Commentary

V17.136 Inward processing

Part V17 Customs duties

V17.136 Inward processing

V17.136 Inward processing

Inward processing (IP) enables goods which are not intended for free circulation in the UK to be imported duty-free so that they may be processed by undertakings based in the UK and then re-exported1. Inward processing arrangements are aimed at promoting exports from UK undertakings, under the international division of labour, by enabling them to import goods from without paying import duties where they are to be exported from the UK after processing, but without adversely affecting the essential interests of UK based producers. Similar principles have been settled by EC v Netherlands (Case 49/82) [1985] ECR 1195 at 1209, [1983] 2 CMLR 476 at 482, ECJ and Fabrica de Queijo Eru Portuguesa Ld v Subdirector-Geral das Alfândegas (Case C–325/96)[1997] ECR I–7249, ECJ. Beneficiaries of the inward processing procedure are required to comply strictly with their obligations under that procedure because it involves obvious risks to the correct application of the customs legislation and the collection of duties: Terex Equipment Ltd and others v HMRC (Joined cases C–430/08 and C–431/08); [2010] All ER (D) 78 (Jan).

As a general rule2, the inward processing procedure allows chargeable goods, intended for re-export in the form of compensating products, to be used in the UK in one or more 'qualifying processing activities', without such goods being subject to import duties or customs special measures3 ('the suspension system')4. The procedure may only be used, in cases other than repair and destruction, where it is possible to identify the goods placed under

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