According to stipulations of the customs legislation, at given times the Department sells off imported goods for which duties and taxes have not been collected. Goods sold under such procedure fall into one of the following categories:
(a) unclaimed goods, i.e. goods which were not regularised customs-wise within the time period prescribed by the legislation; or
(b) confiscated goods, i.e. goods, the ownership of which has passed on the Republic of Cyprus due to violation of the customs legislation; or
(c) abandoned goods, i.e. goods which either have been abandoned to Customs by their owner or which having been put up in two consecutive sales by public auction, have not been sold.
The sale of goods falling under category (a) is done by public auction, hence ensuring the use of transparent procedures and equal treatment of all those interested in purchasing the goods, whereas goods falling under categories (b) & (c) are sold by a tendering procedure by a special customs committee.
2. Procedures for the sale
2.1. Sale of goods by public auction
The sale is published in the Official Gazette of the Republic with full particulars of the goods to be sold. Copies of the notice are posted well in advance and in all prominent areas of all Customs Houses to be read by the general public. Concurrently, the sale is uploaded on the of the Department’s website. A period of two to three weeks must elapse between the date of publication in the Official Gazette and the date of the auction.
The auction covers all the items mentioned in the publication, with the exception of those already cleared or withdrawn from the auction. Particulars of the clearance or withdrawal of goods shall be given to interested persons by the officer in charge.
Goods to be sold by public auction may be withdrawn from the auction up to the time of the auction, provided that the owner or his agent will apply in writing to the Senior Customs Officer to that effect. If his application is accepted, the applicant shall lodge a deposit of money covering the storage charges up to the day of the next auction and any removal expenses, duties and taxes as well as other expenses according to the customs approved treatment or use.
A preliminary assessment of the value of the goods for sale is made by Customs prior to their sale and this amount is taken to be the minimum sale price.
The goods for sale are exhibited for inspection at least three working days prior to the date of the auction. Every bidder is considered to have inspected the goods and bidding is done on his own responsibility. The goods are sold and delivered in the state they are at the time of the sale and the Department of Customs cannot be held responsible for any damages, defects or deficiencies or for any misinterpretation that may arise from the description of the goods on sale in the publication.
If, during the course of the auction, the officer in charge becomes aware of an unlawful collusion or conspiracy or of an attempted conspiracy with the aim of deterring or hindering the free bidding and disposal of goods, he has the right to ask for the dismissal of the persons involved from the place of the auction and where he verifies that the bid in question has been influenced due to such an unlawful collusion or conspiracy he has the right to call it off. Furthermore, the persons implicated may be reported to the Police for having committed a criminal offence.
No bid shall be accepted if it is lower than the preliminary sale price. The officer in charge is not obliged to accept the highest or any bid. With the exception of goods sold for export, VAT is charged at current rates on the sale price of the goods sold at public auctions.
Immediately after the knocking down of the bid by the officer in charge, the successful bidder shall sign the acceptance of the purchase on a specified document and reimburse the whole amount of the bid. If he refuses to sign the acceptance document or to pay the price, the officer in charge, if authorised by the Senior Customs Officer, shall knock down the goods to the next best bidder. If the latter is no interested any more or there is no such bidder, the officer in charge may put up the goods for sale again.
In some cases, certain preconditions are set for the sale of goods, e.g. the goods shall be exported, or the prior approval of a Government Department should be secured for their clearance. These preconditions cannot be altered after the sale has taken place. Hence, if there is a precondition that certain goods will be sold for export only, such goods shall be exported permanently and shall not be allowed to be re-imported.
The successful bidder shall undertake in writing to remove the goods from the Republic stores within ten days from the date of the auction. If on the expiration of this date the goods have not been removed, the Customs is entitled to put them up for sale in the next auction.
If the Department is unable to sell certain goods in two consecutive auctions at prices which to cover the duties and taxes, as well as the storage charges, removal expenses and auctioneer fees, the goods shall be considered as abandoned and their ownership shall be transferred to the Republic. In such a case the Director of the Department has the right to sell them free of duties and taxes, to destroy them, or to dispose them for the benefit of the Republic or of charitable institutions.
2.2 Sale of goods by tenders
The Department by virtue of customs legislation is entitled to sell by tenders confiscated or abandoned goods at the price they would fetch in the open market free of duties and taxes. Calls for tenders are published in the Official Gazette of the Republic and the local press. Anyone interested may receive tender documents from the Regional Customs Stations.
The goods for sale are exhibited for inspection at least three working days prior to the opening of the tenders. Every tenderer is considered to have inspected the goods and tendering is done on his own responsibility. The goods are sold and delivered in the state they are at the time of the sale and the Department of Customs cannot be held responsible for any damages, defects or deficiencies or for any misinterpretation that may arise from the description of the goods in the tender documents.
Prospective tenderers are advised to study the instructions, terms and specifications of the tender documents and may request clarifications in writing at least 15 days prior to the deadline for the submission of the tender.
No tender shall be accepted if it is lower than the preliminary sale price. The officer in charge is not obliged to accept the highest or any bid. With the exception of goods sold for export, VAT is charged at current rates on the sale price of the goods sold at public auctions.
Tenders made must include:
(i) the tender document;
(ii) security in the form of a bond;
(iii) V.A.T. registration certificate.
Tenderers must record separately on their tender document the tendered price for each individual lot of the goods, the V.A.T. payable, and the total amount of the tender, including VAT in Cyprus pounds.
Tenders must be accompanied by a cheque for an amount of 10% of the total amount of the tender drafted in the name of the Director of Customs. Cheques furnished by unsuccessful tenderers will be returned to them after the award of the contract.
The Department is not obliged to accept the higher or any tender and upholds the right to cancel the tendering procedure at any time before or after the award of the contract, without being liable to the tenderers and without having to give reasons for the cancellation of the tendering procedure.
The successful tenderer will be notified in writing and the contract will be attached to the letter for signing. He has to sign and return the contract to Customs within ten days. A cheque for an amount equal to 10% of the contract value must be furnished with the signed contract as security for the implementation of the contract. The cheque will be deposited in the name of the Director of Customs and no interest will be payable for this amount. On completion of the contract in accordance with the terms and conditions of the tender documents, the bond and cheque will be returned to the successful tenderer.
If the successful tenderer is unable or refuses to comply with the terms of the contract, his security will be confiscated. In addition, the Department of Customs will have the right to award the contract to another tenderer or initiate a new tendering procedure.
3. Allocation of the proceeds of sales
The allocation of the proceeds of sales (by auction or tenders) is regulated by the customs legislation.
(i) An amount equal to the amount of duties and taxes, storage charges, handling fees, porterages and auctioneer fees is allocated to the Republic.
(ii) Any balance is kept by Customs in the form of a deposit. This amount may be claimed in order of priority by the transporter of the goods or their owner immediately prior to the sale, provided that the appropriate evidence is produced. The amounts which the transporter is entitled to claim are restricted to the freight ad discharge fees only.
(iii) Any balance remaining unclaimed after the lapse of six months from the date of sale is transferred to the revenue of the Republic.