Chapter 19. CUSTOMS ECONOMIC PROCEDURES
§2. Processing for Domestic Consumption
Article 187. Content of the Customs Procedure
1. Processing for domestic consumption constitutes a customs procedure under which imported goods are utilised in the customs territory of the Russian Federation within a designated period of time (goods processing period) for the purpose of their processing with complete conditional exemption from customs duties and taxes, subsequent release of the compensating products obtained thereof for free circulation including payment of all required duties and taxes levied on compensating products.
2. The imported goods subjected to the processing for domestic consumption shall be liable for all restrictions and prohibitions stipulated by the Federal Law of the Russian Federation on the State Regulation of Foreign Trade Activities.
Article 188. Terms of Placement of Goods under the Customs Procedure
1. Processing for domestic consumption is permitted upon permission issued by the customs office concerned (Article 192).
2. Processing for domestic consumption is permitted with regard to the goods and commodities whose register is approved by the Government of the Russian Federation.
3. Goods processing for domestic consumption is permitted in the following situations:
(1) the amounts of customs duties and taxes payable for compensating products are below those which would be charged on the day of placement of imported goods to the customs procedure for domestic consumption is such goods were released for free circulation;
(2) the customs authorities are capable of identifying imported goods in the resulting [compensating] products manufactured thereof (Article 189);
(3) compensating products cannot be restored to their original state by any economically feasible method.
4. Subject to processing for domestic consumption may be foreign goods, which have undergone other customs procedures, provided the terms and conditions stipulated by this Customs Code are observed.
Article 189. Identification of Goods in Compensating Products
1. Identification of imported goods in the compensating products manufactured thereof may be effected by the following methods provided such methods are applicable proceeding from the nature of said goods and the processing operations they are subjected to:
(1) seals, stamps, digital and other markings affixed by the declarant, processor, or customs officer to the imported goods;
(2) detailed description of imported goods, their photographic images, and scaled drawings;
(3) comparison of the results of examination of samples and specimens of the imported goods and the compensating products manufactured thereof;
(4) use of serial numbers and other markings made by the manufacturer of the imported goods.
2. The customs authorities determine the relevance of the declared method of identification of the goods, which were imported to the customs territory of the Russian Federation for processing for domestic consumption, in compensating products manufactured thereof.
3. Upon the request of an interested person and with the consent of the customs office concerned, identification of goods for customs purposes may be achieved by analysing the submitted information pertaining to raw materials, construction elements and components used for the manufacture of the imported goods, as well as the technology applied for manufacturing the compensating products thereof, or by exercising customs control throughout the whole period of goods processing operations.
Article 190. Goods Processing Operations
1. The operations applied to the goods subjected to processing for domestic consumption include:
(1) goods processing and machine-tooling operations;
(2) manufacture of new goods, including goods’ assembly or disassembly.
Article 191. Time Terms of Goods Processing Operations
1. The time required for goods processing operations shall be determined by the declarant in coordination with the customs authorities and it may not exceed one year.
2. Duration of the processing procedure for domestic consumption shall be determined proceeding from the time required for the goods processing operations, as well as the based on time required for disposal of the compensating product.
3. Upon a motivated request by the person duly authorised to effect the goods processing procedure for domestic consumption, the customs authorities may extend the initially prescribed time terms of the goods processing operations within the time limits stipulated by Item 1 herein if said person is not capable of completing the customs procedure within the initially prescribed period without violating the terms and conditions stipulated by this Paragraph for the reasons beyond his (or her) control.
4. The goods processing period begins on the day of their placement under the terms of the processing procedure for domestic consumption, or on the day when the first consignment is subjected to said procedure in case goods are imported by separate consignments.
Article 192. Permit for Processing Goods for Domestic Consumption
1. A permit for processing goods for domestic consumption is issued by a customs office based on an application submitted by an interested person (Item 1 of Article 193).
2. A permit for the processing for domestic consumption contains:
- the description, quality and quantities of the imported goods and compensating products manufactured thereof;
- the goods processing operations and their methods;
- the rate of yield of compensating products;
- the methods of identification of imported goods in compensating products;
- the time terms of goods processing;
- other information determined by the Federal Customs Authority as required for customs clearance purposes.
