(c) If the answer to (b) is "No", state: (i) Port or place of entry. (ii) Name of Ship- (iii) Customs entry number_ (iv) Date of clearance from customs control_ 5. State particulars to establish that the goods being imported are specially designed for the educational, scientific or cultural advancement of the blind. 6. State why British goods cannot be used_. 7. Are the goods liable to purchase tax?. Yes/No______ I certify that, to the best of my knowledge and belief, the information which I have furnished is correct. Subject: Customs Treatment of Research Equipment Ref: Bonn A-460, Sept. 9, 1963; Dept. 3-31, July 24, 1963; Dept. A-18, July 11, 1963; Bonn A-2426, May 16, 1963 CERP D-11 Also pass commerce (for BIC) The Federal Finance Ministry published a modification of the administrative provisions of the German customs law1 which inter alia provides for a revision of Article 37, Section 4, relating to the customs treatment of research equipment. The modification, effective November 10, 1963, provides that duty and turnover equalization tax-exempt treatment is granted for (a) articles of scientific value destined for research including their spare parts and accessories if domestically produced articles of equal scientific value are not available at the date of placing orders; (b) equipment which is subject of research both destined for public or common welfare institutions which are engaged in research work for scientific reasons. Specifically excluded from the exemptions under (a) are commercially usable equipment for schools, offices or laboratories (such as radio and television sets, microfilm reading apparatus, typewriters, calculating machines, filing card systems, microscopes, centrifuges) unless their characteristic features impart an educational or scientific value or unless they are specifically equipped for use in connection with the aforementioned duty-exempt equipment. The revised administrative provisions include the protective clause of Annex D to Article XVII of the UNESCO Agreement on the Importation of Educational, Scientific and Cultural Materials. Duty-exempt treatment, therefore, no longer needs to be limited to goods which could be used for research purposes exclusively. This ruling corresponds to the practice applied by the customs officials after April 22, 1963. At that date, the Finance Ministry had instructed the customs offices "not to go deeply into" the question of the use of the equipment any longer, provided proof is furnished by the Chief of the research institute that equipment of equal scientific value is not available in the Federal Republic (see referenced airgrams). The point which the Embassy was most concerned with is the question of which party determines the availability of the equipment on the German Market in case of doubt. A new procedure has been established in official instructions to the customs offices. According to the Economics Ministry, these 1 Published in Bundesgesetzblatt I No. 60 of Nov. 8, 1963. provide that if the customs office which admits research equipment duty-exempt on basis of a certification from a research institute has doubts as to its availability on the German market, it will report to the Oberfinanzdirektion. If the latter also has doubts, it will obtain an expert's opinion either from the Max-Planck-Gesellschaft in Goettingen or from the Deutsche Forschungsgemeinschaft, Bad Godesberg. Copies of this will also be sent to the Federal Finance Ministry, Economics Ministry, and Ministry for Scientific Research. If, within four weeks from the receipt of the opinion, the Oberfinanzdirektion receives no different instruction from the Federal Finance Ministry, the Oberfinanzdirektion may decide "at discretion", which will presumably be in accordance with the expert opinion. Even though this practice still involves a certain risk for the importer because of a possible threat of retroactive application of duties, the Economics Ministry believes that this will occur in exceptional cases only. For the Ambassador: PAUL H. BRENT, Commercial Attache. SUPPLEMENTAL STATEMENT REGARDING WHAT OTHER SIGNATORY COUNTRIES ARE DOING IN THE WAY OF LEGISLATION IMPLEMENTING THE FLORENCE AGREEMENT AND THIER PROCEDURES THEREUNDER By Donald M. Dunn of E. Leitz, Inc. Mr. Curtis requested at the hearing on June 7, 1966 that we supply whatever information we have available as to what other signatory countries are doing in the way of legislation implementing the Florence Agreement and their procedures thereunder. Our inquiry was made principally through the offices of our supplier in Germany of scientific instruments and apparatus and its agencies in England and France to ascertain the procedures involved in the duty-free importation of scientific instruments under the provisions of the Florence Agreement. Various documents, forms and copies of regulations have been furnished to us by our supplier, the German-American Chamber of Commerce and our Government which we set forth herein in summary. GERMANY A certificate must be presented to the Customs Bureau signed by the authorized individual of the using institution describing the merchandise, certifying that it is a public institution serving science and education, and further certifying that merchandise of equal scientific value manufactured in the country was not available at the time the order was placed. Normally the certificate is accepted by the local customs authority. However, if there should be any doubt as to whether or not requirements for duty-free importation are being fulfilled, the customs authority reports to the O.F.D. (highest finance authority). The O.F.D. makes its own investigation (for instance, through inquiry at the recipient) and if they still have questions consult either the Max Planck Institute or the German Research Association. Unless a deviating order is received from the Finance Minister within one month, approval is given. It is reported that such reference to higher authority is the exception rather than the rule. The experience of our supplier in connection with imports into Germany has been that customs authorities generally decide promptly and in a non-bureaucratic manner