CIRCULAR OF THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE
No. SE-05/BC/2010

CONCERNING
TECHNICAL GUIDANCE FOR VERIFYING IMPORT NOTIFICATION DOCUMENTS WITHIN THE FRAMEWORK OF FREE TRADE AGREEMENT SCHEME

THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE,

Attachment

To:

• 1. Heads of Regional Customs and Excise Offices,
• 2. Heads of Main Service Offices
• 3. Heads of Customs and Excise Service and Control Offices all over Indonesia

In line with the participation of Indonesia in Free Trade Agreement schemes, both in the scope of bilateral and regional ties, we send you technical guidance for verifying goods import notification (PIB) under the framework of Free Trade Agreement schemes as follows:

1. General Provisions and Definitions

Referred to in this Circular as:

a. "Free Trade Agreement" refers to an agreement between two or more countries in the economic sector, covering among others reduction and! or abolition of tariffs in goods trading.

b. "AFTA (ASEAN Free Trade Area)" refers to an agreement reached by ASEAN member states to form a free trade zone in order to improve the regional economic competitive edge of ASEAN by turning ASEAN into a world production hub.

c. "CEPT (Common Effective Preferential Tariff)" refers to a scheme to realize AFTA by reducing tariffs to up to 0 - 5% and abolishing quantative restrictions and other non-tariff barriers.

d. "ATIGA (ASEAN Trade In Goods Agreement)" refers to a goods trade agreement scheme among ASEAN member states which will function as a substitute for CEPTscheme.

e. "ACFTA (ASEAN-China Free Trade Area)" refers to an agrement among ASEAN member countries to form a free trade area with China.

f. "AKFTA (ASEAN-Korea Free Trade Area)" refers to a framework agreement on comprehensive economic cooperation between the governments of ASEAN member countries and the Republic of Korea.

g. "IJ-EPA (Indonesia-Japan Economic Partnership Agreement)" refers to bilateral economic cooperation between Indonesia and Japan covering 11 fields or groups of agreement including trade,in goods, rules of origin and customs procedure.

h. "Rules of Origin" refers to criteria that must be met for a type of export goods to issue its certificate of origin by the government in the country of origin according to rules based on an agreement.

i. "Certificate of Origin, hereinafter called as SKA" refers to a document showing that a type of goods has met the rules of origin and functioning as a means to get preferential tariff according to respective agreement.

j. "Third Country Invoicing" refers to an invoice issued by companies located in FTA member countries or non FTA member countries in the interests of exporting companies located in FTA member countries. At present it only applies to AFTA, AKFTA and IJ-EPA schemes.

k. "Back-to-back Certificate of Origin" refers to SKA issued by the intermediate exporting party member state based on SKA issued by the first exporting member state.

l. "Issued Retroactively" refers to the subsequent issuance of true SKA, namely issued 3 (three) days after the date of shipment up to 1 (one) year, caused by unintentional errors, or other accountable reasons so that SKA cannot be issued at the time of exporting.

m. "Certified True Copy" refers to a sign put in a copy of SKA as a substitute for true SKA lost or damaged before being submitted to the customs office at the port of entry for import settlement, and given a date according to the issuance date of the lost or damaged true SKA and issued no later than 1 (one) year since the issuance date of the lost or damaged true SKA.

n. "Retroactive Check" refers to a request for information by the importing country about the validity of SKA and the fulfilment of criteria of rules of origin from the exporting country, aimed at ensuring that the imported goods deserve to receive preferential tariffs.

o. "Verification Visit" refers to the verification of imported goods conducted by paying a visit to the exporting country if the results of retroactive check are considered unsatisfactory, and the ruie only applies to CEPT-AFTA, At{FTA and IJ-EPA schemes.

2. Products included in the preferential tariff scheme within FTA framework

Products included in the preferential tariff scheme are provided for in Regulation of the Minister of Finance. The Regulation of the Minister of Finance stipulates the charging of preferential customs tariffs for each product.

