DECISION OF DIRECTOR GENERALOF CUSTOMS AND EXCISE
NO. KEP-37/BC/2000

ON
THE PROCEDURE FOR GRANTING RELIEF OF IMPORT DUTY
ON MACHINES, GOODS AND MATERIALS BY INDUSTRIES/SERVICE INDUSTRIES
UNDERTAKING CONSTRUCTION/DEVELOPMENT
ON THE BASIS OF THE DECREE OF THE MINISTER OF FINANCE
NO. 135/KMK.05/2000
DATED MAY 1, 2000

THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE,

Attachment

Considering:

• a. that the enhancement of service for society in the framework of granting of facilities of exemption from import duty is a pre-quisite to boosting the development of domestic industries;
• b. that since the enhancement of service for granting facilities of exemption from import duty must continue to observe rights and interests of the state, it is deemed necessary to further stipulate the procedure for granting facilities exemption from import duty on the basis of the Decree of the Minister of Finance No. 135/KMK.05/2000 dated May 1, 2000 by issuing a decision of the Director General of Customs and Excise.

In view of:

• a. Law No. 10/1995 on customs affairs (Statute Book of 1995 No. 75, Supplement to Statute Book No. 3612);
• b. Decree of the Minister of Finance No. 135/KMK.05/2000 dated May 1, 2000 on relief of import duty on machines goods and materials in the framework ct building/development of industries/service industries;
• c. Letter of the Minister of Industry and Trade No. 1196/MPP/7/1997 dated July 15, 1997 on the appointment of PT Sucofindo to verify master lists/lists of the need for machines, goods and materials in the framework of development of industries/service industries by non-PMA/PMDN companies;
• d. Letter of the Minister of Finance No. S-388/MK.01/1997 dated July 30, 1997 on the appointment of Surveyor to verify master lists.

DECIDES:

To stipulate:

THE DECISION OF THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE ON THE PROCEDURE FOR GRANTING RELIEF OF IMPORT DUTY ON MACHINES, GOODS AND MATERIALS BY INDUSTRIES/SERVICE INDUSTRIES UNDERTAKING CONSTRUCTION/ DEVELOPMENT ON THE BASIS OF THE DECREE OF THE MINISTER OF FINANCE NO. 135/KMK.05/ 2000 DATED MAY 1, 2000

Article 1

(1) Referred to in this decision as:

• a. Construction shall be the establishment of new industries producing goods and/or services;
• b. Development shall be the expansion (diversification) of products and restructuring (modernization and rehabilitation) of machines, factory equipment and other equipment along with components to step up production capacities, quality, product variety, effeciency of industries/service industries already existing;
• c. Machines shall be machine units, machinery, factory installation equipment, devices or tools in both built-up and knocked down conditions which are used for the building or development of industries/service industries, excluding spare parts and components;
• d. Goods and materials shall be all goods or raw materials, regardless of their types and compositions, which are used as materials or components to produce finished goods;
• e. Industries shall be companies already securing business licenses to process raw materials, basic materials, semi-finished goods and/or finished goods into goods with a higher value of use, including activities of industrial designing and engineering.
• f. Service industries shall be companies already securing business licenses to undertake activities in the following sectors:
• Tourism, excluding golf course;
• Agribusinesses/agriculture;
• Transport/communications;
• Medical service;
• Telecommunications;
• Shopping centers, supermarkets, department stores, limited to domestic investment companies and non-PMA/PMDN companies Mining;
• Public works;
• Information;
• Education/Research and Development;
• Forestry;
• Construction.

Article 2

(1) Machines imported in the framework of construction/development of industries/service industries shall be granted import duty relief so that the final tariffs become 5% (five percent).

(2) In the case of tariffs of import duty which are mentioned in the Indonesian Customs Tariff Book (BTBMI) being 5% (five percent) or lower, the effective tariffs shall be those in BTBMI.

(3) The relief of import duty as meant in paragraph (1) shall be granted for an import period of one year, starting from the date of stipulation of decisions on relief of import duty, which can be extended for another term of one year at the maximum.

Article 3

(1) In the framework of construction, industries already securing the relief of import duty as meant in Article 2, excluding service industries, can be granted relief of import duty on goods and materials for the need of production for 2 (two) years according to installed capacities, so the final tariffs of import duty become 5% (five percent) with the import period of 2 (two) years, starting from the date of stipulation of decisions on relief of import duty on goods and materials.

(2) In the framework of development, industries already securing the relief of import duty as meant in Article 2, excluding service industries, can be granted relief of import duty on goods and materials for the additional need of production for 2 (two) years, so that the final tariffs of import duty become 5% (five percent), in the case of the development being aimed at raising capacities by at least 30% (thirty percent) of the installed capacities with the import period of 2 (two) years, starting from the date of stipulation of decisions on relief of import duty on goods and materials.

(3) Industries executing the construction/development by using domestically made production machines can be granted relief of import duty on goods and materials as meant in paragraphs (11 and (2) for the need of production/additional need of production for 4 (four) years, with the import period of 4 (four) years, starting from the date of stipulation of decisions on relief of import duty on goods and materials.

