4. Outbound - Preferential origin

4. Outbound – Preferential origin assessment

Introduction

Preferential origin becomes relevant where the customer requests proof of preferential origin for an outbound shipment.shipment, so that the importer in the country of destination can claim preferential tariff treatment. Before performing an assessment, CS identifiesidentifies:

• the product and quantity concerned,concerned;
• the country of destinationdestination; and
• the preferential arrangement under which originating status is to be assessed.

Proofs of preferential origin are only issued, made out or facilitated for arrangements and terminals for which a destination-specific work instruction has been approved by the terminal's customs specialist and CGT. At the time of writing, this applies to shipments to the United Kingdom under the EU-UK Trade and Cooperation Agreement (TCA). Requests for other destinations are assessed case by case before the first shipment.

A proof of preferential origin issued or made out in the EU generally certifies that the product originates in the European Union. Preferential origin of an imported product does not confer EU originating status. A product imported with a proof of origin of a partner country that leaves the terminal unchanged remains originating in that partner country. Such a product can only be covered by a proof issued in the EU where the applicable arrangement expressly provides for this, for example through re-export rules within the Pan-Euro-Mediterranean (PEM) zone or replacement proofs. These cases are always referred to the terminal's customs specialist.

Evidence of originating status of inbound product

Where product delivered to the terminal may be shipped under a preferential arrangement, the customer provides evidence of its originating status with the inbound nomination. For product from production in the EU, this is a supplier's declaration or long-term supplier's declaration within the meaning of Articles 61 to 66 of Implementing Regulation (EU) 2015/2447 (Annexes 22-15 and 22-16).

Before relying on a supplier's declaration, CS checks that:

• all combinations of CN code and product description that may be shipped under the arrangement are covered;
• the declaration refers to the arrangement relevant to the destination and, where applicable, contains the required statement on cumulation;
• a long-term supplier's declaration is valid for the date of the inbound delivery (maximum validity 24 months);
• the declaration bears a handwritten signature, or, where both the declaration and the invoice are drawn up electronically, is electronically authenticated or covered by a written undertaking of the supplier accepting full responsibility; and
• renewed declarations are requested before expiry.

Materials originating in a partner country may count as originating in the EU through cumulation where the applicable arrangement provides for this. An example is UK-originating materials used in production in the EU under the TCA. The evidence of their originating status is the proof of origin recorded under section 2.

CS stores and registers the evidence in the same manner as proofs of origin under section 2.

Goods leaving the terminal unchanged

Where the goods leave the terminal unchanged, VTTI relies on the preferentialevidence originof informationoriginating and supporting documentationstatus recorded uponfor arrival.the relevant inbound parcel(s). CS verifies that the outbound goods can be traced to thethose relevant inbound parcelparcels and are covered by the available documentation.

Where originating and non-originating product has been stored in the same tank, the outbound product cannot be identified physically. It may only be treated as originating where all of the following apply:

• the applicable arrangement permits accounting segregation for the product concerned (the TCA does so for fungible products of Chapter 27);
• where required, prior authorisation of the customs authorities has been obtained;
• the method applied ensures that at no time more product receives originating status than would be the case with physical segregation; and
• the method is applied in accordance with generally accepted accounting principles and supported by the ERP inventory records.

Where these conditions are not met, product drawn from a tank that contains any non-originating product cannot be treated as originating. These cases are always referred to the terminal's customs specialist.

Goods blended or processed at the terminal

Where the goods have undergone blending or processing at the terminal, the preferential origin of the resulting product must be assessed under the relevantapplicable tradearrangement.

As agreement.with non-preferential origin, blending is performed on the customer's instruction and assessed in close consultation with the customer. The terminal’customer indicates the arrangement concerned, the components and proportions used, the specification to which the blend is performed, and the basis on which the customer considers the resulting product to be originating. The terminal's customs specialist performs thisa assessmentreasonableness basedcheck on this information, taking into account:

• the relevant product-specific originrule;
rule,
• the rules on insufficient working or processing;
• the originating status of the input materials,materials;
• the operations performed at the terminalperformed; and
• the information available in VTTI’VTTI's systems.

Most arrangements treat simple mixing of products as insufficient working or processing. Whether controlled blending to a specification goes beyond "simple mixing" and satisfies the product-specific rule depends on the arrangement concerned. Some arrangements also specify for Chapter 27 that obtaining a sulphur content by mixing products with different sulphur contents does not confer origin.

A blend may therefore have EU non-preferential origin under section 3 without having EU preferential origin. In principle, a blend only qualifies as originating where all input materials are originating, including through cumulation, unless the applicable arrangement provides otherwise.

A work instruction for determining the preferential origin of outbound products is available here.

Proof of preferential origin