Tariff Quotas (Ministry of Economy, Trade and Industry)
Interlink編集部What is a Tariff Quota (Ministry of Economy, Trade and Industry)
A Tariff Quota (Ministry of Economy, Trade and Industry) is a system mainly applied to the importation of leather and leather shoes, where a lower tariff rate is applied within a specified quantity limit, and a higher tariff rate is imposed on quantities exceeding that limit.
The Tariff Quota system is designed to secure a certain level of import opportunities while mitigating sudden impacts on domestic industries. In English, this is referred to as a Tariff Quota or Tariff Rate Quota.
The Ministry of Economy, Trade and Industry oversees tariff quotas primarily for products such as bovine and equine leather, sheep and goat leather, and leather shoes. Importers can obtain a tariff quota certificate in advance and use it at the time of import declaration to benefit from the lower tariff rate within the quota quantity.
If the certificate is missing, expired, the name or product does not match the declaration, or if the declared quantity exceeds the remaining quota on the certificate, the lower tariff rate cannot be applied. Instead, regular agreement tariff rates, WTO agreement tariff rates, or secondary out-of-quota rates may apply.
Maritime Wiki approaches tariff quotas not as a simple system introduction but from a practical perspective for importers, freight forwarders, and customs brokers: what must be verified before import customs clearance, which documents should be prepared, and how to manage tariff rates, CIF pricing, certificate quantities, NACCS processing, and certificate return procedures.
Scope Covered in This Article
This article focuses on the tariff quota system for leather and leather shoes under the jurisdiction of the Ministry of Economy, Trade and Industry. It outlines the purpose of the system, applicable products, annual quotas, reallocation, existing importers and new applicants, the process from application to customs clearance, tariff quota certificates, the relationship with EPA tariff rates, CIF pricing, NACCS, return management, and the scope of checks performed by freight forwarders and customs brokers.
| Item | Content Covered in This Article | Content Covered in Other Articles in Detail |
|---|---|---|
| Basics of Tariff Quotas | Explanation of the system applying lower rates up to a set quantity and higher rates for excess quantities. | Tariffs, tariff rates, import declarations |
| Items Under METI Jurisdiction | Products subject to tariff quotas such as cow and horse leather, sheep and goat leather, and leather shoes. | HS codes, statistical item numbers, product classification |
| Primary and Secondary Tariff Rates | Differences between the lower rate within the quota and the higher rate outside the quota. | Agreed tariff rates, WTO agreed tariff rates, selective tariffs |
| Annual Quotas and Reallocations | Annual application quotas and additional allocation opportunities during the fiscal year. | Application periods, annual publication, application forms |
| Existing Importers and New Applicants | Differences between those with prior certificate issuance and import clearance history and new applicants. | Import records, CIF pricing, Import Permit notifications |
| Tariff Quota Certificates | Management of certificate holder, quantity, validity period, remaining quota, usage, and returns. | NACCS, certificate return, content amendments, reissuance |
| Relationship with EPA Tariff Rates | Comparison of tariff quotas with EPA/FTA preferential rates and guidance on which to apply. | EPA, FTA, Certificates of Origin, order of tariff application |
| Relationship with CIF Price | Importance of CIF price for application requirements, verifying import records, and determining taxable value. | Taxable value, freight, cargo insurance, invoices |
| Roles of Freight Forwarders and Customs Brokers | Clarification that the focus is on pre-clearance confirmations, verification of quantities, tariff rates, and document consistency—rather than certificate acquisition. | Import declarations, customs clearance requests, customs examination |
Purpose of the System
The purpose of the tariff quota system is to protect domestic industries by supplying a set quantity of imported goods to domestic consumers at a lower tariff rate, while applying a higher rate to imports exceeding that quantity.
Leather and leather shoes are important product groups under the tariff quota system in relation to domestic industry protection. In particular, tariffs on leather shoes can vary significantly depending on whether a tariff quota applies, making prior confirmation of the system essential for importers.
The tariff quota is not simply a system for using a lower tariff rate. It should be understood as a management system covering the application timing, eligibility, issuance of certificates, control of certificate quantities, usage at customs clearance, NACCS processing, and obligations for refunding.
