Adv. Gadi Kaye, Adv. Gill Nadel
For almost two years, importers of spare parts and various accessories, which are considered as transportation products for motor vehicles, face significant difficulties regarding the various marking requirements set by the competent authority in the Ministry of Transportation.
As a rule, many goods that are imported to Israel have marking requirements. Among these are the rules of marking the country of origin (country of manufacture), marking the identity of the manufacturer, marking various warnings on goods that can cause risks, etc.
The marking requirements for transportation products:
In Israel, as far as transportation products are concerned, there are two principle marking requirements: first, the requirement to clearly mark the country of origin; secondly, the requirement to mark the name of the manufacturer and his address on the goods. In addition to these two requirements, importers are also required to get import certification for transportation products.
There is no doubt that these requirements are completely reasonable, and they would not occupy importers to a great extent, were it not for the requirement of the Ministry of Transportation that states that transportation products must reach Israel properly marked, prior to import. This means that the markings must be made in the manufacturer’s factory abroad, and by the manufacturer himself.
Yet, despite these requirement it is not quite clear if in fact the Ministry of Transportation has the authority to set them at all.
It should be further noted that in our opinion, the legal source on which the authorities rely in determining marking requirements together with their timing, suffers from a substantive flaw; the Ministry of Transportation issued protocol instructions relying on the Directive for Supervision of Goods and Services (Manufacture and Trade of Transportation Products) 5743-1983, but that directive differentiates between provisions relating to the legality of trade and supervision over the quality of goods- which apply at the time of import, and of the provisions relating to product marking, which only apply at the stage of sale in Israel.
In our opinion, the protocol instructions issued by the Ministry of Transportation which require, as mentioned, marking transportation products before import- are illegal and issued without legal authorization. Importers‘ daily struggle with the unreasonable requirements.
In any case, the requirement creates a huge difficulty for importers of transportation products, since they have to meet strict marking requirements for products which are- located overseas, not in their control, before the import takes place, while entirely dependent on the good will and attention of the foreign manufacturer (and obviously it is not reasonable to require the importer to send a representative on his behalf to the manufacturer’s factories abroad to supervise this issue).
Not only this but even if the product were to reach Israel in closed packages with all the required marketing details filled in the document inside the packaging, this is not enough for the authorities – the importer must attach the marking details on the product itself or on the packaging and if he does not do so, he is subject to financial sanctions of monetary penalties.
The punishment in the case of failure to mark as required is a financial penalty:
In the case of the goods reach Israel without being properly marked ahead of time in the country of origin, this constitutes a violation of the legality of import, which requires the importer to pay a financial penalty of a certain percentage of the value of the goods, which can in some cases reach sums of tens of thousands of NIS (!) In other words, an importer of transportation products is kept in huge suspense while waiting for goods to reach Israel, and only when they arrive can he breathe safely, when it turns out that they were properly marked.
Importers have made attempts to change the situation.
In light of the huge difficulties and the references of many importers to the competent authority in the Ministry of Transportation, various parties in the office have also expressed their opinion on the subject, and in various letters published by the Ministry of Transportation, the competent authority established a sort of „grace period“, again and again. Thus, for example, in a letter issued by a senior official in the Ministry of Transportation during September 2009, it was written that due to the fact that in many cases shipments of transportation products reached Israel without being properly marked, importers will be given a sort of „adjustment period“ until the end of October 2009, to mark the goods (country of manufacture, name and address of manufacturer) themselves in the customs house or even on their premises, without being subject to any punitive sanction whatsoever.
This adjustment period was repeatedly extended , each time for another month, by the competent parties, out of understanding for the great difficulty that the marking requirements create for importers, and out of an understanding that this is an unrealistic expectation.
Until recently, the Ministry of Transportation allowed the name and address of the manufacturer to be marked even after the transportation products reached Israel, so long as the marking took place „before they reached the shelves“, but such leniencies were not given on the subject of marking the manufacture’s country, even though the difficulty in both cases is identical. In cases where transportation products reach Israel without their country of manufacture being properly marked, the importer is fined for no substantial sums.
