Synopsis of ATA Carnet Rules

Goods for Display at Fairs, Exhibitions etc

Pakistan National Legislation

PNC-ICC & Pakistan Customs

This document provides background legal information on the implementation of the Istanbul Convention in Pakistan, and its incorporation into Pakistan Customs Rules. ATA Carnet legislation is embodied in Chapter XXIII of the Customs Rules.

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1.            Background & Introduction

(a)          The term ATA stands for the French words “Admission Temporaire” or “Temporary Admission.”

(b)          ATA Carnet system allows for temporary importation and exportation of samples of goods for display at exhibitions, fairs, meetings or similar events with total conditional relief from payment of import duties and taxes. It also provides for duty-free importation of professional equipment, including broadcasting or cinematographic equipment and specially adapted vehicles, and their re-exportation afterwards, besides facilitating movement of goods for social, cultural, educational and scientific purposes across national frontiers in a similar manner. The system works in line with national restrictions and prohibitions (of non-economic character e.g. health and environment considerations) on imports and exports, and allows each Contracting Party to apply them in the course of temporary importation and exportation of goods.

(c)           ATA Carnet is administered under the Istanbul Convention, 1990. This Convention incorporates all previous international instruments on temporary importation and exportation of goods into a single document, and enhances the number of goods eligible for that purpose.

(d)          The Convention consists of a Body and 13 Annexes. Each Annex specifies a certain category of goods eligible for temporary importation and exportation, and lays down conditions in relation to them. This is brought out below:

ANNEX

RELATES TO

A

Temporary admission papers

B1

Goods for display at fairs and exhibitions

B2

Professional equipment

B3

Containers, pallets, packings etc imported in connection with goods

B4

Goods imported in connection with a manufacturing operation

B5

Goods imported for educational, scientific or cultural purposes

B6

Travellers’ personal effects and sports goods

B7

Tourist publicity material

B8

Goods imported as frontier traffic

B9

Goods imported for humanitarian purposes

C

Means of transport

D

Animals

E

Goods imported with partial relief from import duties and taxes

2.            Pakistan’s Position

(a)          Pakistan has acceded to Istanbul Convention, 1990, Annexes A, B1 and B2 only. This means that the scope of temporary importation and exportation of goods in and from Pakistan under the Convention is limited to commercial exhibits and professional equipment only, including broadcasting or cinematographic equipment and specially adapted vehicles.

3.             ATA Carnet Rules

(a)          The ATA Carnet Rules, proposed to be inserted in the Customs Rules, 2001, by way of an amendment at sr. no. 77A onward, have been developed in the light of Istanbul Convention, Annexes A, B1 and B2. This is brought out in the “scope” of the  Rules at sr. no. 77B, which confines the adoption of the Convention to the extent of the aforesaid Annexes only and to the goods covered under them. Initially, the ATA Carnet system is proposed to function through the import sections in each Collectorate, keeping in view the requirement of submission of “security” by the national guaranteeing organization in each case and its acceptance by Customs, though, in future, temporary import via accompanied baggage could be permitted. As a result, the  Rules preclude the temporary admission of goods by post or baggage into the country at present, and also do not apply to goods in transit through Pakistan.

4.            Prohibitions & Restrictions

(a)          As mentioned above, the Convention authorizes a Contracting Party to apply the “prohibitions or restrictions imposed under national laws and regulations,” while allowing temporary import or export of goods in and from the country. This provision has been incorporated into the “scope” of the  Rules in rule 77B, in definitions of terms “temporary admission,” “temporary export” in clauses k and 10f rule 77C respectively, and in rule 77E pertaining to “Goods eligible for temporary importation.” The restrictions and prohibitions referred to are those notified under the Imports & Control Act, 1950, or any other law for the time being in force.

5.            Conditions of temporary admission

(a)          The temporary admission of goods under an ATA Carnet is subject to a number of conditions. While most of these conditions are stipulated under the Convention and the Annexes, a few others arise from the necessity of making declarations in the ATA Carnet itself. These conditions range from providing true and correct particulars to Customs in terms of value, description, quantity etc of the goods meant for temporary import, to importing them in a reasonable quantity, to using them exclusively for the purpose for which they have been allowed temporary admission, and, finally, to re-exporting them within the stipulated period in the same state in which they were brought into the country. All these conditions have been consolidated into rule 77F of the  Rules.

6.            Goods eligible for temporary admission

(a)          Since Pakistan has only acceded to Annexes A, B1 and B2 of Istanbul Convention, 1990, the goods eligible for temporary admission primarily include -

(i)            Samples and exhibits for display at exhibitions, fairs or similar events;

(ii)           Professional equipment, including films of educational, scientific or cultural character, intended for use at meetings or conferences; and

(iii)          Broadcasting or cinematic equipment, including specially adapted vehicles.

(b)          The above-said goods do not include means of transport other than those mentioned in category ‘c’ above, since Pakistan has not acceded to Annex C of the Convention so far.

