried out separately for each. Posting more collateral than necessary entails collateral guarantee charges and importers usually set the collateral very close to the expected total for Customs duties and consumption tax. Since they cannot apply extra collateral from sea cargo to air cargo, they must increase their collateral for air cargo. The increase in the consumption tax from April will further increase such expenses. If collateral for air and sea cargo could be unified and used wherever it is needed, importers would not need to increase collateral, and accordingly, the system should be amended to allow unified collateral to be used for air and sea cargo and one procedure for both.

5. Results of deliberation:

More extensive use of computerized systems for import procedures like Customs clearance and so on greatly improve users' convenience. Given the progress of information technology, efforts should be made to use such systems for operations. Where administration of collateral using NACCS is concerned, the system has been improved by introducing the nationwide collateral system and, in an action taken in response to a complaint last year, all Customs houses have been allowed to handle collateral for application for approval of cargo transactions prior to import permit. However, it is important to continue improving the system for the further convenience of users.

The concerned ministry expects that developing a new system enabling sharing of collateral for Sea-NACCS and Air-NACCS will require considerable time and money; cost-effectiveness is a factor which must be considered. Since the Sea-NACCS system is due to be renovated in October 1999, this issue should be studied when the next-generation Sea-NACCS system is reviewed.

To reduce the financial burden on users, the collateral administration system should be unified to a greater degree. When Sea-NACCS is renovated in 1999, the NACSS system should be changed to make it possible to post shared collateral on both Sea-NACCS and Air-NACCS.

Government decision (March 25,1997)

6-(3) Simplification of procedures for extension of payment date for Customs duties and consumption tax on imported cargo

Sea-NACCS (Nippon Automated Cargo Clearance System) and Air-NACCS (Nippon Automated Cargo Clearance System), which currently operate separately, are expected to be modified to permit setting of collateral for extension of payment date for Customs duties and consumption tax on imported cargo on both, when Sea-NACCS will be replaced during FY 1999.