Applicable Items
The Ministry of Economy, Trade and Industry’s tariff quotas mainly cover leather and leather shoes.
| Category | Representative Items | Main Points for Verification | Practical Notes |
|---|---|---|---|
| Cattle and Horse Leather | Dyed or otherwise treated cattle and horse leather, and others | Leather type, processing condition, surface area, statistical item number | Do not judge by product name alone; confirm material and processing condition. |
| Sheep and Goat Leather | Dyed or otherwise treated sheep and goat leather | Leather type, intended use, processing condition, surface area | Handled separately from cattle and horse leather; avoid classification errors. |
| Leather Shoes | Footwear made of or containing leather, excluding sports shoes and slippers | Upper material, sole material, intended use, size, shape, statistical item number | Tariff classification and rates vary by upper, sole, and use, not just appearance. |
| Items That May Be Excluded | Sports footwear, slippers, footwear mainly made of non-leather materials, etc. | Intended use, material composition, HS code, applied tariff schedule | If excluded, confirmation focuses on standard tariff rates rather than quota certificates. |
Determining whether an item is subject to tariff quotas cannot be based on the product name alone. It is necessary to check the HS code, material, intended use, structure, leather type, sole and upper materials, and statistical item number to decide if the item falls under the applicable categories.
For leather shoes, since tariff codes and rates vary depending on the upper and sole materials, intended use, size, and shape, using customs pre-classification advice may be considered where appropriate.
Practical Importance of Tariff Rate Differences
The tariff quota system is significant because there is a substantial difference in tariff rates between quantities within and beyond the quota.
For leather and leather shoes under the jurisdiction of the Ministry of Economy, Trade and Industry, the primary tariff rate applies within the quota quantity, while a secondary tariff rate applies to quantities exceeding the quota. In the case of leather shoes, the secondary rate may be either a specified ad valorem rate or a fixed amount per pair, whichever is higher.
This approach is similar to the selective tariff system organized under existing tariff classifications. In other words, not only the ad valorem rate but also the fixed tax amount per unit affects the import cost, so lower-priced leather shoes can experience a significant impact on import cost due to the fixed amount per pair.
| Tariff Rate Category | Description | Common Issues for Leather Shoes | Documents to Verify |
|---|---|---|---|
| Primary Tariff Rate | The lower rate applied within the quantity range indicated on the tariff quota certificate. | If the remaining quantity on the certificate is insufficient, the rate may not be applied to the entire shipment. | Tariff quota certificate, NACCS remaining quantity, import declaration quantity |
| Secondary Tariff Rate | The higher rate applied to quantities exceeding the quota. | Import costs could rise significantly compared to initial estimates. | Implemented tariff rate schedule, HS code, declared quantity |
| Selective Tariff Type Rate | A method applying either the ad valorem rate or the specific duty amount, whichever is higher. | For low unit price items, the per-pair specific duty amount may have a large impact. | Invoice unit price, quantity, tariff rate schedule, taxable value |
| EPA Tariff Rate | Preferential tariff rates applied when origin requirements under EPA/FTA are met. | If lower than the tariff quota rate, using the EPA rate may be more advantageous. | Certificate of origin, origin declaration, EPA tariff rate, HS code |
Therefore, importers and customs brokers must verify the HS code of the targeted products at the quotation stage and confirm the product’s applicability to tariff quotas, primary and secondary tariff rates, EPA tariff rates, and the remaining quantity on the quota certificate.
Comparison with Other Systems
For the import of leather and leather shoes, not only tariff quotas but also regular tariff rates, WTO agreement rates, and EPA/FTA preferential rates may be applicable. It is necessary to compare which tariff rate is appropriate before customs clearance, rather than deciding solely based on whether a tariff quota certificate is held.
| System / Tariff Rate | Main Features | Required Checks | Practical Usage |
|---|---|---|---|
| Primary Tariff Quota Rate | A lower tariff rate applied within the quantity limit of the tariff quota certificate. | Applicable product, certificate holder, remaining quantity, validity period, declared quantity | Considered when the certificate is available and the rate is more favorable than the EPA rate or EPA use is not possible. |
| Secondary Tariff Quota Rate | A higher tariff rate applied when no certificate is held or for quantities exceeding the quota. | HS code, quantity, customs value, comparison of ad valorem and specific duty | Has a significant impact on import cost when the certificate is not obtained or quantity exceeds the quota. |
| EPA / FTA Preferential Rate | The tariff rate applied when goods are originating products from an EPA partner country, satisfying rules of origin. | Certificate of origin, origin declaration, rules of origin, direct shipment requirements, HS code | Consider using the EPA rate when it results in a lower tariff rate than using the tariff quota certificate. |
| Agreement Rate / WTO Agreement Rate | The standard baseline tariff rate generally applied on imports. | HS code, country of origin, tariff schedule, import declaration details | Serves as the reference rate when neither tariff quotas nor EPA apply. |
| Advance Ruling | A procedure to consult customs in advance regarding tariff classification and related matters. | Product information, photos, material, usage, structure, samples | Considered when classification of shoe uppers, soles, or usage is unclear. |
Using EPA rates may result in lower tariffs compared to using a tariff quota certificate. In such cases, the planned import quantity eligible for EPA rates should be excluded from the tariff quota application quantity.
