Labeling of fur products

Starting from August 12, 2016 sale, acquisition, storage, use and transportation of furs, clothing accessories and natural fur products unmarked by a special sign is prohibited on the territory of Eurasian Economic Union (EAEU). These changes will affect manufacturers, importers, traders and commission agents.

Legal framework

The entry into force of the decision of the Eurasian Economic Commission no. 88 dated October 10, 2014 "On the development of a system of labeling for certain types of consumer goods in the territory of the Member States of the Customs Union and Eurasian economic space" gave start to a project on labeling of the following goods: "garments, clothing accessories and other articles made of natural fur". On the September 8, 2015 the Member States of the Eurasian Economic Union signed an "Agreement on implementation of the pilot project to introduce labeling of goods by identification signs in 2015-2016" (hereinafter referred to as the Agreement). the Agreement entered into force on August 12, 2016.

In 2015 the President of the Russian Federation signed a Decree "Оn additional measures to counter trafficking of industrial products, including counterfeit", on August 12, 2016 the Resolution of the Government of the Russian Federation from August 11, 2016, no. 787 "on implementation of the pilot project on the introduction of labeling by control (identification) signs of the goods heading "garments, clothing accessories and other articles of natural fur" entered into force.

Later on, the State Committee has been formed in order to counter smuggling, illicit production and trafficking of industrial products, including counterfeit products and local Special Commissions in individual regions of Russia started operating. In general, a goal of the concerned bodies is to combat counterfeiting of fur products and eliminate «grey imports».

Goods subject to marking

According to the Agreement, products imported, as well as the previously imported, but not sold until August 12, 2016 under HS code group 4303 "garments, clothing accessories and other articles made of natural fur" are subject to marking. This heading includes garments of mink, nutria, white fox or fox, rabbit or hare, raccoon, sheep fur as well as garments of other kinds of fur, of the respective customs codes: 4303 10 901 0, 4303 10 902 0, 4303 10 903 0, 4303 10 904 0, 4303 10 905 0, 4303 10 906 0, 4303 10 908 0. The issues of labeling of articles with a fur lining or collar only are to be addressed individually (except for articles with only fur trim-collar, lapels, cuffs or trim clothing, etc.).

This heading also includes clothing made of leather, tanned or dressed, along with the hair or wool on, as well as all other articles made of natural fur that have the natural fur as the key attribute (carpets, blankets, bags, suitcases, as well as, for example, paint rollers covers).

This heading does not include:

leather goods included in heading 4202 (suitcases, travelling-bags, handbags, briefcases, rucksacks, cases, backpacks);
gloves, mittens and mitts of leather and fur (heading 4203);
shoes (64), hats (65), toys and sports equipment (95), if they are made of natural fur.

Exceptions

In accordance with the Agreement, labeling requirements are not applied to:

transportation of goods when they are exported outside the customs territory of the EAEU;
transportation and storage of goods under customs control;
transportation and storage of samples and specimens of goods;
goods imported for international exhibitions and fairs as samples and exhibits;
the goods imported as foreign humanitarian supplies;
transportation and storage of goods, acquired through retailers and returned by buyers provided the documents confirming the return of goods are presented;
sales of goods in the stores of duty-free trade;
storage of goods under customs control at the customs control zones, temporary storage warehouses and customs warehouses;
storage and use of goods by their producers;
acquisition, storage, use, transportation and sale of arrested, seized, confiscated goods, etc.;
storage of goods by commission agents based on agreements made with individuals, prior to sale;
transportation, storage and use of goods by individuals.

What is a Smart Label?

Smart label (adhesive)

Smart Label is a strip made of a special flexible material, containing a radio frequency tag - RFID (Radio Frequency IDentification). Such tags may be used, for example, in transport tickets, electronic passes, etc. The tag in Smart Label stores a unique number that can be used to obtain the information about the product: product name, type of fur, the country of production, manufacturer, brand, seller, number of Declaration of Conformity.

The number of a Smart Label includes 18 alphanumeric symbols in the following form YY-XXXXZZ-NNNNNNNNNN which imply:

YY-the country that issued a product;
XXXX-customs tariff code;
ZZ-a method to put the product on sale in the Russian Federation;
NNNNNNNNNN-series and number of the Smart Label (these settings are unique for each product).

Both fur manufacturers and the traders may label articles. Smart Labels are presented in two colors: green color is for goods produced on the territory of the Russian Federation, red color is for goods imported into Russian Federation.

3 methods of marking exist: sewn-in, adhesive and hinged. The cost of sewn-in or adhesive mark is 15 rubles and 22 rubles for a hinged mark. The "Goznak" is one and the only organization that issues the Smart Labels.

The procedure for labeling

To start labeling of its fur products an organization needs to be a member of the GS1 System. GS1 is an international entity dealing with bar coding of products. After joining the national branch (e.g. GS1 Russia) the organization is assigned a special 9-digit GCP number (Global Company Prefix) - an international registration number. Likewise, the organization is assigned a 14-digit Global Trade Item Number (GTIN) for each type of its products that is used to identify trade items in electronic catalogues and information systems.

All participants of fur market then should register in the "Labeling" system through the official website of the Russian Federal Tax Service. The organization must have an advanced electronic signature to register. After logging in to personal account and selecting the type of business (manufacturer, importer, wholesaler, retail) one may immediately start working in the system.

Upon receipt of identification marks a party is required to encode each fur product with the RFID equipment. Manufacturers producing goods of fur on the territory of the Russian Federation mark the goods autonomously. A manufacturer or a supplier may mark fur products imported to the customs territory of the Russian Federation prior to importation or at a customs warehouse. A manufacturer indicates in the invoice that all products are labeled, an importer specifies the appropriate Smart Label numbers in the customs declaration. Fur products, produced in Russia or imported into Russia prior to August 12, 2016, as well as the goods on the balance sheet as of August 12, 2016 must be tagged by Smart Labels until December 5, 2016.

Identification of goods

"Labeling" system stores information on all transactions with fur products. Data on tagged products is also shared with the information system of the Federal Customs Service. One can check the legality of fur products by entering the Smart Label number on the FTS site in the section "Labeling". Verification can be also done by using the QR-Reader installed on one’s mobile device or with a special "Goods inspection" mobile application.

Control over sale of goods subject to marking

The State Committee and the Commission created in year 2015 are responsible for the control over sale. The Federal Tax Service maintains the electronic database. In addition, information on the relevant goods will be provided by Customs authorities, manufacturers, importers, retailers and the "Goznak". The introduction of the comprehensive control is assumed to allow tracking of each product turnover, to increase revenue for State in duties, taxes, fees, to reduce the share of counterfeit products in the market.

Responsibility

The production and sale of fur products without marking as well as the violation of the established procedure (article 15.12 Administrative Code) entails administrative liability. For example, the sale of goods without marking is punishable by a fine for individuals from 2 to 4 thousand rubles, for officials from 5 to 10 thousand rubles, for legal entities from 50 to 100 thousand rubles. In each case the goods in question are subject for confiscation.

In addition, if the value of unlabeled products exceeds 1.5 million rubles, it entails criminal liability. According to part 1 of the art. 171.1 of the Criminal Code of the Russian Federation, the maximum penalty is deprivation of liberty for up to 3 years with a fine of up to 80 thousand rubles. Failure to submit or late submission of information on the use of the identification marks in electronic resource "Labeling" will entail the inspections by state authorities.

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