7.            Guaranteeing Chain

(a)          The ATA Carnet system operates on the basis of an internationally valid security chain, operated by the World Chambers Federation (WCF) globally. This security chain presupposes that the national issuing and guaranteeing organization would submit a security of an approved amount to the WATAC Secretariat of the WCF prior to its notification as a issuing and guaranteeing association, so that the ATA carnet operations could be made secure and guaranteed world wide. In case of Pakistan the association approved and notified by the Ministry of Commerce for this purpose is the National Committee of the International Chamber of Commerce, Pakistan, which is affiliated to the guaranteeing chain for the issuance of ATA Carnet in relation to goods meant for temporary export from or import into the country. The requirement of submission of a security of an approved amount for the national issuing and guaranteeing organization is contained in rule 77X of the  Rules, which has been fulfilled by it.

8.            Procedure for payment of duties & taxes

(a)          The mechanism for the operation of the security chain is embodied in Article 9 of Annex A to the Convention, which stipulates under clause ‘a’ of sub-article 1 that on submission of a claim by Customs for the payment of import duties and taxes, the guaranteeing organization will have a period of six months in which to “furnish proof of re-exportation . . . or of any other proper discharge of ATA Carnet,” failing which it ‘shall forthwith deposit, or pay provisionally, such sums.” This payment is to become “final after a period of three months from the date of deposit or payment” during which period it may still furnish the aforesaid documents and claim refund of the dues paid by it. The period provided to the guaranteeing association under Article 9 for the discharge of its liability is six months, while the period for claiming refund in such a case is 9 months.

(b)          The procedure devised under the ATA Carnet Rules for the realization of the import duties and taxes is slightly different from the one outlined above. Rule 77X(2) provides for the submission of a security by the guaranteeing organization to cover import duty and taxes payable on goods in case of breach or violation of the conditions of temporary import. The term “security” under rule 77C(j) means a bank guarantee, to be submitted by the guaranteeing organization, either individually in each case of temporary import, or collectively, in all such cases, without which no ATA Carnet will be entertained or approved. Under rule 77V of the ATA Carnet Rules, the guaranteeing organization will have a period of seven days within which to reimburse to Customs the amount of import duties and taxes claimed by it. Upon default in payment of such dues, these will be deducted from the “security” furnished by the guaranteeing organization. However, the deduction of these due will be “provisional” in nature only, since it would become final only after the case has been adjudicated under section 179 of the Customs Act, 1969. The time period allowed for adjudication of a case under the aforesaid provision is ninety days (three months), which can be extended upto another ninety days (three months), so that, all in all, a case must be decided within one hundred eighty days or six months, which is exactly the period allowed to the guaranteeing organization under Article 9(1)(a) of Annex A to the Convention for making payment of dues to Customs. The only difference being that in case of ATA Carnet Rules, the payment is provisionally “secured” through encashment (or ‘freezing’) of the “security” on lapse of seven days of lodging of a claim by Customs, though it would become final only after such dues have been determined to be payable by it, and a decision to this effect is made by the appropriate officer within a period of six months.

(c)           The above-said procedure has been devised as per the mandate given to each Contracting Party under Article 4(1) of the Convention whereby it can subject the temporary admission of goods to “such conditions and guarantees as it shall determine.” The said procedure has been consented to by the guaranteeing organization, i.e. ICC Pakistan. The amount of “security” to be submitted by the guaranteeing organization will be decided by each Collectorate, keeping in view the expected volume of goods for temporary import into Pakistan.

9.            Liability of guaranteeing organization & Carnet-holder

(a)          There are other important aspects of the guaranteeing mechanism under the Convention, which need to be highlighted. Under Article 8(1) of Annex A to the Convention, the guaranteeing organization is obliged to pay to the Customs authorities import duties and taxes and any other sums in the event of breach or violation of the conditions of temporary admission. However, Article 8(2) stipulates that the liability of the guaranteeing organization shall “not exceed the amount of import duties and taxes by more than ten percent.” This means that the “security” submitted by the guaranteeing organization would cover the whole amount of import duties and taxes, but only ten per cent of “any other sums” (e.g. penalty) payable by the Carnet holder. The delimitation of the liability on account of dues other than import duties and taxes is explained by the fact that Article 16 of Annex A to the Convention fully authorizes the Customs authorities to initiate any proceedings against a Carnet-holder for the recovery of import duties and taxes, or any other sums payable, or any penalties to which it may render itself liable in case of non-compliance with the conditions of temporary import. The extent of liability fixed on the guaranteeing organization and the Carnet-holder is reflected in rule 77U(2&3) of the  Rules.

(b)          It may be noted further that the “security” furnished by the guaranteeing association would also not cover any dues payable on account of temporary export of goods. This is brought out by Article 4(3) of the Convention, which confines the scope of the “security” to import duties and taxes only. Article 8(1) of Annex A to the Convention, accordingly, obliges the guaranteeing organization to discharge its liability to the Customs authorities to the extent of “import duties and taxes and any other sums.” As such, the liability arising in relation to temporary export of goods would be that of the Carnet holder exclusively, and the provisions of section 202 of the Customs Act, 1969, will apply for the purpose of recovery.