Annual Quotas and Reallocation
Customs quota allocation includes annual quotas set for each fiscal year, and reallocations, which provide additional application opportunities during the fiscal year.
The annual quota serves as the basic allocation applied for at the start of the fiscal year. Reallocation allows for additional applications when the allocated quantity under the annual quota is insufficient or when certain system requirements are met.
| Category | Meaning | Application Checkpoints | Practical Notes |
|---|---|---|---|
| Annual Quota | The basic allocation applied for initially in the fiscal year. | Number of applications accepted, application period, applicant eligibility, quantity requested, required documents | Review planned import volumes within the fiscal year to avoid excessive applications. |
| Reallocation | An additional application opportunity provided mid-fiscal year. | Status of annual quota certificate issuance, usage performance, reallocation eligibility | May require not only holding the annual quota but also partial use as a condition. |
| Application Acceptance | Application periods and methods are announced per fiscal year and per round. | Deadline criteria (receipt date or postmark), mailing method, checklist, forms | Avoid using previous years’ application methods unchanged. |
| Issuance Period | After application and review, a customs quota certificate is issued. | Expected issuance period, presence of face-to-face review, requests for additional documents | Confirm certificate issuance timing before shipment and expected arrival dates. |
Since application periods, application categories, required documents, submission methods, and expected issuance periods are published annually, information from previous years should not be used as is. When planning imports, it is necessary to confirm whether to apply for the annual quota or use reallocation, and whether the certificate issuance timing aligns with shipment and arrival schedules.
Existing Importers and New Importers
Applicants for tariff quotas are classified as existing importers or new importers.
Existing importers are those who have received tariff quota certificates and have cleared imports within a specified period. For example, in the 2026 announcement, existing importers are defined as those who have received certificates and completed import clearance within the past two years.
New importers are those who do not qualify as existing importers but meet certain criteria regarding their self-imported cargo's CIF-based declared import value over a specified period before the application date. In the 2026 announcement, the criteria for new importers include having import records of at least JPY 500,000 over two or more customs clearances, or at least JPY 1,000,000 in a single customs clearance within one year before the application date.
| Category | Main Definition | Records to Confirm | Practical Notes |
|---|---|---|---|
| Existing Importer | An importer with a history of receiving tariff quota certificates and import clearance records. | Certificate issuance records, Import Permit notifications, import quantities cleared | Always verify the applicable period and definitions of records for each fiscal year. |
| New Importer | An importer who does not qualify as an existing importer but has a certain level of self-importing history. | CIF-based declared import value, Import Permit notifications, import contracts, payment records | Import records for leather and leather shoes are not always mandatory, but the importer’s own import history must be verified. |
| Self-Import | Import contracts, receipt, customs declaration, and payment are conducted under one’s own name. | Import Permit notifications, contracts, payment records, B/L, invoices | Records of domestic purchases or imports under another company’s name may be insufficient. |
| Quota Limits for New Importers | New importers may be subject to limits on application quantity or allocated quantity. | Tariff quota announcements, FAQs, application guidelines of the relevant fiscal year | It cannot be assumed that all planned import quantities can be applied for without restriction. |
Application Process Flow
When using tariff quotas, it is essential to verify eligibility, certificate acquisition, duty rates, and quantity management before ordering or shipping, rather than rushing after the import contract.
