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

7-(4) Elimination of document preservation requirement for import applications kept by Customs brokerage

1. Complainant: Tokyo Chamber of Commerce

2. Ministry concerned: Ministry of Finance

3. Background:

(1) Customs brokerage is defined as having another person acting as a representative or proxy file Customs declarations for export or import with the Customs house, in accordance with the provisions of the Customs Law and other laws and ordinances relating to Customs Duty, and prepare forms for Customs procedures (Customs forms) to be presented to the Customs or the Minister of Finance in accordance with the provisions of the Customs Law and other laws and ordinances relating to Customs Duty. Carrying out Customs brokerage under license of Director-General of Customs is defined as Customhouse broker, and parties wishing to handle Customs brokerage having received a license from the Director-General of the Customs, whose has jurisdiction in the area in which the business is to be located called Custom brokerage (The Law of Customs Brokerage Articles 2, 3).

(2) In accordance with Article 22, Clause 1 of the Law of Customs Brokerage and Article 8 of the Cabinet Order for Enforcement of the same law, ledgers recording brokerage activities must be entered and retained for a period of three years. The documents to be preserved include declarations, applications, statements of dissatisfaction and so on submitted to the Director-General of Customs or to the Minister of Finance which are concerned with customs clearance operations.

As set down in Article 22, Clause 1 of the above law, Customhouse brokers are required to preserve documents concerning customs clearance for a specified period because these constitute the original materials from which the ledgers they are obliged to keep are created, and to clarify their responsibilities as representatives filing customs declarations. These documents are also useful for determining causes of errors discovered after procedures have been completed and for verifying fees received.

(3) The Director-General of Customs may suspend Customhouse brokers from carrying out all or part of their activities if they violate the Law of Customs Brokerage and other laws and ordinances relating to Customs duty or revoke their licenses The Law of (Customs Brokerage, Article 34). When it is necessary to ensure that the Law of Customs Brokerage is carried out appropriately, Customs officials may investigate Customhouse brokers' ledgers, as stated in the regulations in Article 38 of the said law.

(4) Import or export declarations filled out by Customhouse brokers and submitted to Customs are generally kept by Customs for seven years. Import or export declarations filed using the NACCS (Nippon Automated Cargo Clearance System) are preserved on magnetic tape for seven years at the NACCS Center.

(5) In cases where any goods are imported in evasion customs duties, through fraudulent or any other illegal acts, or without payment of customs duty on the said goods with respect to which custom duty shall be paid, revision, determination or determination for duty assessment, with respect to customs duty on such goods, may be made on or before the date when the period of 7 years expires from the prescribed time limit for payment (Customs Law, Article 14, Clause 3).

4. Complaint:

Customs declarations filed by Customhouse brokers must be kept for three years, under Cabinet Order for Enforcement of the Law of Customs Brokerage. Having to keep such documents for three years in each sales office requires considerable storage space and takes time and money to keep well organized. Costs and other burdens could be reduced if the requirement for document preservation were simplified. Three parties currently preserve the same customs declaration forms: the Customs (seven years), Customhouse brokers (three years) and the NACCS Center, when declarations are filed on NACCS (preserved for seven years on magnetic tape). If a copy of the declaration is needed for verification by Customs after the declaration has been made, the forms kept by the Customs or by the NACCS Center (on magnetic tape, in this case) should be sufficient, and Customhouse brokers should not be required to keep the forms for so long, or should be exempted from keeping them altogether.

5. Results of deliberation:

Government regulation requires constant updating in order to keep up with changes in technology. This is especially so where information and telecommunications technology is concerned, and it should be borne in mind that conditions can be very different from circumstances when the rules were first drawn up. According to the ministry concerned, it is necessary to supervise and guide Customhouse brokers appropriately in order to protect users (importers) and ensure that customs procedures are carried out appropriately. Customhouse brokers are required to keep import and export declaration forms, but this requirement should be reviewed periodically, taking the existing level of technology into consideration, to avoid over-burdening Customhouse brokers.

From this perspective, the ministry concerned should thoroughly consider the opinion of the complainant, who wishes to reduce costs in connection with storing the documents. The issue of reducing the burden (by allowing, for example, the use of electronic media to store documents, taking into account factors such as abilities to ensure genuineness, readability of date, ease of preservation, and legal validity) on Customhouse brokers resulting from the requirement to keep documents should be studied and all procedures necessary to implement this taken in FY1997.

Government decision (March 25,1997)

6-(4) Elimination of document preservation requirement for import applications kept by Customs brokers

Taking into account factors such as ability to ensure genuineness, readability of data, ease of preservation, and legal validity, the problems related to allowing Customs brokers to preserve documents by means of electronic media will be studied and all procedures necessary to implement this are expected to take place in FY 1997.