(4) In the case of tariffs of import duty which are mentioned in the Indonesian Customs Tariff Book (BTBMI) being 5% (five percent) or lower, the effective tariffs shall be those in BTBMI.

Article 4

(1) The need for machines, goods and materials in the framework of construction of industries and the additional need for goods and materials in the framework of development of industries shall be verified by the ministries/institutions concerned, namely:

• a. the Board in charge of capital investments and fostering of state-owned enterprises, for foreign/domestic investment (PMA/PMDN) companies;
• b. the Ministry of Industry and Trade or other relevant institutions, for non-PMA/PMDN companies.

(2) In executing the verification as meant in paragraph (1), particularly in the framework of construction, the ministries/institutions concerned shall use surveyor appointed by the government, namely PT (Persero) Sucofindo.

Article 5

Machines imported in used condition shall be accompanied by certificates from the surveyor stating that the machines are stiff good and not scraps.

Article 6

(1) The facilities as meant in Article 3 shall not be effective for automotive assembly industries, except automotive component industries.

(2) Industries/service industries already securing the facilities of exemption from/relief of import duty on the basis of other provisions can not use the facilities of relief on the basis of this decision.

Article 7

(1) The applications for securing the facilities as meant in Articles 2 and 3 shall be submitted to:

• a. the Head of the Board of Capital Investments and Fostering of State-owned Enterprises, for the construction of PMA/PMDN industries;
• b. the Director General of Customs and Excise attn. the Director of Customs Facilities Heads of local Regional Offices of the Directorate General of Customs and Excise, for the development of PMA/PMDN industries and non-PMA/PMDN industries as well as the construction of non-PMA/PMDN industries.

(2) The procedure for submission the applications as meant in paragraph (1) letter b shall be explained in Attachment I (the construction of industries) and Attachment II (the development of industries).

Article 8

The granting of the facilities of relief of import duty as meant in Articles 2 and 3, as long as they are not connected with the provision in Article 7 paragraph (1) letter b, shall be contained in a decree of the Minister of Finance which is signed by the Director General of Customs and Excise in this case the Director of Customs Facilities or Heads of Regional Offices of the Directorate General of Customs and Excise for the Minister of Finance.

Article 9

(1) The decree of the Minister of Finance as meant in Article 8 shall be effective for:

• a. the import of machines or goods and materials with the import period of one year, starting from the date of issuance of the decree of the granting of relief of import duty on machines or goods and materials;
• b. the import of goods and materials resulting from the purchase of domestic machines as meant in Article 3 paragraph (3) with the import period of one year, starting from the date of issuance of the decree on the granting of relief of import duty on goods and materials.

(2) he import period as meant in paragraph (1) can be extended with the time limits as meant in Article 2 paragraph (3), Article 3 paragraphs (1), (2) and (3).

Article 10

Industries/service industries securing the facilities of relief of import duty shall be obliged:

• 1. to keep books of import of machines, goods and materials for the need of customs audits;
• 2. to store and maintain books, documents and other records connected the granting of relief of import duty in business places for at least 10 (ten) years, starting from the date of realization of the import;
• 3. to convey reports on the realization of import of machines and/or goods and materials securing the relief of import duty to the Director General of Customs and Excise attn. the Director of Verification and Audit, and also the Board in charge of investments and fostering of BUMN, especially by PMA/PMDN industries.

Article 11

If the goods securing the facilities of relief of import duty as meant in Articles 2 and 3 fail to meet the provisions on quantities, kinds and technical specifications mentioned in lists of goods upon the import, the said goods shall be subjected to the collection of import duty and other import levies without fines.

Article 12

(1) The machines, goods and materials already securing facilities of relief of import duty can only be used for the need of the relevant industries.

(2) Any misuse of machines, goods and materials as meant in paragraph (1) shall nullify the facilities of relief of import duty on the said goods, so that import duty owed must be paid and the relevant industries are subjected to a fine of 100% (one hundred percent) of the shortage.

Article 13

(1) In order to safeguard state financial rights and assure the fulfillment of the customs and excise provisions in force, the Directorate General of Customs and Excise shall audit books, records and documents of companies connected with the import and use of goods.

(2) Based on the results of the audit as meant in paragraph (1), companies shall be responsible for the settlement of import duty owed and the administrative sanction in the form of a fine.

Article 14

Companies already securing facilities of exemption from import duty on machines, goods and materials which are based on the previous provisions and do not yet realize the import wholly, can continue to use decisions on the granting of customs facilities on the basis of the previous provisions up to the expiration of validity period of the said decisions, with the provision that the facilities can not be extended or changed.

Article 15

With the enforcement of this decision, Decisions of the Director General of Customs and Excise No. KEP.01/BC/1999 and No. KEP-02/BC/1999 dated January 4, 1999 shall be declared null void.

Article 16

This decision shall be retroactive to May 1, 2000.

Stipulated in Jakarta
On June 9, 2000
THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE
sgd
R.B. PERMANA AGUNG D

Attachment to DECISION OF DIRECTOR GENERALOF CUSTOMS AND EXCISE
NO. KEP-37/BC/2000