Failed export of CISCO routers highlights need for due diligence
25 August 2023
We are warning exporters to carefully check the requirements for export licences following a rise in seizure notices being issued by Border Force for exports of high-tech CISCO goods by a small British business.
In the latest case, we were asked to advise an exporter because one of their shipments, which included routers manufactured by the international networking giant CISCO Systems, had been stopped at the UK border. The shipment was bound for a middle eastern country.
All internationally traded goods are categorised for customs and tax purposes using commodity codes; in the case of the CISCO routers, the code to which they belonged required them to be checked for “dual use controls” before export – which is why they were stopped at the border.
The term “dual use” refers to goods, whether specially manufactured or sold “off the shelf”, which, though they have been designed for commercial, non-military use, could be used for harm if they end up in the wrong hands. Dual-use items encompasses goods, software and technology with the capacity to serve both civil and military purposes. It includes, for instance, components that could contribute in some way to the manufacture of nuclear weapons. Such items may special export licenses to be granted by the government, depending on who the final end-user will be, or which country they are being shipped to. In 2014, for instance, the managing director of Delta Pacific Manufacturing Limited, a British SME, was jailed for two and a half years and fined £68,000 for exporting specialised alloy valves to Iran in breach of UK dual-use export control laws.
In the case of the CISCO routers, the exporter refused to believe that the goods had been legitimately impounded, even when Chamber International advised that this was the case. Chamber International’s customs expert Ehtsham Razaq advised the exporter to contact CISCO, to see if the same goods were listed in a similar way by US customs – which they were. One of the routers, which originated from the USA, was found to carry an Export Control Commodity Number in the category relating to telecommunications and information security. The exporter only conceded the situation when it received an official letter from UK Border Controls confirming the fact.
The fact that the routers were not of UK origin, meaning that they had been imported and already passed through both US and UK customs, could lead to suggestions that the company may have been trying to evade UK export controls, in order to sell the goods to a customer in the Middle East.
Under the Customs and Excise Management Act, it is a criminal offence to inadvertently ship unlicensed goods, and an even more serious one if the exporter deliberately tries to evade export controls.
Violations of export controls can lead to severe penalties, including fines, export restrictions, or criminal prosecution.
According to the UK government, in April this year, one UK business had to pay a fine of £217K for the unlicensed export of dual-use goods; the following month, a second was hit by a whopping £920K fine.
Get in touch with our specialists Ehtsham Razaq and Vincent Taylor on 0845 034 7200 if you think your exports might be at risk.
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