After a Bonded Factory has been put under the control of the Customs authority, or has commenced the production of new product and prior to exportation of such product, it shall, within a period of one month beginning from the next day, prepare for each line of product a "Schedule of Raw Materials Used Per Unit of Product" giving therein detailed information on the code numbers, nomenclature, specifications, quantity of the product as well as the stock number, nomenclature, specifications or model number, unit, quantity used (quantity actually used plus quantity of attrition) , and submit the same in duplicate to the supervising Customs for reference. Customs may conduct inspections when necessary, and request the production process instructions and other documents that facilitate the inspection. Unless this is done, the exported raw materials used for such products shall not be deducted from the stock accounts. However, if the products exported are sample products, such Schedule may be submitted to the supervising Customs for reference within one month beginning from the next day after exportation , and failure to do so within said time limit shall cause the raw materials used non-deductible from the stock accounts.
The quantity used as indicated in an approved "Schedule of Raw Materials Used Per Unit of Product" shall be taken as the basic reference in settling the quantity of raw materials used in the products produced by a bonded factory. No separate attrition account may be declared for scraps and wastes generated in the course of production.
After receipt of the said Schedule set forth in Paragraph 1 of this Article, the Customs authority shall after taking reference, examine and grant their approval and return one copy of such documents to the Bonded Factory concerned for use as the basis for settlement of bonded raw materials.
If the "Schedule of Raw Materials Used Per Unit of Product" originally submitted is amended, a new schedule identified by the Number of reference or supervising for the original schedule shall be prepared and submitted to the Customs authority for reference. The time period for submission of such a new schedule by the applicant and for examination and approval of it by the Customs authority shall be the same as those stated in Paragraph 1 of this Article.
In case the price, characteristics and functions of raw materials used by a Bonded Factory are of a similar nature and are interchangeable, a statement to that effect should be given in the Schedule of Raw Materials Used Per Unit of Product and, submitted to the supervision Customs authority for reference.
If raw materials mentioned in the preceding paragraph are of Chinese origin whose importation has been granted by the Board of Foreign Trade , Ministry of Economic Affairs , or are subject to countervailing or anti-dumping duties as published by the Ministry of Finance, the importing bonded factory shall assign them particular part numbers and ensure that they will not be interchanged with materials from other sources.
The "Schedule of Raw Materials Used Per Unit of Product" shall be valid for a period of three years beginning from the second day of reference or approval by the supervising Customs. The Bonded Factory shall remake the schedule and submit it to the supervising Customs for reference prior to expiration.
The "bill of materials" and the revised Schedule therefrom mentioned in Paragraph 1 and 4 respectively may be, if approved, stored in an electronic medium for Customs reference. However, if a " bill of materials "contains raw materials which are subject to countervailing or anti-dumping duties as published by the Ministry of Finance, it has to be electronically transmitted through CPT Single Window to Customs for review.

A Bonded Factory shall set up separate sets of books and ledgers for raw materials, finished products and self-use machines and equipment, recording in detail the quantities of raw materials and finished products received by and released from the warehouses, and quantities being kept in the warehouse. If Customs deems it necessary, the Bonded Factory shall also keep dynamic records of semi-finished products and products under processing in order to furnish the same to the supervising Customs for inspection from time to time.
For books and ledgers, off-plant processing record cards and factory release slips of a bonded factory referred to in the preceding Paragraph of this Article which are processed by computers, relevant data therein should be input into the computer for establishing computer files within the time limit as specified in Article 18 hereof for inspection by Customs from time to time. The Bonded Factory shall also make printouts of monthly report of substitute raw materials, finished products and self-use machines and equipment, off-plant processing record cards and factory release slips of a bonded factory before the twentieth of the ensuing month for verification by Customs.
The above-mentioned books, ledgers and monthly reports may be, with Customs approval, stored in electronic media for reference.
The off-plant processing record cards and factory release slips in Paragraph one of this article of a bonded factory which is handled with human manner shall be submitted to Customs for verification and stamping before the use thereof.
If the raw materials imported or purchased domestically by a Bonded Factory for processing of export goods are not of bonded raw materials and may be interchangeable with other bonded raw materials, they should be entered in the account books maintained for raw materials and placed under control.
The raw materials mentioned in paragraph 6 of the preceding Article and products made therefrom shall be separately recorded on their stock accounts for Customs audits.
The records of movement of raw materials and products among bonded factories referred to in Paragraph 4 of Article 6, with prior consent of competent Customs, shall be kept in the account books separately and accumulatively for raw materials, semi-products, finished products, of the bonded factories concerned respectively. The records of movement and inventories in detail shall be recorded on factory-basis and ready for Customs audit. In addition,the annual inventory of all bonded factories concerned shall be integrated. However, any bonded factory that has set up its account books for both raw materials and finished products with an exclusive column for keeping record of the movement, with prior approval of competent Customs, is not required to set up additional account books for keeping those records.
The provisions set forth in Paragraph 2 and 3 shall apply mutatis mutandis on the application of the preceding paragraph.

