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[The Procedures, etc. of Import and Export Customs Clearance in Japan]

■ Outline

Customs clearance refers to exporting, importing and returning goods by going through the formalities prescribed by related Act.

In detail, it refers to a series of procedures starting with the export-import declaration to Customs, followed by the audit of Customs on submitted documents and inspection on export-import goods and transportation means, customs collection, permission of import and export, etc.

The procedures of export and import clearance of Japan are in line with those of other countries, and usually, a customs broker files the declaration as a proxy for exporters or importers like other countries.

Hereinafter, the procedures of export and import clearance will be simply outlined.

■ Basic Flow of Export and Import Clearance of Japan

☉ Outline

The general procedures of export and import clearance of Japan are as follows, and all export and import goods shall undergo those formalities.

1) Procedure of export clearance

Export goods being brought into the bonded area ⇒ export declaration ⇒ inspection ⇒ export permit ⇒ shipment

2) Procedure of import clearance

Import goods being brought into the bonded area ⇒ import declaration ⇒ inspection ⇒ payment of customs duty, etc. ⇒ import permit ⇒ release

☉ Being brought into the bonded area

For the export and import clearance, in principle, goods shall be brought into state-designated bonded area.

☉ Declaration of export and import

ㅇ Exporters and importers shall make export and import declarations to Customs attaching with necessary documents describing the name, quantity, value, and country of origin, of goods, or place of export, means for transportation, place of storage, and other required particulars.

ㅇ Import declaration may be made by documents, but generally, you can use electronic system on freight and port services, which is called NACCS (Nippon Automated Cargo and Port Consolidated System).

ㅇ FOB price for export declaration shall be filled in declaration form, but CIF price for import declaration, which will be used for an assessment standard. Provided, That there is only import duty in Japan, and customs duty isn't imposed on all exported goods.

ㅇ The following documents for export and import declaration must be submitted to Customs.

1) Invoice

2) Packing list

3) Data to determine assessment standard such as freight bill, insurance bill(only for import)

4) Licenses, certificates, etc. required by laws and regulations other than the Customs Law

5) The certificate of origin (where WTO rates(preferential tariff, convention tariff, etc.) are applicable)

6) Other documents required by customs clearance or Customs

ㅇ The people subject to obligation of import and export declaration cover exporters, importers or their agents, and the competent Customs are each Customs having jurisdiction over the location where relevant goods are stored in principle. Provided, That AEO-approved importers, exporters or customs agents can report to customs they want regardless of jurisdiction (newly added in 2016).

ㅇ Declaration for export and import shall be made after relevant goods have been placed in bonded area or other places for storage.

☉ Inspection of Customs

Inspection of export and import mainly aims at the determination of HS code and tariff rate, detection of import and export prohibited goods, and the verification of compliance of statutory regulations, etc.

If the submitted documents are decided to be valid after the review of NACCS, such application are approved, and approved goods go through a series of inspections such as simplified inspection, documents inspection and goods inspection. Goods which underwent all those procedures will be notified of the result of inspection, and for goods designated subject to simplified inspection, its inspection is concluded automatically by NACCS.

Goods with the liability for crime, and declaration cases subject to documents inspection and goods inspection shall be under a thorough inspection, based on other related information, including CIS(Customs Intelligent Database System).

☉ Payment of Customs duty, etc. (for import)

Japan has adopted and implemented principles of self-assessment, under which importers of goods by himself/herself shall declare item names(HS code), quantity of goods, assessment standards, tax amount, etc.(principles of self-assessment). In the case where customs duty, excise tax and local consumption tax, etc. are imposed on imported goods, import declarants shall lodge a tax payment bill at the time of filing an import declaration.

Exceptionally, payment for levied-duty imposed by customs office, not by principles of self-assessment, is applied to the goods exceeding the range of duty exemption from among goods hand-carried by persons entering to Japan, and to postal articles, etc. from abroad.

☉ Issuance of export and import permit

For export procedures, Customs issues an export permit to declarants whose goods are found without any errors.

For import procedures, Customs delivers tax payment bills to declarants if internal inspection procedures are completed. Declarants receiving such bills shall pay for them, and submit payment certificates to Customs to get issued with import permits.

