Liquidation Regulation

The Liquidation Regulation was prepared under the responsibility of the Ministry of Trade and published in Official Gazette No. 28688 of 25 June 2013; it entered into force on 1 September 2013 (Article 71). Its purpose is to set the procedures and principles for taking goods into, keeping and delivering goods from temporary storage places, bonded warehouses and depots operated by customs administrations, and for liquidating goods that have become subject to liquidation (Article 1). It is based on Customs Law No. 4458 and Anti-Smuggling Law No. 5607 (Article 2). It has since been updated, including by amendments published in the Official Gazettes of 3 June 2018 and 31 December 2019.

What does liquidation mean and which goods does it cover?

Liquidation is the process of disposing of goods that have become subject to liquidation under the Customs Law or the Anti-Smuggling Law. For goods that become subject to liquidation, the customs directorate draws up an identification and assessment document within three working days at most and sends it to the operating directorate. The goods are taken over by the operating directorate within thirty days of the arrival of the documents; goods that are difficult or costly to move, or that cannot be kept waiting, are liquidated where they are (Article 30).

The right holder in the goods may apply, before a tender notice or retail sale decision, to have the goods placed under a customs regime (Article 57). Goods whose import is banned or restricted are sold only for re-export (Article 56).

What are the liquidation methods and where does destruction come in?

The Regulation sets out the methods provided in the Law in separate sections: sale by tender, retail sale, liquidation by special means (for example allocation or sale to public bodies, foundations and associations) and liquidation by destruction. Destruction is the last resort for goods that cannot be, or should not be, put to use through sale or allocation. Goods put up for sale and not sold may be offered one last time by negotiated sale before being destroyed (Article 59).

In liquidation by special means, goods that the committee determines to be recyclable may be given to persons and bodies authorised by the Ministry of Environment, Urbanisation and Climate Change, and goods determined to be scrap and raw material may be given to the Mechanical and Chemical Industry Corporation (Article 59).

Which goods are destroyed and who decides?

Goods ordered destroyed by a court, goods that have lost their economic value, goods found to be harmful to health, and goods that cannot be liquidated by other means are liquidated by destruction. For goods other than those ordered destroyed by a court, the committee decides on destruction (Article 61). The committee consists of an odd number of at least three persons chaired by the head of the administration or a designated staff member, decides by majority vote, and its members are responsible for its decisions (Article 68).

Destruction of goods in places under the supervision of the customs directorate and the operating directorate is carried out by the administrations concerned, and destruction of goods placed in custody for storage is carried out by the customs administration that placed them there (Article 62). Destruction of goods found to be fit only for destruction before they became subject to liquidation follows the Customs Regulation, and destruction of goods that become so after becoming subject to liquidation follows this Regulation (Article 63).

What does it mean for destruction and recycling?

Destruction is carried out within the framework of the Environmental Law and the regulations based on it, by rendering the goods completely worthless or unusable. For goods requiring technical knowledge, the views of the relevant bodies are sought, and where necessary destruction is carried out by bodies authorised by the Ministry of Environment, Urbanisation and Climate Change. If the cost of analysis exceeds the value of the goods, or the goods have expired or are about to expire, they are destroyed without analysis and this is stated in the destruction decision (Article 63).

Destruction takes place under the supervision of the committee chair; every stage is video-recorded and a destruction report is drawn up. If licensed companies carry it out, delivery and destruction records are kept on file. Measures are taken to prevent reuse of parts of destroyed goods, such as packaging or bottles, that retain economic value. Video recordings are retained for five years, and approval of the regional directorate is obtained before destruction of goods above a certain value (Article 63).

Who pays for destruction and what should be watched in practice?

The principle is that destruction costs are collected from the owner of the goods. For ownerless goods, and where the owner cannot be reached or does not pay, the operator that holds the goods bears the costs, with its right of recourse against the owner preserved; costs for smuggled goods and goods in liquidation depots are met from the revolving fund budget (Article 63). Where goods that were paid for but not collected, and that cannot be liquidated by other means, are destroyed, the costs of destruction are met from the money held in escrow (Article 41).

The critical point for an owner is that no payment is made for goods that are destroyed; payment of the value arises only where goods that became subject to liquidation under the Anti-Smuggling Law and were ordered returned to their owner have been destroyed (Article 64). Every destruction rests on a report, video and committee decision, and these documents are kept by the administration that carried out the destruction.