3. Certificate of Origin (SKA)

a. SKA within the framework of CEPT-AFTA preferential tariff scheme uses a document Form D, ACFTA uses document Form E, AKFTA uses document Form AK, and IJ-EPA uses document Form JIEPA issued and signed by authorized officials in the countries where exports are conducted.

b. Form SKA is made in English, using ISO A4 size paper, with the number of sheets and appropriation as follows:

• 1) SKA Form D, Form AK and Form JIEPA consist of 3 (three) sheets, namely one original and two copies (duplicate and triplicate). The original sheet is sent by the exporter to the importer for conveyance to the customs office at the port of entry (the importing country). The duplicate is for the issuing agency in the exporting country and the triplicate for the exporter.
• 2) Form E consists of 4 (four) sheets:
• a) original: beige/light brown (pantone color code 727c);
• b) duplicate: light green (pantone color code 622c);
• c) triplicate: light green (pantone color code 622c);
• d) quadruplicate: light green (Pantone color code 622c).
  The original and triplicate are sent by the exporter to the importer for conveyance to the customs office at the port of entry (the importing country). The duplicate is for the issuing agency in the exporting country and the quadruplicate for the exporter.

c. Each sheet of SKA carries reference number. Examples of the model of each SKA are attached to this Circular.

d. In case of specific reasons, SKA cannot be issued at the time of shipment or in the next 3 (three) days, at the request of the exporter or the appointed agent, SKA can be issued and made retroactive to one year since the date of shipment. In this case, SKA must bear a note/stamp "ISSUED RETROACTIVELY". But to obtain preferential tariffs within the FTA framework provisions in point 4 must constantly be followed.

e. If SKA is lost or damaged before being submitted to the customs and excise office for import settlement, the exporter or appointed agent can apply to the issuing agency for new SKA based on export documents. The new SKA carries a stamp "CERTIFIED TRUE COPY", new reference number, and number and issuance date of lost and damaged SKA. The validity period of new SKA is the same as the lost or damaged SKA. The substitute SKA is issued no later than one year since the issuance date of the lost or damaged SKA;

f. Invoice number contained in SKA may be different from that attached to PIB document. The SKA can constantly be accepted as the basis for the granting of preferential tariffs, provided the linkage of transactions involving the third party, either in the same or different country, can be proven. For transactions involving third party outside the country of the exporter:

• 1) SKA Form D and Form AK are given a (check mark) mark in the box "Third Country Invoicing" and in column 7 (below the description of goods) carry information on the name and country of the party issuing the invoice.
• 2) SKA Form JIEPA in column 8 carry information "Third Country Invoicing" and the name and address of the party issuing the invoice.
• The above provisions currently only apply to CEPT-AFTA, AKFTA, and IJ-EPA schemes, and not to ACFTA scheme.

g. In case of errors in filling SKA, the wrong part must not be omitted but must be stricken out and corrected by putting the signature of the authorized official.

4. Implementation of preferential tariff scheme

Preferential tariff scheme within the FTA framework is given on condition:

a. Importer must put the facility code of preferential tariff and reference number of SKA in PIB.

b. Importer must send SKA sheets with the format and appropriation as described in point 3 b. to the customs office at the port of entry at the time of applying for PIB (attached to PIB).

5. Verification and Decision of Document Verifying Official.

a. Verification of PIB

• 1) Beside PIB customs complementary documents must be attached as specified in the customs procedure in the import sector, PIB must also be accompanied by SKA Form D (original) or Form E (original and triplicate), or Form AK (original), or Form JIEPA (original) or each of SKA given a stamp "CERTIFIED TRUE COPY";
• 2) The type and quantity of goods notified in PIB, the results of physical inspection (for PIB served through the red lane) and SKA are found suitable;
• 3) The type of goods notified include goods granted preferential tariff facilities as specified in Regulation of the Minister of Finance for each of the FTA schemes;
• 4) Name of supplier and importer notified in PIB and SKA is found suitable;
• 5) Column 19 of PIB has been filled with:
• for PIB using FTAfacility only, facility code of preferential tariff is filled with the following figures:
• - CEPT AFTA, namely 06;
• - ACFTA, namely 54;
• - AKFTA, namely 55;
• - IJ-EPA, namely 56;
• And reference number and date of SKA.
• 6) Column 34 PIB has been filled correctly according to the customs tariff of the relevant imported goods based on the preferential tariffs as specified in the Regulation of the Minister of Finance for each of the FTA schemes;
• 7) Import duties have been calculated and settled according to the import duties as specified in the Regulation of the Minister of Finance for each of the FTA schemes.