■ A Standard of Assessment and Assessment for Customs Duty

☉ A Standard of Assessment

Standard assessment refers to the value or quantity which is basis for the calculation of tax amount. In principle, the price or quantity of imported goods at the time of import declaration becomes an assessment for customs duty(customs duty = standard assessment × tariff rate)

If the price of goods is standard assessment, it's called “an ad valorem duty”, if quantity is standard duty, called “a specific tariff”, and if both the price and quantity are standard assessment, called “combined specific ad valorem duty”(In Japan, there are much more items whose specific duties are levied on, and its specific tariff system are more complicated compared to other countries.).

With respect to an ad valorem duty, the price which is a standard assessment refers to a dutiable value, and as for Japan, CIF price which is the sum of wholesale price(FOB standard price), international freight cost and insurance cost is determined as a dutiable value(for the U.S., the price of FOB is a dutiable value.).

☉ Assessment for Customs duty

Assessment for customs duty refers to determining a dutiable value which is standard assessment of customs duty in accordance with related Act.

The price of imported goods varies depending on whether it is based on the place of production or the place they are imported or exported, and there are even the case where paying additionally the price which isn't listed on Invoice. So, the matters of deciding the exact point when dutiable value is determined, and its exact amount of value are quite difficult.

Regulations for assessment for customs duty are determined internationally, and the Customs Tariff Act of Japan also specifies detailed provisions relating to it according to international regulations, which means that methods of assessment for customs duty in Japan are in line with those of other countries.

In principle, dutiable price is the total amount of price, adding freight and insurance costs, etc. to the original price of goods which was paid or to be paid. But, if it's deemed inappropriate to use such method, such dutiable value is determined based on the actual trading price of same or similar kinds of goods, domestic sales prices of imported goods, etc.

■ The Classification of Items and Tariff

☉ HS(Harmonized System)

Japan adopts item classification system by the HS (Homonized System) like other countries, and in principle, it has used 10 unit code system, which 1 unit for NACCS(freight and harbor work-related computer system) is added to original 9 unit code system.

The HS code system of Japan, on the one hand, is considered as a systemized scheme by classifying the title and its respective subordinate contents of item name, but, on the other hand, corresponding other systems relating to export-import requirements with respective HS code hasn't been established yet in a clear way, which requires considerable expertise to utilize on the system.

☉ The Kinds of Tariff

The kinds of tariff in Japan are as follows, and the priority for application of tariff is determined by related Acts(approximately, the order is proceeded as follows, preferential tariff ⇒ EPA(FTA) tariff ⇒ WTO rate ⇒ provisional tariff ⇒ general rate). In Japan, export tariff levied on exported goods doesn't exist, and tariff is levied on imported goods only.

1) General rates(General tariff)

Conventional tariff - WTO rate, Most Favored Nation tariff, EPA rates such as the Singapore Conventional rate

National tariff - preferential tariff, provisional tariff, general rate, etc.

2) Simplified tariff

Tariff for personal effects and mailed goods, small-sum goods

3) Special tariff

Retaliatory tariff, countervailing tariff, anti-dumping tariff, etc.

☉ The kinds of internal taxes levied for importation

In importing goods in Japan, internal taxes which are imposed on relevant goods along with customs duty cover the consumption tax, local consumption tax, liquor tax, tobacco tax, gasoline tax, oil and gas tax, and oil and coal tax, etc.

■ Regulations for Export and Import

Clearance regulations and trade management in Japan are implemented based on the customs-related Acts(The Customs Act, etc.), Acts other than customs-related Acts(so-called Other Acts such as the Pharmaceutical Affairs Act) and the Acts for domestic sales(JAS- law, etc.).

Among them, the Acts that trading parties need to keep in mind are the regulations by Other Acts, representatively ① the Foreign Exchange and Foreign Trade Act(Export Trade Control Order and Import Trade Control Order, its subordinate Acts), ② Other permit and approval-related Acts(11Acts for export, 27 Acts for import).

