The by-products, waste materials, scraps and defective products generated from a production process in a park enterprise shall be stored, in sequential order by categories and nature thereof, in warehouses or other storage places recognized by the Park Bureau and the Customs. Discarded materials in the form of semi-finished products shall be recorded respectively in a list for inspection and auditing purposes.
The by-products, as mentioned in the preceding Paragraph, refer to other products generated from a production process of the targeted products.
The term "waste materials" referred to in Paragraph 1 shall mean the obsolete machines, equipment, and parts and components or materials which are owned by the park enterprise but have become unusable or not through production process but are still considered as a part of its assets; or the products or machinery and equipment damaged due to disasters which become unusable to the park enterprise but are still considered as a part of its assets.
The term "scraps" referred to in Paragraph 1 of this Article shall mean the residuals and discarded materials leftover in the course of production which become unusable to the park enterprise.
The defective products, as mentioned in Paragraph 1, refers to products with defects or blemishes that do not meet the customers' quality requirements, but have all or part of the intended functions of the target products and are still available for sale.

The scrapping of by-products, waste materials, scraps and defective products referred to in the preceding Article shall be conducted in accordance with the following provisions:
1.Items worth using:
(1)For items that still have value after scrapping, the Park Bureau shall dispatch its designated personnel, or engage a professional agency, along with Customs officers to supervise the destruction, and the park enterprise shall prepare the appropriate forms, pay taxes due according to its residual value, and then clear the items out of the park. If the by-products, waste materials, scraps and defective products are materials subject to import/export control as designated by the
authority in charge of trade per a public notice, the park enterprise shall apply to the Park Bureau or relevant competent authority for its issuance of an export license.
(2)Alternately to these processes, as mentioned in the preceding Item, a park enterprise may submit estimated quantities for each scrapping action, and, in accordance with the residual value, clear Customs in advance, pursuant to the Customs Act, and pay the commensurate amount of guarantee deposits. After completing these actions, items may be cleared out of the park in batches after the scrapping, as supervised by the Park Bureau and Customs. Within four (4) months of customs clearance, the park enterprise shall supply the invoice equivalent to the actual transaction quantity to the Customs office for verifying taxes due. Enterprises who need an extension, with valid reasons, shall apply to the Customs for an extension before the expiration of the deadline; the extended deadline shall not exceed six (6) months after the customs clearance.
2. Items not worth using: For items with no residual value after scrapping, the Park Bureau shall dispatch its designated personnel, or engage a professional agency, along with Customs officers, to supervise the destruction.
The waste materials and scraps referred to in the preceding Paragraph, for which the attrition rates are not separately indicated in the "Bill of Materials" or have been indicated therein but the approvals therefore are pending, may be offset against the account of bonded raw materials after verification.
The operation procedures of reporting for disposal as set forth in Paragraph 1 may be processed with electronic communications, and the park enterprise must process the waste in accordance with the provisions of the Waste Disposal Act.
Items reported for disposal as per Paragraph 1 of this Article, by a park enterprise approved as a Security and Safety Authorized Economic Operator (AEOS) by the Customs, may be disposed of by the enterprise without supervision. A scrap item of a non-AEOS park enterprise, that needs not be deducted from stock accounts and has been determined by the Park Bureau and Customs to be in the state of destruction, is exempt from a supervised scrapping operation.

If the quantity of bonded goods falls short due to theft and the case has been duly certified by police authority and verified by the Customs, the park enterprise shall pay import duties levied on the missing bonded goods, within three months from the date of theft, before writing off the shortfall from the stock account. Under special circumstances as approved by the Customs, the park enterprise may apply for exemption from making payment of such import duties by furnishing a security deposit, the period of such import duty exemption shall in no case be longer than six months; and upon expiration of the duty exemption period, the security deposit shall be used to offset the outstanding import duties if the missing bonded goods are not recovered, or be fully or partially refunded for the portion of missing goods recovered.

In the case of lending, borrowing or returning raw materials, supplies, fuel, semi-finished products and/or finished products between two park enterprises, the parties thereto shall jointly fill out an "Application for Borrowing (Lending) Raw Materials, Supplies, Fuel, Semi-finished Products, and/or Finished Products between Park Enterprises" and file the same with the Customs for examination and approval before receiving (releasing) such materials, and shall respectively post such transactions in the account books after having inventoried the receipt thereof or after having returned the materials and closed the case.
In the case set forth in the preceding Paragraph, the examination and inspection on and the entry or release of such items entered into or released from the factory may be conducted by the park enterprise on its own in accordance with the provisions set out in Article 5 and Article 6 hereof, and an "Application for Borrowing (Lending) Raw Materials, Supplies, Fuel, Semi-finished Products and/or Finished Products between Park Enterprises" shall be filed within five days with the Customs for recordation.
The raw materials, supplies, fuel, semi-finished products and finished products lent by a park enterprise under the preceding two (2) Paragraphs shall be returned to the lender within three (3) months from the date of lending. In the event the lent items are not returned or the case is not cancelled with the Customs within the above-given time limit, the processes of application for import and account transfer shall be completed in accordance with the provisions of Article 25 hereof. In addition, the Park Bureau will not accept any further lending/borrowing application from both parties thereto for a period of six months, if the violation is deemed serious in nature.