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Customs Law

Title One - General Provisions and Principles

Chapter Five : Disciplines to Govern the Application of Customs Duties

Chapter five - Disciplines to Govern the Application of Customs Duties

Section 1: The Origin of Imported Goods

Section 2: Rules of Assessment of the Origin of Goods in Customs

Section 1: The Origin of Imported Goods

A -Non-preferential Origin of Goods:

Article 25	The origin of imported goods is the country in which the goods are produced or wholly obtained, which shall include the following: a- Mineral products extracted from the soil, territorial waters, or seabed of the said country.
	b- Vegetable products harvested or gathered in the said country.
	c- Live animals born and raised in the said country.
	d- Products directly obtained from live animals in the said country.
	e- Fishing or hunting products of the said country.
	f- Maritime fishing products and other products obtained from the sea, outside a country's territorial waters, by means of fishing boats registered in the said country and raising its flags.
	g- Goods produced or procured aboard manufacturing ships from amongst the goods listed in paragraph (f) above, provided that such ships are registered in the said country, and raise its flag.
	h- Products extracted from the seabed or the subsoil thereof outside territorial waters provided that the country has exclusive rights to operate the seabed or its subsoil.
	i- Waste and scraps obtained from manufacturing processes and residues that are fit only to be recovered as raw materials.
	j- Goods obtained from the products referred to in paragraphs (a) to (i) above or from the derivatives thereof, and at any production stage.
Article 26	1- Where two or more countries are involved in the production of a product, the origin of the product shall be the country in which the last substantial manufacturing or transformation process of economic value took place, provided that such process was carried out in a plant equipped for this purpose and led to a substantial transformation of the product or the creation of a new product altogether.
	2- For the purposes of paragraph (1), change of tariff classification shall be considered as the primary criterion for determining origin, provided that due account is taken of one or both of the following two criteria, as complementary conditions: a- The ad valorem percentage criterion. b- The criterion of manufacturing or processing operation.
	3- The Higher Council of Customs shall issue decisions determining necessary conditions for the application of any of the above-mentioned criteria in accordance with the rules set out by the WTO with the collaboration of the World Customs Organization, due account being taken of Article 27 below.
Article 27	The following operations, considered as secondary, shall not be taken into consideration when determining the origin of imported goods, whether or not accompanied by a change in the tariff classification: 1- The operations carried out to insure that goods are preserved in good condition during transport or storage.
	2- The operations carried out to facilitate shipment or transportation of goods.
	3- The operations carried out to package or prepare goods for sale.
	4- Simple operations on goods, namely: ventilation, spreading out, drying, cooling, removal of damaged parts, greasing or rust removal, adding a coat of paint to protect against natural elements, rust removal, washing, cleaning, sifting or screening, sorting or classifying, scaling, testing or calibration, packaging or breaking up of assembled packages or repackaging, dividing the bulks, affixing marks, labels and other distinguishing signs on the packages of goods, dilution by water or any other aqueous solution, ionization, salting, peeling, crushing, removal of seeds from fruits, slaughtering of animals.
Article 28	1- The origin of foreign goods imported into Lebanon and which qualify for the Normal Tariff, shall be proved whether by including in the original invoice issued by the foreign seller evidence proving, in one way or another, the origin of goods or by submitting an independent certificate of origin.
	2- Contrary to the provisions of paragraph 1, the Higher Council of Customs may, upon the consultation of the Director General of Customs and for non- statistical purposes, seek, in some special cases, documentary evidence from the relevant authorities in the country of origin proving the origin of imported goods, or as deemed appropriate, exempt them from providing such evidence. Whenever there is reason to believe that the documents contain inaccurate information, the Higher Council of Customs shall have the right to request additional documentary evidence to verify that the proof of origin is consistent with applicable rules.
	3- Any dispute regarding the accuracy of the proof of origin shall be subject to revision as referred to in chapter 7 of section 2 of the this law.
	4- Failure to submit the original invoice or a true copy thereof, certified by the issuing authority or submission of incorrect country of origin information shall lead to the imposition of penalties referred to in Articles 421, 425 and 428, as the case may be.

