REFINED SUGAR REGIME- SPEAKING NOTES

BACKGROUND

Cabinet Decision No. 43/03 on Refined Sugar submitted by the former Ministry - Ministry of Commerce, Science and Technology (MCST) mandated the Trade Board Limited (the Trade Board) to manage a verification process for the importation of refined sugar.

Prior to 1994 the Sugar Industry Authority (SIA) held a monopoly on all sugar imports. In 1994 direct importation of refined sugar was permitted under a regime that ensured that the landed cost of refined sugar was no less than a given benchmark price.

The regime was further adjusted by way of Cabinet Decision 22/99 dated June 28, 1999 when the benchmark regime was rescinded and replaced by a tariff regime of 40% Common External Tariff (CET) on refined sugar plus 63% Additional Stamp Duty (ASD).

At present,imported refined sugar attracts CET and ASD, with an aggregate duty of 179%. In addition Customs User Fees (CUF), Environmental Levy and Standard Compliance Fee totalling 2.8% are also payable. The total duties plus fees for the importation of refined sugar amounts to 181.8% compounded.

Under the new regime manufacturers continued to be relieved of both the CET and ASD on refined sugar. The regime, as approved by Cabinet, required that there be an effective monitoring mechanism to ensure no “leakage” in revenue.

There is concern that sugar imported duty free for manufacturing is being diverted to the retail trade for which duty is payable.

An Advisory Committee has been set up for the monitoring of the regime. The primary purpose of this committee is to review and analyze registration documents and recommend the yearly allocation to be given to each manufacturer. The committee meets quarterly with round robin decisions taken in extreme circumstances. Recommendations are done by a pre-verification and a post-entry verification process.

Pre-verification process

All importers/manufacturers/distributors of refined sugar are required to register with the Trade Board. All entities making applications to be certified as bona fide manufacturers would complete the product analysis form. The form when submitted to the Trade Board is checked for accuracy after which a verification visit to the manufacturing plant will be conducted to determine if the product analysis is in conformity with the production process.

The regime also covers applications from importers, who are not themselves manufacturers, and must be accompanied by confirmed purchase orders signed by the manufacturers.

Applications for registration and import licences must be duly signed by an authorized officer of the company and affixed with the company’s seal.

Trade Board’s function in relation to the verification process and administration of the new regime includes the following:

  1. Register and maintain a list of importers/manufacturers/distributors of refined sugar and manufactures of products utilizing refined sugar in accordance with Ministerial Order under Section the Regimefor Refined Sugar. These entities should either be manufacturers that use refined sugar in production or distributors of the product;
  1. Maintain a data base of all importers/manufactures/distributors certified by Trade Board to include the following information:
  • Name of the Business operation (Company or individual).
  • Address, telephone number, fax number and email address.
  • Date of Incorporation (If a Limited Liability Company).
  • Tax Payer Registration Number (TRN).
  • Names of Directors and Senior Responsible Officers of the organization.
  • Specimen signatures of all officers authorized to sign on behalf of the company, together with an imprint of the company seal.
  • Products manufactured and details of major raw material required for production of these items.
  • The names and countries of their suppliers of refined sugar
  • Production statistics including usage levels of refined sugar over the last five years.
  1. Ensure that the importers/manufacturers/distributors have complied with all the statutory requirements including filing of Income Tax Returns, Employer Annual Returns, Declaration of Assets and Annual Returns required under the Companies Act. Trade Board ensures that the business operation carries a valid tax compliance certificate prior to granting the approval for registration;
  1. The Trade Board reviews application for registration and import quantities required.
  1. The Trade Board/Customs conducts verification visits and prepares reports for submission to the Trade Board Refined Sugar Committee.
  1. The Advisory Committee has specific responsibility for allocating import quantities for refined sugar.
  1. Trade Board has written terms of reference for the Committee together with specific procedures which are carried out by the Committee. The Secretariat for the Refined Sugar Committee is located at the Trade Board;
  1. Trade Board ensures that information pertaining to the new regime is communicated to importers/manufacturers so that the mechanism is clearly understood;
  1. Ensures that import quantities allocated are based on the following criteria:

Imports over the previous 5 years

Usage over the previous 5 years

Projections for the ensuing year

Report of the Refined Sugar Committee

  1. Ensures that a written notice indicating import quantities allocated is issued to each importer/manufacturer signed by the Chairman or a representative of the Advisory Committee;
  1. Once the quantities are allocated to the importers and/or manufacturers, the Trade Board ensures that importers submit a procurement plan giving the estimated volume and value to be imported, suppliers names and the country of origin;
  1. Maintains records of the quantities imported with each licence granted. This information will be used in determining the unused import quantities and also for review of import quantities with usage levels;
  1. Ensures that procedures are in place to accommodate requests for review of import quantities by a manufacturer and/or importer, especially when it is for an increase. A factory visit and a review of the usage levels follow a request of this nature by the Trade Board. A report is then prepared by the Trade Board to be submitted to the Refined Sugar Committee. The Committee would carry out their review and document the decision and communicate the decision to the manufacturer and/or importer accordingly;
  1. Applications for review of the quantities approved must be submitted one month in advance of production requirements to provide for processing by the Trade Board within three (3) days;
  1. Ensures that an up–to-date database is maintained of import quantities and that a report is submitted to the Trade Board Refined Sugar Committee for allocation of the import quantities for each importer;
  1. The Refined Sugar Committee will prepare monthly reports for submission to the Board of Directors of the Trade Board and the Ministries of Industry, Investment and Commerce; Finance and the Public Service; and Agriculture and Fisheries. The report would include licences granted, import quantities allocated, pre-entry verifications and post-audit reports.
  1. In addition to the database maintained for the importers, Trade Board maintains files for each of the manufacturers. These files will carry reports on factory visits, documentation and minutes of meetings with the manufacturer and all other reports and correspondence that may be required for future references.
  1. If a manufacturer has to dump imported refined sugar due to spoilage or any other factor, the manufacturer must first notify and obtain the approval of the Trade Board. The Jamaican Customswould however supervise the dumping procedure.
  1. Ensure a time-frame for the delivery of service as follows:

Registration of Manufacturer/Importer

Pre-Verification Inspections

Approval of licence applications

Post entry verification

All importers and/or manufacturers will be subject to a post-audit to be conducted by Customs and Trade Board. The verification process is designed to determine compliance with the requirements of the regime and will be conducted as follows:

  1. Ensure that the importer/manufacturer has complied with all the statutory requirements and maintains proper accounting records;
  1. Ensure that the importer and/or manufacturer present his accounting and production records for inspection by Customs and Trade Board. In addition all manufacturers are required to maintain a Customs Post-Audit Spreadsheets.
  1. Ensure that the manufacturing process is in conformity with the pre-audit inspection conducted by Trade Board;
  1. Check the quantities imported against amounts allocated and pre-determine usage levels to determine compliance with requirements.
  1. Prepare report of the investigations for review by the Advisory Committee to determine any decision to allocate, withdraw or reduce quantities in accordance with the Refined Sugar Regime.
  1. Ensure that decisions to withdraw or reduce quantities are adequately documented and, that all necessary steps are taken to have a meeting with an officer of the importer/manufacturer before an adjustment to quantities is made. All such decisions are communicated in writing.
  1. Trade Board/Customs will carry out periodic inspections of retail establishments to ensure that these entities have for inspection documentation to support the quantities of refined sugar in their possession. If retailers are found to be in breach appropriate steps are taken in accordance with the Regulations.
  1. Operators of conveyances of refined sugar will be required to have documentation showing that the sugar being conveyed is in accordance with the regulations. If these operators are found to be in breach appropriate steps will be taken in accordance with the regulations.

Refined Sugar registration forms

A package of all forms needed for the registration process is available at the Trade Board limited or may be downloaded from the Trade Board website at This package includes:

-Application form

-Registration form

-Product analysis form

-Declaration form

Margaritta Sherwood

Ministry of Industry, Investment & Commerce

June 21, 2010

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