The self-use machines and equipments of Bonded Warehouse that have been imported for 5 years and have exceeded the time listed on the “Revised Table of Service Life of Fixed Assets” from Executive Yuan may be deducted from the stock accounts by Bonded Warehouse and exempted from Customs supervision.
The self-use machines and equipments of Bonded Warehouse that have been imported for 6 months and showed no signs of providing service of export, competent Customs shall ascertain the facts and require for improvement in limited time. Supervising customs may notify Bonded Warehouse that failed to improve performances within limited time with suitable reason to make deduction from stock accounts after paying the import taxes and duties.
Where goods prescribed in the preceeding paragraphs with import regulations to follow; it will require agreement documents from competent authorities to proceed with de-booking.

The books, ledgers, schedules, tables and reports as required in these Regulations shall be printed according to the formats standardized by the Customs authority provided, however, that case a Bonded Factory needs to design the forms to suit its own purposes or to alter the forms standardized by Customs, it may do so only after such new forms have been reported to and duly approved by the Customs authority.

All bonding account books and ledgers and statements pertaining to bonded duties which are made and maintained in each year by a Bonded Factory shall be preserved for a period of five years after completion of annual inventory process, and the relevant certificates shall be preserved for a period of three years.
A Bonded Factory may, after completion of the annual inventory process and with the approval of the supervising Customs, have the certificates referred to in the preceding Paragraph recorded in micro-films, magnetic tapes, magnetic disks or any other electronic media and placed in custody for a custody period as specified in the preceding Paragraph; moreover, the originals of such certificates should not be destroyed. However, if the supervising Customs needs to obtain reproduced copy of any such certificates and/or relevant documents while conducting an investigation under the law at any time or from time to time, the Bonded Factory shall have the obligation to provide such certificates and/or relevant documents for reproduction.
While performing its auditing and supervising duties, the supervising Customs may, as necessary, in addition to auditing the bonding account books, records and statements related to customs bonding operations, also send customs officer(s) who shall bring an authorization letter with him/them to inspect or audit other accounting books, statements and certificates of a Bonded Factory subject to the inspection, to which the Bonded Factory shall not refuse to provide such access.

Bonded goods stored in a Bonded Factory shall be stored in a systematic and orderly manner in the warehouse(s) or storage place(s) approved by the Customs authority with serial numbers assigned and a stock-record card system established to record, from time to time, the quantities of bonded goods received, withdrawn and in stock so as to facilitate examination provided, however, that no stock-record card system is required if the stock records of bonded goods are controlled and managed by computer system and can be checked through on-line operation. The warehouses for bonded goods shall be under the care of the Bonded Factory and shall be locked during any period of work suspension. If the period of work suspension exceeds ten days, the Bonded Factory shall report to the Customs authority of such period, and the Customs authority may send its personnel to lock the warehouse(s) jointly with the Bonded Factory.