The form of the permit for goods processing is determined by the Federal Customs Authority.
3. A permit for goods processing remains in effect throughout the prescribed time limit of goods processing.
4. A permit for the goods processing is issued prior to placement of goods under the customs procedure of processing for domestic consumption.
5. A permit for goods processing shall not be transferred to another person.
6. The person who was issued a permit for the processing goods for domestic consumption shall be responsible for the disbursement of customs duties and taxes as per Item 2 of Article 320 of this Customs Code.
Article 193. Issuance of Permit for Processing Goods for Domestic Consumption
1. In order to obtain a permit for processing goods for domestic consumption a person shall be obliged to submit to the customs office concerned an application containing the following details:
- on the applicant;
- on the person(s) directly involved in the goods processing procedure;
- on the goods intended for processing, compensating products thereof, wastes and residues;
- on the goods processing operations, their methods and duration;
- on location of production facilities involved in goods processing operations;
- on the rate of yield for compensating products;
- on the methods of identification of imported goods in the compensating products manufactured thereof;
- on the time terms of goods processing.
2. The form of the application and the form of presentation of information contained therein is determined by the Federal Customs Authority.
The application ought to be supplemented with the documents confirming the declared information.
3. The customs office concerned consider the submitted application the documents supplemented thereto within 30 days from the day of their acceptance. Within the designated period the customs authorities verify the observance by the applicant of the established terms and conditions and pass a resolution with regard to coordinating the declared rate of yield of the compensating products, which is determined pursuant to the regulations stipulated by Article 178 of this Customs Code.
The customs office has the right to request that third parties, as well as the state agencies, provide the documents verifying the information stated in Item 1 herein. Those persons shall be obliged to furnish the requested documents within ten days from the day they receive such a request from said customs office.
Note: the customs office has the right to extend the period of consideration of the application, but for not more than two months from the date of its acceptance.
4. The customs authorities will deny a permit for the goods processing procedure only when the person who is submitting the application has not observed the terms and conditions set forth in this Paragraph, or in that event the customs authorities resolved to refuse to coordinate the declared rate of yield of the compensating products and time terms of goods processing.
Refusal by the customs authorities to issue a permit for the goods processing procedure ought to be properly substantiated and motivated. An applicant will be given a written notification with regard to the denial of said permit.
Article 194. Wastes and Residues
The wastes and residues which have formed as a result of goods processing operations, as well as remnants of the goods placed under the customs processing procedure for domestic consumption, shall be liable for the rules and requirements stipulated by Articles 183 and 184 of this Customs Code.
Article 195. Completion of the Customs Procedure
1. The goods processing procedure for domestic consumption by way of releasing compensating goods for free circulation. At the instance of their release for free circulation, the goods’ compensating products shall be liable for the customs duties and taxes calculable proceeding from the rates applicable to compensating products. The customs value and quality of the compensating products shall be determined as of the date of their declared release for free circulation.
2. With a view to promoting the development of Russian economy and stimulating the process of substitution of imported investment goods on the territory of the Russian Federation by their domestic analogues, the Government of the Russian Federation has the right to determine specific kinds of goods and/or the compensating products manufactured thereof in whose regard for the purpose of calculating the value of dutiable payments the customs value and and/or quantity of foreign goods may apply at the instance of their placement under the customs procedure of goods processing for domestic consumption.
Article 196. Peculiarities of Application of Rates Customs Duties with regard to Compensating Products
Compensating products shall be liable for the rates of customs duties effective in the country of origin of the goods imported [to the customs territory of the Russian Federation] for their processing. In the instances when goods processing involves the use of foreign goods originating from different countries, the rates of pertinent customs duties shall be applied with consideration of the following peculiarities:
(1) in case goods processing has resulted in a change of a goods’ classification code as per the Nomenclature of Goods subject to Foreign Trade on the level of any first digits, applicable to the resulting [compensating] products shall be the rates of customs duties established for the goods imported from the countries enjoying the status of a most favoured nation in trade and political relations; the rates applicable to the goods originating from a country enjoying the status of a most favoured nation in terms of its trade and political relations with the Russian Federation;
(2) in other instances, the rates of customs duties based on the country of origin of foreign goods whose customs value is highest shall be applicable.
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