These Acts specifies the matters concerning various permits and approvals, and if related certificates for customs clearance aren't lodged with Customs, such clearance shall not be proceeded.

■ Others System related to Clearance

Japan has operated following various systems for an expedited and smooth clearance. It's recommended to find suitable system and utilize it.

☉ Advance Question and Answer System - To improve the predictability

It's the system to enable importers or exporters to receive information regarding the classification of items and tariff rates, assessment for customs duty(dutiable value), determination of country of origin, etc.

In order to gain legal effects, such inquiries need to be offered in written documents, and Customs needs to offer answers within about 30 working days(about 90 working days for assessment for customs duty) with the maximum 3 years of the validity date.

☉ Advance Audit System of imported goods - For prompt clearance

It allows importers to lodge import declaration documents with Customs prior to the arrival of imported goods, or the completion of import-related procedures, and to be notified of the information regarding the necessaries of inspection or goods inspection of Customs in advance. It's useful for a prompt clearance of perishable goods, goods required for the imminent delivery, etc.

Application for advance audit is applied to all sorts of imported goods, and it's required to lodge advance declaration form, invoice, and other required particulars to determine a standard of assessment, etc. with Customs.

☉ The Extension of payment of Customs duty, etc. - To alleviate the burden of funding

Import permit and clearance are completed if paying for customs duty, internal taxes, etc. for imported goods to Japan, but exceptionally, this system allows import clearance to be available in the state of deferred payment of customs duty upon the request of importers(approximately three-month grace).

There are three extension types such as an individual extension type, a comprehensive extension type, and a special extension type. Attention is needed that it's required to provide the pledge equivalent to the amount duty payable.

☉ Special Import Declaration System - For prompt clearance

This system allows the importers who obtained an approval from the director of Customs(special importers) to declare importation and payment separately. That is, such importers may file an import declaration and obtain an import permit prior to the arrival of imported goods, in order to expedite the release of imported goods.

In order to be eligible for special import declarations, such declarant shall have no history of the violations of the Customs Act for the past 3 years, and lodge a special import application form with Customs to obtain an approval from the director of Customs. If obtained such approval of a Customs, such importer may file a special import declaration at any Customs across the nation. In declaring import, Customs may request relevant importers to provide the pledge in order to preserve the customs bonds.

☉ Specific Export Declaration System - To facilitate export clearance

In principle, for exportations, it's required to declare an export after bringing in goods to designated bonded area of Customs. But, specific export declaration system allows exporters to file an import declaration and obtain an export permit without bringing in goods to the bonded area.

Provided, That exporters only who have established security control and Compliance System may be eligible to lodge a special import approval application with Customs, and obtain an approval of the director of Customs.

☉ Goods Release System prior to Import permit - For prompt clearance

This system allows importers to file an import declaration of foreign goods(excluding designated goods relating to special declaration) with an approval of the director of Customs, and to release such goods prior to an import permit after providing the pledge equivalent to customs duty payable.

This system is especially very useful to expedite the clearance of the goods which are required to pass inspection and quarantine or have risks of deterioration, of the goods whose quantities aren't decided for an import declaration, and of the case where the submission of certificates to be granted EPA(FTA) tariff or preferential tariff, etc. is deferred.

☉ AEO(Authorized Economic Operator) System - To simplify the procedures of clearance

This system was introduced to reinforce related regulations by World Customs Organization(WCO), in the circumstances where Customs of America has emphasized security, which leads to delay clearance since September 11 attacks in the U.S.(for the U.S. it's called C-TPAT). AEO Certification System has been forced to be introduced mandatorily by all member countries under the agreement at WCO in 2005.

AEO refers to the persons certified by Customs of each nation in terms of safety, the efforts of compliance, integrity, etc. from among supply chains relating to the flow of cargos, covering import and export shippers, carriers, porters, warehouseman, customs brokers, etc. Enterprises which satisfy the requirements of AEO system may have advantages such as simplified customs clearance, etc.

AEO system decides whether to grant a certification by comprehensively considering maintenance work around the system, financial situation, document management, security management, and compliance with laws and regulations, freight management, etc. It's not easy for small and medium-sized enterprises to satisfy those criteria.