within a few days after receipt of the application. Only in doubtful cases will the local customs authorities have to consult the recipient and the finance authorities. Attached hereto are (1) Translation supplied by German-American Chamber of Commerce of the applicable law (Enclosure A), (2) Translation of an excerpt from a letter from the Optical Manufacturers Association of Germany discussing the procedures (Enclosure B), (3) Letter dated February 25, 1966 in German and translation thereof into English setting forth amount of duty-free imports into Germany (Enclosure C) [Original letter in German filed in the Legislative Files of the Committee], and (4) Airgram from our Embassy in Bonn to the Department of State dated November 15, 1963 on the subject of customs treatment of research equipment (Enclosure D). ENGLAND The user of the imported equipment makes an application to the Board of Trade which describes the instruments to be imported, the use to be made of them, the institution where the work is to be carried out, the names and addresses of United Kingdom manufacturers or trade associations of manufacturers of whom inquiries were made prior to the placing of an order for foreign instruments, and similar information. The decision is made by the Board of Trade which cooperates with "technical advisers" who are representatives of British industry. It usually requires the British Board of Trade four to six weeks after application for duty-free import license to issue a "direction" granting duty-free entry. However, if application is made prior to the release of the merchandise from customs control, the merchandise will be released upon payment of normal duty, and, upon receipt of the "direction", duty will be refunded. Consequently, there is no delay involved in obtaining the instrument for use. Annexed hereto are (1) Notice No. 342 by the Board of Trade re Importation of Articles for Non-Commercial Use in Scientific Research or in Advancing Learning or Art or in Promoting Sport, dated July, 1965 setting forth the procedures and with an appendix of Legal Provisions (Enclosure E) and (2) Application Forms DFA 1c and DFA 3 (Enclosures F-1 and F-2). FRANCE The application for duty-free importation is made to Direction des Industries Mecaniques et Electriques (DIME) by either the customer or the importer. The user must, however, confirm in writing that the instrument is for use in research purposes and usually states that "to his knowledge" no French instruments of similar type are being manufactured. The application must provide certain information as to the supplying company, invoice, literature, etc. DIME is the sole authority for the release. There is no submission to French manufacturers and no publication of the application takes place. DIME maintains a staff of engineers who are responsible for comparing imported and French products. The experience of our supplier's agency in France has been that after an application has been filed it is seldom necessary to wait any longer than eight days for a release. Annexed hereto are (1) a study on duty-free importation under the Florence Agreement in French (Enclosure G) [A translation of this document was not ready at the time of printing of this hearing. Such a translation may be found in the Legislative Files of the Committee on this bill] and (2) Translation of extracts from a letter dated January 28, 1966 received by our supplier from its French agency discussing procedures under the French practices (Enclosure H). CEYLON, SWEDEN AND SWITZERLAND The State Department has supplied us with copies of reports of the Governments of Ceylon, Sweden and Switzerland submitted to it by the Director-General of UNESCO under date of August 21, 195(?). We understand that the Committee will be supplied with this information and perhaps additional information by the State or Commerce Department. We have noted that the procedures appear to be uncomplicated and, in particular, have noted that Sweden uses an equivalency test phrased much as has been proposed in the pending bill. Respectfully submitted. June 13, 1966. ENCLOSURE A DONALD M. DUNN. TRANSLATION Agreement from Lake Success dated November 22, 1950 concerning the import of commodities with educational, scientific or cultural charakter: Admission of the Federal Republic of Germany (German Law dated April 15, 1957) (BGB II Nr. 6 dated April 29, 1957 page 170). The Federal Assembly has decided on the following law: Articel 1 The joining of the Federal Republic of Germany in the agreement of November 22, 1950 concerning the importation of products with educational, scientifical or cultural charakter as well as its amendments A and E and its additional records is authorized. Articel 2 This law is valid also in the state of Berlin, as far as the state of Berlin determines the use of this law. Articel 3 (1) This law will be enacted beginning the day of its announcement. (2) The date on which this agreement with its amendments and its additional records shall become law in the Federal Republic of Germany is to be announced in the Bundesgesetzblatt. The constitutional rights of the Federal Counsil are maintained. The aforementioned law is being announced herewith. ENCLOSURE A Objects for public collections; Research-and Educational products Free of duty are clear 1. Films or sound recordings of educational, scientifical or cultural character, which have been manufactured by the United Nations or one of its Departments at their own account. 2. Objects which are alloted to public collections 3. under official supervision of the customs authorities products for teaching and educational purposes, including their spare parts and accessories, for public or common cause, which serve scientific instruction or education, if such products, as within the range of the law specified, of the same educational or cultural value were not available at the time of the ordering. 4. under official supervision of the customs (a) Products of scholarly value intended for research purposes, including their spare parts and replacement parts and accessories, if such products—as specified within the range of the law-of same educational or scientific value were not available at the time of ordering. (b) Products alloted to research work, for public owned or charitable organizations, doing research work in general only for scientific purposes. 