| Stage | Main Tasks | Check Points | Actions if Issues Arise |
|---|---|---|---|
| 1. Product Verification | Confirm if the intended import product qualifies as a tariff quota item. | HS code, material, usage, structure, statistical item number | If classification is unclear, gather product documentation and consider consulting a customs broker or requesting an advance ruling from customs. |
| 2. Duty Rate Comparison | Compare primary and secondary tariff quota rates, EPA rates, and regular duty rates. | Country of origin, EPA applicability, certificate of origin, remaining certificate quantity | If the EPA rate is more advantageous, consider excluding the quantity from the tariff quota application. |
| 3. Application Category Confirmation | Confirm if you are a repeat applicant or new applicant, and whether applying for an annual quota or reassignment. | Certificate issuance and customs clearance records for the past 2 years, CIF records for 1 year before application | If requirements are not met, verify application eligibility or other available schemes. |
| 4. Application Preparation | Check the public notices, instructions, application forms, and checklists for the relevant fiscal year. | Submission period, arrival deadlines, mailing method, required documents, return envelope | Prepare using the current fiscal year’s forms and avoid outdated versions. |
| 5. Certificate Issuance | After examination, receive the tariff quota certificate. | Certificate number, item, quantity, validity period, holder name | If the issuance schedule does not align with shipping or ETA, review the import schedule. |
| 6. Import Declaration | Use the certificate at the time of import declaration. | Declared quantity, remaining certificate quantity, HS code, CIF value, NACCS processing | If quantity exceeds or names do not match, confirm if lower duty rates may not be applied. |
| 7. Usage Quantity Management | Manage certificate usage quantities and remaining balances. | Customs clearance records, NACCS remaining quantity, import permit notification | Check remaining quantity before the next import to avoid over-ordering. |
| 8. Return and Change Management | Complete certificate returns or amendment procedures after use or upon expiry. | Return deadline, return confirmation, NACCS closure processing, name changes | Failure to return may affect eligibility for applications in subsequent years. |
Points to Confirm at the Time of Application
When applying, the first step is to confirm the application period. Applications for tariff quotas cannot be submitted freely throughout the year; the acceptance periods are set for each fiscal quota or reallocation.
Additionally, the application requirements, allowable quantities, required documents, and points of verification during examination may differ between established applicants and new applicants. Companies importing dress shoes or leather goods for the first time need to confirm not only the import contract but also whether they qualify as new applicants and meet the necessary import performance or CIF price criteria.
| Item to Confirm | Details to Check | Reference Documents | Practical Notes |
|---|---|---|---|
| Application Period | Confirm the application periods for fiscal quotas and reallocations, submission deadlines, and mailing methods. | Public notices for the relevant fiscal year, announcements, checklists | Late arrivals after the deadline may not be accepted. |
| Applicant Requirements | Confirm whether the applicant is classified as an established or new party. | Import Permission Notices, certificate issuance records, company registration certificates | Check the criteria and reference documents for each fiscal year. |
| Target Products | Confirm that the HS codes and product items match those listed in the tariff quota notice. | Product data, HS codes, material specifications, photos | Do not determine eligibility solely based on product names. |
| Application Quantity | Confirm that the planned import quantity is within the annual allowable range. | Import plans, purchase orders, contracts, past performance records | Applying for quantities beyond the necessary amount may result in requests for revision during review. |
| CIF Price | Confirm the CIF-based price required for application eligibility and import performance verification. | Invoices, freight details, insurance premium details, Import Permission Notices | Include not only the cargo price but also freight and insurance costs in the calculations. |
| Application Forms | Use the forms, completion examples, and checklists corresponding to the applicable fiscal year. | Application forms, checklists, instructions | Do not reuse forms from previous years. |
| Issuance Period | Confirm the expected period for certificate issuance after application. | Notices for each round, application window information | Since it may take several weeks from the end of acceptance to issuance, coordinate with the shipping schedule. |
About the Tariff Quota Certificate
The Tariff Quota Certificate is required to apply a lower tariff rate within the allocated quota quantity.
The certificate includes details such as the issuer, applicable items, quota quantity, validity period, and certificate number. At the time of import declaration, the certificate information must match the declared details.
If there are errors in the certificate holder's name, quantity, item, validity period, or remaining quantity, the lower tariff rate may not be applicable during customs clearance. Even after issuance, the Tariff Quota Certificate requires management of used quantity, unused balance, and return deadlines.
| Check Item | Details to Confirm | Impact at Customs Clearance | Action if Issues Are Found |
|---|---|---|---|
| Certificate Holder | Confirm that the importer name, corporate name, address, etc. match the declaration details. | If there is a mismatch in the holder name, the certificate may not be usable. | Verify if application or notification for amendments is required. |
| Applicable Items | Confirm that the certificate’s applicable items match the imported declared items. | Items outside the scope cannot be subject to the lower tariff rate. | Recheck the HS codes and certificate item descriptions. |
| Quantity | Check the quota quantity, used quantity, and remaining quantity. | Quantities exceeding the remaining balance may be subject to secondary tariff rates. | Confirm partial declarations, quantity adjustments, and impact of secondary tariff rates. |
| Validity Period | Cross-check the import declaration date with the certificate validity period. | If expired, the certificate might be unusable. | Check for possible extensions or applications for next quota period. |
| NACCS Processing | Confirm NACCS registration, used quantity, remaining quantity, and closure processing. | Omissions in NACCS processing could affect returns or next-year applications. | Coordinate with the customs broker to check processing status. |
Management in NACCS
Quota certificates may be managed and used within NACCS in customs clearance operations.