B- Preferential Origin of Goods:

Article 29	1- The preferential origin of goods shall ensure partial or total exemption from customs duties.
	2- Each agreement shall determine the goods eligible for preferential treatment and necessary conditions for the goods to bear proof of their origin.
	3- All goods not subject to preferential origin requirements shall pay the normal tariff.
Article 30	1- Preferential treatment shall be granted upon the submission of a certificate of origin issued by the relevant authorities in the country of origin and including sufficient indications for the identification of goods; goods must also be imported directly from the country of origin into Lebanon.
	2- Customs may request Customs authorities in the country of origin to verify that goods bear proof of their origin; Customs authorities shall also be responsible for verifying the validity of the submitted certificate of origin.
Article 31	Exported goods shall not be subject to proof of origin requirements. In case the country of importation requires such proof to determine preferential treatment eligibility, relevant Lebanese authorities shall issue the certificate of origin.

C- Common Provisions for Preferential and Non-preferential Origin:

Article 32	1- If the sale transaction is concluded through a third country, the certificate of origin issued by the said country shall be accepted whether or not goods are entered into the latter; the global certificate of origin shall be accepted if the goods it covers constitute one consignment.
	2- Any person shall have the right to seek advance country of origin ruling provided that such ruling is issued within a maximum period of 15 days as of the date of submission of the application. The ruling shall be valid for three years provided applicable conditions and country of origin rulings are not subjected to change. If any adverse decision is issued during its revision, the ruling shall become invalid provided the parties concerned are notified in advance.
	3- Customs shall ensure that all information provided on a confidential basis with regard to the application of rules of origin are treated as strictly confidential and not disclosed to a third party without the specific permission of the party providing such information. However information submitted to Customs may be disclosed for judicial proceeding purposes.
	4- Importers shall have the right to appeal unfavorable administrative decisions pertaining to origin determinations at the administrative court level.
	5- Administrative court decisions and general administrative decisions pertaining to rules of origin shall be published; new rules of origin and amendments to rules of origin shall not have retroactive effect.
	6- Rules of origin applicable to local products shall apply to import and export.
	7- MFN treatment shall be observed when applying rules of origin.

D- The Origin of Goods:

Article 33

The origin of goods shall be the country from which they were directly imported.

E- Sanctions:

Article 34

Fraudulent country of origin information aimed at obtaining a more favorable treatment or a lower tariff rate for imported merchandise shall lead to the imposition of penalties prescribed in Articles 421 and 425 as the case may be.

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Section 2: Rules of Assessment of the Origin of Goods in Customs

