This Law establishes procedure of formation and use of customs tariff of the Azerbaijan Republic - major means of state control over the foreign trade, to provide efficient relationship between domestic and foreign markets, and also procedure of imposition of duty on commodities being cleared through the customs border of the Azerbaijan Republic.

The following are main objectives of customs tariff:

This Law is applicable on the customs territory of the Azerbaijan Republic.

The following are general concepts used in this Law:

1. Customs tariff of the Azerbaijan Republic is summary of rates of customs duties applied to commodities being transported through the customs border of the Azerbaijan Republic and classified in accordance with Nomenclature of commodities in foreign-economic activity (hereinafter - Nomenclature of commodities).

2. Nomenclature of commodities in foreign-economic activity of the Azerbaijan Republic is defined by the Cabinet of Ministers of the Azerbaijan Republic in accordance with world practice of commodities classification.

3. Customs tariffs are applied to the import of commodities to the customs territory of the Azerbaijan Republic or export of commodities from this territory.

1. Except cases envisaged by this Law, rates of customs duties shall not depend on specific legal entities and physical persons transporting commodities through the customs border of the Azerbaijan Republic, kinds of deals and other factors.

2. Rates of import customs duties are established by the Cabinet of Ministers of the Azerbaijan Republic. Maximum rates of import customs duties for commodities from those countries which enjoy most favourable treatment in trade with the Azerbaijan Republic are established by National Assembly of the Azerbaijan Republic.

As for the commodities originated from the countries which do not enjoy most favourable treatment in trade, or those with uncertain origin, rates of import custom duties are double, except cases when Azerbaijan Republic grants tariff privileges in accordance with this Law.

3. Rates of export customs duties and list of respective commodities, and also non-tariff measures of foreign-economic control are established by the Cabinet of Ministers of the Azerbaijan Republic. Maximum rates of export customs duties for those countries which enjoy most favourable treatment in trade with the Azerbaijan Republic are established by National Assembly of the Azerbaijan Republic.

The following kinds of customs duties are applied in the Azerbaijan Republic:

To improve control over the import and export of commodities seasonal duties might be applied to some of them. Whereas, rates of customs duties envisaged by customs tariff are not applied. Term of use of seasonal duties may not exceed six months in a year.

To protect economic interests of the Azerbaijan Republic, special duties may be temporarily applied to the imported commodities:

Procedure of formation and use of special duties is established by legislative acts of the Azerbaijan Republic.

Special duties are applied:

Antidumping duties are applied in cases of import of commodities to the customs territory of the Azerbaijan Republic at a price lower that their actual cost in the country- exporter at the moment of such import, if such import causes (or could cause) damage to local producers of similar commodities, interferes with organisation of production or expansion of production of similar commodities in the Azerbaijan Republic.

Compensatory duties shall apply to imported commodities, when in production of such commodities or on their export direct or indirect subsidies were used, if such import causes (or could cause) damage to local producers of similar commodities, interferes with organisation of production or expansion of production of similar commodities in the Azerbaijan Republic.

1. Before applying special kinds of duties (special, antidumping, compensatory), investigation should be carried out in accordance with legislation of the Azerbaijan Republic, within 10-day term, initiated by relevant state regulatory bodies of the Azerbaijan Republic.

Decisions made in the course of investigation should be based on quantitative estimates.

2. Rates of duties are established by the Cabinet of Ministers of the Azerbaijan Republic based on results of investigation for each specific case, and their amount should be comparable with the dumping undercharge, subsidies and revealed damage.

1. Method of estimate of customs cost(customs estimate) of commodities is based on general principles of customs estimate according to world practice and shall apply to commodities imported to the customs territory of the Azerbaijan Republic or exported from said territory.

2. Procedure of use of the system of customs estimate for commodities imported to the customs territory of the Azerbaijan Republic or exported from said territory is established by the Cabinet of Ministers of the Azerbaijan Republic.

1. Customs cost is declared by declaring person at the customs of the Azerbaijan Republic when commodities are being transported through the customs border of the Azerbaijan Republic.

2. Procedure and terms of declaring of commodities being imported to the customs territory and exported from said territory, including form of customs declaration, are established by State Customs Committee of the Azerbaijan Republic.

