Is it possible to get help from customs with the pre-assessment of required raw material quantities for export products, as the calculation is complex? What are the application procedures, required documents, assessment period, and validity period? Released

If you are experiencing difficulties due to the complexity of calculating the raw material requirements for export products, you can receive assistance through the Customs Service's 'Pre-Assessment of Requirements' system. This system is a useful service designed to enhance the accuracy and transparency of customs refund operations and to alleviate the burden on companies.

Customs refunds for raw materials used for export are based on the "Special Act on Customs Refunds for Raw Materials for Export," and according to Article 10-2 of this law, companies can apply to the customs office for a pre-assessment of the appropriateness of the raw material requirements and calculation methods for the export products before applying for a refund. This is a key procedure that helps to preemptively resolve the risk of non-recognition of requirements that may arise during the refund assessment process and supports companies in receiving refunds stably.

The calculation of requirements is the process of accurately identifying the amount of raw materials actually used in the production of export products, considering various factors such as the production process by item, production volume, loss rate, and byproduct occurrence, making it a very specialized and complex task. Especially when multiple types of raw materials are used, the process is complex, or the production unit is large, accurate calculation of requirements becomes more difficult. If the requirements are overestimated, it may be considered an unjust refund, subject to recovery and additional tax, while underestimation may result in not receiving the rightful refund amount. The pre-assessment of requirements greatly contributes to minimizing refund risks and increasing predictability.

Application Procedure and Required Documents for Pre-Assessment of Requirements

To apply for a pre-assessment of requirements, you must submit the forms specified in the "Notice on the Calculation and Management of Requirements and Assessment" to the customs office in charge of refunds. The main documents are as follows:

• Attachment No. 5 Form ‘Pre-Assessment Application for Requirements’
• Attachment No. 6 Form ‘Explanation of Goods and Requirements Calculation Details’

In addition, it is helpful to prepare and submit materials that can objectively prove the company's production process, input raw materials, production volume, etc., such as BOM (Bill of Materials), Flow Chart, Production Log, Raw Material In/Out Ledger, Test Report, Basis for Loss Rate Calculation. Especially, the explanation of goods and requirements calculation details is a key document that presents the logical basis for the calculation of requirements, so it is important to write the names, specifications, requirements, and calculation basis of the raw materials used in each product in detail and clearly.

Assessment Period and Validity Period

The assessment period for the pre-assessment of requirements is within 30 days from the date the customs office receives the application. However, if on-site verification (a procedure where customs officers visit the company's production site to verify the process and requirements) is necessary, the assessment period can be extended to 50 days. The validity period of the pre-assessment results is 1 year from the date you receive notification of the assessment results. If you apply for a refund for the relevant item within the validity period, you can apply the pre-assessed requirements to the refund assessment, which greatly enhances the efficiency of the company's refund operations. It is advisable to apply for reassessment if there is a significant change in the production process or raw material input method at the expiration of the validity period.

Importance of Requirements Calculation and Tips for Utilizing Pre-Assessment

Since requirements are a key criterion for customs refunds, it is important to consider the following when calculating:

• Accurate Data Basis: It is important to precisely record and manage all relevant data such as input volume, loss rate, and byproduct occurrence in the actual production process.
• Reasonable Calculation Method: Requirements can generally be applied using one or a combination of Actual Requirements Calculation Method (based on the actual performance of produced products and required raw materials), Standard Requirements Calculation Method (calculated based on reasonable production standards), or Official Requirements Calculation Method (based on engineering formulas such as design drawings, chemical formulas, etc.). You should choose the method that is most suitable and objective for the company's production characteristics.
• Appropriateness of Loss Rate: The loss rate, which is the natural loss occurring due to the characteristics of raw materials (e.g., liquid, powder, etc.) and the characteristics of the production process (e.g., cutting, heating, evaporation, etc.), is a very important factor. The loss rate should be proven with objective data (test reports, past performance data, process analysis data, etc.) to ensure it is not excessively accounted for.

Through the pre-assessment of requirements, companies can officially receive recognition from customs for the appropriateness of requirements calculation, significantly reducing uncertainties that may arise during subsequent refund assessments or post-assessments. This also has the effect of reducing the burden on the company's refund operations personnel regarding the expertise and accuracy of requirements calculation, allowing them to focus more on their core tasks.

Therefore, if you have difficulties in calculating requirements or want more stable refund operations, it is recommended to actively utilize this pre-assessment system. If necessary, it is also a good approach to seek the help of a professional customs broker to accurately calculate the requirements and prepare for the pre-assessment.