Interview with the Senior Appraiser of machinery and equipment in Brazil
Image by Pete Linforth from Pixabay
We are honored to introduce a new member of the editorial board of the Customs Compliance & Risk Management journal - Mr. Roberto Raya da Silva from Brazil, the expert in foreign trade, customs valuation, and tariff classification. Mr. Raya is an Accredited Engineer from the Federal Revenue Service for launching technical reports to customs. He became the first Senior Appraiser for the machinery and equipment section in Brazil.
Mr. Raya, how did you make the decision to work in the field of customs?
A friend who works in the foreign trade area advised me that the customs in Brazil were open to registration for an expert. I decided to register, and I became one of the engineers selected. That was in 1997.
You became the first Senior Appraiser of machinery and equipment in Brazil. How did you achieve that? What are the responsibilities of the Senior Appraiser?
After becoming an expert in customs, I enjoyed the area and read a lot about engineering expertise and assessments. I discovered a vast field of action and decided to specialize in it. At that time, Brazilian legislation required the technical appraisal report to approve the import of used machines. It was obligatory to determine the market value of the used machine or production line to be imported into Brazil.
Responding to this need, I selected one of the most renowned associations in the USA - the American Society of Appraisers (ASA) - for the training and the tests. As I had been working with evaluations for some years, I was awarded the title of Senior Appraiser and became the first Senior Appraiser of machinery and equipment in Brazil. In 2017, I was invited by the ASA to give a lecture in Sydney on the subject Appraisals of Machinery in the Vision of Brazilian Customs.
You elaborate on technical reports for customs. Would you share some insights from this work?
In Brazil, customs experts are not government officials. They are professionals, who are selected by customs to provide services in their area of training. As I have two degrees, mechanical and electrical engineering, I'm the only accredited engineer in both specializations. When a customs auditor has a technical question about the functioning of a commodity or its technical specifications, he requests an expert to prepare a technical report that answers the question and dispels any doubts.
In Brazil, there is a regime called Ex tariff which allows a company according to certain criteria to import machines, equipment, or a production line with a reduction of taxes at around 60%, but for this, the machine has to be described with characteristics and technical specifications. The expert inspects it in order to check if the good imported is technically the one described, and after that, the expert makes the report.
As the founder of Raya Consult, please share, what are the most common questions/ issues your company helps clients to solve?
According to Brazilian legislation, the Federal Revenue Service of Brazil can carry out the fiscal review of the classification of goods for the past 5 years. Besides that, we have two important aspects:
- import rates for machines vary from 14% to 20%;
- the fines incurred when the classification is wrong, are high.
If a company imports for a long period applying the wrong classification, the fine can reach absurd values. We have already helped companies in the defense of their classifications, where the value of the fine was USD 26 million!
Raya Consult operates on two fronts:
- classification reports, which indicate and justify the accurate classification to be adopted by the company;
- classification reports that assist law firms in challenging the tax assessment notices.
It is very important for companies to understand the correct classification of their products because an error in the classification of goods can result in the loss of profit or even in the closure of the company.
Tariff classification is the subject you teach in the courses. Do you have a favorite example of a good, that poses great difficulties for classification?
The two rules that present the most considerable difficulties in training and classifying a commodity are the General Interpretative Rule 2 a) and the Rule 3 b) when it is required to determine the essential character of the merchandise.
- In Rule 2 a), when incomplete or unfinished merchandise is presented for customs clearance and there is a need to verify if the essential character of the finished merchandise is present.
- In the case of Rule 3 b) when we have a compound or an assortment packaged for retail sales (a kit) and it is necessary to determine the material or component which gives it its essential character.
When I had the opportunity to write for the 1st issue of the Customs Compliance & Risk Management journal, I made an article on the classification of the drone. From my point of view, it is the best example of a future product that will be manufactured. Depending on the integrated accessories and the application of the drone, the essential character will change and, accordingly, the classification of the merchandise will change. Acknowledging this aspect quickly will be a challenge for the years to come.
Is there a story from all your customs-related experiences that you like to share with your students, colleagues?
There was a hospital that imported a radiotherapy machine. A part of this hospital provided services to the government, but the import was done privately. While checking the machine and the technical characteristics, there were errors in the description and in the tariff classification found. The Director of the hospital told me that he understood the errors and they were responsible for that, but that he needed a quick release. There were many patients waiting in the queue, who needed the treatment.
I focused on completing the technical report and delivery, and the machine was customs cleared rapidly. My surprise came later when I was invited to participate in the radiotherapy machine delivery event and the Secretary of Health was present. The hospital Director quoted my name and thanked me, and people applauded. He mentioned that thanks to my efforts, they were able to do the opening on the scheduled date, as well as to start treating cancer patients. I was absolutely happy because I was able to contribute to the health system in Brazil and indirectly to its patients.
What do you like most about your work?
When Raya Consult takes action, the goods that we make the classification report for, require technically to know the merchandise, its functions, and specifications; based on this information, we analyze what is the accurate classification. In most of the cases, a great deal of analysis and line of reasoning is required to be able to prove that we are correct. This fascinates me.
Since every day is a new challenge, the learning is constant.