Adv. Gill Nadel
In November 2012, the Standards Institution of Israel published a new version of Regulation 401, which entrenches various temporary orders that had been published since the previous version of Regulation 401 came into effect. The newer edition establishes new systems with the purpose of improving the existing processes by which an Official Standard Certificate is acquired and making them more efficient.
A significant change in the revised version of Regulation 401 was the list of causes for giving an importer the "violating importer" status and the causes for removing him from this status. We will go into further detail on this matter in due course.
Regulation 401 details the type of inspections which may be applied to imported goods, including a sampling examination and a prototype inspection, random inspections and inspections of release. The process by which goods are released and inspections are carried out on those goods often entails the production of documents, product files, various statements and commitments, arranging securities and/or other demands which, if the importer fails to comply, may cause him to be given the status of a "violating importer". As such, shipments imported by him will be inspected with a higher level of stringency, until his status as an importer is reevaluated.
The significance of this is that the importer must be familiar with the process of examining whether the products he imports are compatible with the requirements set by the relevant Israeli standards, and particularly, the importer must be familiar with the obligations that apply to him according to the Regulation.
The primary obligations are as follows: the obligation to market the goods only after the importer has marked them in accordance with the instructions of the official standard; the obligation to market the goods only after completing the process by which defects have been removed and it has been confirmed that the goods comply with the requirements set by the official standards, as applicable to them; the obligation to possess a product file of a sample for seven years after the last date of release of that specific sample; the obligation to meet the schedule of inspections and ordering inspections; the obligations regarding the process by which goods are destroyed.
A "violating importer":
The primary sanction that can be taken against an importer is to place give him the status of a "violating importer". As mentioned, this means the shipments he imports will be subject to stringent inspections. Among other things, the shipment recognition will be carried out in port, the sample that will be inspected according to the S. addendum will be larger, the importer may be required to deposit a bank guarantee and in certain cases permission for the conditioned release of the products will not be granted until the Official Standard Certification is received.
Regulation 401 in its current, revised form expands the list of causes for which an importer can be given the status of "violator", and they are:
A. Failing to set a date for an identification and sampling inspection that is no later than 30 days after the release of the goods from Customs, or an incompatibility discovered upon inspection; changes discovered in the samples during the process for granting approval for release without the importer notifying the Standards Institution of such; the discovery of misleading classifications and/or inappropriate documents/declarations for the purpose of avoiding inspection; failing to provide samples to the Standards Institution within 30 days of when the approval for the release of the goods from Customs was issued; violating the obligation not to market, sell or transfer the goods before receiving the Official Standards Certificate from the Standards Institution of Israel.
B. When removing defects - failing to set a date for the defect removal inspection within 60 days of when the inspection was ordered; an incompatibility that has been discovered in the identification inspection or the defect removal inspection; failing to provide a sample of a shipment whose defects have been removed within 14 days from the date of approval of the order for proving the ability to remove defects; failing to summon a representative of the Standards Institution of Israel for an identification and sampling inspection and a defect removal inspection within 14 days from the date on which the notification letter was sent due to failure to remove defects.
C. Failing to comply with obligations regarding the process for destroying or returning goods or failing to remove their defects; failing to approve the orders for carrying out various inspections within two weeks of their being dispatched; in addition, an importer will be given the status of violator based on written instructions received by the Standards Institution of Israel from the Standards Supervisor of the Israel Ministry of Economy.
Removing an importer from the status of "violating importer":
In order to get out of the status of "violating importer", the importer must present a "clean" history in relation to five regular consecutive shipments imported by the importer after entering this status.
Alternately, the importer can be removed from this status if he imports fewer than five shipments over the course of three years while meeting all his obligations as per the regulation, so long as there is no knowledge of the importer having made illegal imports.
Another option for the importer is to use concrete proof to present and convince the administrator of the relevant laboratory or department of the Standards Institution of Israel that he did not commit a breach of confidence.
In cases in which the ownership of a company has been transferred, the importer will be removed from the status of violator if it is found that the new owners have not been given the status of "violating importer" during the previous three years.
An importer will be considered a "serial violator" if he has been given the status of violating importer more than once a year or if he has committed a breach of confidence while he was still under the status of violating importer. As such, he will be forced to present a "clean" history over the course of 15 regular, consecutive shipments imported by him, including non-standard imports and small quantity imports.
We believe that these rigorous conditions constitute, among other things, a reaction to the criticism that was directed at the Standards Institution of Israel in the State Comptroller's Report for 2011. This report, which examined the work of the Standards Institution of Israel in a number of fields, tested a number of processes for the inspection of compliance with standards of imported goods.
The findings of these tests led the State Comptroller to the conclusion that the Standards Institution of Israel does not take sufficient steps to prevent recurring instances of products being marketed without an Official Standards Certificate and the Comptroller expressed the opinion that it would be appropriate for the Standards Institution of Israel and the Standard Supervisor to examine additional ways to prevent the marketing of products that had not passed the standards inspection, in addition to the limitations that apply to an importer when given the status of "violating importer".
The new regulation came into effect in mid-November 2012.
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The content in this communication is provided for informational purposes only and is not intended to be comprehensive. It does not serve to replace professional legal advice required on a case by case basis. The firm does not undertake to update the information in this communication or its recipients about any normative, legal or other changes that may impact the subject matter of this communication. If you are interested in obtaining further information or wish to follow the legal developments in this matter, please contact Adv. Gill Nadel - Chair of the firm's Import, Export and International Trade Law Practice, Tax Department. Email: Gill.Nadel@goldfarb.com, phone: +972-3-6089979.