Article 35	1- The customs value of goods imported into Lebanon shall be the transaction value that is the price actually paid or payable for the goods when sold for export to Lebanon. There shall be added to the price actually paid or payable the following to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the goods: a- The cost of transport of the imported goods to Lebanon. b- Loading, unloading and handling charges associated with the transport of the imported goods to Lebanon. c- The cost of insurance. d- Commissions and brokerage, except buying commissions. e- The cost of containers, which are treated as being one for customs purposes with the goods in question. f- The cost of packing whether for labor or materials. g- The value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer, free of charge or at a reduced cost, for use in connection with the production and sale for export of the imported goods, to the extent that such value has not been included in the price actually paid or payable: - Materials, components, parts and similar items incorporated in the imported goods. - Tools and moulds used in the production of the imported goods. - Materials consumed in the production of the imported goods. - Engineering, development, artwork, design work and plans and sketches undertaken elsewhere than in the country of importation and necessary for the production of the imported goods. h- Royalties and license charges related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of sale of the goods being valued to the extent that such royalties and charges are not included in the price actually paid or payable. i- The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller.
	2- The customs value shall not include the following charges or costs, provided that they are distinguished from the price actually paid or payable for the imported goods: a- The cost of transport after importation. b- Charges for construction, erection, assembly, maintenance or technical assistant, undertaken after importation on imported goods such as industrial plants, machinery or equipments. c- Interests paid in accordance with a written financing contract signed by the buyer for the purchase of the imported goods, whether the buyer or any other third party supplies the financing. d- Costs in connection with the right to reproduce the imported goods in Lebanon. e- Buying commissions paid by an importer to the importer's agent for the service of representing the importer abroad in the purchase of the goods being valued. f- Flow of dividends and other payments made by the buyer to the seller that are not related to the imported goods. g- Duties and taxes applicable in Lebanon.
	3- The price actually paid or payable referred to in paragraph (1) of this Article is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. It includes all payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation laid upon the seller. Payment may be made either in cash or by way of letters of credit or negotiable instruments. Payment may be made directly or indirectly.
	4- a) The transaction value of declared goods shall be proved by submission of the original purchase invoice and other documents related to shipment and insurance costs and other expenses and charges due on the imported goods. b) The invoice should include the names of the buyer and the seller, the price actually paid or to be paid and a detailed description of the consigned goods and their quantity. The invoice shall be accepted whether handwritten, typewritten or electronically transmitted, signed by hand or by e-signature. The Higher Council of Customs shall set out the details of application of this paragraph.\| c) Customs shall have the right to require the submission of contracts, correspondence, bank credits and other documents deemed appropriate to prove the value of goods. However, customs preserves the right to question the authenticity of the invoice and the declaration, under provisions of Article 36. d) When the value of the goods included in the invoice is denominated in foreign currency it shall be converted into Lebanese currency using the rate of exchange in effect at the time of registration of the complete manifest. The rate of exchange to be used shall be that duly defined, on a monthly or periodic basis, by the Lebanese Central Bank. e) The original invoice or a copy thereof certified by the relevant customs house, must be attached to the manifest unless the Higher Council of Customs, upon the consultation of the Director General sets otherwise
	5- Customs value shall be determined under paragraph (1) of this Article provided: a- That there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which: - Are imposed or required by law or by the public authorities in Lebanon. - Limit the geographical area in which the goods may be resold. - Do not substantially affect the value of the goods. b- That the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued. c- That no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of paragraph (f) of clause (1) of this Article. d- That the buyer and seller, whether legal or natural persons, are not related within the meaning of the following cases: 1- They are employer and employee. 2- They are legally recognized partners in business. 3- Any person directly or indirectly owns 5 per cent or more of the outstanding voting stock or shares of both of them. 4- One of them directly or indirectly controls the other. 5- Both of them are directly or indirectly controlled by a third person. 6- Together they directly or indirectly control a third person. 7- They are officers or directors of one another's businesses. 8- They are members of the same family. Persons who are associated in business with one another in that one is the sole agent, sole distributor or sole concessionaire, however described, of the other shall be deemed to be related if they fall within the criteria mentioned above. e- The fact that the buyer and the seller are related within the meaning of paragraph (d) above shall not in itself be grounds for regarding the transaction value as unacceptable provided that the Customs administration has no grounds for considering that the relationship influenced the price. In such case the Customs administration shall communicate its grounds to the importer and give the importer the opportunity to respond within the delay referred to in Article 36 below. If the importer so requests, the communication of the grounds shall be in writing. f- In a sale between related persons, the transaction value shall be accepted in accordance with the provisions of paragraph (d) above and the goods valued in accordance with the provisions of this Article whenever the importer demonstrates, on his own initiative and for comparison purposes only that such value closely approximates to one of the following: - The transaction value of similar or identical goods respectively specified, in accordance with Articles 37 and 38 below, sold for export to Lebanon to other buyers not related to the seller, 30 days before or after the importation of the goods being valued. - The customs value of identical or similar goods respectively specified in accordance with Articles 40 and 41 below. In applying the foregoing values, due account shall be taken of demonstrated differences in commercial levels, quantity levels, the elements enumerated in paragraph (1) of this Article, and costs incurred by the seller in sales in which the seller and the buyer are not related and costs not incurred by the seller in sales in which the seller and the buyer are related.
Article 36	1- If Customs has grounds to question the authenticity of the customs value declaration under provisions of Article 35 of this law, it shall, before applying any other Article of this section, notify the importer in writing of its grounds and the importer shall be given a reasonable opportunity to respond within a maximum period of 30 days as of the date of notification.

