DECREE OF THE MINISTER OF FINANCE
No.580/KMK.04/2003

CONCERNING
PROCEDURES FOR GRANTING AND CONTROLLING IMPORT FACILITIES FOR EXPORT GOODS

THE MINISTER OF FINANCE,

Considering:

• a. that by Law No.10/1995 on Customs, import duty on the import of goods and/or materials to process or assemble the goods and/or materials or fit the goods and/ or materials on other goods to produce export goods can be exempted and/or refunded;
• b. that by Law No.11/1995 on Excise, the export of excisable goods is exempted from excise;
• c. that pursuant to Article 3 of Government Regulation No. 143/2000, as has been amended by Government Regulation No.24/2002, the import of taxable goods, which by the Customs Law is exempted from import duty, can be treated as uncollected tax due by a decree of the Minister of Finance;
• d. that to increase non-oil/gas exports, it is deemed necessary to streamline the procedures for exempting the import of goods and/or materials from and/or making refunds on import duty and/or excise, uncollected Value Added Tax (PPN) and Sales Tax on Luxury Goods (PPnBM);
• e. that the use of goods produced by manufacturers exempted from and/or granted refunds on import duty and/ or excise, uncollected PPN and PPnBM in support of the national economy need to be increased;
• f. that the exemption of the import of goods and/or materials from and the granting of refunds on import duty and/or excise, uncollected PPN and PPnBM by the Directorate General of Customs and Excise need to be controlled;
• g. that based on the considerations in letters a, b, c, d, e and f, it is necessary to stipulate a Decree of the Minister of Finance on the Procedures for Granting and Controlling Import Facilities for Export Goods;

In view of:

• 1. Law No.6/1983 on General Provisions and Taxation Procedures (Statute Book of 1983 No.49, Supplement to Statute Book No.3262), as has been several times amended the latest by Law No.16/2000 (Statute Book of 2000 No.126, Supplement to Statute Book No. 3984);
• 2. Law No.8/1983 on Value Added Tax and Sales Tax on Luxury Goods (Statute Goods of 1983 No.51, Supplement to Statute Book No.3264), as has been several times amended the latest by Law No.18/2000 (Statute Book of 2000 No. 128, Supplement to Statute Book No. 3986);
• 3. Law No. 10/1995 on Customs (Statute Book of 1995 No.75, Supplement to Statute Book No.3612);
• 4. Law No.11/1995 on Excise (Statute Book of 1995 No.76, Supplement to Statute Book No.3613);
• 5. Government Regulation No.33/1996 on Bonded Hoarding Place (Statute Book of 1996 No.50, Supplement to Statute Book No. 3638), as has been amended by Government Regulation No.43/1997 (Statute Book of 1997 No.90, Supplement to Statute Book No.3717);
• 6. Government Regulation No. 143/2000 on the Implementation of Law No.8/1983 on Value Added Tax and Sales Tax on Luxury Goods as has been several times amended the latest by Law No. 18/2000, as has been amended by Government Regulation No.24/2002;
• 7. Presidential Decree No.228/M/2001;
• 8. Decree of the Minister of Finance No. 291/KMK.05/1997 on Bonded Zones as has been several times amended the latest by Decree of the Minister of Finance No.37/KMK.04/2002;
• 9. Decree of the Minister of Finance No. 453/KMK.04/2002 on Customs Procedure in the Import Sector as has been several times amended the latest by Decree of the Minister of Finance No.112/KMK.04/2003;
• 10. Decree of the Minister of Finance No.557/KMK.04/2002 on the Customs Procedure in the Export Sector;

DECIDES :

To stipulate:

DECREE OF THE MINISTER OF FINANCE ON PROCEDURES FOR GRANTING AND CONTROLLING IMPORT FACILITIES FOR EXPORT GOODS.

CHAPTER I
GENERAL PROVISIONS

Article 1

Hereinafter referred to as:

