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CIRCULAR OF THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE
NUMBER SE-23/BC/2007

CONCERNING
TECHNICAL GUIDELINES ON STIPULATION OF TARIFFS OF IMPORT DUTY IN THE FRAMEWORK OF ASEAN-KOREAN FREE TRADE AREA (FTA)

THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE,

To:

• 1. Heads of Regional Offices of the Directorate General of Customs and Excise;
• 2. Heads of Customs and Excise Primary Service Offices, and Supervision and Service Offices Throughout Indonesia

Following the issuance of Regulations of the Minister of Finance Number 75/PMK.011/2007 dated July 3, 2007 concerning Stipulation of Tariffs of Import Duty on Imported Goods in the Framework of ASEAN-Korea Free Trade Area (AK-FTA) and Number 131/PMK.011/2007 dated October 30, 2007 concerning the Amendment to Regulation of the Minister of Finance Number 75/PMK.011/2007 concerning Stipulation of Tariffs of Import Duty in the Framework of ASEAN-Korea Free Trade Area (AK-FTA) as well as in order to execute the Regulations of the Minister of Finance, we hereby provide technical guidelines as follows:

1. Definition

In this Circular, referred to of:

• a. Certificate of Origin Form AK is Certificate of Origin used to prove that products/goods come from Korea and countries joining in ASEAN in implementing the tariff preferential scheme of ASEAN-Korea FTA;
• b. Back-to-back Certificate of Origin is Form AK that is published by the second exporter country (mediator country) according to Form AK that was published by the first exporter country. The usage and function of back-to-back certificate of origin is same with Form AK as intended in paragraph a.

2. Products included into tariff preferential scheme of ASEAN-Korea FTA

Products included into the tariff preferential scheme of ASEAN-Korea FTA are regulated in Regulation of the Minister of Finance Number 75/PMK.011/2007 dated July 3, 2007, The Regulation of the Minister of Finance stipulates the imposition of prefere9tial import duty tariff f on each product.

For certain products at remark column from the attachment to Regulation of the Minister of Finance there is asterisk (*).

Mean of the asterisk sign that the burden of preferential tariff shall not take effect for import goods from Korea. On import goods that are asterisk sign from Korea is subjected the general tariff burden (MFN).

The charge of general entrance customs tariff is a realization of reciprocities principle (both sides principle) because Korea is grouping the goods in goods list of Sensitive Track (ST) or Highly Sensitive Track (HSL) while Indonesia is grouping in Normal Track.

On import goods from Indonesia at Korea is subjected the general tariff burden, not preferential tariff. Because Korea is regulating the general entrance customs tariff, than according with Agreement on Trade in Goods ASEAN-Korea that had been ratified with Regulation of the President Number 12 of 2007, Indonesia is allowed to execute the reciprocities principle by subjecting the general entrance customs tariff on goods from Korea that is imported to Indonesia.

3. Certificate of Origin (SKA)

• a. SKA in the framework of tariff preferential scheme of ASEAN-Korea FTA uses the document of Form AK that is published and signed by the authorized functionary at local country where the export is executed.
• b. Form AK is made in English language, size of paper is A4, and consisted from 3 (three) sheets, original sheet and both of its copy. Three of Form AK is white. Original sheet is sent by the producer and/or exporter to the importer to be delivered to customs and excise at importer country. Second sheet for publisher institution at the exporter country while the third sheet for producer and/or exporter.
• c. In each sheet of Form AK is mentioned the reference number. Form sample of Farm AK is enclosed at this Circulation Letter.
• d. The issuer country of Form AK is sending the list of Form AK that had been published to customs and excise at the importer country in gradually. The list is consisted for example reference number, and publishing date of Form AK, producer and/or exporter and goods detail.
• e. Form AK is effective for 6 (six) months as from the date of issuance.
• f. Form AK is published when exporting or as soon as after it.
• g. In the case of any mistake being not disclosed, or if reason being accountable, Form AK can not be issued upon exporting or as soon as after it, Form AK shall be published and takes effect again for one year, as from the shipping date. For this matter, at Form AK is given the note/stamp "issued retroactively".
• h. In case Form AK is lost or broken before it is delivered to the customs and excise office for the import settlement, the producer and/or exporter shall propose the application to the issuer institution to issue the copy from the original of Form AK according to the export document. Copy of Form AK as the substitutes of the lost of Form AK or broken and shall be given the stamp ‘CERTIFIED TRUE COPY”, and given the date according with the publishing date of the lost or broken of Form AK. This substitute of Form AK is published at least one year since the publishing date of the lost or broken Form AK;

4. Execution of tariff preferential scheme

Tariff preferential scheme in the framework of ASEAN-Korea FTA is given with the provision:

• a. Shall take effect according to the both sides principle;
• b. Entrance customs tariff as stipulated in Regulation of the Minister of Finance Number 75/PMK.011/2007 dated July 3, 2007 is only took effect to the gods from Korea and ASEAN that is completed with Form AK that has been signed by the authorized functionary;
• c. Importer obliges to mention the facility code of tariff preferential and reference number of Form AK in Import declaration (PIB);
• d. Original Form AK is delivered by the importer to the Main Service Office (KPU) or Customs and Excise Supervision and Service Offices (KPPBC) at the entry port upon submitting PIB (enclosed to PIB);
• e. In case Form AK is given to KPU or KPPBC through the period of its effectiveness (6 months), KPU or KPPBC shall take it as long as the lateness is attributable to force majeure or other responsible cause and beyond control of producer and/or exporter of the said imported goods.

5. Things that importers need to execute

Importer accepts the original form of Form AK for the imported goods in the framework of tariff preferential scheme of ASEAN-Korea FTA. Next for the import settlement, the importer prepares:

5.1. PIB.

The filling of PIB columns is executed by following the filling guidance as has been regulated at Decision of the Minister of Finance Number 101/KMK.05/ 1997, excluding for column 19, 32, and 34 is written/ told as follow:

• a. Column 19 regarding the decision on facility of import requirement fulfillment is written:
• a.1. facility code of tariff preferential for importation in the framework of ASEAN-Korea FTA, is number 55, and
• a.2. reference number and date of Form AK.
• b. Column 32 regarding tariff post/HS; is written tariff post of related import goods according to the Indonesian Customs Tariff Book Tariff (BTBMI).
• c. Remembering the number of tariff post, goods type and product burden that are including in the tariff preferential scheme of ASEAN-Korea FTA has not entered in the system of import application, than column 34 concernng tariff and facility: is written the amount of entrance customs tariff of related import goods according to the general entrance customs tariff (MFN) than next to it is written BBS (abbreviated from free) is followed with “dispensation percentage” to obtain the preferential entrance customs tariff of ASEAN-Korea FTA.

Sample:

Import goods in the form of AC air cooler machine, separate model (split system) the tariff post 8415.10.00.00, general entrance customs was 15% (BTBMI 2007). In the framework of ASEAN-Korea FTA, based on the Regulation of Minister of Finance Number 75/PMK.011/2007 dated July 3, 2007, the preferential entrance customs was 8%.

The goods was fulfilled the requirement to be given the tariff preferential facility with the proof of Form AK that was signed by the authorized functionary. column 34 concerning tariff and facility was filled as follow.

The amount of general entrance customs tariff (MFN) of related import goods according to BTBMI.

Then was written “BBS” was followed with “dispensation percentage” to obtain the preferential entrance customs tariff of ASEAN-Korea FTA.

Remarks:

Number 46,66% is obtained by formula:

(General entrance customs (15%) - preferential entrance customs (8%)) / General entrance customs x 100% = 46,66%

d. Import Duty is calculated and paid according to the entrance customs tariff in the framework of the preferential of ASEAN-Korea FTA that is regulated by Regulation of the Minister of Finance Number 75/PMK.011/2007 dated July 3, 2007.

5.2. Form AK

Original sheet of Form AK for related import goods is enclosed at PIB and delivered to KPPBC at goods entrance.

6. Examination and decision of official stipulating the tariff

Official stipulating the tariff, which accepts PIB enclosed with Form AK undertake administrative examination as follow:

6.1. PIB.

• a. Has been enclosed to original Form AK or Form AK that has been given the stamp "ERTIFIED TRUE COPY";
• b. Type and amount of the goods that are mentioned in PIB, the result of goods checking (for PIB that is served with red line) and Form AK there is a suitable uncovered;
• c. Type of goods that are mentioned including the goods that are obtaining the facility of tariff preferential of ASEAN-Korea FTA as stipulated in Regulation of the Minister of Finance Number 75/ PMK.011/2007 dated July 3, 2007 (including in Normal Track of ASEAN-Korea FTA);
• d. Distributor name and Importer that were mentioned in PIB and Form AK there was a suitable uncovered;
• e. Column 19 of PIB has been filled the facility code of tariff preferential and reference number of Form AK;
• f. Column 34 of PIB has been filled correctly according to number 5.1 (c);
• g. Entrance customs that has been calculated and paid is suitable with the entrance customs tariff in the framework of preferential scheme of ASEAN-Korea FTA.

