On recognition as illegal in terms of making changes (or) additions to information in declarations of goods

No.6001-22-00-6ap/2740(2) dated 07/21/2023

Plaintiffs: LLP "A", LLP "B"

Respondent: RSU "State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan" Interested parties: LLP "AS", LLP "E", RSU "Main Dispatch Department of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan" and

The subject of the dispute: to declare illegal in terms of making changes (or) additions to the information in the declarations for goods (DT) No. 51426/020322/1000722, No. 51426/150322/1000867, and to refund additionally collected customs duties for DT No. 51426/020322/1000722 in the amount of 4 million tenge, for the declaration for goods in the amount of 3 million tenge

Review of the cassation complaint of the defendant and the cassation petition of the Main Transport Prosecutor's Office of the Republic of Kazakhstan.

PLOT: In March 2022, the plaintiffs, according to preliminary declarations, declared the import of various goods from the People's Republic of China to the Republic of Kazakhstan (truck crane – $ 20,000, tower cranes – $ 20,100 and $ 14,950, fresh ginger at a price of $ 0.8 per 1 kg).

The plaintiffs, appealing to the court, indicated that the state revenue authority, when conducting the customs clearance procedure without checking the documents and information stated in the declarations, contrary to the requirements of customs legislation, in the absence of a request for additional documents and information, sent the declarants through the automated system of customs and tax administration "Astana -1" forms to ensure the fulfillment of the duty to payment of customs duties and taxes.

             Judicial acts:

1st instance: the claim was denied.

Appeal: the court's decision is overturned, the claim is satisfied.

Cassation: the appeal ruling is upheld.

Conclusions: The Court of First instance, refusing to satisfy the claim, motivated its decision by the legality of the actions of the customs authority to make changes and (or) additions to the information specified in the disputed declarations and the person who released the goods.

The Court of Appeal did not agree with these conclusions of the court of first instance on the following grounds. The declared customs value for LT LLP "V" No.51426/040322/0000760 and 51426/040322/0000761 is determined by the transaction price of imported goods (method 1). The validity of these actions of the declarant is confirmed by the correspondence of the information stated in the goods declaration with the information from the export customs declaration of the People's Republic of China obtained as part of the electronic online exchange of preliminary information of the People's Republic of China, which follows from the case file.

According to the disputed data, the plaintiff provided all documents confirming the application of the transaction method for imported goods (method 1). Thus, according to paragraph 1 of Article 66 of the Code of the Republic of Kazakhstan dated December 26, 2017 No. 123-VI SAM "On Customs regulation in the Republic of Kazakhstan" (hereinafter – TC RK) "Method of transaction value of imported goods (method 1)" the customs value of imported goods is the value of the transaction with them, that is, the price actually paid or payable for these goods when they are sold for export to the customs territory of the Eurasian Economic Union and supplemented in accordance with Article 67 of the Labor Code of the Republic of Kazakhstan, subject to the following conditions:

1) there are no restrictions on the rights of the buyer to use and dispose of the goods, with the exception of restrictions that: limit the geographical region in which the goods can be resold; do not significantly affect the value of the goods; established by acts of the bodies of the Eurasian Economic Union or the legislation of the Republic of Kazakhstan;

2) the sale of goods or their price does not depend on any conditions or obligations, the impact of which on the price of goods cannot be quantified;

3) no part of the income or proceeds from the subsequent sale, disposal in any other way, or use of goods by the buyer is owed directly or indirectly to the seller, except in cases where additional charges may be made in accordance with Article 67 of the Labor Code of the Republic of Kazakhstan.;

4) the buyer and seller are not related persons, or the buyer and seller are related persons in such a way that the transaction value of the imported goods is acceptable for customs purposes in accordance with paragraph 4 of this Article.

According to paragraph 2 of this Article, if at least one of the conditions specified in paragraph 1 of Article 66 of the Labor Code of the Republic of Kazakhstan is not fulfilled, the price actually paid or payable is not acceptable for determining the customs value of imported goods and the method of transaction value of imported goods (method 1) is not applied.

The conditions specified in paragraph 1 of Article 66 of the Labor Code of the Republic of Kazakhstan for the application of the transaction value method for imported goods (method 1) have been met by the plaintiffs.