	2- Upon receiving the response of the owner of the goods, or upon expiry of the delay referred to in the foregoing paragraph, Customs shall issue a written decision pertaining to the disputed case on the basis of customs valuation rules prescribed in Article 35 of this law, and communicate it to the owner of the goods.
	3- In case the party concerned protested the valuation decision stated in paragraph (2) above, the dispute shall be referred to the Arbitration Committee mentioned in chapter 7 of title 2. Both parties may obtain annulment of the arbitration decision relating to the dispute by appealing the decision in question to the customs court competent. Appeals must be filed within 30 days after the date of notification of the party concerned.
	4- The importer or any other person responsible for the payment of duties shall not be subject to payment of a fine for having protested the valuation decision before a customs authority or any judicial authority; he shall also be notified of the decision issued by any authority examining the protest.
	5- The rules set out in this Article shall be applied when applying customs valuation rules defined in the following Articles.
Article37	1- If the customs value of the imported goods cannot be determined under the provisions of Article 35 above, the customs value shall be the transaction value of identical goods sold for export to Lebanon 30 days before or after the exportation of the goods being valued.
	2- In applying this Article, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value. Where no such sale is found, the transaction value of identical goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributed to commercial level and/or quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or decrease in the value.
	3- Where costs and charges referred to in clauses (a), (b) and (c) of paragraph (1) of Article 35, are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the identical goods in question arising from differences in distances and modes of transport.
	4- If, in applying this Article, more than one transaction value of identical goods is found, the lowest of such value shall be used to determine the customs value of the imported goods.
Article38	1- If the customs value of the imported goods cannot be determined under the provisions of Articles 35 and 37 above, the customs value shall be the transaction value of similar goods sold for export to Lebanon 30 days before or after the exportation of the goods being valued.
	2- In applying this Article the transaction value of similar goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value. Where no such sale is found, the transaction value of similar goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributed to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.
	3- Where the costs and charges, referred to in clause (a), (b) and (c) of paragraph (1) of Article 35 are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the similar goods in question arising from differences in distances and modes of transport.
	4- If, in applying this Article, more than one transaction value of similar goods is found, the lowest value shall be used to determine the customs value of the goods being valued.
Article39	If the customs value of the imported goods cannot be determined under the provisions of Articles 35, 37 and 38 above, the customs value shall be determined under the provisions of Article 40 or, when the customs value cannot be determined under that Article, it shall be determined under the provisions of Article 41 except that, at the request of the importer the order of application of Articles 40 and 41 shall be reversed.
Article40	If the customs value of the imported goods cannot be determined under the provisions of Articles 35, 37 and 38 above the customs value shall be as follows:
	1- If the imported goods or identical or similar imported goods are sold in Lebanon in the condition as imported, the customs value of the imported goods shall be based on the unit price at which the imported goods or identical or similar imported goods are so sold in the greatest aggregate quantity, 30 days before or after the importation of the goods being valued, to persons who are not related to the buyer, subject to deductions for the following: a- Either the commissions usually paid or agreed to be paid or the additions usually made for profit and general expenses in connection with sales in Lebanon of imported goods of the same class or kind. b- The usual costs of transport and insurance and associated costs incurred in Lebanon. c- Customs duties and other national taxes payable in Lebanon by reason of the importation or sale of the goods. d- Where appropriate, the costs and charges referred to in clauses (a), (b) and (c) of paragraph (1) of Article 35.
	2- If neither the imported goods nor similar nor identical imported goods are sold in Lebanon 30 days before or after the importation of the goods being valued, the customs value shall, subject otherwise to the provisions of clause (1) of this article, be based on the unit price at which the imported goods or similar or identical imported goods are sold in Lebanon in the condition as imported, at the earliest date after the importation of the goods being valued but before the expiration of 90 days after such importation.
	3- If neither the imported goods nor identical nor similar goods are sold in Lebanon in the condition as imported, then, if the importer so requests, the customs value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons in Lebanon not related to the persons from whom they buy such goods, due allowance being made for the value added by such processing and the deductions provided for in paragraph (1) of this Article.
Article41	a- If the customs value of the imported goods cannot be determined under the provisions of Articles 35, 37, 38 and 40 above, the customs value of the imported goods shall be based on a computed value. Computed value shall consist of the sum of: 1. The cost or value of materials and fabrication or other processing employed in producing the imported goods. 2. An amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind of the goods being valued which are made by producers in the country of exportation for export to the country of importation. 3. Wages, costs and charges associated with the transport of the imported goods including the costs of transport, loading, unloading insurance and handling charges associated with the transport of imported goods to Lebanon.
