In-house processing in a continuous production process is

Companies engaged in continuous production processes may face challenges when using EU inbound processing procedures. For context, inward processing allows EU companies to import materials and, if products made from those imported materials are exported, avoid paying import duties and other charges such as anti-dumping and countervailing duties.

First, EU customs law allows companies to use inbound processing if the imported non-EU materials used in production can be identified in the products produced. Companies with so-called continuous production processes often find it difficult to identify non-EU materials in the products they produce. For example, if a company sources chemical X in the EU and the United States and mixes them together in a continuous production process to produce chemical proportion. Y.

Secondly, EU customs law allows for the so-called principle of equivalence to import processing. This means that non-EU goods can be substituted with the same (equivalent) material as EU goods. However, the law does not allow equivalence if (1) one of the materials used is subject to anti-dumping or countervailing measures and (2) the processed product is sold in the EU.

For example, assume that a company purchases 100% of chemical X from South Africa and that product is subject to anti-dumping measures in the EU. However, in some years it will replace 50% of the South African material with EU-origin Chemical X as equivalent goods. The company produces 100 kg of chemical Y through a continuous production process. Of this amount, 25 kg were exported outside the EU and 75 kg were sold in the EU. The company may face difficulties using EU Chemical X as an equivalent good when selling 75kg in the EU because (1) Chemical , are equivalent goods.

In summary, the EU’s import processing procedures and anti-dumping measures create obstacles for companies with continuous production processes. Add to this the complications companies can face when using storage and inbound handlers, as discussed in a previous blog post.