• 1. Import shall be the act of entering goods into a customs area.
• 2. Export shall be the act of releasing goods from a customs area.
• 3. Import Facilities for Export (KITE) shall be the facilities granted to exempt the import of goods and/or materials from import duty and/or excise, uncollected PPN and PPnBM, and/or to refund import duty and/or excise, uncollected PPN and PPnBM on the import of goods and/ or materials, to process or assemble the goods and/or materials or fit the goods and/or materials on other goods to produce export goods.
• 4. import duty and/or excise exemptions shall be import duty and/or excise exemptions granted to the import of goods and/or materials to process or assemble the goods and/or materials or fit the goods and/or materials on other goods to produce goods either for export or delivery to a bended zone,
• 5. Uncollected Value Added Tax (PPN) and Sales Tax on Luxury Goods (PPnBN) facilities shall be uncollected PPN and PPnBM facilities granted to the import of goods and/or materials to process or assemble the goods and/ or materials or fir the goods and/or materials on other goods to produce export goods, as long as the import of goods and/or materials is exempted from import duty.
• 6. Refunds on import duty and/or excise shall be refunds on import duty and/or excise paid for the import of goods and/or materials to process or assemble the goods and/ or materials or fit the goods and/or materials on other goods into goods already exported or delivered to a bonded zone.
• 7. Directorate General shall be the Directorate General of Customs and Excise.
• 8. Director General shall be the Director General of Customs and Excise.
• 9. Regional Office shall be the Regional Office of the Directorate General of Customs and Excise appointed to provide KITE.
• 10. Customs Office shall be the Customs and Excise Service Office.
• 11. Official shall be the employee of the Directorate General of Customs and Excise appointed to a certain post to carry out certain tasks.
• 12. Bonded zone shall be a building, place or area which has certain borders to carry out activities, such as manufacture, construction designing, engineering, sorting, initial inspection, final inspection, packing of goods and materials of import origin or goods and materials from other customs areas in Indonesia, particularly for the purpose of export.
• 13. Company shall be the company granted KITE to import goods and/or materials to process or assemble the goods and/or materials or fit the goods and/or materials on other goods for export on its own or delivery to a bonded zone to further process or assemble the goods and/or materials or fit the goods and/or materials on other goods.
• 14. Customs and Excise Inspection Report (LPBC)/Inspection Result Report (LHP) shall be a report issued by the Directorate General of Customs and Excise on the result of customs inspection of export goods originating from goods or materials of import origin granted import duty and/or excise exemptions and/or refunds, and uncollected PPN and PPnBM facilities.
• 15. Certificate of promise (SSB) shall be a letter issued by a company as a guarantee to pay state levies on imported goods and materials granted import duty and/or excise exemptions and uncollected PPN and PPnBM facilities.
• 16. Damaged products shall be the products that are damaged or have quality/quality standard reduced so that they cannot be repaired to have the expected quality/ quality standard.
• 17 By products shall be those other than main products obtained in a production process or those resulting from the development and use of residual raw materials or residual products.
• 18. Residual products shall be raw materials or goods in a production process that cannot be further processed into main products because they cannot meet technical requirements.
• 19. Damaged raw materials shall be raw materials that have their quality reduced so that they cannot be processed and if they are processed the products will not meet the expected quality/quality standard.
• 20. The realization of export shall be the completion of goods and/or materials of import origin granted import duty and/or excise exemptions and uncollected PPN and PPnE3N facilities, from a company whose products are exported.
• 21 Delivery of goods and/or materials of import origin to a bonded zone shall be the completion of goods and/or materials of import origin granted import duty and/or excise exemptions and uncollected PPN and PPnBM facilities, from a company whose products are delivered to the bonded zone for further process.
• 22. Delivery of products from a bonded zone shall be the delivery of products from the bonded zone to a company to process or assemble the products or fit the products on other goods for exports.

Article 2

(1) Goods and/or materials of import origin processed or assembled or fitted on other goods in a company to produce export goods can be granted import duty and/ or excise exemptions and uncollected PPN and PPnBM facilities.

(2) Goods and/or materials of import origin and/or products from bonded zones processed or assembled or fitted on other goods to produce export goods for which import duty and/or excise have been paid and which have been already exported can be granted refunds on import duty and/or excise.

(3) Product using raw materials of import origin delivered to bonded zones for further process can be granted import duty and/or excise exemptions and/or refunds on import duty and/or excise and uncollected PPN and PPnBM facilities.

(4) The import duty and/or excise exemptions and/or refunds on import duty and/or excise and uncollected PPN and PPnBM facilities as meant in paragraphs (1), (2) and (3) shall not apply to fuel oil, lubricant and capital goods.

(5) Products from a company using raw materials of import origin can be sold to Other Customs Areas in Indonesia (DPIL), after there have been realization of export or delivery of goods and/or materials of import origin to a bonded zone.

(6) By-products, residual products, damaged products and damaged raw material, using raw materials of import origin can be brought to DPIL or destroyed.

Article 3

The Head of the Regional Office on behalf of the Minister of Finance shall provide import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities as mean in Article 2 paragraphs (1), (2), (3) and (4).

