Attorney Gil Nadel
A few months ago we published an article about regulation 401 of the Standards Institution of Israel, which deals with obligations that are applicable to importers in matters of upholding the requirements of Israeli standards, the process by which an Official Standard certificate is acquired and the status of "violator"
Last November, the Standards Institution of Israel published a new edition of regulation 401, which secures various temporary orders that had been publicized since the previous regulation 401 had come into effect. This new edition of the regulation determines new systems whose purpose is to improve and make efficient the existing processes by which the Official Standard certificate is acquired.
A significant change in this revised version regulation 401 is the list of causes for placing an importer in a status of "violator"and removing him from this status. We will go into further detail on this matter in due course.
As detailed in our above mentioned article, regulation 401 details the type of inspections which may be given 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 the inspections carried out on those goods often entail the production of documents, product files, various statements and commitments, arranging securities and/or other demands which, if the importer fails to uphold, may cause him to be placed in a status of a violating importer. As such, shipments imported by him will be inspected at a higher level of stringency, until his status as importer will be reevaluated.
The significance of such is that the importer must be familiar with the process of examining whether the products imported by him are compatible with the requirements set by Israeli standards, as relevant to these products, and particularly, the importer must be familiar with the obligations that are applicable to him according to the regulation.
The following are the primary obligations:
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 correspond 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 him under the status of a violating importer. As such, the shipments imported by him will be subject to a stringent regiment of inspections. Among other things, the shipment recognition will be carried out in the port, the sample that will be inspected according to the S. addendum will be larger, the importer may be required to deposit a bank security and in certain cases permission for the conditioned release of the products will not be granted until the Official Standard certification will be received.
Regulation 401 in its current form, has expanded the list of causes for which an importer can be placed under the status of "violator", and they are:
Failure to set a date for an identification and sampling inspection no later than 30 days after the goods were released 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; failure to provide samples to the Standards Institution within 30 days after the approval for the release of the goods from Customs has been issued; violating the obligation not to market or sell or transfer the goods before receiving the Official Standards certificate from the Standards Institution.
When removing defects- failure to set a date for the defect removal inspection within 60 days of the inspection having been ordered; incompatibility that has been discovered in the identification inspection or the defect removal inspection; failure 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; failure to summon a representative of the Standards Institution 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.
Failure to uphold obligations regarding the process for destroying or returning goods or for failure to remove their defects; failure to approve the orders for carrying out various inspections within two weeks of their dispatch; in addition, an importer will be placed under the status of violator based upon written instructions received by the Standards Institution from the Standards Supervisor of the Ministry for Industry Trade and Labor.
Removing the status of a violating importer:
In order to get out of the status of a violating importer the importer must present a "clean" history in relation to the five regular consecutive shipments that have been imported by the importer after entering this status.
Alternately, the importer can be removed from this status if he will import less than five shipments over the course of three years and has upheld all his obligations as per the regulation, so long as there is no information 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 that he had not committed 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 placed under the status of violator during the previous three years.
An importer will be considered a "serial violator" if he has been placed under 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 in the state comptroller's report for 2011. This report, which examined the work of the Israeli Standards Institution in a number of fields, tested a number of processes for the inspection of compatibility with standards of imported goods.
The findings of these tests led the state comptroller to the conclusion that the Standards Institution does not take ample steps towards preventing recurring instances of products being marketed without a certificate of standard compatibility and the comptroller expressed an opinion that it would be appropriate for the Standards Institution and the Standard Supervisor to examine additional ways by which to prevent the marketing of products that had not passed the standards inspection, in addition to limitations which apply to an importer when placed under the status of violator.
The new regulation came into effect in mid-November.