	b- No one may require or compel any person not resident in Lebanon to produce for examination, or to allow access to, any account or other record for the purposes of determining a computed value. However, Customs shall have the right to verify information supplied by the producer of the goods for the purposes of determining the customs value under the provisions of this Article in another country with the agreement of the producer and provided the authorities of the country in question are given sufficient advance notice and the latter does not object the investigation.
Article42	a- In order to apply the aforementioned rules on customs valuation, shall be regarded as: 1- Identical Goods: Goods, which are the same as the goods being valued in all respects, including physical characteristics, quality and reputation. Minor discrepancies in appearance shall not exclude goods otherwise conforming to the definition from being regarded as identical. Goods shall not be regarded as identical unless they were produced in the same country as the goods being valued. 2- Similar goods: Goods, which although not alike in all respects, have like characteristics and like component materials to the goods being valued, which enable them to perform the same functions and to be commercially interchangeable. The quality of the goods, their reputation and the existence of a trademark are among the factors to be considered in determining whether goods are similar. Goods shall not be regarded as similar unless they were produced in the same country as the goods being valued.
	b- The terms "identical goods" and "similar goods" shall not include, as the case may be, goods which incorporate or reflect engineering, development, artwork, design work and plans and sketches for which no adjustment has been made under the last passage of paragraph (g) of Article 35.
	c- Goods produced by a different person shall be taken into account only when there are no identical or similar goods, as the case may be, produced by the same person as the goods being valued.
Article43	1- If the customs value of the imported goods cannot be determined under the provisions of Articles 35, 37, 38, 40 and 41, the customs value shall be determined using reasonable means consistent with the principles and general provisions of the international agreements applicable in Lebanon and on the basis of available data.
	2- No customs value shall be determined under the provisions of the aforementioned paragraph on the basis of: a- The selling price in Lebanon of goods produced in Lebanon. b- A system, which provides for the acceptance for customs valuation purposes of the higher of two alternative values. c- The price of goods on the domestic market of the country of exportation. d- The cost of production other than the computed values which have been determined for identical or similar goods in accordance with the provisions of Article 41 above. e- The price of goods sold for export to a third country other than Lebanon. f- Minimum customs values. g- Arbitrary or fictitious values.
	3- If the importer so requests, he shall be informed in writing of the customs value determined under the provisions of this Article and the method used to determine such value.
Article44	The Higher Council of Customs shall, upon the consultation of the Director General of Customs, set out special customs valuation rules for carriers designed for data processors, provided that such carriers are consistent with the WTO rules and principles.
Article45	1- Customs valuation procedures for imported goods shall not impede the right of the importer to withdraw his goods from Customs if, where so required by Customs, the importer provides sufficient guarantee covering the ultimate payment of customs duties and, where necessary, the fine for which the goods may be liable.
	2- Customs shall have the right to keep samples of the goods released before the final determination of their customs value. Samples shall be returned to the owner of the goods if not consumed while being tested and examined.
Article46	All information which is by nature confidential or which is provided on a confidential basis for the purposes of customs valuation shall be treated as strictly confidential by the authorities concerned who shall not disclose it without the specific permission of the party providing such information, except to the extent that it may be required to be disclosed in the context of judicial proceedings.
Article47	The value of goods that must be declared at the time of exportation shall be the value of goods at the time of registration of the manifest in addition to the cost of transport to the borderline. This value shall not include: - Where applicable, taxes and duties imposed at the time of exportation. - National taxes and duties refunded at the time of exportation.
Article48	Submission of false declaration of value may lead to penalties provided for in Articles 421 or 425, as the case may be.
Article49	The Higher Council of Customs shall, upon the consultation of the Director General, determine the rules of application of customs valuation rules stipulated in this section and rules relating to special cases not explicitly covered by such rules, taking into consideration explanatory comments on customs valuation rules published by the WTO.
Article50	1- The type of goods shall be the customs nomenclature of such goods as mentioned in the customs tariff table according to the Harmonized System.
	2- Goods not included in any of the customs tariff table headings according to the Harmonized System and those included in two headings or more shall be itemized by decisions of the Higher Council of Customs upon the consultation of the Director General, under the general rules referred to in the said table for the interpretation of such system.
	3- Itemizing decisions referred to in paragraph (2) above shall, unless the same decisions otherwise provide, be published in the official gazette and come into effect within the ordinary time limits set for publication. Such decisions shall be revocable before the administrative court.
Article51	Due account being taken of the commentary of the Harmonized System tariff published by the International Customs Organization, additional commentary and implementing provisions of the customs tariff shall be defined by decisions of the Higher Council of Customs upon the consultation of the Director General provided that publishing and implementation provisions referred to in paragraph (3) of Article 50 above are applied.
Article52	Any false declaration with regard to the designation, type or description of goods shall lead, as the case may be, to the penalties provided for in Articles 421 or 425.