OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA 7th Year No. 29 ADDIS ABABA - 26th June , 2001 CONTENTS Proclamation No. 241/2001 International Development Association Credit Agreement for Financing Economic Rehabilitation Support Ratification Proclamation Page 1526 PROCLAMATION No. 241/2001 A PROCLAMATION TO RATIFY THE CREDIT AGREEMENT BETWEEN THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION WHEREAS , a Credit Agreement , between the Federal Development Association stipulating that the International ( one hundred sixteen million six hundred thousand Special Program , was signed in Washington D.C. on the 19th day of June , 2001 ) WHEREAS , basic economic international agreements have to be ratified prior to entry into force ; WHEREAS , the House of Peoples ' Representatives of the Federal Democratic Republic of Ethiopia has ratified said NOW , THEREFORE , in accordance with Article 55 ( 1 ) and ( 12 ) of the Constitution , it is hereby proclaimed as follows : Short Title This Proclamation may be cited as the “ International Development Association Credit Agreement for Finan cing Economic Rehabilitation Support Ratification Proclamation No. 241/2001 ” . Unit Price 2.30 INegarit G.POBox 80,00 The African Law Archive 2. Definition In this Proclamation “ Credit Agreement ” means the Credit Agreement No. 3512 - ET signed in Washington D.C. on the 19th day of June , 2001 , between the Federal Democratic Republic of Ethiopia and the International Development Association . 3. Power of the Minister of Finance The Minister of Finance is hereby empowered to undertake all acts necessary for the utilization of the Credit amount of SDR 116,600,000 ( one hundred sixteen million six hundred thousand Special Drawing Rights ) in accordance with the terms and conditions set forth in the Credit Agreement . 4. Effective Date This Proclamation shall enter into force as of the 26th day of June , 2001 . Done at Addis Ababa , this 26th day of June , 2001 . PRESDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The African Law Archive 5 July , 2001- ~ Page 1593 3 ) re - exporting commodities , or raw materials , they have imported upon payment of duties , for being not in conformity with purchase specifications , damaged , short delivered or not in market demand ; 4 ) Notwithstanding the provision laid - down above , persons or organizations partially or occasionally engaged in exporting their products shall not be beneficiaries of the schemes established by this Proclamation , where raw - materials equivalent in price and quality to those they imported are locally available . Directives to be issued by the Minister of Finance shall regulate the implementation of this Sub - Article . 6. Duty Draw - Back 1 ) Duties paid at the port of entry and locally , on goods imported by the beneficiaries indicated under Article 5 above shall be refunded to the beneficiaries of the scheme upon fulfillment of conditions laid - down in this Proclamation with respect to duty draw - back . 2 ) Notwithstanding the provisions laid - down under Sub - Article ( 1 ) of this Article , duties paid on commodities or raw - materials shall not be refunded where the amount of duty paid is less than birr 1000 ( one thousand Birr ) . 3 ) The duty to be drawn - back in accordance with this Proclamation shall be paid to the beneficiary by the Ministry of Finance . 4 ) Where , part of the payment effected in accordance with Sub - Article ( 3 ) of this Article had been collec ted by the revenue authorities of the Regional Governments , such payment shall be reimbursed to the Ministry of Finance by the relevant body . 7. Duty Draw - Back Rate 1 ) When the export of raw material or commodity on which duty to be drawn - back is ascertained : ( a ) if re - exported in the same condiuun 95 % ( ninety five percent ) ; ( b ) if exported after being processed or used for packing containing 100 % ( one hundred per cent ) of the duty paid shall be refunded . 