Explanatory notes concerning protocol No 4 to the Europe Agreements

Explanatory note - Accounting segregation

(2002/C 49/04)

Conditions for the use of "accounting segregation" for the management of stocks of materials used in manufacture (referred to in Article 20(a)

1. Authorisation to use accounting segregation for the management of stocks of materials used in manufacture shall be granted to any manufacturer who submits to the customs authorities a written request to this end and who satisfies all the conditions for the grant of the authorisation.

2. The applicant must demonstrate a need to use accounting segregation on the grounds of unreasonable costs or impracticibility of holding stocks of materials physically separate according to origin.

3. The originating and non-originating materials must be of the same kind and commercial quality and possess the same technical and physical characteristics. It must not be possible to distinguish materials one from another for origin purposes once they are incorporated into the finished product.

4. The use of the system of accounting segregation shall not give rise to more products acquiring originating status that would have been the case had the materials used in the manufacture been physically segregated.

5. The accounting system must:

- maintain a clear distinction between the quantities of originating and non-originating materials acquired, showing the dates on which those materials were placed in stock and, where necessary, the values of those materials;

- show the quantity of:

(a) originating and non-originating materials used and, where necessary, the total value of those materials;

(b) finished products manufactured;

(c) finished products supplied to all customers, identifying separately,

(i) supplies to customers requiring evidence of preferential origin (including sales to customers requiring evidence other than in the form of a proof of origin), and

(ii) supplies to customers not requiring such evidence;

- be capable of demonstrating either at the time of manufacture or at the time of issue of any proof of origin (or other evidence of originating status), that stocks of originating materials were deemed available, according to the accounts, in sufficient quantity to support the declaration of originating status.

6.1 The stock balance to which reference is made in paragraph 5 final indent shall reflect both originating and non-originating materials entered in the accounts. The stock balance shall be debited for all finished products whether or not those products are supplied with a declaration of preferential originating status.

6.2 Where products are supplied without a declaration of preferential origin, the stock balance of non-originating materials only may be debited for as long as a balance of such materials is available to support such action. Where this is not the case, the stock balance of originating materials shall be debited.

6.3 The time at which the determination of origin is made (i.e. time of manufacture or date of issue of proof of origin or other declaration of origin) shall be agreed between the manufacturer and the customs authorities and be recorded in the authorisation granted by the customs authorities.

7. At the time of the application to commence using a system of accounting segregation, the customs authorities shall examine the manufacturer's records to determine opening balances of originating and non-originating materials that may be deemed to be held in stock.

8. The manufacturer must:

- accept full responsibility for the way the authorisation is used and for the consequences of incorrect origin statements or other misuses of the authorisation;

- make available to the custom authorities, when requested to do so, all documents, records and accounts for any relevant period.

9. The customs authorities shall refuse authorisation to a manufacturer who does not offer all the guarantees that the customs authorities deem necessary for the proper functioning of the accounting segregation system.

10. The customs authorities may withdraw an authorisation at any time. They must do so whenever the manufacturer no longer satisfies the conditions or no longer offers the specified guarantees. In this case the authorities shall invalidate the proofs of origin or other documents justifying origin that have been incorrectly issued.