6.2. Form AK.

• a. Original sheet has been enclosed at related PIB;
• b. Has been signed and given the position stamp by the authorized functionary as stipulated in the list of authorized functionary is signing the Form AK from the source country of related goods;
• c. Adjusting the signature and position stamp of the authorized functionary that is signing Form AK with the sample of signature specimen and related position and there is a suitable uncovered;
• d. Columns at Form AK has been filled with the suitable statement that was mentioned in PIB and customs complement document (for example invoice or packing list);
• e. Column S of Origin Criterion has been filled with the origin criteria as meant in the note at the back of Form AK (example WO for Wholly Obtained criteria, CTH or RVC 40% for Change to Tariff Heading or Regional Value Content 40%);
• f. No doubtful its legalization. Legalization indication of Form AK is doubted as follow:
• f.1. paper size and color are not suitable with the paper size that is stipulated as referred at number 3 (b);
• f.2. format of Form AK is not suitable with the format that is stipulated as enclosed at this Circulation Letter;
• f.3. Origin country is doubted
• Origin country is doubted is only in Customs and Excise is having the real evidence (example written information) that has been assured its correctness for example from:
• - company/certain industrial association at overseas/place where the goods are made or the company/domestic industrial association;
• - government institution in domestic/overseas;
• - the intelligent development result of the Directorate General of Customs and Excise; and/or
• - the result of book checking,
• that the correctness of source country is doubtful is do not fulfill the provision that is regulated in Rules of Origin of the ASEAN-Korea FTA.
• Minor discrepancies between Form AK with PIB and/ or customs complement document, the discrepancies do not cause the Form AK is not valid.
• Sample of little difference for example:
• (i). written mistaken of town name/place that is easily can be known the correct of town name/place;
• (ii). mentioning mistaken of HS tariff post,

than the Functionary that stipulates the tariff gives the tariff preferential. Next, the Functionary that stipulates the tariff gives the note regarding the preferential giving at Form AK of original sheet at column 4 (for official use) and sign it. The note in the form V at the stipulated box is at column number 4 of Form AK.

|        |Preferential Treatment Not Given
|        |(Please State reason/s)

Jakarta, July 1, 2007
Suroso
(name and signature)
Import Specialist of Customs District Office of Tanjung Priok, Jakarta, Republic of Indonesia
,...................................................
Signature of Authorized Signatory of the Importing Country

While, if the research result is showing that the tariff preferential scheme can not be given, than the Functionary stipulates the tariff:

• a. stipulates the entrance customs tariff according to the general tariff (MFN);
• b. publishes the Correction Note (Notul) to collect the less payment of entrance customs and tax in the framework of import (PDRI) in relation with the rejection of tariff preferential;
• c. gives the note regarding the rejection of tariff preferential giving at column 4 of Form AK and sign it.

Sample:

4. For Official Use

l     l Preferential Treatment Given Under ASEAN-China Free Trade Area Preferential Tariff

l  v  l Preferential Treatment Not Given (Please State reason/s)

Sample of reason:

• - Form AK is not signed by authorized official of the exporting country;
• - The importer does not declare on the import document that he claims for tariff concession under ASEAN-Korea FTA;
• - There is no conformity with respect to the name of importer or/and exporter stated on the Import document and Form AK;
• - The physical inspection shows that the description of the goods do not conform with those stated in the Form AK

Jakarta, July 1, 2007
Suroso
(name and sign)
Import Specialist of Customs District Office of Tanjung Priok, Jakarta, Republic of Indonesia
,...................................................
Signature of Authorized Signatory of the Importing Country

Form AK that has been given the rejection note of tariff preferential giving at the copy and original sheet is sent to the publisher country at least two months since the date of tariff stipulation, while the copy sheet is enclosed/attached at PIB.

Specially for the research result that is showing the legalization of doubtful Form AK, than the Functionary stipulates the tariff:

• a. stipulates the tariff according to the general tariff (MFN);
• b. tells the importer to put the guarantee on the less of entrance customs payment and tax in the framework of import;
• c. sends the original sheet of Form AK, copy of PIB, and the result of physics checking, complement document, customs and report (justification) regarding doubtful on the legalization of Form AK to the Central Office cq. Technical Directorate of Customs.

Next in case the decision has been obtained from the Central Office of DJBC on the matter that:

• a. facility of tariff preferential of ASEAN-Korea FTA is given, than the guarantee is returned; or
• b. facility of tariff preferential of ASEAN-Korea FTA is not given, than the guarantee is liquefied/identified becomes state acceptance.

7. Settlement process of Form AK legalization is doubted at Technical Directorate of Customs

After the file of the matter of Form AK legalization is accepted, the Technical Director of Customs executes the re research steps as stipulated in Rule 14 and 15 of Operational Certification Procedures for the Rules of Origin of the ASEAN-Korea FTA, is tells, the publisher country of SKA to execute retroactive check and if needs to visit the country to execute the verification visit. The result of retroactive check or verification visit is in the form of the giving decision or rejection of tariff preferential of ASEAN-Korea FTA. The decision is immediately delivered to the Functionary that stipulates the tariff at KPU or KPPBC to be followed up.