2 ) The Customs Authority shall transfer to the Ministry of Finance the amount of the tax and duty to be drawn back on each commodity exported after having been domestically produced , together with the Bank Account Number of the beneficiary . Conditions to be fulfilled in Order to Become the Beneficiary of the Duty Draw - Back Scheme 1 ) The commodity produced with the raw material should be exported within one year from the date on which such raw material has been imported or purchased locally ; 2 ) The beneficiary of the Draw - Back Scheme shall , before exporting the commodity or raw material , declare to the Authority upon presentation of suppor ting documents that he is prepared to export and that he intends to claim draw - back . The declaration presented shall include the following : ( a ) the name and address of the claimant ; ( b ) if the raw material or commodity is imported , the date of importation and the import transac tion documents ; ( c ) the document proving the amount of duty paid ; ( d ) the type and quantity of the commodity or raw material on which draw - back is claimed ; The African Law Archive No. 39 5 July , 2001– Page 1594 ( e ) input output coefficient ; ( f ) the type and the detailed description of the manner of exportation of the commodity to be exported : ( g ) if the commodity or raw material is re - exported in the same condition , the damage that could be caused by not being re - exported . 3 ) The burden of proof that the duty claimed and the raw material and commodity presented that for draw back are in accordance with this Proclamation shall rest with the claimant of the drawback , failing which the Customs Authority shall have the discretion to make its own decisions . 4 ) The claimant shall give all assistance to the Customs Authority while it conducts inspection to prove the accuracy of duty drawback claim . Section 2 Voucher Scheme Beneficiaries of the Scheme Beneficiaries of the Voucher Sheme are persons and organizations who have obtained eligibility certificate issued by the Ministry of Trade and Industry . 10. Conditions to be Fulfilled to become Beneficiary of the Voucher Scheme To become beneficiaries of the scheme persons and organizations must : 1 ) have manufacturing license ; 2 ) submit at the beginning of the budget year their annual business and export plan ; 3 ) submit input - output coefficient ; 4 ) supply information concerning raw materials wasted in the process of production ; 5 ) submit evidence of export performance in the last two years , if they are not new to the sector ; 6 ) sign an agreement with the Customs Authority undertaking to fulfill obligations enabling them to become beneficiaries of the Scheme ; 7 ) If the raw materials are imported on supliers credit or ( a ) submit evidence confirming that the com modity has demand and that the demand is confirmed by a purchase order issued by the prospective buyer or submit a purchase agreement concluded with the prospective buyer ; ( b ) if the raw material is sent by a foreign company to its local affiliate with the objective of producing export commodities submit memorandum describing the mode of af filiation between the two companies . 8 ) If the exporters are new entries into the sector : ( a ) submit their annual export plan ; and ( b ) submit an investment certificate and / or trade license from the appropriate ernment organ . 11. Procedures for the Application of Voucher Scheme 1 ) The Customs Authority shall issue vouchers , in the amount of taxes and duties to be paid on raw materials they may import , to producers who are eligible to become beneficiaries upon satisfying the conditions laid down under Article 10 . The African Law Archive No. 39 5 July , 2001 – Page 1595 2 ) On arrival of the imported raw materials at the Customs post , the raw materials shall directly be transferred to the private warehouse in the premises of the production site after the exporter has deposited with the Customs Authority the vouchers in the amount of taxes and duties to be paid . 3 ) Customs formalities shall be carried out in the producers private warehouse . 4 ) Raw material imported under the Voucher Scheme may not be sold in the local market . Any producer who , in violation of the prohibitions provided herein , sells the raw materials imported under the Voucher Scheme , shall forfeit his right to use the Scheme . 5 ) Notwithstanding the provisions of Sub - Article ( 4 ) above , if the producer , because of events beyond his control , has terminated his export activity , shall , after securing the consent of the Customs Authority , sell the raw materials upon payment of duties and taxes together with interest thereon . 6 ) Export Commodities produced from raw materials imported under the Voucher Scheme shall be de clared and exported in accordance with Customs Procedure Code issued for this purpose by the Customs Authority . 7 ) Raw materials imported under the Voucher Scheme must be fully utilized within one year from the date of their importation . However , taking into consideration the nature of the raw material , the Customs Authority may extend this period for an additional one year . 