Anexo 24 Presentation English

Mexican Customs Anexo 24 Software for inventory control of IMMEX authorized companies.

1. Welcome to Welcome to Joffroy Group

2. Annex 24 / Anexo 24 Inventory Control System for IMMEX Companies

3. Introduction 1. Understanding Anexo 24 2. Rules, Regulations & Requirements 3. Examples & Common mistakes 4. Concequences ( Customs fines & others ) 5 . Best practice recommendations

4. The automated inventory control ( Anexo 24), requires the following : Anexo 24 Chapter I. Minimum information for the inventory control system Chapter I : Obligations of the importer . Keep an automated Inventory Control System Article 59 LA 1. Comply with its Regulations in accordance to the foreign trade rules ( RCGMCE 4.3.2) regarding inventory control of goods imported temporarily . 2. Have an automated inventory control system that maintains balances of temporary imported materials and exported finished products. 3. The system shall g enerate annual reports that comply with the reporting requirements established by Customs and the Mexico department of commerce.

5. Anexo 24 Chapter I . Minimum information required for the inventory control system A - CATALOGS : General Information of the importer of record / responsible party Raw materials Finished goods B – CUSTOMS MODULE : Module of entry to customs information (temporary import ) Module of information about the used materials . Module of customs information for outputs ( returns , destruction , donations , regime changes , scrap , etc ...) Module of assets ( equipment , machinery ) C – REPORT MODULE : Report of goods entry of temporary imports Report of goods output of temporary imports Report of balance of temporary imports Report of used materials

6. Anexo 24 Anexo 24 Operational Process Diagram Others

7. Examples & Common mistakes All these mistakes affect inventory Anexo 24

8. BOM Anexo 24 Examples & Common mistakes Component ID Description Qty L1-T Lid 1 LA12-PT Water Label 1 B10-ER Plastic bottle R 1 Component ID Description Qty L1-T Lid 1 LA12-PT Water Label 1 B10-EH Plastic bottle H 1 Wrong BOM ( System VS Real) BOTTLE-1L – Annex System BOTTLE-1L – Real used in line production This should be another BOM Production requested 1000 the finished good BOTTLE-1L Raw material Description Balance System Required Real Used New Balance L1-T Lid 10,000 1000 1000 9,000 LA12-PT Water Label 14,000 1000 1000 13,000 B10-ER Plastic bottle R 1000 -1000 Inventory result

9. Anexo 24 Examples & Common mistakes Pedimento VS Real +/- Materials received Qty : 1,000 Pedimento VS Qty : 1,100 Reported in the system but not correction was made for customs purposes Real input

10. Anexo 24 Examples & Common mistakes Scrap a) Quality control rejection: It’s necessary make a virtual transfer of scrap of finished good . In the production process c ) Liquid spilled by the machine: It’s necessary to specify in your BOM, the waste that would be deducted in the process. b ) Damaged raw materials: It’s necessary make a virtual transfer or a goods return.

11. Anexo 24 Examples & Common mistakes Transfer of materials from one company to the other without the required paperwork and inventory control. Virtuals Not done Output Company 1 Input Company 2

12. Consequences Anexo 24

13. Anexo 24 Consequences The consequences of failing to keep a proper inventory ( Anexo 24) are : 176, Chapter I: Excess of merchandise Penalty of 130% to 150% of foreign trade taxes omitted 176, Chapter X: No Pedimento Penalty of 70% to 100 % of the merchandise 144 A, Chapter II: Cancellation of IMMEX 185 A: No inventory control system Penalty of $ 14,650 to $ 29,310 MXP

14. Best practice recommendations Anexo 24

15. Thank you ! Joffroy Group