3. Customs cost of commodity is determined by declaring person as specified in this Law.

4. Control over accuracy of estimation of customs cost is accomplished by customs authorities of the Azerbaijan Republic.

1. Information given by declaring person in declaration - customs cost of commodity - which is confidential and constitutes commercial secret might be used by customs authorities for customs estimate. This information may not be given to third parties, including other state bodies without permit of declaring person, except cases of taking respective judicial decision.

2. According to existing legislation of the Azerbaijan Republic, customs authorities of the Azerbaijan Republic and officials are responsible for disclosure of information which is confidential and constitutes commercial secret.

1. Customs cost of commodity declared by declaring person, and information related to estimate of such cost shall be based on reliable data (with indication of quantities) and confirmed by relevant documents.

2. Should it be necessary to clarify customs cost of commodity declared by declaring person, the latter will have the right to apply to customs authorities of the Azerbaijan Republic requesting to be given declared commodity for use, against the mortgaged property or guarantee of the authorised bank in accordance with legislation of the Azerbaijan Republic, or he will have to pay customs duty for transported commodities according to customs estimate made by customs authorities of the Azerbaijan Republic.

3. Costs of clarification of declared customs cost or provision of additional information to tax authorities of the Azerbaijan Republic shall be borne by declaring person.

Whereas, prolongation of the term of custom clearing in connection with customs estimation shall not be used by declaring person for deferment of payment of duty.

When no data confirming accuracy of estimated customs cost of commodity declared by declaring person are available, or if there is some uncertainty in validity of the documents presented by the declaring person, customs authorities of the Azerbaijan Republic may estimate themselves customs cost of declared commodity, applying in succession methods of estimation of customs cost based on information available (including known prices for identical and similar commodities).

2. At written request of declaring person, customs authorities of the Azerbaijan Republic must provide him with written notice explaining how to estimate the customs value of the goods.

3. Should declaring person disagree with decision of the customs authorities of the Azerbaijan Republic with respect to the customs cost of commodity, said decision may be appealed against in an order specified by the Customs code of the Azerbaijan Republic.

1. In accordance with Customs code of the Azerbaijan Republic estimation, payment and withdrawal of duty on commodities are done based on customs cost of said commodities.

2. Customs duty is paid to the Republican budget

1. Customs cost of commodities imported to the territory of the Azerbaijan Republic is determined using the following methods:

2. Most common method of estimation of customs cost of imported commodities is that based on a sum of transaction with these commodities.

Where this method cannot be used, other methods listed in paragraph 1 of this Article shall apply in succession, each of them being used if customs cost could not be established on a basis of the former.

At the request of declaring person methods of deduction and adding of customs cost might be used in any order.

1. Customs cost of commodities imported to the customs territory of the Azerbaijan Republic is cost of transaction actually paid or subject to payment for imported commodity at the moment when said commodity is sold for export to the Azerbaijan Republic (to a port or other point of import).

When estimating customs cost, the following expenditures must be added into the sum of transaction if they have not been already included:

a) cost of delivery of commodities to the airport and sea port, or any other point of import of commodities to the customs territory of the Azerbaijan Republic:

b) costs borne by the buyer:

c) relevant part of cost of the following commodities and services which, directly or indirectly, were provided by the buyer free of charge or at lower cost, for use in connection with production or export sale of commodities being estimated:

d) licensing and other payments for use connected with products of intellectual property objects, to be implemented by the buyer, directly or indirectly as a condition of sale of estimated commodities;

e) amount of part of direct or indirect profit obtained by the seller as a result of future re-sale, transfer or use of estimated commodities on the territory of the Azerbaijan Republic.

2. This method cannot be used for estimation of the customs cost of commodity, if:

a) limitations of the buyer’s right for disposal or use of estimated commodity are envisaged, except:

b) if sale and sum of transaction depend on observance of conditions, whose impact cannot be accounted for;

c) if the data used by declaring person when estimating customs cost are not confirmed by documents, or are not based on reliable (with determined quantities), true and unbiased information;

Whereas, by related parties we shall mean persons (entities) which possess at least one of the following indices:

1. When using method of estimation of customs cost of commodities based on a cost of transaction with identical commodities, said cost is taken accounting for conditions specified in this article. Whereas, by identical commodities we shall mean those which are the same in all respects to the estimated ones, including:

Minor differences in outer appearance shall not result in undue refusal to accept commodities as identical if by all other parameters they correspond to requirements of this paragraph.