b. Verification of SKA

• 1) The original (SKA Form D, Form AK and Form JIEPA) or the original and triplicate (Form E) have been attached to the relevant PIB.
• 2) Already signed by the authorized official as specified in the list of officials authorized to sign SKA from the country of origin and stamped officially.
• 3) Comparing the signature of the official authorized to sign SKA and official stamp with the relevant specimen signature and official stamp.
• 4) Columns in SKA have been filled with appropriate statements as specified in PIB and customs complementary documents (for instance, invoice and packing list).
• 5) Checking bill of lading to see whether imported goods are directly shipped or transhipped. If transshipped, additional information must be requested from the importer to see to it that during the transshipment there is no process other than loading, unloading and effort to keep the quality of goods and trade is not conducted.
• 6) Comparing the issuance date of SKA with the date of shipment contained in B/L. If SKA is issued 3 (three) days after shipment it must carry a stamp "ISSUED RETROACTIVELY". Otherwise, preferential tariffs can not be given.
• 7) Column 8 Origin Criterion (in SKA Form D, Form Eand Form AK) or column 5 Preference Criterion (in Form JIEPA) have been filled with origin criterion. For example, WO for Wholly Obtained, CTH for Change Tariff Heading or RVC 40% for Regional Value Content 40%, or other criteria as referred to in notes overleaf of each SKA.
• 8) The validity is not doubted.
  Indications of suspicious SKA validity include:
• a) paper size and format of SKA do not accord with provisions as described in information on SKA of each FTA.
• b) signature of the official authorized to sign SKA and official stamp are not the same as specimen signature and official stamp concerned.
• c) Criteria of rules of origin are doubted, only if the customs and excise office has concrete evidence, for instance, written information believed to be true, among others from:
• - certain overseas companies/industrial associations/places where goods are produced or domestic companies/industrial associations;
• - domestic/foreign government agencies;
• - the results of investigation developed by the intelligence unit of the Directorate General of Customs and Excise; and/or
• - the results of acconting audit.
• 9) Minor discrepancies between SKA and PIB and/or customs complementary documents, the discrepancies do not lead to SKA being considered invalid. The minor discrepancies result among others from miswriting in SKA regarding description of goods, name and/or address of exporter, name of transport means, and/or other discrepancies the truth of which can easily be identified through customs complementary documents (invoice, BL/AWB, packing list). Examples of discrepancies that can be categorized as minor discrepancies include:
• - Hot Dip Coated AI-Zn 555pct in coil is written in description of goods in SKA, while in the customs complementary document it is written Hot Dip Coated AI-Zn 55pct in coil.
• - Name of exporter in SKA is written Chung Hung Steel Company Ltd., while in the customs complementary document it is written Chung Hung Steel Corporation Ltd.

c. Decision of the Document Verifying Official

If the results of verification show that:

1) Appropriate and the validity of SKA is not doubted:
The document verifying official receives preferential tariffs and puts a check mark in the box Preferential Treatment Given in column 4 SKA Form D, Form E and Form AK and signs them.