8 ) If the Ministry of Trade and Industry accepts the input output coefficient submitted by the producer in accordance with Article 10 ( 3 ) , the Customs Authority shall assess the taxes and duties payable on the raw materials imported under the Voucher Scheme on the basis of this input output coefficient and settle the voucher on the basis of such assessment . 9 ) The Customs Authority shall commence the assess ment referred under Sub - Article ( 8 ) above on the first day of the eleventh month from the date on which the raw material is imported or purchased locally , and the assessment must be completed within thirty days . 10 ) If raw material remains unutilized from what has been assessed , unless the period in which the raw material must be utilized is extended in accordance with Sub- Article ( 7 ) , the producer shall be made to pay the taxes and duties on such raw materials together with the interest thereon . 11 ) The Customs Authority shall carry out an assessment of taxes and duties , paid by beneficiaries of the Voucher Scheme on raw - materials purchased locally to be used for producing export commodities , on the basis of which refund shall be made . The Ministry of Finance shall on the basis of the assessment refund the taxes and duties so paid . 12 ) Beneficiaries of the Voucher Scheme , in addition to input output coefficient submitted in accordance with Article 10 ( 3 ) , shall submit a memorandum showing the amount of raw material wasted in the course of production process , the amount and type of by product to be supplied to a foreign or local market , the input used out of the raw material imported in the production of the by - product , in percentage , during the execution of the annual production plan . The African Law Archive 5 July , 2001– Page 1596 12. The Voucher 1 ) The Customs Authority shall , on the basis of the export plan sent to it from the Ministry of Trade and Industry , determine the amount of voucher to be issued and notify same to the Ministry of Finance . 2 ) The Ministry of Finance shall , upon the request submitted by the Customs Authority , issue vouchers that will be used by the beneficiaries of the Voucher Scheme as deposit for taxes and duties payable on raw materials they import . 3 ) Vouchers issued in accordance with Sub - Article ( 1 ) above shall : ( a ) have monetary value ; ( b ) be not - transferable to third parties ; ( c ) be denominated in Birr 100 , Birr 50 , Birr 10 , Birr 5 and Birr 1 notes to facilitate their use as deposit . Section 3 Bonded Manufacturing Warehouse 13. Beneficiaries of the Scheme Beneficiaries of the Bonded Manufacturing Warehouse Scheme are producers wholly engaged in exporting their products who are not eligible to use the Voucher Scheme and who have license that enables them to operate such Warehouse . 14. Condtions to be Fulfilled In order to become Beneficiary of the Bonded Manufacturing Scheme Persons that can be beneficiaries of the Bonded Manufac turing Warehouse Scheme are persons who have fulfilled the following conditions : 1 ) have manufacturing license ; 2 ) having warehouse that has fully complied with all requirements provided for by Customs laws and regulations ; 3 ) that have paid allowances to the Customs officials assigned in the warehouse and license fees as determined by law ; 4 ) present evidence showing that they have insured the warehouse ; 5 ) that can provide to the Customs Authority their annual export plan showing the type , uantity and value of the products they intend to export during the year , and the raw materials they import to use in such products ; 6 ) submit input - output coefficient ; 7 ) In addition to input and output coefficient submit a memorandum showing the amount of raw material wasted in the course of production process , the amount and type of by - product to be supplied to a foreign or local market , the input used out of the raw material imported in the production of the by product in percentage , during the execution of the annual production plan . 15. Procedures for the Application of Bonded Manufacturing Warehouse Scheme 1 ) The customs official and the exporter shall jointly lock the licensed warehouse . The African Law Archive No. 39 5 July , 2001 – Page 1597 2 ) The Exporter who imports raw materials shall com plete transit formalities at the port of arrival and the raw materials shall directly be transferred to the warehouse . All necessary Customs formalities shall be completed at the Warehouse . 3 ) The raw material to be used for production must be removed in the presence of the Customs official . 