2. Cost of transaction with identical commodities can be taken as a basis for estimation of customs cost if these commodities:

b) were delivered at the same time or almost simultaneously with import of commodities being estimated;

c) were sold at the same commercial level and in about same volumes that estimated commodities.

3. Customs cost estimated based on a sum of transaction with identical commodities should be corrected accounting for delivery costs specified in subparagraph "a" of paragraph 1 of Article 18 of this Law, if there are significant differences between the goods being valued and the identical goods in such costs and distances and if difference derived from a variety of distances and types of vehicles.

Corrections should be made by declaring person in accordance with reliable data confirmed by documents.

4. If several different costs of transactions with commodities are revealed, the lowest cost will be taken as a basis for estimation of customs cost of imported commodities.

5. If the sale of identical goods at the same commercial level and/or substantially with the same quantity is not determined, then the transaction price of identical goods sold at different commercial levels and/or with different quantities will be used, taking into account the difference of the levels and quantities, adjusted taking into account the differences of the levels and quantities. Adjustments, regardless of whether they increase or decrease the value or not, must be substantiated by proved arguments, clearly setting out their suitability and accuracy.

1. When using method of estimation of customs cost of commodities based on a sum of transaction with similar commodities, said cost is taken accounting for conditions specified in this article. Whereas, by similar commodities we shall mean those which although different in all respects, but with similar features and components of materials to enable them to perform the same functions with estimated commodities and commercially interchangeable. Similarity of commodities is established by their quality, availability of trade mark and market standing.

2. When estimating customs cost based on sum of transaction with similar commodities, paragraphs 2-4 of Article 19 of this Law shall apply.

3. When using methods of estimate of customs cost with regard to provisions of Article 19 and this Article:

a) commodities are not regarded as identical with estimated ones or similar to them if they have not been produced in the same country as estimated ones;

b) commodities are not regarded as identical or similar to estimated ones if relevant engineering work, experimental-design, product styling, preparation of drafts and drawings were accomplished on the territory of the Azerbaijan Republic;

1. Estimation of customs cost according to method of estimation of customs cost based on deduction of costs is carried out in cases, when estimated, identical, similar commodities would be sold on the territory of the Azerbaijan Republic without change of their initial state.

2. When using method of estimation of customs cost of the commodities based on deduction of costs, the cost of unit of the commodity is taken into account as per which the greatest total volume of commodities which are identical or similar to imported commodities, valued on the territory of the Azerbaijan Republic was sold to the participant of transaction not being in relation with the seller at the same time or almost simultaneously with the import of estimated commodities.

3. The following articles of expenses are deducted from the cost of unit of the commodity:

b) sum of import custom taxes, duties, collections and other payment, subject to payment in the Azerbaijan Republic in connection with import or sale of the commodities;

c) expenses, usually arisen in the Azerbaijan Republic for transportation, loading, unloading works, insurance;

d) where appropriate, the costs and charges mentioned in sub-paragraph «a», paragraph 1 of Article 18 of this Law.

4. When no cases of sale of estimated, identical or similar commodities in the same state, as they were up to the moment of import are available, on request of the declaring person the cost of unit of the commodity having processed, with amendment for added tax and with observance of provisions of paragraphs 2 and 3 of the present article may be used.

1. When using this method as a basis for estimation of customs cost of commodities unit price calculated by way of adding the following costs:

b) transportation costs, insurance to a place of loading and their cost, and etc., as indicated in sub-paragraph «a», paragraph 1 of Article 18 of this Law;

1. Whenever customs cost of commodities cannot be determined by declaring person as a result of successive use of methods specified in Articles 18-22 of this Law, or customs authorities reasonably state that said methods of estimation of customs cost cannot be used, customs cost of estimated commodities shall be determined by reasonable means, conforming with the relevant principles and provisions of Article VII of the General Agreement on Tariffs and Trade 1994 (GATT) and the Agreement on the Application of Article VII of GATT and by the use of information available in the Azerbaijan Republic.