Article 4

(1) To obtain the import duty and/or excise exemptions and/ or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities as meant in Article 2, the company shall hold a company's registry number (NIPER) issued by the Regional Office.

(2) To secure a NIPER, the company shall file a company's data base (DI PER) in a correct and complete way to the Head of the Regional Office using an electronic instrument.

(3) The Regional Office shall conduct administrative and field audits to see if the data contained in DIPER as meant in paragraph (2) are true.

(4) The administrative and field audits as meant in paragraph (3) shall be conducted in no more than 14 (fourteen) working days after DIPER has been received in a complete and correct way.

(5) The results of administrative and field audits shall be put in an official report.

(6) The approval or rejection of an application for NIPER shall be made in no more than 3 (three) working days starting from the date of the official report.

(7) The company whose application for NIPER has been ap.proved, shall:

• a. put up a name plate in the location of the company containing:
• NAME OF COMPANY : ................................
• NIPER : ................................
• b. inform in writing the Head of the Regional Office of any change in data contained in NIPER.

(8) If within 12 (twelve) consecutive months since the issuance date of NIPER the company does not carry out any activity after receiving import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities, NIPER shall be revoked.

(9) The company, which has its NIPER revoked after receiving import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities, shall settle import duty and/or excise as well as PPN and PPnBM due, including interest in no more than 30 (thirty) days after the revocation date of NIPER.

CHAPTER II
IMPORT DUTY AND/OR EXCISE EXEMPTIONS AS WELL AS UNCOLLECTED PPN AND PPnBM FACILITIES

Article 5

Any application for the import duty and/or excise exemptions as well as uncollected PPN and PPnBM facilities as meant in Article 2 paragraphs (1) and (3) shall meet the following requirements:

• a. the application shall be filed by the company importing goods and/or materials and exporting products made of the goods and/or materials or by the company delivering products made of the goods and/or materials to a bonded zone to process or assemble the goods and/or materials or fit the goods and/or materials on other goods;
• b. the application shall be filed by the company to the Head of the Regional Office by enclosing a list of linkage between the goods and/or materials of import origin and the products exported or delivered to a bonded zone or sold to other Customs Area in Indonesia (DPIL).

Article 6

The Head of the Regional Office shall approve or reject the application as meant in Article 3 in no more than 14 (fourteen) working days after receiving the application in a complete and correct way.

Article 7

If the application is approved, the applicant shall:

• a. hand over guarantee in the form of bank guarantee, customs bond or certificate of promise (SSB) to the Director General of Customs and Excise as much as the amount of import duty and/or excise as well as PPN and PPnBM due before the release of goods is made;
• b. keep documents, books and reports related to the import of goods and/or materials and the export of products for at least 10 (ten) years in its business site in Indonesia;
• c. send reports to the Regional Office at least once every 6 (six) months regarding:
• 1. exports;
• 2. delivery of products to the bonded zone (for the producer delivering its products to the bonded zone for further processing);
• 3. sales of products to Other Customs Area in Indonesia (DPIL);
• 4. sales of products to Other Customs Area in Indonesia (DPIL) or a company (for the producer selling its by-products, residual products, damaged products and damaged raw materials);
• 5. completion of imported raw materials whose export has not been settled or completed.

Article 8

The guarantee as meant in Article 1 shall be returned in no more than 14 (fourteen) working days after the reports as meant in Article 7 have been approved.

Article 9

(1) Realization of export shall not exceed 12 (twelve) months since the registration date of import notification (PIB).

(2) Delivery of products to the bonded zone shall materialize in no more than 12 (twelve) months starting from the registration date of import notification (PIB) to the entry date of goods into the bonded zone.

(3) Exception to the rule on the period of time as meant in paragraph (2) shall be granted by the Head of the Regional Office on behalf of the Minister of Finance to the company whose production period exceeds 12 (twelve) months.

(4) If the provisions in paragraphs (1), (2) and (3) are not met, the import duty and/or excise as well as PPN and PPnBM owed for the import of goods and/or materials shall be settled.

(5) The obligation as meant in paragraph (4), where import duty and/or excise are concerned, shall be added by interest as much as 2% (two percent) of the levies that must be paid every month for a maximum of 24 (twenty four) months since the registration date of the import notification (PIB), provided that the goods and/or materials are still kept as stocks at the company receiving import duty and/or excise exemptions as well as uncollected PPN and PPnBM facilities.

(6) The obligation as meant in paragraph (3), where PPN and PPnBM are concerned, shall be added by fines in accordance with the existing taxation rules.