5. Recorded sound carrying devices and exposed films, also developed for public radio and television establishments for their own use. (2) Excluded from exemption of duty are, according to section 1 Nos. 3 and 4, letter a, products of normal commercial usage in the sections school-, office- and laboratory-equipment (i.e., sound- and picture-reproduction apparatus, Mikrofilm-projection apparatus, Typewriters, calculators, filing systems, microscopes, centrifuges) unless special quality gives those products scientifical value (this in connection with No. 3 teaching and educational value, No. 4 letter a scientifical value) or if they have been adjusted especially in combination with section 1 numbers 3 and 4, letter a, as a duty free product. (3) Duty exemption depends upon (according to section 1 numbers 2 and 5) the fact that the customs authority has to have in its files during customs clearing an official document signed by the principal of the collection, of the radio- or television station or by his second in command or legally recognized representative which states the actual prerequisites for the duty exemption. Should this document not have been submitted by reasons not caused by the collection, radio or television station it is possible that this certificate can, submitted afterwards, however, within the limits which legally permit protest in customs clearance matters. (4) Duty exemption depends upon the fact (according to section 1, numbers 3 and 4), that the products may not be sold within a period of two years after customs clearance, unless to other favored institutions under the favored purposes. Law 38 (1) Free of duty are 1. Objects, which are intended to serve as evidence or similar purposes at court or other authorities. 2. Objects officially used by government offices outside the customs boundaries and which will serve the same purposes inside customs boundaries. (2) Exemption from duty depends upon the fact that the authorities involved issue a document which certifies the actual prerequisites for exemption of duty. In addition to Law 37 Objects for public collections; Research and Educational Means. Research, instruction and education should be hindered as little as possible by the customs barriers. However, it is not possible, to leave every object free of duty, which will serve these purposes directly or indirectly. A limit has to be established which serves international freedom of intellectual exchange as well as the acknowledged protective interests of the inland industries, which often has invested considerable amounts in developing and manufacturing these scientifical and educational products. Therefore Law 37 connects freedom of duty with a number of provisions and conditions which refer either to the object itself or to the person of the manufacturer or recipient. This ruling complies with the conditions which were acknowledged by the Federal Republic by its joining the so called UNESCO-Agreement dated November 22, 1950 concerning the importation of products of educational, scientifical and cultural character. (German law dated April 15, 1957, BGB1 II page 170, 1467). The freedom of duty according to section 1, number 1 complies with the regulation in supplement C number 4 of the UNESCO-Agreement. The freedom of duty according to section 1, number 2 complies with the regulations in supplement B of the agreement; public collections are those open to the public even if the collection is privately owned. Under "collections" are also libraries, zoological gardens and botanical gardens. In section 1, numbers 3 and 4 two groups of instances are combined which were treated separately in the UNESCO-Agreement. Teaching and educational objects are objects which serve in connection with education and furthering of education of a definite group of persons in any realm of science and knowledge, however, not those objects which serve merely the elevation of general knowledge or religion or influence because of general educational reasons a constantly changing circle of persons (compare decision of the FG Duesseldorf from June 25, 1959 IV 145–146/57 Z,ZfZ 1959 page 314). Which objects (products) should be regarded as research products was questionable under the old tariff law (Law 69, section 1, number 17 ZG 1939). Especially difficult was to find the definition between objects for actual research and auxiliary means (compare decision of BFH dated 11/9/1960 VII 103/60 U, BZBI 1961 page 171 and dated 4/9/1963 VII 78/61 U, BStB1 1963 III page 314). The new tariff law instituted new objectives in Law 37 AZO. The experience gathered with this lead to the second VO and amendment of the AZO revision numbers 3 and 4. Objects for research under the tariff law are now a) Products of scientifical value intended for use in research including their spare parts and their accessories and b) products for research. Excluded from exemption of duty are products of normal commercial use in the school, office and laboratory area unless they comply with certain definite prerequisites. New is the, according to the UNESCO-Agreement permissible and also in other Common Market member countries valid "Inland Protection Clause", which makes duty exemption subject to the availability of products of the same educational and scientifical value at the time of the ordering. This clause makes it possible to disregard the prevailing condition of exclusive use of the products for research purposes. On the recipient's side the term of public or charitable institution (legally independent with own means) was changed to a more general definition of public or charitable establishment. By the fifth regulation to the amendment of the AZO of May 2, 1965 (BGB1 I page 435, BZB1 page 383) the following words have been added in numbers 3 and 4 "under supervision by the customs authorities". This means that the products have been cleared not for the free trade, but under limited conditions (section 4). 64-216-66- -14 |