8. Restitution

Regulation of the Minister of Finance Number 75/ PMK.011/2007 dated July 3, 2007 regarding the Stipulation of Tariffs of Import Duty on Imported Goods in the framework of ASEAN-Korea Free Trade Area (AK-FTA) and Number 131/PMK.O11/2007 dated October 30, 2007 regarding the Amendment to Regulation of the Minister of Finance Number 75/PMK.011/2007 regarding Stipulation of Tariffs of Import Duty in the framework of ASEANKorea Free Trade Area (AK-FTA) applies to imported goods having PIB already securing registration number from KPU or KPPBC in the entry port since the effective date of the Regulation of Minister of Finance , July 1, 2007, the goods imported from Korea and ASEAN countries as from July 1, 2007, which fulfill the requirements to obtain the tariff preferential scheme of ASEAN-Korea FTA, shall be given restitution of import duty. Technical Guidelines for restitution of import duty are in accordance with the effective provisions.

Especially for restitution of import duty in the framework of tariff preferential scheme of ASEAN-Korea FTA the application is completed with the original form of Form AK or that has been given the stamp CERTIFIED TRUE COPY. Needs to be attention that the column 19 of PIB does not fill with the facility code of tariff preferential and reference number of Form AK can not become the reason to not serve the returning application.

9. Audit of Bookkeeping

KWBC and KPU verify and audit of bookkeeping of the importation with tariff preferential scheme in the framework of ASEAN-Korea FTA with the purpose to assure that the transaction and the entire of bookkeeping related with the transaction show that the related imported goods come from ASEAN-Korea.

In case the result of the audit of booking showing that the imported goods do not come from ASEAN-Korea and/or the legalization of Form AK is doubtful, KPU and KPPBC executes the following steps:

9.1. KPU

• a. the imported goods not coming ASEAN-Korea FTA, stipulation of tariff based on ASEAN-Korea FTA preferential tariff is cancelled, the tariff is stipulated according to the general tariff (MFN) and underpaid import duty and taxes in the framework of import are collected;
• b. the legalization Of Form AK is doubtful (not legalization abash as stated in paragraph 6) problem will be bring to the Head Office of DJBC cq. Technical Directorate of Customs.

9.2. KWBC

• a. the Imported goods not coming from ASEAN-Korea, KWBC inform KPPBC overseeing the importing place of goods that the tariff stipulated according to the tariff preferential scheme of ASEAN-Korea FTA is cancelled and the tariff is stipulated according to the general tariff (MFN) and KPPBC is asked to collect underpaid import duty and taxes in the framework of the import;
• b. Legalization of Form AK is doubtful (indication of legalization and/or correctness of source country is doubtful as stipulated at number 6), the matters is being followed up to Central Office cq. Technical Directorate of Customs.

10. Reporting

According to Rule of Origin ASEAN-Korea FTA, each member country of ASEAN-Korea FTA importing goods by using the tariff preferential scheme of ASEAN-Korea FTA is obliged to make the usage report of Form AK. The reported substance is the quantity of Form AK which are accepted, number of HS tariff post (4 digit) and value of CIF in US dollar. The report is made every 3 (three) months, and sent to Secretariat ASEAN to be compiled.

Form of the report as follow:

REPORTING COUNTRY INDONESIA
PORT OF ENTRIES (NAME OF PORT) ................
PRIOD REPORTED
TOTAL NUMBER OF COs RECEIVED: ..............
TOTAL TRADE VALUE OF COs: ..............
RECEIVED

Remark:

- Column:

• (1) To be completed by country of origin of goods
• (2) To be completed by the quantity of Form AK accepted
• (3) To be completed by tariff headings 4 digit HS/AHTN
• (4) To be completed by the amount of CIF value in USD mentioned in Form AK.

- COs is abbreviation to Certificate of Origins (Form AK).

The provision regarding the procedure of report making of Form AK usage shall be furthermore regulated by itself.

11. Other of goods

Form AK that is filled with more than of one type

If in one Form AK there is more than one type of goods, and the research result shows that is a matter at one or more of type of goods can be used as the reason to not give the tariff preferential to another type of goods at Form AK.

12.Attachment to Circulation Letter

Enclosed is in this Circulation Letter, sample of Form AK that is used in the framework of tariff preferential scheme of ASEAN-Korea FTA.

This is for implementation in a full sense of responsibility.

The Director General,
signed,.
AN WAR SUPRIJADI
NIP 120050332