When certificate information is registered in NACCS, it is necessary to accurately verify the quantities used and remaining at the time of import declaration. When returning a certificate, a completion procedure in NACCS registration may be required.
Failure to complete this process could affect the return of certificates and subsequent applications in following years. Therefore, importers, customs brokers, and freight forwarders should check not only the physical certificates but also the processing status within NACCS.
Return of Certificates
Certificates for tariff quotas must be returned after use or at the specified time.
Failure to return certificates may affect eligibility for applications in subsequent fiscal years. Even unused certificates may need to be returned.
| Situations Requiring Return | Items to Confirm | Commonly Required Documents | Practical Notes |
|---|---|---|---|
| When all allocated quantities have been used | Confirm usage quantity, date of import permission, and remaining certificate quantity. | Import Permit notification, NACCS usage history, original certificate | Manage the return deadline after completion of use. |
| When it is decided not to use the allocation | Confirm unused quantity, cancellation of import plans, and reason for return. | Tariff Quota Return Confirmation, original certificate, documents on changes to import plans | Even unused certificates may be subject to return. |
| When the validity period has expired | Confirm the final customs clearance date, unused quantity, and certificate validity period. | Original certificate, customs clearance history, return confirmation | Failure to return may affect applications in the following fiscal year. |
| If registered in NACCS | Check if NACCS deregistration processing is required before returning. | NACCS registration information, customs broker confirmation, processing receipts | Confirm both the paper return and system processing status. |
Changes, Reissuance, and Validity Period
If there are changes to the name, address, corporate information, quantity, or usage status on the customs tariff quota certificate, the prescribed procedures for modification may be required.
In case of loss of the certificate or errors in its details, it is necessary to verify whether reissuance or corrections are possible. If the import declaration cannot be submitted within the validity period, confirm whether an extension is allowed and what procedures are needed.
However, extensions, reissuance, or changes are not always granted. It is important to manage by cross-checking the planned customs clearance date, shipment date, arrival date, and the certificate’s validity period to avoid expiry or quantity shortfalls.
Relation to CIF Price
The CIF price may become a key factor when applying for or verifying customs tariff quotas.
The CIF price includes the cargo value plus freight and insurance charges to the import port. Since this price affects customs valuation and import declaration prices, it is necessary to verify the invoice price, freight details, and insurance charges.
When the CIF price is used as a benchmark for new applicants or for verifying import performance, relying solely on the cargo value can lead to errors. Therefore, for customs tariff quotas, it is important to review the invoice, Bill of Lading, freight invoice, insurance policy, and insurance charge details together.
Relation to Cargo Insurance
The tariff quota system itself is not a cargo insurance scheme. However, insurance premiums may be relevant when verifying CIF prices or assessable values for customs duties.
When the seller arranges insurance under CIF terms, it is necessary to confirm whether the insurance premium is included in the invoice price. In cases where the importer separately arranges insurance under FOB or CFR terms, it should be confirmed how the insurance premium is treated in customs valuation.
During tariff quota certificate applications, customs clearance, and performance verification, unclear distinctions between cargo price, freight, and insurance premiums may complicate the proper calculation of CIF prices or declared values.
Scope of Involvement for Freight Forwarders and Customs Brokers
Freight forwarders and customs brokers are not necessarily responsible for obtaining the tariff quota certificates themselves. However, during import customs clearance, it is necessary to verify the presence of the certificate, the applicable items, quantities, validity period, name on the certificate, NACCS processing, HS codes, and declared values.
