Classifying Products for the End-Use Procedure (EU)

In some cases, the classification of a product under the TARIC does not only depend on its characteristics but also on its intended end-use. As a rule, this differentiation goes along with a duty suspension that is only granted if the product is actually put to this end-use.

Duty suspensions under end-use fall within the tariff measures you learned about in the Mapping Nomenclatures for International Trade unit. In the TARIC database, you can check for each TARIC code whether the duty suspension applies and, if so, to which end-use the duty suspension applies.

In the example, the duty suspension can only be claimed for ball bearings classified under TARIC code 8482101015 that are imported "for use in the manufacture of electromotors" with specific characteristics. If the ball bearings are imported for any other use, they must be classified under another TARIC code. In that case, the third country duty is levied unless another tariff measure applies like, for example, a tariff preference.

The duty suspension listed in the TARIC database is only available for products that have been placed under the end-use procedure. The end-use procedure is one of the special procedures defined in the Union Customs Code (UCC). Like other special procedures, it requires prior authorization from customs.

In the end-use procedure, the products to be imported are released for free circulation and change their customs status from non-Union goods to Union goods accordingly. Customs supervision of these products, however, does not end with their release for free circulation. These Union goods remain under customs supervision until they have been used for the purposes laid down for the application of the duty suspension. In our example, the imported ball bearings must thus have been used for the manufacture of specific types of electromotors.

If, depending on its use, two customs tariff numbers apply to the same product, the numbering scheme for the customs tariff can be enhanced to enable multiple classifications.

Codes representing the relevant end-uses can be freely defined in Customizing (SAP Global Trade Services, edition for SAP HANA → General Settings → Numbering Schemes → Tariff Numbers → Define End Uses). These codes have to be assigned to the numbering scheme representing the customs tariff in the End Use folder. In addition to this assignment, the End Use indicator has to be set (SAP Global Trade Services, edition for SAP HANA → General Settings → Numbering Schemes → Tariff Numbers → Define Numbering Scheme for Tariff Numbers).

Unlike other special procedures in SAP GTS, the end-use procedure cannot be set up by Customizing and master data maintenance alone. The configuration of this procedure rather relies on the implementation of Business Add-Ins (BAdIs).

The decision whether a product is to be imported for a particular end-use has to be made in the feeder system at the time of goods receipt posting. Items qualifying for the end-use procedure have to be flagged in the extract of the material document to be transferred to SAP GTS. In the customs declaration created from the material document data, SAP GTS defaults the appropriate customs tariff numbers depending on the information received from the feeder system.