10.          Period for lodging a claim

(a)          Under Article 8(4) of Annex A to the Convention, the Customs authorities can lodge a claim with the guaranteeing organization for the payment of import duties and taxes and any other sums within a year of the expiry of the validity of the ATA Carnet. This means that the security furnished by the guaranteeing organization should remain valid for the prescribed duration of the ATA Carnet, which cannot exceed one year as per Article 5(1) of Annex A to the Convention, and for one year following it. The security, however, remains valid longer than this period taken together. This is because Article 9(1) of Annex A to the Convention allows a period of six months to the guaranteeing organization for submission of proof to Customs of re-exportation of goods prior to making any payment of import duties and taxes to them, and another three months afterwards during which the payment made by it would become final. All this adds up to a period of 33 months during which the security must perforce remain valid. Rule 77C(j) of the  Rules, accordingly, fixes the validity period of the security to three years, at least.

(b)          Article 8(3) of Annex A to the Convention provides that no claim can be lodged by Customs against the guaranteeing organization once the temporary admission papers have been unconditionally discharged. Indeed, the presumption is that where an irregularity was visible in such documents, and was not objected to by Customs at the time of being discharged, such an act would tanatamount to condonation of the irregularity. However, the aforesaid provision authorizes the Customs authorities to make a claim upon the guaranteeing organization even after the release of temporary admission documents in case it is “discovered that the discharge of the documents was obtained improperly or fraudulently or that there had been a breach of the conditions of temporary admission,” though without specifying any time-limit in this regard. Under the  Rules, this period has been fixed to be five years, which is in accordance with section 32(2) of the Customs Act, 1969.

11.          Re-exportation Period

(a)          The period allowed for re-exportation of goods imported for display at exhibitions or fairs is “at least six months” under Article 4(1) of Annex B.1 to the Convention, twelve months in case of professional equipment under Article 5 of Annex B.2 to the Convention, and not specified for broadcasting vehicles. Under Article 7(2) of the Convention, the Customs may either grant a longer period than originally provided for, or extend the initial period, if so warranted under the circumstances. The time frame incorporated in rule 77M is identical to the one given in the Convention or the Annexes, though the power to extend this period by six months has been allowed only in case of goods for display, and not in case of professional equipment, which is already twelve months. Another reason for so doing is the limitation prescribed under Article 5(1) of the Convention, which states that temporary admission papers cannot be issued with validity period exceeding one year. The timeframe for re-exportation of broadcasting vehicles will be determined by the relevant ministry on case-to-case basis, keeping the same time limitation in view.

12.          Regularization of Temporary Admission

(a)          Article 9 of the Convention provides that the temporary admission of goods will terminate upon their re-exportation. However, as per Article 10(1) of Annex A to the Convention, where re-exportation has not been certified by the Customs authorities of the country of importation, the said authorities may accept as valid proof of re-exportation of such goods if their re-importation has been certified by the Customs authorities of the country from whence the goods were originally exported, and regularize the temporary admission operation accordingly. Since this is not a mandatory provision, it has not been incorporated into the  Rules.

13.          Replacement ATA Carnet

(a)          Article 14 of Annex A to the Convention prescribes the acceptance of a replacement ATA Carnet in case the goods cannot be re-exported within the original time frame or the extended period, as the case may be. Since this is an unusual situation, at least, to the extent of goods brought into the country for display, the application of this provision has been restricted to professional equipment and broadcasting vehicles only under rule 77M(3).

14.          Transfer of ATA Carnet

(a)          Article 8 of the Convention authorizes the transfer of the benefit of the temporary admission operation from a Carnet holder to another person. This may give rise to unnecessary complications in the course of administration of the system. It has, therefore, not been incorporated into the  Rules.

15.          Offences & Penalties

(a)          Offences under the Rules fall into four categories: first, misstatement or fraud in securing release of goods; second, breach or violation of the conditions listed in ATA Carnet, or those specified under the  Rules; third, abuse of temporary admission facility in any manner; and lastly, when the goods are not re-exported within the stipulated period. In all these events, the goods shall be liable to confiscation and the Carnet holder liable to the imposition of penalties prescribed under clause 11 of section 156 of the Customs Act, 1969, or under any other allied law for the time being in force.

16.          Review by ICC WATAC Secretariat

(a)          The Rules were reviewed by ICC WATAC Secretariat. The changes proposed by them, except for the last one, which is a query, have been incorporated into the  Rules.

17.          Adoption of remaining Annexes

(a)          In order for the system to work smoothly, it is recommended that the remaining Annexes to the Convention, i.e. from B.3 to E, are also adopted or acceded to in near future, so that the system can work in an integrated manner.

 

 

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