The Customs Duties (Exemption) (Amendment) (No. 2) Order 2024, which is deemed to have come into effect on 1 January 2024, amends the Customs Duties (Exemption) Order 2017 by inserting a new item 121 in Part I of the Schedule.
This new item provides customs duty exemptions for certain manufacturers on the import or purchase of manufacturing aids and cleanroom equipment.
Key points from the amended order:
1. The exemption applies to manufacturers licensed under section 65A of the Customs Act 1967 or manufacturers in free industrial zones declared under section 3 of the Free Zones Act 1990.
2. The exempted goods are manufacturing aids and cleanroom equipment, which must be used directly or indirectly in the manufacture of the manufacturer's finished goods.
3. If the goods are used indirectly, prior approval from the Director General of Customs is required.
4. The goods must be imported or purchased from a licensed warehouse under section 65 of the Customs Act 1967 or from a free industrial zone.
5. The exempted goods shall not be part of the manufacturer's finished goods and must be stored at the manufacturer's approved premises.
6. The goods cannot be sold, disposed of, transferred, exported, or taken out of the manufacturer's premises without the Director General's approval.
7. If the goods are damaged, destroyed due to unavoidable accidents, or do not meet the specified quality, the manufacturer may export, transport, or return the goods to the supplier without any duty levied.
Advice for businesses:
1. Manufacturers licensed under section 65A of the Customs Act 1967 or operating in free industrial zones should assess whether the manufacturing aids and cleanroom equipment they import or purchase qualify for the customs duty exemption.
2. Ensure compliance with all the conditions specified in the amended order, such as obtaining prior approval from the Director General for goods used indirectly in manufacturing and storing the goods at approved premises.
3. Maintain accurate records of the imported or purchased goods, their usage, and storage to demonstrate compliance with the exemption conditions.
4. Follow the prescribed procedures for handling damaged, destroyed, or substandard goods to avoid any customs duty liabilities.
5. Consult with customs specialists or tax advisors to ensure a clear understanding of the exemption provisions and to develop appropriate compliance strategies.
By leveraging this customs duty exemption, eligible manufacturers can potentially reduce their import costs and improve their competitiveness in the market. However, strict adherence to the specified conditions is crucial to avoid any non-compliance issues.
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