Using reserve method, customs authorities of the Azerbaijan Republic provide price information in their possession to declaring person.

2. When estimating customs cost of commodity using reserve method the following may not be used as a basis:

a) price of commodity at domestic market of the exporting country;

b) price at domestic market of the Azerbaijan Republic for commodities produced in Azerbaijan;

c) price of commodity shipped from the country-exporter to third countries;

Country of commodity origin is identified in order to implement tariff and non-tariff measures of control over the import of commodities to the customs territory of the Azerbaijan Republic and export of commodities from this territory.

Principles of identification of the country of commodity origin specified in this Law are based on existing world practice. Procedure of identification of the country of commodity origin is established by the Cabinet of Ministers of the Azerbaijan Republic based on provisions of this Law.

By the country of origin of commodity we shall mean the country where commodity was completely produced or sufficiently processed so as to comply with criteria established in this Law.

The following are commodities completely produced in this country:

a) minerals produced on its territory or from its territorial waters, or continental shelf and sea depths (if this country has exclusive right for development of said sea depths);

b) vegetable products grown and gathered on its territory;

c) animals born and bred in this country;

d) products of hunting, fishing and other offshore activities;

e) products offishing produced in the world ocean by fleet of this country or vessels leased (rented) by it;

f) recycled resources and wastes being result of production and other operations implemented in this country;

g) products of high technologies obtained in the open space on space ships belonging to this country or rented by it;

h) commodities produced in this country solely from products listed in paragraphs «a» - «g»;

1. If two and more countries take part in production of commodity, origin of commodity is established in accordance with criteria of sufficient processing.

2. Criteria of sufficient processing of commodity in specific country are the following:

a) change of commodity position (classification code of commodity) under the Nomenclature of commodities at a level of any one of the first four symbols which took place as a result of processing of commodity;

b) implementation of production-technological operations sufficient or insufficient to regard the commodity as originated from this specific country;

c) rule of ad valorem share - change of cost of commodity when percentage share of cost of used materials or added value reaches fixed share of cost of delivered commodity.

The following are regarded as non-complying to criteria of sufficient processing:

3. If no special conditions are put forward with regard to specific commodities and country of origin, general provision applies. According to this provision, commodity is considered sufficiently processed when commodity position under the Nomenclature of commodities has changed at a level of any one of the first four symbols.

4. Criteria of sufficient processing for specific commodity and country are established by the Cabinet of Ministers of the Azerbaijan Republic in accordance with this Law.

If declaring person so desires, commodities in disassembled or non-assembled condition, delivered in several lots when they cannot be shipped as one single lot due to production or transport conditions, and also if one lot of commodities has been broken down into several lots by mistake, should be regarded as a single whole when identifying the country of origin.

This rule applies upon the following conditions:

1. As confirmation of the origin of commodity customs authorities of the Azerbaijan Republic have the right to request certificate of origin for commodity.

2. When, on export of commodities from the customs territory of the Azerbaijan Republic, certificate of origin is required and this is fixed in respective contracts, legislative acts of the country or envisaged by international obligations of the Azerbaijan Republic, said certificate shall be issued by relevant state body.

3. On import of commodities to the customs territory of the Azerbaijan Republic certificate of the origin of commodities must be presented:

1. Certificate of the origin of commodity must unambiguously state that said commodity is originated from respective country and should contain:

a) written statement of the sender that commodity corresponds to specific criterion of origination;

b) written statement of authorised bodies of the country-exporter that data specified in certificate are true.

2. Certificate of the origin of commodity is presented together with customs declaration and other documents presented for customs clearing. In case of loss of certificate its witnessed copy is accepted.

3. If there is any doubt concerning validity of certificate and data contained in it, customs authorities of the Azerbaijan Republic may apply to authorised bodies which issued certificate, or other authorised organisation of the country which has been specified as the country of origin, asking for additional data and clarification.

4. Commodity will not be regarded as originated from this specific country, until, as specified in this Law, duly prepared certificate of origin or requested additional data are supplied.