When a Bonded Factory withdraws raw materials and semi-finished products from the raw materials and semi-finished products warehouses, for processing, it is required to complete an "application for claim of materials" and act in accordance with the prescribed procedures. Evidentiary documents shall be retained for inspection.
When a Bonded Factory returns raw materials and semi-finished products drawn in accordance with the procedure of the preceding Paragraph to the raw materials and semi-finished products warehouses, it shall complete an "application for return of materials" and turn in the materials in accordance with the prescribed procedures. Items so turned in shall be again entered into the account book and stored in the warehouses. Evidentiary documents shall be retained for inspection.
With regard to the "application for release of materials" and the "application for return of materials" as mentioned in the preceding two Paragraphs, if a factory has its own existing forms to adequately replace such applications or if the operational procedure is of a special nature, substitution for or exemption from completing such forms may be permitted after an approval has been requested from and granted by the Customs authority.

The "application for storage of finished products in warehouse" for the finished products manufactured by a Bonded Factory shall be completed on a daily basis and the products shall be entered into account books and stored in the warehouses for finished products. When the products are being taken out of the warehouses, an "application for withdrawal of products from warehouse" shall be completed with a description therein explaining the reason for withdrawal from the warehouses, and the products shall be released from the warehouses and entered into account books. However, if a factory has other forms to adequately replace the application forms, with the approval of Customs, they may use their existing forms in lieu of such application form.

Bonded items of a Bonded Factory, except those for direct export or for sale in other districts outside the bonded area, shall be released from the Factory only when an approval has been obtained from Customs authority after application, or a report for recording such release has been submitted to the Customs authority in accordance with the governing provisions.
When releasing articles or items from a Bonded Factory, a factory release certificate shall be prepared in accordance with governing provisions by the Bonded Factory, and then the guard on duty shall release such articles or items from the factory according to the factory release certificate.
The factory release certificates referred to in the preceding Paragraph shall be serially numbered and used in sequence, with the counterfoils thereof to be retained for inspection.

The entry and withdrawal of bonded goods shall register the relevant account books within 2 days beginning from the next day after entering/ withdrawing form the warehouse. The bonded goods imported from abroad shall enter for registration within one week after being examined and released from the customhouse.

If, due to lack of storage space, a Bonded Factory needs to rent a warehouse outside its business premises, an approval from the supervising Customs shall be obtained. Moreover, the use of an outside warehouse will not be approved by Customs unless:
1. the warehouse is strong enough and equipped with the anti-theft system, fire and flood hazard protection system, ventilation and lighting system, and other facilities necessary to ensure the safety of goods stored therein.
2. the bonded warehouse operator has submitted a building occupancy license for warehouse or plant, a building ownership certificate, and a land ownership certificate of the outside warehouse issued by the competent authority, together with their photocopies. In addition, if the outside warehouse is to be obtainted by lease. a lease contract and its photocopy, and a letter of agreement from the leasor declaring that the lease contract remains effective for a period of at least six months even though the leasee has lost the bonded warehouse status, allowing the supervising Customs to dispose bonded goods.

After an export processing factory has been approved for registration as a Bonded Factory, an inventory shall be conducted jointly by the factory and a representative(s) of Customs on the date designated by the Customs authority for taking over the control of the factory (taking over inventory). The import duties and taxes levy on raw materials, products in process, semi-finished products and finished products subject to such inventory check shall be offset and/or refunded against statistics of bonded items inventoried (the inventory statistics).
A Bonded Factory which has already been registered for being taken over for control shall inventory its bonded goods once a year (the annual inventory). The interval between the date of annual inventory of current year and that of the preceding year shall not be shorter than ten (10) months nor longer than fourteen (14) months. Annual inventory may be advanced or postponed as special situation dictates if a prior approval has been obtained from the supervising Customs. However, the inventory may be taken at any time or from time to time whenever Customs deems it necessary.
After completion of the inventories as mentioned in the preceding two paragraphs, if any incorrect record or omission is subsequently found, an application may be filed by the Bonded Factory with the supervising Customs for recheck and correction before the bonded goods involved is put to use. Application filed after two weeks beginning from the second day of the completion of inventory shall be rejected.
A Bonded Factory shall compile inventory statistics, warehouse bonded raw materials and finished products settlement reports, self-use machines and equipment settlement reports, bonded raw materials settlement reports, an analysis table of converting the inventoried in-process products and processed products, semi-finished products and finished products into raw materials, and an analysis table of converting the finished products for export and/or domestic sales into raw materials based on the inventory checklist within two months from the day following the inventory date and submit them to the supervising Customs for reference. An examination may be made if necessary. However, upon approval by Customs, the period may be extended by one month for one time.
The various forms and reports submitted to the supervising Customs for reference with the approval in the preceding paragraph may be stored in electronic media. However, it is not applicable if the content of the relevant report is corrected and signed by an accountant entrusted.
After the annual inventory list prepared by a Bonded Factory has been approved by the Customs authority, it may be distributed to the competent tax collection authority for reference upon its request.
A bonded factory may, with the approval of Customs authority, conduct the annual inventory without interruption of its production operation or on holiday(s) in accordance with the manner set forth by Customs.

