The continuing evolution of EMCS
The Excise Movement Control System was launched over seven years ago. The data collected by EMCS enables Customs to closely monitor transports under suspension of excise duty within the EU and prevent fraud. However, these opportunities are currently not fully utilised. Gert Vorsteveld, policy advisor on excise, explains how Customs and trade and industry can jointly achieve yet a greater success.
The introduction of EMCS brought about a break with the past: the paperwork needed for the transport of goods under suspension of excise duty within the EU was replaced by a digital process. The consignor dispatches his electronic Administrative Documents (abbreviated to e-ADs). The receiving party then signs off the e-ADs accordingly. This allows Customs to monitor the movement of goods. However, not everyone uses the system correctly, which is, inter alia, due to a lack of knowledge of laws and regulations.
Wrong delivery of beer
Vorsteveld acknowledges that the provision of public information on EMCS could have been better. “The system is quite complicated in terms of messaging. Suppose: a company ships a container loaded with beer from Rotterdam to Paris. And the intended recipient then says: This is brand A, yet I had ordered brand B. How do you then process such a shipment? After the receiving party’s refusal, the consignor must amend the destination to show a new destination of the goods in EMCS. In this case, this will be his own bonded warehouse. After all, the responsibility of the shipment still lies with him. Are the goods not given a new destination? In that case, the status of the shipment will remain open in EMCS. After all, the receiving party does not notify that it has received the shipment, and the consignor does not notify that he has taken the shipment back. Especially in the beginning this was a common error.”
Also not everything went perfectly smoothly on the side of Customs. If a company wants to transport something, it submits a provisional declaration (e-AD). Vorsteveld: “Customs identifies the consignor, verifies whether the receiving party has a permit and concludes with some automated checks. If everything is in order, the consignment gets a unique accompanying number, ARC. This results in the notification ‘accepted’ in the status overview of EMCS. It amounts to nothing less than the consignor being allowed to transport the goods. It does not say anything about the consignment itself also being accepted at the end of the chain. This status initially created confusion. You have to imagine customs officers carrying out an inspection with a list that contains hundreds of e-ADs. Ten of these, for example, have the notification ‘cancelled’. The rest of them has ‘accepted’ listed. Different colleagues focused on the declarations that had been cancelled, in the assumption that the rest had been settled. And when in such cases both the officer as well as the company fail to recognise this, you eventually end up with a pile of documents that do not yet have a final status, however, which do have an excise burden.”
Source of knowledge
In order to prevent such problems in the future, Customs published the EMCS Manual (only in Dutch) earlier this year. “It explains the purpose in a low-threshold manner, thereby making use of print screens among others”, thus Vorsteveld. “The target group consists of our internal colleagues. However, as we also identified a knowledge gap of the market place in relation to EMCS, we decided to publish the manual externally. We recommend everyone dealing with excise goods under suspension to consult this manual. Because filling out forms accurately and completely ensures better logistics and prevents any additional assessments.”
“When we still worked with paper documents, the flow of goods was much less insightful and it was more difficult to combat fraud”, Vorsteveld continues. “EMCS hosts a wealth of information, however, you do need to know how to unlock it, and it is a complex system. Fortunately, it becomes increasingly successful for us. Thanks to queries and automatic data comparison, we get more usable data from the system than was previously the case. Furthermore, our Central Excise Unit runs a monthly query that shows the outstanding consignments for each permit holder. Clever queries also bring the true outliers to the surface. For example, when a permit holder who normally takes care of a maximum of ten consignments a day suddenly exceeds this number by far. This will then become evident thanks to the query. Off course, we also check the receiving party and the payment of the excise to the Dutch public purse. Sometimes a batch is received, however, no declaration for payment is filed. This is why it’s so important for us to be right on top of the process. Excise is an important priority for Customs, this year and in 2018 as well. This is beginning to bear fruit: the amount of open-ended e-ADs is decreasing and compliance is increasing. To be monitoring this so closely, is also common decency towards companies. You do not want to run up an excise debt and charge millions of euros in one go. This apart from the risk that a trader cannot afford such an amount and such an additional assessment becomes impossible to be collected.”
Who is allowed to collect?
In order to optimise EMCS as best as possible, Customs also coordinates with sister services in other EU member states. “We, for example, meet in a Benelux context and in an EU context to increase our knowledge”, Vorsteveld says. “How to best structure EMCS, what action to take for which notification? Especially in terms of combating fraud there is much to learn from one another. Or the question whether or not a taxable event has presented itself, and whether or not excise duty must be paid. Which is the member state of taxation? Is it the Netherlands or another country? Belgium, for example, has levied excise much more frequently in 2015 than we did. Though this does not automatically mean that we have missed out on money, such a sizeable difference does deserve our attention.”
Work to be done
Though EMCS has since been quite up to par, there is still always something to wish for. Vorsteveld: “When transporting excise goods outside the EU, following EMCS, you then have to deal with the Export Control System – ECS. To facilitate quick processing, these two processes should really be automatically linked. This is not yet the case in many member states, the Netherlands included, while the business and industry explicitly ask for this link. This is now also on the agenda. Furthermore, the so-called time scales for transportation, whereby the dispatcher may decide for himself how long the transport is to take, are too fraud-sensitive. Currently, the maximum is set to as many as 92 days. Only after these 92 days do we claim any payable excise duty. In 2018, this time limit will change for each mode of transport. All in all there is still plenty of work to be done.”
In order to monitor the transport of goods under suspension of excise duty between and within the member states, the European Union developed the Excise Movement and Control System. In operation since 1 January 2011, EMCS exchanges digital information between entrepreneurs and customs services. Anyone wanting to receive or dispatch excise goods such as alcohol, tobacco and fuels from or to another EU country must make use of EMCS. The transport takes place covered by an electronic administrative document. To receive such an e-AD, one must have a Registered Consignee Permit or an Excise Goods Place Permit.