| Category | Support Typically Provided | What Should Not Be Asserted | Practical Response |
|---|---|---|---|
| Verification of Applicable Items | Organize product materials, HS codes, materials, and usage details | Determine tariff quota applicability based solely on the product name | Confirm with customs broker, customs pre-ruling, and the annual public notice |
| Certificate Verification | Check for certificate presence, name, quantity, and validity period | Assume that having a certificate automatically allows the use of the primary tariff rate | Ensure consistency between the declaration and the certificate details |
| Tariff Rate Comparison | Compile comparison data for tariff quota rates, EPA rates, and standard rates | Unilaterally decide which tariff rate should be applied | Consult with customs broker, importer, and customs as needed |
| CIF Price Verification | Support gathering invoice, freight, and insurance fee documents | Determine taxable values or application requirements based on incomplete documents | Collect the Import Permit notification, freight breakdown, and insurance fee details |
| NACCS Management | Encourage checking certificate registration, quantities used, remaining quantities, and completion processes | Assert that NACCS processing is unnecessary | Confirm processing status with the customs broker |
| Return Management | Encourage checking return deadlines, return documents, and unused quantities | Assume that failure to return has no consequences | Explain the impact on next year’s application to the importer |
Documents to Confirm
| Document | Details to Confirm | Relevant Situations | Notes |
|---|---|---|---|
| Tariff Quota Application Form | Applicant, item, quantity, application category | Annual quota and reallocation applications | The form for the relevant fiscal year should be used. |
| Tariff Quota Certificate | Certificate number, holder name, applicable item, allocated quantity, validity period | Import declaration, quantity management, return procedures | Verify that the certificate details match the declaration. |
| Tariff Quota Announcement and Advisory | Application requirements, acceptance period, submitted documents, return obligations | Application preparation, returns, amendment procedures | Check the latest version for each fiscal year. |
| Certificate of Registered Matters, etc. | Applicant’s business details, corporate information, holder name | Confirmation of applicant qualifications | If there are changes, also confirm updates to certificate holder information. |
| Import Permit Notification | Import history, CIF value, declarant, item, quantity | Requirements for experienced and new applicants, returns, next year’s application | This is also related to confirming "self-import". |
| Invoice and Packing List | Price, quantity, item description, unit, cargo details | Application, customs clearance, CIF price verification | Cross-check quantities with those on the certificate and imports. |
| B/L or Sea Waybill | Shipment details, consignee, quantity, transportation terms | Import history, CIF price, customs clearance | Confirm importer name and correspondence with cargo. |
| Freight and Insurance Cost Details | Freight and insurance to be included in CIF price | CIF price verification, taxable value checks | Especially important to verify under FOB or CFR terms. |
| NACCS Registration and Usage Status | Certificate registration, used quantity, remaining quantity, closure processing | Import declaration, returns, next year’s application | Confirm consistency between paper certificates and system records. |
| Certificate Return Confirmation | Completion of use, unused quantity, expiration, return details | Certificate returns | Failure to return can affect future applications. |
Typical Situations Where the System Becomes a Problem
| Case | Common Issues | Documents or Contacts to Check | Practical Response |
|---|---|---|---|
| Importing leather shoes without a certificate | Cannot apply the primary tariff rate under the tariff quota, potentially causing a significant increase in import cost due to secondary tariff rates. | HS code, applicable tariff schedule, tariff quota certificate, customs broker | Confirm eligibility and certificate availability before placing order. |
| Importing quantities exceeding the remaining certificate amount | Cannot apply the low tariff rate to the excess quantity, possibly causing discrepancies between estimated and actual customs duties. | Remaining certificate quantity, NACCS usage history, import quantity, invoice | Check remaining quantity before declaration and estimate tariff impact of excess volume. |
| Preferential EPA tariff rates are more advantageous | EPA tariff rates may be lower without using the tariff quota. | Certificate of origin, EPA tariff rates, HS code, tariff quota certificate | Consider excluding quantities covered by EPA from the tariff quota application volume. |
| Assumed to be an established importer but does not meet requirements | Past certificate issuance or import clearance may not be within the qualifying period. | Certificates issued in past two years, import permission notices, clearance records | Check eligibility criteria for the relevant year and confirm if application can be made as a new applicant. |
| Insufficient confirmation of CIF import performance for new applicants | Decisions based solely on invoice price may overlook inclusion of freight and insurance in CIF price. | Import permission notices, invoice, freight details, insurance fee details | Organize own import performance in CIF terms for one year prior to application date. |
| Mismatch between certificate issuance timing and shipment/arrival dates | Cargo may arrive before certificate issuance, invalidating the conditions for applying the low tariff rate. | Application receipt info, estimated issuance period, shipment schedule, ETA | Plan imports to anticipate several weeks required from application to issuance, and move import schedule earlier. |
| Forgetting to return the certificate | Could affect eligibility for applications in subsequent years. | Return confirmation, original certificate, NACCS completion procedures, customs clearance history | Manage returns promptly regardless of whether usage is completed, unused, or expired. |
| Using a certificate without changing the registered name | If company name changes, mergers, or business transfers occur but old name is still used, certificate validity becomes questionable. | Certificate of registered matters, original certificate, application for content change, customs broker | Confirm with issuing authority before use whenever changes occur. |
Example 1: Case of Importing Leather Shoes
When an importer imports leather shoes, the first step is to verify whether the leather shoes fall under the tariff quota items. Even for leather shoes, classification and tariff quota eligibility may vary depending on factors such as sports use, slippers, materials of the upper or sole, application, and shape.