In case the actual quantity of any bonded item inventoried by a Bonded Factory in accordance with the preceding Article is not consistent with the booked balance-in-stock for that inventory year, the case shall be handled in accordance with the following provisions:
1. If the quantity actually inventoried is less than the booked balance-in-stock by a rate within the inventory discrepancy tolerance, the factory shall be exempted from making supplementary payment of import duty dues therefore, If the imports fall in the category approval, the inventory discrepancy shall be reported to the Customs for supplementary payment of tax within a month beginning from the second day after the submission of the settlement report. The Customs may examine by sampling and ask for supplementary payment of tax or order a refund of payment according to the actual situational.
2. If the quantity actually inventoried exceeds the booked balance-in-stock by a rate beyond the inventory discrepancy tolerance, the factory shall report, with reasons, the case to the supervising Customs for identification of the cause of such amount exceeding the booked balance-in-stock. If the cause thereof is the result of a relatively high consumption forecast of raw material per unit of product, the schedule of raw materials used per unit of product shall be revised for use in the stock accounting process in the following year.
If the raw materials of same category or interchangeable with each other are partly of bonded items and partly of non-bonded items, they shall all be included in the inventory in the annual closing process, and the quantities of bonded and non-bonded raw materials actually used shall be separately offset against their corresponding booked quantities. For raw materials of which the quantities actually used can not be identified, account offsetting shall be made preferentially for quantities of bonded raw materials. Inventory discrepancies found in the portion of non-bonded raw materials shall be exempted from additional duties and taxes.
The inventory discrepancy tolerance rates applicable to the raw materials of Bonded Factories shall be formulated by trades and classes announced by Customs authority and published on the Executive Yuan Gazette.
Upon occurrence of shortage of bonded articles the Bonded Factory shall, within 15 days beginning from the second day of occurrence of the event, disclose the case to the Customs authority and make supplementary payment of import duties and dues levy on such short fall.

A Bonded Factory shall appoint two or more full-time representative to handle matters related to bonding affairs on behalf of the bonded factory. Said full-time representative should have an educational attainment of senior high school or vocational high school graduate or higher or pass the equivalence appraisal examination and acquired a completion certificate for bonded goods operation personnel training program conducted by the competent Customs office or a Customs accredited private institution. Furthermore, at least one of such full-time representatives should hold a management position dealing with bonded affairs executive. The full-time representative roster should be submitted to Customs for record purposes.

The Bonded Factories shall obtain the prior approval of the supervising Customs and receive the supervision of Customs for its operation of the processing business.

The Bonded Factories shall obtain the prior approval of the competent Customs and under its supervision for conducting the product inspection, testing, repair, maintenance or the operating software installation required for these businesses mentioned above; and the account book for keeping those service record is required to have prior approval and verification stamp from Customs.
The imported product referred to in the preceding paragraph shall be re-exported within six months following the next day of its release. However, upon written request with specified reasons, the competent Customs may grant an extension of another six months for re-exportation. Once the product fails to be re-exported within the time limit, a formal entry shall be declared and with payment of duty and taxes to Customs within ten days from the due date.
In the case where bonded materials have been used for maintenance of the bonded product referred to in Paragraph 1, the bonded materials and the components used for maintenance shall be listed in a reference table and reported to the competent Customs prior to the product been re-exported or moved out of bonded factory. The bonded materials and components shall not be deducted from the account books if failed, or over the time limit, to be reported to Customs. Where any components disassembled from the product shall be recorded in an exclusive account book, Paragraphs 1 and 2 of Article 44 shall apply mutatis mutandis.