Article 10

Products made of raw materials of import origin can be sold to Other Customs Area in Indonesia (DPIL) after realization of export and/or delivery of products to the bonded zone have been made, on the stipulation that:

• a. the company files an application to the Head of the Regional Office or the appointed official, and the products undergo a physical inspection by an official;
• b. the products which are to be sold to Other Customs Area in Indonesia (DPIL) must reach a maximum of 25% (twenty-five percent) of the realization of export and/ or delivery of products to the bonded zone;
• c. the company must pay import duty and/or excise based on the tariff of finished goods and the customs value of raw materials at the time of importation plus interest in accordance with the existing rules;
• d. the company must collect PPN and PPnBM at the time of delivering the products to Other Customs Area in Indonesia (DPIL).

Article 11

If the sales of products to Other Customs Area in Indonesia (DPIL) exceeds the amount stated in Article 10 letter b, the excess shall be subject to:

• a. fines as much as 100% (a hundred percent) of import duty and/or excise that must be paid;
• b. 2% (two percent) additional interest according to applicable regulations.

Article 12

(1) The sales of products to Other Customs Area in Indonesia (DPIL) shall materialize in no more than 12 (twelve) months starting from the registration date of the import notification (PIB) to the entry date of goods into Other - Customs Area in Indonesia (DPIL), except if the company's production period exceeds 12 (twelve) months, exception to the rule shall be given by the Head of the Regional Office on behalf of the Minister of Finance.

(2) If the provisions in paragraph (1) are not met, import duty and/or excise as well as PPN and PPnBM owed for the import of the goods and/or materials shall be paid.

(3) The obligation as meant in paragraph (2), where import duty and/or excise are concerned, shall be added by interest as much as 2% (two percent) of the levies that should be paid every month for a maximum of 24 (twenty-four) months since the registration date of the import notification (PIB), provided that the goods and/or materials are still kept as stocks at the company receiving import duty and/or excise exemptions as well as uncollected PPN and PPnBM facilities.

(4) The obligation as meant in paragraph (2), where PPN and PPnBM are concerned, shall be added by fines in accordance with the existing rules.

Article 13

(1) The sales of by-products, residual products and damaged products made of raw materials of import origin, and the sales of damaged raw materials of import origin to Other Customs Area in Indonesia (DPIL) shall be subject to:

• a. import duty as much as 5% (five percent) of the selling price;
• b. excise based on the prevailing rate; and
• c. PPN and PPnBM which were not previously collected using tax base as much as the import value.

(2) The goods as meant in paragraph (1) shall be inspected by the official before being sold to Other Customs Area in Indonesia (DPIL).

(3) If by-products, residual products, damaged products and damaged raw materials which must be made available at the company cannot be accounted for, they shall be subject to:

Article 14

(1) By-products, residual products, damaged products and damaged raw materials can be destroyed under the supervision of the official.

(2) By-products, residual products, damaged products and damaged raw materials that are destroyed shall be exempted from import duty and/or excise as well as PPN and PPnBM.

(3) Any application for the destruction of the goods as meant in paragraph (2) shall be filed to the Head of the Customs and Excise Service Office overseeing the applicant's business site.

(4) The result of the destruction of the goods shall be put in an official report of destruction.

CHAPTER III
REFUNDS ON IMPORT DUTY AND/OR EXCISE

Article 15

Refunds on import duty and/or excise as meant in Article 2 paragraphs (2) and (3) can be granted to

• a. any company exporting its products;
• b. any company delivering its products to a bonded zone.

Article 16

To apply for refunds on import duty and/or excise as meant in Article 15, the following requirements shall he met:

• a. in case products are exported:
• 1. the products have undergone customs inspection by the official;
• 2. the date of customs and excise inspection report/ report of inspection result (LPBC/LHP) does not exceed 12 (twelve) months starting from the date of Bill of Lading (B/L) or Airway Bill (AWB) or other similar transport documents to the receipt date of the application by the Regional Office;
• 3. import has been made for a maximum of 24 (twenty four) months before the shipment of the export goods.
• b. in case products are delivered to a bonded zone:
• 1. the products have undergone customs inspection by the official;
• 2. the date of inspection notes does not exceed 12 (twelve) months starting from the date of inspection to the receipt date of the application by the Regional Office.

Article 17

(1) Any application for refunds on import duty and/or excise shall be filed to the Head of the Regional Office.