If the product qualifies as a tariff quota item and the importer has obtained the tariff quota certificate, a lower tariff rate might apply within the quota quantity. Conversely, if there is no certificate or if the quantity exceeds the quota, a secondary tariff rate may apply, potentially significantly increasing the import cost.
In this case, the importer should confirm the HS code and tariff quota applicability before placing orders. The freight forwarder and customs broker should verify the presence of the quota certificate, its validity period, remaining quota quantity, and compare it with the EPA tariff rate before customs clearance.
Example 2: Case of Importing Quantities Exceeding the Certificate Amount
Even if the importer holds a tariff quota certificate, there may be cases where the imported quantity exceeds the remaining amount specified in the certificate. In such cases, the lower tariff rate applies only to the quantity within the certificate limits, while the excess quantity may be subject to secondary rates or other higher tariffs.
Miscalculating quantity control can lead to a significant difference between the estimated customs duty at the time of quotation and the actual duty amount. This is especially true for leather shoes, where the secondary duty rate may be the higher of a value-based rate or a unit-based specific duty per pair, causing the duty burden to vary greatly depending on unit price and quantity.
In this scenario, the importer should have reconciled the order quantity with the remaining certificate quantity, and the customs broker should have verified the used and remaining quantities in NACCS prior to customs declaration.
Example 3: Case Where the EPA Tariff Rate Was More Advantageous
In the import of leather shoes and leather goods, using the EPA tariff rate can sometimes result in a lower duty rate than using a tariff quota certificate. When the origin requirements are met and the necessary certificate of origin or declaration of originating goods can be prepared, it may be preferable to give priority to applying the EPA tariff rate.
In such cases, even if a tariff quota certificate has been obtained, it does not mean that all imports must use the tariff quota. Import quantities planned under the EPA tariff rate need to be excluded from the quantities applied for under the tariff quota and managed accordingly.
Here, the importer should have compared the country of origin, EPA agreement, rules of origin, EPA tariff rates, and the primary tariff quota rates, and confirmed with the customs broker which tariff rate should be applied.
Example 4: Case of Insufficient CIF Price Verification for New Applicants
When verifying new applicants or checking import performance, confirming the CIF price may be required. If only the invoice price is checked without properly including freight and insurance costs to compile the CIF price, it could cause problems with meeting application requirements or performance verification.
Especially under FOB or CFR terms, it is necessary to separately verify the freight and insurance arranged by the importer. Relying solely on the cargo price to determine if the criteria are met may result in discrepancies between the declared value and the actual CIF-based import performance.
In this case, the importer should have gathered the invoice, freight details, insurance details, and Import Permit notification, and accurately compiled the CIF price.
Example 5: Case of Neglecting to Return the Certificate
After using the tariff quota certificate, there may be cases where the return procedure is overlooked. Failure to properly return the certificate could affect applications in subsequent fiscal years.
If the registration remains on NACCS, it is necessary to confirm the required closure procedures before returning the certificate. Simply retaining the paper certificate does not mean the return process has been completed.
In this case, the importer should have managed the return deadline after using the certificate and confirmed with the customs broker the status of NACCS processing.
Example 6: Case Where Cargo Arrives Before Certificate Issuance
The expected issuance period for the tariff quota certificate may be indicated in each notification during the application process. If the application is submitted just before the deadline and the cargo arrives before the certificate is issued, the conditions to apply a reduced tariff rate at import declaration may not be met.
It is especially important to coordinate the ordering, shipment, arrival, application submission, and certificate issuance timing for imports of items with short delivery schedules, such as leather shoes or seasonal products. Considering certificate issuance after cargo arrival carries risks of customs clearance delays and application of higher tariff rates.
In this case, the importer should have confirmed the tariff quota application schedule before ordering, and the freight forwarder and customs broker should have verified the expected certificate issuance and ETA alignment before shipment.