The goods were transported under purchase and sale contracts for export to the customs territory of the Eurasian Economic Union, prepayments were provided in the amount of 100% of the total value of the goods according to declarations No. 51435/080322/0000027, No. 51426/020322/1000722, part according to declarations No. 51426/150322/1000867, No. 51426/270322/1000994, part of the amount was paid immediately after receipt and goods No. 51426/040322/0000760; and 51426/040322/0000761 on declarations subsequent payment is provided.

             It has been established that, in accordance with the risk management system for the disputed DTS, the automated system of customs and tax administration "Astana-1" is indicated to conduct one of the forms of customs control – verification of customs, other documents and (or) information in the form of customs value control.

According to paragraph 1 of Article 396 of the Labor Code of the Republic of Kazakhstan, when conducting customs control of the customs value of imported goods declared during customs declaration (hereinafter referred to in this article as control of the customs value of imported goods), the customs authority verifies the correctness of determining and declaring the customs value of goods (choosing and applying the method of determining the customs value of goods, the structure and magnitude of the customs value of goods, documentary confirmation of information about the customs value of the goods).

Also, paragraph 2 of this Article provides that when monitoring the customs value of imported goods, the customs authority has the right to request written explanations from the declarant about the factors affecting the formation of the price of goods, as well as about other circumstances related to goods imported into the customs territory of the Eurasian Economic Union.

However, in violation of the above-mentioned norms of the Labor Code of the Republic of Kazakhstan and the EAEU Labor Code, the customs authority, without checking documents and information, in accordance with Article 410 of the Labor Code of the Republic of Kazakhstan (similarly, Article 325 of the EAEU Labor Code), forms and sends to the declarants through the Astana-1 IP a form for calculating the amount of security for the payment of customs duties and taxes (hereinafter referred to as FRRO). In violation of the requirements of the customs legislation, the customs authority does not send to the declarants a request for additional documents and (or) information (hereinafter referred to as the request).

As it is established, after the customs authority issues the FRO to the declarants, the latter are given the right to choose the following options: when choosing "Release on security", the goods are released in accordance with Article 195 of the Labor Code of the Republic of Kazakhstan; when choosing "Agree with the adjustment", the state revenue authority will adjust the DT; if choosing "Disagree", the state revenue authority The revenue refuses to issue a declaration for the goods.

In this case, the defendant refers to the fact that since the declarants chose the decision "I agree with the adjustment", the customs authority is not obliged to send a request to the declarants jointly with the Federal Customs Service.

This statement of the defendant is refuted by the provisions of the following customs legislation. By virtue of the requirements of paragraph 5 of Article 139 of the Labor Code of the Republic of Kazakhstan, when requesting documents and (or) information in accordance with paragraph 4 of Article 410 of this Code, the amount of security for the performance of obligations to pay special, anti-dumping, countervailing duties is calculated by the customs authority and sent to the declarant in accordance with paragraph 6 of Article 410 of this Code, Paragraph 5 of Article 96 of the Labor Code of the Republic of Kazakhstan it is provided that when requesting documents and (or) information in accordance with paragraph 4 of Article 410 of this Code, the calculation of the amount of security for the fulfillment of obligations to pay customs duties and taxes, interest in the case of accrual of such interest for deferral or installment payment of import customs duties shall be made by the customs authority and sent to the declarant in accordance with paragraph 6 of Article 410 of this Code.

Further, paragraph 22 of the Order of the Minister of Finance of the Republic of Kazakhstan dated January 26, 2018 No. 73 "On Approval of the Rules for Customs Clearance of Goods by Officials of State Revenue Bodies" (hereinafter referred to as the order) stipulates that the application of risk mitigation measures determined by the risk management system is carried out by an authorized official, taking into account the following provisions:

1) when conducting customs control in the form of a form of verification of customs, other documents and (or) information, a request is sent to the service recipient via the IP for the submission of documents confirming the information stated in the electronic customs declaration (EDT).

If the documents are submitted and their verification is completed before the goods are released, or when the results of customs control in other forms, including customs examination of the goods, confirm the accuracy and (or) completeness of the information being verified, the service provider releases the goods in accordance with Article 192 of the Code.