1. Customs authorities of the Azerbaijan Republic can refuse in clearance of commodities if there is enough evidence that said commodities originate from the country whose commodities may not be cleared in accordance with international agreements (Azerbaijan Republic being one of the participants in these agreements) or in accordance with legislation of the Azerbaijan Republic.

2. Failure to present duly executed certificate or information about the origin of commodities does not constitute grounds for refusal in clearance of commodity through the customs border.

3. Commodities of uncertain origin will be cleared with payment of customs duty at maximum rates of customs tariff of the Azerbaijan Republic.

1. Commodities may enjoy favourable treatment or privileges on condition that duly executed certificate of their origin has been received not later than one year from the date of customs clearance.

2. When identifying country of origin of commodities, origin of electric power, machines, equipment and instruments is not taken into account.

3. Procedure of identification of the origin of commodities imported from the third countries, and also from free customs zones and free warehouses, including rules of «direct shipment and direct purchase» is established by the Cabinet of Ministers of the Azerbaijan Republic.

1. Tariff privileges (preferences) with respect to commodities are established in this Law, and their use, except articles 35, 36 and 37 cannot bear individual character. Customs preferences are established by decision of the Cabinet of Ministers of the Azerbaijan Republic.

By tariff privilege (tariff preference) we shall mean privilege in trade policy of the Azerbaijan Republic, which is granted on conditions of reciprocity or unilaterally, with regard to commodity cleared through the customs border of the Azerbaijan Republic; said preference is realised in the form of return of earlier paid duty, exemption from payment of duty, reduced rate of duty, establishment of tariff quotas for preferential import (export) of commodity.

2. Procedure of granting of customs privileges envisaged by this Law is established by the Cabinet of Ministers of the Azerbaijan Republic.

The following are exempted from customs duties:

a) transport means used for international transportation of cargo, luggage and passengers, and also articles of supplies and accessories, fuel, food and other products required for normal functioning on the road, in stop points, or articles purchased abroad for liquidation of accident (breakage) of said transport means;

b) articles of supplies and accessories, fuel, food and other property exported outside the customs territory of the Azerbaijan Republic, in order to provide normal operation of Azerbaijanian vessels leased (rented) by legal entities and physical persons of the Azerbaijan Republic which carry out fishing, and also products of their activity imported to the customs territory of the Azerbaijan Republic;

c) commodities imported to the customs territory of the Azerbaijan Republic and exported from this territory for official or personal use by representatives of foreign countries, physical persons having the right for duty-free importation and duty-free exportation of such commodities in compliance with international agreements of the Azerbaijan Republic and legislation of the Azerbaijan Republic;

d) currency of the Azerbaijan Republic exported from the customs territory of the Azerbaijan Republic and foreign currency (except that used for numismatics), securities imported to this territory in accordance with legislation of the Azerbaijan Republic;

e) commodities which are subject to expropriation in favour of the state in cases envisaged by legislation of the Azerbaijan Republic;

f) commodities imported to the customs territory of the Azerbaijan Republic and exported from this territory with the objective of elimination of consequences of accidents and catastrophes, natural calamities or as humanitarian aid, including free text-books for schools, nursery schools and medical institutions;

g) commodities imported to the customs territory of the Azerbaijan Republic and exported from this territory as free aid and charity at a level of states, governments, international organisations, including technical assistance, and also money and/or other material assistance, received as grant according to the agreement or resolution on grant provision;

h) commodities transported under the control of customs authorities, as a transit, through the customs territory of the Azerbaijan Republic and intended for third countries;

i) commodities exported by physical persons from the customs territory of the Azerbaijan Republic for personal use, and not intended for production and commercial activity in accordance with Customs code of the Azerbaijan Republic;

When implementing trade policy in relations of the Azerbaijan Republic with foreign countries, preferences may be established in the form of exemption from payments of duties, reduction of rates of duties or establishment of quotas for preferential import (export) regarding commodities:

When implementing trade policy of the Azerbaijan Republic within the borders of its customs territory, privileges may be provided in the form of return of earlier paid duty, reduced rate of duty and exemption, in exceptional cases, from payment of duty regarding the following commodities:

If provisions of international agreements of the Azerbaijan Republic are other than provisions of this Law, the former shall apply.