The supervising Customs may send Customs officials to a Bonded Factory for auditing or performing following functions:
1. Check and examine the progress of production operations, stock in warehouses for raw materials and warehouses for finished products, management situation of self-use machines and equipment, as well as books and statements of the Bonded Factory.
2. Audit the schedule of raw materials use per unit of products compiled by the Bonded Factory and the schedule of raw materials used on non-bonded goods, and examine reports and statements prepared in annual inventory.
3. Conduct, jointly with the Bonded Factories, periodic or non-periodic inventories on bonded items.
4. Supervise the destruction of by-products, self-use machines and equipment and substandard products of the Bonded Factory authorized for destruction by special approval.
5. Provide assistance and guidance to a newly established or poorly managed Bonded Factory requiring enhanced control and supervision.
6. Audit and inspect other activities relating to the control and supervision over the Bonded Factory.

When the registration of a Bonded Factory is repealed, its bonded articles shall be dealt with in accordance with the following provisions:
1. All bonded articles shall be kept in the warehouse(s) of the said factory to be attached with the sealing tape of the Customs authority or to be locked jointly by the Customs authority and the said Bonded Factory. The Customs authority shall send its official to inspect the warehouse(s) un-periodically or take the custody of the bonded articles as necessary.
2. The repealed Bonded Factory with repealed registration shall contact the supervising Customs for fixing the date of inventory, or the supervising Customs may fix the date of inventory at its own discretion, so as to take the inventory in accordance with the relevant provisions in Article 20 hereof (the "closing inventory"). In case of discrepancies between the quantities actually inventoried and the quantities in stock as shown in the account book, the provision in Paragraph 1, Article 21 hereof shall apply.
3. Subject to the provisions of subparagraph hereunder, the supervising Customs shall, based on the in-stock quantities of bonded articles which have been inventoried, issue the import duties and dues assessment notice in respect of such bonded articles (For finished products and semi-finished products, import duty and dues shall be assessed based on the original form of bonded raw materials used for making such finished and semi-finished products).
4. In order to meet the production or export requirements, or to sell the goods to the enterprises in the Science Parks, Technology Industrial Parks, Agricultural Biotechnology Parks, Free Trade Zones or other Bonded Factories, the Bonded Factory may, prior to the issuance of import duties and dues assessment notice by the supervising Customs, furnish securities in an appropriate amount and obtain the approval of the supervising Customs, to withdraw the bonded articles to use. However, it shall, within one year from such approval for withdrawal of bonded articles, submit to the supervising Customs for closing of the case the evidentiary documents for exportation of products concerned. Failure to apply for closing the case within the time limit shall cause the Customs authority to offset the securities against the import duties and dues payable thereon.
In the case that a bonded factory fails to conduct the closing inventory, the supervising Customs shall issue import duties and assess dues based on quantities in stock as shown in the account book.
When a company that established a bonded factory is declared bankrupt by the court and Customs has not repealed the registration of this company, the bonded goods therein shall be disposed of in accordance with the relevant provisions of the Bankruptcy Act; if there is a need to withdraw the goods for use, such bonded goods may be released for use with the approval granted by Customs against an appropriate amount of collateral. The application to Customs for closing the case shall be processed within one year from the day following the aforementioned approval. Otherwise, Customs may offset the collateral against the import duties and dues payable thereon.

The Customs may adopt the performance grade system for management of the Bonded Factories.

The Bonded Factories shall obtain the prior approval of the supervising Customs and receive the supervision of Customs for its production of non-bonded goods.
The “non-bonded goods” provided in the preceding paragraph refers to the goods produced by bonded warehouses using the materials imported from foreign countries or bonded areas and passing the customs with duty paid, or the materials purchased from the tax zones.