4 ) The product shall be registered and transferred to the warehouse and shall be exported after all Customs export formalities have been completed . 5 ) Unless the raw materials tranferred into the warehouse are fully utilized and unless the products are exported within one year from the date of transfer to the warehouse , the exporter shall be made to pay the taxes and duties together with the interest thereon . 6 ) If products manufactured by the use of the raw materials imported free of duty through the Bonded Manufacturing warehouse Scheme are sold locally . the Customs Authority shall transfer all required documents and information to the Inland Revenue Authority so that the Sales and Excise tax due thereon may be collected . 7 ) If , because of events beyond his control the producer has terminated his export activity , he shall , after securing the consent of the Customs Authority , sell the raw materials and the products locally upon payment of duties and taxes together with the interest thereon . Section 4 General 16. Input - Output Coefficient 1 ) The Ministry of Trade and Industry shall develop the input - out put Coefficient within one year from the date of entry into force of this Proclamation . 2 ) Until the input - output coefficient is developed in accordance with the provisions of Sub - Article ( 1 ) above , the input , output coefficient developed by the exporters or producers shall be reviewed by the Ministry of Trade and Industry and be put into use . Raw Materials Wasted in the Process of Production When calculating the raw material used in the produc tion of export commodities , the wastage and scrap of raw material shall be taken into account . Duties and Responsibilities of the Customs Authority 1 ) Issue directives regarding the procedures to be followed by persons and organizations that are beneficiaries Bonded Manufacturing Warehouse Scheme established under Proclamation . 2 ) Allow , for good cause , the extension of the period of limitations provided for in this Proclamation , for persons and organizations who are beneficiaries of the Duty Drawback and Bonded Manufacturing Warehouse Schemes for a period not exceeding one year . 19. Directives The Minister of Finance is hereby empowered to issue directives proper implementation of this Proclamation . The African Law Archive - No. 39 5 July , 2001– Page 1598 20. Offences 1 ) Unless the relevant provisions of the Penal Code impose greater penalty , any Duty - payer who , with the intention of evading or under paying the duty . makes false declaration concerning his production activity , prices , or submit incorrect books of ac counts and supporting documents or refuse to supply , or conceals information necessary , or in way , obstructs or attempts to obstruct the work of the Authority shall upon conviction by the court be punishable : ( a ) with five year imprisonment and birr 25,000 ( twenty five thousand Birr ) fine , if the offense is committed for the first time ; ( b ) with ten years imprisonment and birr 50,000 ( fifty thousand Birr ) fine , if the offense is committed for the second time ; ( c ) in addition to fifteen years imprisonment and birr 75,000 ( seventy five thousand Birr ) fine , his incentive privilege shall be withdrawn , if the offense is committed for the third time . 2 ) Any person who sold raw materials imported under the Voucher or Bonded Manufacturing Warehouse Schemes , or sold commodities it produced with raw materials imported under such schemes locally without payment of taxes and duties and interest due thereon shall , upon conviction by the court , be punishable with 15 years imprisonment and a fine of Birr 75,000.00 . 3 ) Any person who , in any way , obstructs or attempts to obstruct the implementation of this Proclamation or regulations and directives to be issued hereunder , shall upon conviction by the court , be punishable in accordance with the Penal code . 1 ) Export Trade Duty Incentive Scheme Establishing Proclamation No. 69/1993 is hereby repealed . 2 ) Any law inconsistent with this Proclamation shall be inapplicable with regard to matters provided for in this Proclamation . 22. Transitory Provisions Raw materials imported on deposit or guarantee prior to the coming into force of this Proclamation for the ' production of export commodities shall be finalized in accordance with legislations that were in force . 23. Effective Date This Proclamation shall enter into force as of the 5th day of July , 2001 . Done at Addis Ababa , this 5th day of July , 2001 . PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The African Law Archive