Problems with origin & origin fraud

Along with classification, the origin of a product determines the applicable customs duty rate. But when is a product considered to originate from a specific country? Is a simple processing step sufficient? Often, it is not! Depending on the country of origin or destination, specific and complex rules apply. We are happy to guide you through this maze of regulations to help determine the correct origin.

Do you have a quick question or need a solution?

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Along with classification, the origin of a product determines the applicable customs duty rate. But when is a product considered to originate from a specific country? Is a simple processing step sufficient? Often, it is not! Depending on the country of origin or destination, specific and complex rules apply. We are happy to guide you through this maze of regulations to help determine the correct origin.

You would not be the first to have claimed a lower customs duty in good faith, only to be informed years later by Customs that an investigation has revealed a falsified document. Or suddenly, you receive a notice of intent to issue a customs debt (an invitation to pay, or UTB), because Customs believes anti-dumping duties should have been applied. While you thought you were dealing with a reliable supplier, it turns out that the goods were not produced in Malaysia or Bangladesh, as claimed, but rather in China.

What are the consequences?

The answer is often sobering and disappointing. In customs law, principles of "reasonableness and fairness" are rarely applied. But you could not have known and acted in good faith, right? While you may be able to win the case in some instances, it will likely require legal proceedings in court.

Can you protect yourself against this entirely? There are a limited number of precautions you can take, which we outline below.

Practical tips

     1.      Acknowledge the importance of accurate origin

In most cases, irregularities arise when using certificates of origin for imports. Often, it is only much later that Customs alleges the origin was incorrect. To avoid unpleasant surprises, it is important to understand the significance of origin and the certificates of origin. Without a valid document, you will usually have to pay the standard customs duty and face additional charges. Don not assume that the risk ends once the import declaration is completed. Customs can retroactively collect duties for at least three years. In some cases, this period extends to five years, and in other member states, it can be even longer. For more information, visit our website.

2.      Maintain clear communication and coordination with your supplier
To reduce the risk of receiving incorrect or falsified certificates, it is crucial to know your supplier well. Maintain good communication, verify whether they genuinely have a production facility, and request evidence. Do not settle for just a registration in the local Chamber of Commerce. While it might seem excessive, consider visiting the production site if necessary.

3.      Act on doubts
If you have doubts based on the available information, don not sit back and hope for the best. Take action and investigate further if needed. Discuss with your supplier the need for additional guarantees to clarify the process and the origin of the goods. Alternatively, engage a reputable organization to conduct an audit at the production site. While this will not eliminate the risks entirely, it can significantly reduce it. Moreover, it demonstrates due diligence, protecting you from allegations of negligence later on.

FAQ

Do you have a quick question or need a solution?

These are our Origin specialists

Bart
Lawyer
Theo
Advisor
Bram
Advisor
Samantha
Advisor
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