Such rigid requirement do not exists in other fields.
As far as we know, this requirement of marking prior to the arrival of the goods to is exceptional and unique and has no parallel, neither in regard to other marking requirements during import (for example, marking Ministry of Health warnings on cigarette packages), nor in the requirements of the regulator which, during import, make sure the goods meet certain standards before being released from customs. Even when marking food products there is no such requirements, and this is also exceptional and unique when comparing to marking requirements of the Customs Authorities in other states. In all these cases, the goods can be marked before being released from customs and in some cases even in the importer’s warehouses after being released from customs‘ supervision, as long as they are properly marked before being marketed to consumers in Israel.
The absurdity in the requirements for marking transportation products and their timing, is more conspicuous in light of the fact that regarding marking EME (Engineering Mechanical Equipment) spare parts of vehicles, which have similar marking requirements from the exact same supervision directive, instructions were issued by the competent authority in the Ministry of Transportation extending and re-extending the „grace period“ that allows the requirements markings to be made after import without the importer facing any punitive-monetary sanction, as long as the product is properly marked before consumption by the final user, and even a few days ago, on 3.01.2011, an instruction extending the grace period to the end of February 2011 was issued.
For all the reasons detailed above, importers have attempted to change the situation by meetings with the Ministry of Transportation, but they have not succeeded so far. Unfortunately despite the great efforts that have been made in this field, the Ministry of Transportation remains firm in its position and requires that the country of manufacture be marked before the goods enter Israel or else the importer faces paying a fine, which all importers of various types of spare parts for vehicles fear the most.
No good news from the Ministry of Transportation on the matter :
Following this background, and following a series of meetings and activities recently held on the matter, importers did expect the Ministry of Transportation to change its stance, but these hopes were shattered. However, a new instruction was recently published by the Ministry of Transportation, titled „Marking Transportation Products- Declaration of Intent of the Ministry of Transportation“, in which an extension of only 90 days was given, during which the importer could mark the manufacturer’s particulars (name of manufacturer and commercial symbol) on the goods before release from customs, but in terms of marking the country of manufacturer, there was no good news in the above instruction- not of a single day, and so up until today an importer who imports transportation products that reach Israel without the country of origin being marked, even for reasons that do not depend on him, faces significant financial sanctions and fines.
Such rigid marking requirements are illogical:
The rationale behind the marking requirements on transportation products, including marking country of origin, is for the benefit of the final users in Israel- vehicles owners, so that they can know the origin of the spare parts that they buy, the name of the manufacturer, etc.
But we believe the unbearably heavy burden placed on importers, without any justification, beyond the harm that it causes importers, may also end up hurting the interests of the final users of the transportation products, since small importers without deep pockets, and who constantly fear being fined for improper marking before the goods‘ arrival, may find themselves out of the game, which will certainly lead to the weakening of healthy competition in the field, and to higher prices. Furthermore, the heavy importers who will continue to import spare parts for vehicles, despite their fear of fines, which are occasionally collected, will eventually roll this expense to their clients, and this too will raise the prices for spare parts.
To summarize, we believe that proper and appropriate enforcement of the various marking requirements should be applied by the Ministry of Transportation and not by the Customs Authority, exactly as the Ministry of Transportation enforces other laws relating the way that mechanics operate, etc. There is no relation between the moment the goods are imported and their release from customs supervision, and between the marking requirements, which are more relevant and applicable to the time of their actual consumption by the final users. It logically follows that we believe that the various marking requirements, even in cases when they are proper and appropriate, should apply and be enforced directly before the goods are presented to the consumer on the shelves and consumed by him, and by the Ministry of Transportation and not the customs officers.
We further believe that the Ministry of Transportation should weigh the process again, and rule that the various marking requirements can all be fulfilled after the transportation products reach Israel without setting a limited period of time, but as a matter of policy as is the case for many types of goods. The enforcement of the marking requirements can be done just as well by the Customs Authority, which enforces regulatory requirements for various types in an efficient and comprehensive way.
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by Gill Nadel, Advocate