What can be confirmed and what is the application procedure if we utilize the Korea Customs Service's advance ruling system regarding the fulfillment of origin criteria or the application of preferential tariffs for the goods we intend to import? Released

You inquired about utilizing the Korea Customs Service's advance ruling system to resolve uncertainties regarding the origin criteria of the goods you intend to import and the application of preferential tariffs. This system is a crucial mechanism that provides legal predictability to enable businesses to operate stably in a complex trade environment. As a customs broker, I will explain in detail what to check using this system and how the application process works.

◎ What is the advance ruling system on origin, etc.?

The advance ruling system on origin, etc., allows you to apply to the Commissioner of the Korea Customs Service for a review of unclear or questionable matters, such as whether the origin criteria are met, which form the basis for the application of preferential tariffs on specific goods. After the review, the results are communicated to you. This helps prevent potential customs disputes or the risk of additional customs payments in the future and assists businesses in utilizing customs benefits stably. The advance ruling results from the Commissioner have legal binding power, so importing goods according to these results can prevent disadvantages such as customs back taxes.

◎ Matters that can be confirmed through advance ruling

Through this system, you can clearly confirm various key matters, including whether the goods meet the origin criteria and the possibility of applying preferential tariffs, which you are curious about. Specifically, they are as follows.

• 1. Matters concerning the origin of the goods and materials used in their production: This is the most crucial element for applying preferential tariffs. You can clearly determine whether the goods meet the origin criteria (e.g., change in tariff classification, value-added criteria, processing criteria, etc.) required to benefit from a specific Free Trade Agreement (FTA). Accurate origin verification is essential in a complex global supply chain environment.
• 2. Matters concerning the classification, price, or cost determination of the goods and materials used in their production: The accurate classification of goods (HS CODE) directly affects the application of tariff rates and origin criteria. Additionally, when determining origin based on value-added criteria, verifying whether the pricing or cost estimation method of goods and materials is appropriate can solidify the basis for meeting origin criteria.
• 3. Matters concerning the calculation of value-added in the production, processing, or manufacturing process of the goods: Certain FTAs require a regional value-added ratio as an origin criterion. Through the review, you can confirm whether the value-added generated in the production process meets the criteria set by the FTA agreement and whether the calculation method is legal.
• 4. Matters concerning the refund or reduction of tariffs on the goods: In addition to applying FTA preferential tariffs, you can pre-confirm whether specific goods are eligible for tariff refunds (e.g., duty-free for re-export in original condition) or reductions (e.g., duty-free for research equipment).
• 5. Matters concerning the indication of origin of the goods: The obligation to indicate the origin of imported goods is very important. By having the indication method and content pre-reviewed for compliance with domestic laws, you can prevent issues with origin indication violations during customs clearance.
• 6. Matters concerning the application of quantity-based differential preferential tariffs under Article 3 of the Enforcement Decree of the FTA Customs Act: Some FTA agreements apply different tariff rates depending on the import quantity of specific goods. By confirming these special tariff application conditions, you can apply the correct tariff rate.
• 7. Other matters that form the basis for the application of preferential tariffs or tariff exemptions as prescribed by the Ministry of Strategy and Finance: In addition to the above six items, you can request a review of comprehensive matters that may affect the application of preferential tariffs or tariff exemptions. This shows the flexibility of the system.

By utilizing the advance ruling system in this way, you can minimize customs-related risks, increase the predictability of business operations, and ultimately reduce unnecessary costs.

◎ Advance ruling application procedure

The advance ruling application procedure can be broadly divided into document preparation and submission, review by the Korea Customs Service, and notification of results and objections. The detailed contents of each stage are as follows.

• 1. Preparation and submission of necessary documents:

  The applicant must prepare and submit the following documents to the Commissioner of the Korea Customs Service.

  • a. Application form: It must include basic information such as the applicant's information, the name of the goods, specifications, item number, etc.
  • b. Documents necessary for the advance ruling on the application content: You must submit documents containing detailed information necessary for the review, such as the transaction contract, cost calculation sheet, raw material list, process specification, etc., including the name, item number, price, and origin of the materials used in the production of the goods. These documents are crucial materials for proving the validity of the application content, so it is very important to prepare them accurately and thoroughly.

  ※ Note: A fee of 30,000 won per application item is incurred.

• 2. Review by the Korea Customs Service and notification of results:

  The Commissioner of the Korea Customs Service completes the review within 90 days (excluding the correction period) from the date of receiving the advance ruling application and notifies the applicant of the results in writing. This period may be extended for the time required for document correction (e.g., additional material requests). Since additional material requests or supplementary instructions may occur during the review process, it is important to respond promptly.

• 3. Objection:

  If you have objections to the advance ruling results, you can file an objection within 30 days from the date of receiving the notification. This is a procedure to protect the applicant's rights, providing ample opportunity to explain if there are parts of the review results that are difficult to accept.

◎ Advice from a customs broker

The advance ruling system is a very effective tool for increasing predictability and reducing customs risks for businesses in a complex trade environment. It is a system that must be considered, especially when planning to utilize an FTA or when the origin criteria for