Common Misconceptions
| Misconception | Correct Understanding | Practical Considerations |
|---|---|---|
| All leather shoes are subject to tariff quotas. | Whether items are subject is determined by HS code, material, usage, and construction. | Check not only the product name but also the upper and sole materials and intended use. |
| Having a certificate always guarantees a lower tariff rate. | The certificate’s holder, quantity, item, validity period, and declaration must match. | Verify the certificate against the declaration before customs clearance. |
| Lower tariff rates apply to the entire quantity even if it exceeds the certificate’s remaining quantity. | Excess quantities may be subject to secondary tariff rates or other charges. | Check NACCS remaining quantities and import volumes. |
| If there is an EPA, tariff quotas are always unnecessary. | Check for each item whether EPA rates apply or if they are more favorable than tariff quotas. | Confirm certificates of origin, origin rules, and EPA tariff rates. |
| The application can be submitted at any time. | There are specified reception periods for each fiscal quota and reallocation. | Confirm the public announcement and notifications for the applicable fiscal year. |
| There is no issue in practice even if certificates are not returned. | Failing to return certificates may affect eligibility for applications in future years. | Confirm the need for returns, including unused certificates. |
| The CIF price is the same as the invoice price. | The CIF price includes freight and insurance costs to the import port. | Check freight details, insurance costs, and import permission notifications. |
| The freight forwarder will decide whether to obtain certificates. | Certificate acquisition is primarily the importer’s decision on using the system. | Freight forwarders support eligibility checks and certificate verification; final decisions are coordinated with the importer and customs broker. |
Freight Forwarder's Decision Checklist
| Timing | Party to Confirm With | Items to Confirm | Actions if Issues Arise |
|---|---|---|---|
| Before Quotation and Order | Importer, Customs Broker | Whether the product is subject to tariff quota and eligibility for EPA rates | Verify HS code, origin, material, and intended use. |
| Before Loading | Importer, Customs Broker, Supplier | Existence of tariff quota certificate, planned issuance, shipping and arrival schedule | If arrival is before certificate issuance, confirm customs clearance schedule and tariff rate impact. |
| Before Import Declaration | Customs Broker, Importer | Certificate holder name, quantity, validity period, remaining quantity, NACCS registration | If inconsistencies exist, confirm whether reduced tariff rates can be applied. |
| When Confirming Tariff Rates | Customs Broker, Importer | Primary tariff rate, secondary tariff rate, EPA rates, standard tariff rate | Compare and apply the most advantageous and legally appropriate tariff rate. |
| When Confirming CIF Price | Importer, Insurance Officer, Freight Forwarder, Customs Broker | Cargo price, freight charges, insurance premiums, declared import value | For FOB or CFR terms, separately confirm freight and insurance charges. |
| When Managing Quantities | Importer, Customs Broker | Ordered quantity, imported quantity, remaining certificate quantity, used quantity | If exceeding remaining quantity, estimate tariff impact for excess amount. |
| After Usage | Importer, Customs Broker | Return deadline, return confirmation document, NACCS closure process | Assign a clear person responsible for post-usage management to avoid return omissions. |
| Before Next Year’s Application | Importer, Customs Broker | Whether returns are completed, fulfillment of performance requirements, existence of CIF performance records | Confirm return of prior year certificates and import performance. |
Important Points
- The tariff quota system’s application periods, forms, submission methods, and requirements may change each fiscal year.
- Using forms or instructions from previous years as-is may lead to incomplete or incorrect documentation.
- Errors in the certificate’s name, quantity, validity period, applicable items, or NACCS registration status may prevent the application of lower tariff rates during customs clearance.
- Whether an item is subject to a tariff quota cannot be determined by the product name alone. HS codes, materials, usage, structure, the tariff schedule, and, if necessary, prior rulings should be checked.
- For quota-exempt rates on leather shoes, the higher tax between the ad valorem rate and the specific amount per pair could be a factor.
- If EPA tariff rates are more advantageous, there is an option to use EPA rates instead of the tariff quota certificate.
- Even after obtaining a tariff quota certificate, failure to return unused quota, update changes, or properly manage usage quantities may affect future applications or customs procedures.
- Since it takes time from application to certificate issuance, confirming eligibility and requirements before ordering—instead of after shipment or arrival—is critical.
Summary
The tariff quota system (Ministry of Economy, Trade and Industry) mainly applies to imports of leather and leather footwear, allowing a lower tariff rate up to a set quantity, with higher rates applied to any excess volume.
Since import costs for items like leather footwear can vary significantly depending on whether the tariff quota applies, it is essential to verify the system during the import contract and quotation stages.
In practice, it is important to manage target products, HS codes, annual quota allocations, re-allocations, existing and new importers, tariff quota certificates, EPA tariff rates, CIF prices, marine cargo insurance premiums, NACCS, and certificate returns as an integrated process.
Freight forwarders, customs brokers, and importers involved in leather and leather footwear imports should confirm the necessity of tariff quotas, compare with EPA tariff rates, check certificate issuance timing, monitor remaining certificate quantities, and manage returns—not after cargo arrival, but at the order placement and pre-shipment stages.