(2) The application shall be complete with a list of linkage between goods and/or materials of import origin and goods exported or delivered to the bonded zone, import documents, export documents and/or documents on the delivery of products to the bonded zone.

Article 18

The application as meant in Article 17 shall be approved or rejected in no more than 14 (fourteen) working days after the application has been received in a complete and correct way.

CHAPTER V
CONTROL

Article 19

Any company receiving import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities shall keep documents, books, records and letters in connection with the import duty and/or excise exemptions and/or refunds on import duty and/or excise for 10 (ten) years at its business site in Indonesia.

Article 20

The Directorate General of Customs and Excise shall control the granting of import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities as meant in this Decree of the Minister of Finance by employing an electronic data system, either individually or jointly with the Directorate General of Taxation, and auditing the companies receiving import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities.

Article 21

Audits in the customs, excise, and/or taxation fields can be conducted any time in accordance with 'the existing rules on audits in the customs, excise and/or taxation fields.

CHAPTER VI
OTHER PROVISIONS

Article 22

A company that joins a group of companies can apply for import duty and/or excise exemptions and/or refunds on import duty and/or excise, provided that:

• a. the company has group company's registry number (NIPER);
• b. guarantees and reports are forwarded by the appointed company;
• c. PPN and PPnBM are collected in accordance with the existing taxation regulation.

Article 23

A company that does not carry out the whole production process and gives a subcontract to other company can apply for import duty and/or excise exemptions and/or refunds on import duty and/or excise, on the stipulation that:

• a. the subcontractor must have a work contract;
• b. the job must be given by the company to the subcontractor after receiving prior consent from the Head of the Regional Office;
• c. PPN and PPnBM are collected in accordance with the existing taxation rule.

Article 24

If the company cannot account for the products which must be exported and made available at the company after the importation of raw materials are granted import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities, the company shall:

• a. pay import duty and/or excise due plus fines as much as 100% (a hundred percent) of the import duty and/or excise that must be paid and interest according to the existing rules;
• b. pay PPN and PPnBM, which were not previously collected, plus fines according to the prevailing taxation rules.

Article 25

(1) If export goods which once received import duty and/or excise exemptions and/or refunds on import duty and/ or excise as well as uncollected PPN and PPnBM facilities are re-imported, at the time of entering the goods into the Indonesian customs area the company shall hand over guarantee as much as import duty and/or excise along with the price and tariff of finished goods and export documents in the form of export notification (PEB) and customs and excise inspection report/report of inspection result (LPBC/I.HP) to the Head of the Customs Office through which the goods are re-imported.

(2) If export goods which once received import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM facilities are re-imported at the time of entering the goods into the Indonesian customs area the company shall pay PPN and PPnBM in accordance with the existing taxation rule.

(3) The export goods which have been re-imported as meant in paragraph (1) but are not re-exported within 6 (six) months shall be subject to import duty and/or excise according to the tariff prevailing at the time of importing the goods and/or materials.

Article 26

In case the result of inspection shows an excess of import duty and/or excise exemptions and/or an excess of refunds on import duty and/or excise, the excess shall be returned in accordance with the existing rules.

CHAPTER VII
TRANSITIONAL PROVISIONS

Article 27

All decisions on import duty and/or excise exemptions and/or refunds on import duty and/or excise as well as uncollected PPN and PPnBM issued by the Head of the Bapeksta - Finance/the Head of BINTER - Finance or the appointed official that are still valid shall remain valid until the expiry date of the said decisions

CHAPTER VIII
CONCLUSION

Article 28

Technical provisions needed to implement this Decree of the Minister of Finance shall be stipulated by the Director General of Customs and Excise and the Director General of Taxation, either individually or jointly, by observing the Taxation Law, Customs Law and Excise Law.

Article 29

At the time when this Decree began to take effect:

• 1. Decree of the Minister of Finance No.129/KMK.04/2003 on Import Duty and/or Excise Exemptions and Refunds as well as Uncollected Value Added Tax and Safes Tax on Luxury Goods on the Import of Goods and/or Materials for Processing or Assembling the Goods and/Materials or Fitting the Goods and/or Materials on Other Goods for Export shall be declared null and void.
• 2. All regulations needed to implement Decree of the Minister of Finance No.129/KMK.03/2003 shall remain valid, provided that they do not contradict this Decree of the Minister of Finance and have not been replaced by other regulations.

Article 30

This Decree of the Minister of Finance shall come into force as from January 1, 2004.

Stipulated in Jakarta
On December 31, 2004

THE MINISTER OF FINANCE,
sgd.
BOEDIONO