Discharging the Transit Procedure with SAPTechnology
Customs Transit takes place when goods are moved between different customs territories. With the help of customs transit procedure, import of goods can be postponed and therefore customs duties, taxes and commercial policy measures can be temporarily suspended. Import of goods, then, takes place at the point of destination rather than at the point of entrance into customs territory.
Nowadays, there are couple of transit procedures in European Union available. The blog explains Union and Common transit procedures and how SAP applications can help during discharging of such procedures. To achieve the aim, several SAP systems are used to handle the business process – SAP S/4HANA 2020 Enterprise Recourse Planning system, SAP Extended Warehouse Management 9.5 (EWM) and SAP Global Trade Services 11 (GTS). Different types of transit procedures
When performing customs transit procedures in the EU, the following options of Union or Common transit are available:
- T1 – External transit procedure, which applies mainly to the movement of non-Union duty-unpaid goods through the territory of the Union.
- T2 – Internal transit procedure generally applies to Union goods where they are moved from one point to another within the customs territory of the Union, and pass through a territory outside the Union without changing their customs status.
- T2F – Internal transit procedure applies where Union goods are moved from a special fiscal territory to another part of the Union, which is not a special fiscal territory. The movement ends outside the Member State, where goods entered the Union.
Placing the goods into transit procedure electronically is done in the NCTS system.
New Computerized Transit System (NCTS) makes it possible to submit and process transit declarations using electronic communication with customs authorities. Communication between the declarant and customs authorities is then performed via electronic messages such as acceptance notification, release of goods, unloading permission, etc.
Since SAP GTS supports electronic communication with customs authorities, its functionality is sufficient to implement robust and reliable business process in SAP landscape by connecting it to the NCTS system.
Simplified Procedure Authorization
Authorized Consignee is allowed to use simplified transit procedure. The goods arriving under a Union T-transit procedure can be received at customs or at a temporary storage facility that belongs to the business without having to present the goods to the customs authorities.
Authorized consignee has the following benefits in the NCTS system:
- receive the goods at own premises without presenting them at customs office of destination;
- send Arrival Notification (IE007) message to the appropriate customs office of destination electronically;
- communicate subsequent electronic messages with the customs authorities;
Transit authorizations and guarantees are then maintained in SAP GTS, so the system can automatically determine a simplified process and assign appropriate guarantees to the declaration.
Discharging T1 Transit within S/4HANA-GTS Landscape
When performing the discharging of the transit procedure, it is possible to optimize the whole business process by implementing it in the SAP Landscape. The first option of discharging the T1 transit is performed within S/4HANA-GTS landscape. The whole business process will consist of several steps:
- During creation of the Inbound Delivery document, Previous Document Type (T1) and the corresponding Movement Reference Number (MRN) should be provided. They are usually obtained from a customs broker, who has opened transit beforehand.
- Next, the inbound delivery is being transferred to SAP GTS system, where, according to T1 transit identifier and maintained authorization, a simplified procedure for duty-unpaid goods (T1) was determined. New Customs Shipment document is then created in SAP GTS system, which references the Inbound Delivery number and MRN Number entered in the previous step.
- At this point, to be able to further process Customs Shipment, it should contain no errors, which is proofed by the Incompleteness Check procedure for customs declarations in SAP GTS. In case no errors persist in the declaration, actual communication with customs authorities is performed further via Electronic Data Interchange (EDI). Completely processed declaration in SAP GTS can look as follows:
After all, the declaration was processed and the transit procedure was discharged. Now the goods will remain in temporary storage during a legally defined time limit, until the owner decides how to process them further.
Discharging T1 Transit within S/4HANA-EWM-GTS Landscape
The whole process remains pretty similar to one, defined in the previous step, but now Warehouse Management System is included in our landscape. WMS enables advanced tracking of different types of stocks and controlling of warehouse activities based on the good’s customs status. The whole procedure will consist of the following steps:
- Creating the inbound delivery in S/4HANA system. After saving the inbound delivery, it is being transferred to SAP EWM according to assigned EWM-enabled storage location, where goods should be moved. Currently, two options for assigning the MRN number to the inbound delivery are available. Either the MRN number is assigned directly to the Inbound Delivery in S/4HANA, or it is supplied afterwards in the EWM system.
Note: In case of ASN (Advanced Shipping Notification), inbound delivery will be created in SAP S/4HANA system
- After filling MRN reference into the Inbound Delivery, transit information can be communicated between SAP EWM and SAP GTS. Status “In Yard” needs to be set in EWM system, which means that the Transportation Unit with goods has already arrived at premises. This will trigger a PPF (Post Processing Framework) action to communicate transit information to SAP GTS.
Assigning the MRN number to the Inbound Delivery and setting the status “In Yard” will block the document in the EWM system, so unloading of the truck will not be possible until such permission from customs authorities is received. In the next step SAP GTS communicates with the customs authorities in order to receive such permission.
- After transit information is transferred to the GTS system, a customs shipment is then created. References to the previously mentioned MRN number and EWM Inbound Delivery number are presented in the document:
- At this point, communication with the customs authorities will take place. After obtaining the Unloading Permission from Customs Authorities, the corresponding record in the Communication tab will appear:
Such a message should allow unloading of the goods out of the transportation unit.
- After unloading permission is transferred to the EWM system, inbound delivery in the EWM system is released, which allows unloading. Transit Procedure status (DWN) in the inbound delivery is changed to “released”:
Next, physical unloading of transportation unit and goods receipt posting can take place. Customs stock in the warehouse gets increased. At this moment, the goods were still not cleared; therefore, the stock is kept under a customs restricted status (C1):
This status, though, allows the owner of goods to move the stock to the dedicated storage bin, which will trigger stock change according to the corresponding Availability Group (C2). Nevertheless, such stock still remains restricted by customs authorities because goods still were not cleared (non-Union goods):
When the transit procedure is discharged in SAP GTS, the goods are placed into Temporary Storage where the decision of the next processing steps should be made. There they can be further processed during a legally defined time period – i.e., cleared for free circulation or re-exported. After the goods are cleared, SAP GTS releases the goods and sends an update to the EWM system, where the stock type changes from “Customs Blocked” to “Unrestricted”.
When keeping uncleared goods in the facility, SAP EWM can track their precise location, stock and movements. It supports several integration scenarios with SAP GTS Customs module, among them are:
- Temporary storage integration
- Scrapping from Customs Warehouse
So far, the following points were described:
- SAP GTS supports EDI communication with Customs Authorities and discharging transit in the NCTS system with Authorized Consignee authorization.
- SAP EWM connected to SAP GTS system makes it possible to track different types of stocks based on their customs status.
- SAP EWM can block unloading of goods in transit until they receive unloading permission from customs authorities.
Important points for consideration before implementing the transit discharging procedure:
- Number of transit-relevant transactions in the system. With a high number of such transactions, electronic communication using SAP GTS is time and money saving aspect.
- Authorized Consignee Authorization is a prerequisite. Such authorization allows the holder to use a simplified transit procedure.
Trade preference with SAP GTS Identity-based Preference Processing (IBPP)
SAP GTS Identity-Based Preference Processing (IBPP) is an
add-on for SAP Global Trade Services (GTS) which brings additional
functionality to it’s preference processing capabilities. The general
purpose of trade preference processing is to leverage customs preferences,
which are mainly represented in less or zero customs duties during
importing of goods.