(1) Goods prescribed by Ordinance of the Ministry of Economy and Finance may be exempted from customs duties, from among the parts and raw materials (including re-imported parts that are repaired or manufactured in a foreign country after having been exported and raw materials that are processed and repaired) used by a small or medium enterprise under Article 6 (1) of the Restriction of Special Taxation Act (hereafter referred to as "small or medium enterprise" in this Article) to manufacture or repair any of the following goods at a factory designated by the head of a customs office, as prescribed by Presidential Decree, in order to correct uneven tariff rates: <Amended on Jan. 1, 2013; Dec. 31, 2018; Dec. 22, 2020>
1. Aircraft (including parts);
2. Equipment used to manufacture semiconductors (including accessory machinery thereof).
(2) None of the following persons shall be designated under paragraph (1): <Newly Inserted on Dec. 15, 2015>
1. A person who falls under any of subparagraphs 1 through 5 and 7 of Article 175;
2. A person for whom two years have not passed from the date on which the designation was revoked under paragraph (4) (excluding where it was revoked by reasons falling under any of subparagraphs 1 through 3 of Article 175);
3. A corporation for which a person who falls under subparagraph 1 or 2 works as an executive officer (limited to a person who is directly in charge of or who supervises the operation of the relevant factory).
(3) The period of designation of any factory referred to in paragraph (1) shall not exceed three years, and such period may be extended upon request from the designated person.
(4) If a person designated under paragraph (1) falls under any of the following cases, the head of a customs office may revoke the designation: Provided, That in cases falling under subparagraph 1 or 2, the designation shall be revoked: <Newly Inserted on Dec. 15, 2015; Dec. 31, 2018>
1. Where he or she falls under any subparagraph of paragraph (2): Provided, That this shall not apply to cases falling under paragraph (2) 3, where a corporation which has a person falling under subparagraph 2 or 3 of Article 175 as its executive officer replaces the relevant executive officer within three months;
2. Where the agency has obtained the designation by fraud or other improper means;
3. Where the head of a customs office deems it impractical to achieve the purpose of establishing the designated factory due to its shutdown for not less than one year.
(5) Articles 179, 180 (2), 182 and 187 shall apply mutatis mutandis to any designated factory under paragraph (1). <Amended on Jan. 1, 2013; Dec. 15, 2015>
(6) Customs duties on the parts and raw materials that a person who is not a small or medium enterprise uses for manufacturing or repairing goods referred to in paragraph (1) 1 at a factory designated by the head of a customs office, as prescribed by Presidential Decree, referred to in paragraph (1), shall be reduced or exempted as follows: <Newly Inserted on Dec. 31, 2018; Dec. 22, 2020; Dec. 21, 2021>
1. With respect to the reduction or exemption of the customs duties of goods prescribed by Ordinance of the Ministry of Economy and Finance among goods subject to Annex 4 Agreement on Trade in Civil Aircraft of the Marrakesh Agreement Establishing the World Trade Organization, the reduction rate that falls under each relevant applicable period shall apply to the portion of import declaration filed during the period classified in the following table:
2. With respect to the reduction or exemption of the customs duties of goods other than those referred to in subparagraph 1, the reduction rate that falls under each relevant applicable period shall apply to the portion of import declaration filed during the period classified in the following table:(7) Notwithstanding paragraph (6), paragraph (1) shall apply mutatis mutandis to parts and raw materials used by the State and local governments to manufacture or repair goods referred to in paragraph (1) 1. <Newly Inserted on Dec. 22, 2020>
(8) Where a person designated pursuant to paragraph (1) intends to modify any designated matter, he or she shall file a report on modification with the head of a customs office, as prescribed by the Commissioner of the Korea Customs Service. <Newly Inserted on Dec. 22, 2020>[This Article Wholly Amended on Dec. 30, 2010][Title Amended on Jan. 1, 2013]