• Example:
• 4. For Official Use
• [check] Preferential Treatment Given Under..................................
• Free Trade Area Preferential Tariff
• [     ] Preferential Treatment Not Given (Please state reason/s)
• Jakarta, January 2010
• (name and signature)
• Position
• ...................................................................................................
• Signature of Authorized Signatory of the Importing Country

2) Preferential tariff scheme can not be given:

a) Giving a mark in a box is not accepted (preferential treatment not given), in column 4 SKA Form D, Form E and Form AK, accompanied by reason for rejection (in English) and signature of the document verifying official;

• Example:
• 4. For Official Use
• [     ] Preferential Treatment Given Under............................
  Free Trade Area Preferential Tariff
• [check] Preferential Treatment Not Given (Please State reason/s)
• ..................................................................................
• Example of reasons:
• CoO is not signed by authorised official of the exporting country,
• or: The importer does not declare on the import document that the importation is under the scheme of tariff concession of FTA.
• or: There is no conformity with respect to the name of importer or/and exporter stated on the import document and CoO.
• or: The physical inspection shows that the description of the goods do not conform with those stated in the CoO.
• Jakarta, February 2010
• (name and signature)
• .................................................................
• Signature of Authorised Signatory of the Importing Country

b) Issuing Tariff and Customs Value Assessment Form (SPTNP) for difference between underpaid import duties and PDRI based on common tariffs (MFN).

3) In case of early indications leading to the validity of SKA and rules of origin being doubted, after administrative verification:

• a) Document verifying official issues SPTNP as much as the difference between underpaid import duties and PDRI based on common tariffs (MFN).
• b) Reporting to the Head of KPU/KPPBC and later to the Head of KPU/KPPBC to write a letter to the SKA issuing authority signed by the Head of KPU/KPPBC, with copies addressed to the Directorate of Technical Customs, the Directorate of Intemational Customs, the Directorate of Customs and Excise Receipts and Regulations/Units Handling Objections and the Directorate of Investigation containing:
• (1) notifying that the validity of SKA is doubted, along with the reasons;
• (2) asking for confirmation on the validity of SKA.
• Photocopies of SKA are attached to the letter.
• c) If company or importer objects to the issuance of SPTNP, it can lodge an objection according to the rules.
• d) In case of PIB of red lane and yellow IP lane, document verifying official issues SPPB on condition:
• (1) If SPTNP is paid without lodging an objection, SPPB is issued after evidence of payment (SSPCP) has been received.
• (2) If an objection is lodged, SPPB is issued after the objection has been actepted according to the rules.

4) If the Head of KPU/KPPBC has received confirmation on the validity of SKA from the SKA issuing authority, the confirmation must later be sent to the Unit Handling Objections, with copies addressed to the Directorate of Technical Customs, the Directorate of International Customs, and the Directorate of Investigation.

5) In case of strong clue or early evidence of criminal offence (for instance, document forgery), document verifying official sends the relevant import documents to the Customs and Excise Official at the Control Unit.

6. Official Handing Objections

• a. May ask for repeat confirmation to the SKA issuing authority by referring to the previous letter by the Head of KPPBC/KPO requesting confirmation, if no confirmation on the validity of SKA has yet to be received.
• b. May directly decide the objection according to his/her duties and functions in verifying objections.

7. The use of SKA is not valid in:

• a. FTZ for release to other place in a customs area (TLDDP);
• b. TPB (not including bonded warehouse) and KITE for release to DPIL.

8. To apply FTA in border areas, provisions related to the relevant FTA are valid but the official must prioritize control related to ban/restriction.

9. Attachment to Circular

Attached, find specimen form used within the FTA preferential tariff scheme, along with examples of cases and analyses of solving problems related to the implementation of FTA..

When this Circular begins to take effect, Circular of the Director General of Customs and Excise No. SE-01/BC/2010 dated January 15, 2010 on the Verification of Certificates of Origin (SKA) of Imported Goods within Free Trade Agreement Schemes and Circular of the Director General of Customs and Excise No. SE-03/BC/2010 concerning The Affirmation of point 5 in Circular of the Director General of Customs and Excise No. 01/BC/2010 are declared null and void.

This is for your implementation with full responsibilities.

Stipulated in Jakarta
on March 23, 2010
THE DIRECTOR GENERAL
signed,
THOMAS SUGIJATA
NIP 19510621 197903 1 001

Copies to:

• 1. Minister of Finance,
• 2. Echelon II Officer in Head Office of DJBC environment.