If the documents do not contain information or do not properly confirm the information stated in the EDT affecting the amount of customs duties, taxes, special, anti-dumping, countervailing duties, the authorized official notifies the recipient through the IP of the possibility of releasing goods in compliance with the requirements of Article 195 of the Code, as well as with the condition of providing security for the performance of duties. for the payment of customs duties, taxes, special, anti-dumping, countervailing duties.

Thus, the current customs legislation provides that, regardless of the choice of the declarant with the decision on consent / disagreement with the adjustment of the customs value, including at the preliminary stage, the customs authority, together with the Federal Tax Service, must send the declarants a request for additional documents and (or) information. The form of the request for amendments (additions) to the information stated in the customs declaration before the release of the goods is determined by the Commission.

According to paragraph 1 of Article 183 of the Labor Code of the Republic of Kazakhstan, a change (addition) of the information stated in the registered customs declaration may not entail a statement of information about goods other than those indicated in this registered customs declaration.

The procedure for performing customs operations related to changing (supplementing) the information stated in the customs declaration and the information in the electronic form of the customs declaration on paper before the release of goods is determined by the Commission (decision of the Board of the Eurasian Economic Commission of December 10, 2013 No. 289 (hereinafter Decision No. 289). According to paragraph VI of Decision No. 289, the procedure for making changes (additions) to the information stated in the goods declaration is defined before the goods are released at the request of the customs authority.

In accordance with subparagraph 27 of paragraph VI of Decision No. 289, if the results of customs control reveal the need to make changes (additions) to the information stated in the goods declaration (hereinafter referred to as the DT), in the case provided for in paragraph 2 of Article 112 of the EAEU Code, the customs authority sends (hands over) to the declarant a request for amendments (additions) in the information provided in the DT, before the release of the goods (hereinafter referred to as the Requirement) in the form of an electronic document or a paper document (depending on the form of filing the DT) in an approved form.

According to subparagraph 28 of paragraph VI of Decision No. 289, the request in the form of a paper document is handed over to the declarant against signature or sent to him to the e-mail address indicated in column 54 of the DT. The person who received the request against signature shall enter the date in the format dd.mm.yyyy (day, month, calendar year) and the time in the format hh:mm (hours and minutes) after receiving it, he certifies this record with his signature, indicating his last name and initials. The request in the form of an electronic document is sent to the declarant by the customs authority using the information system of the customs authority or sent to him to the e-mail address specified in column 54 of the DT.

Information on the date and time of receipt of the request by the declarant in the form of an electronic document is recorded by the declarant's information system and sent electronically to the customs authority.

At the same time, as established by the case materials, without issuing an administrative act in the form of a claim, on his own initiative, without specifying the grounds that served to make adjustments provided for in the established form of the Claim, the defendant made changes and (or) additions to the information in the disputed declarations for goods of LLP "A" No.51435/080322/0000027, 51426/150322/1000867, 51426/270322/1000994, and "V" LLP 51426/020322/1000722, No.51426/040322/0000760, 51426/040322/0000761.

These actions of the customs authority violated the requirements of paragraph VI of Decision No. 289, paragraph 1 of Article 183 of the Labor Code of the Republic of Kazakhstan, paragraph 11 of Article 410 of the Labor Code of the Republic of Kazakhstan. According to Decision 160, column 7 of the DTS-2 indicates a brief justification for the reasons why the methods of determining the customs value of goods that precede the method of determining the customs value of goods are not applicable. At the same time, the case materials established that according to DT LLP "A" No.51435/080322/0000027, 51426/020322/1000722, 51426/270322/1000994, the customs authority did not indicate why the method declared by the declarant for the transaction price of imported goods (method 1) is unacceptable.

Also, the defendant did not explain why the attached documents did not confirm the declared customs value at the transaction price of the imported goods (method 1). Thus, according to DT LLP "A" No. 51426/150322/1000867, and DT LLP "B" No. 51426/040322/0000760, 51426/040322/0000761, the reason for not accepting the method for the transaction price of imported goods (method 1), according to the defendant, was the lack of documentary evidence of the customs value of the goods.

At the same time, there is no reasoned justification for such a conclusion by the defendant, whereas the latter did not request documents from the plaintiff to confirm the customs value of the goods (there is no request), and there are no explanations for the documents submitted by the plaintiff when submitting the goods declaration. According to DT LLP "A" No.51435/080322/0000027, 51426/150322/1000867, the defendant, in substantiating the application of the reserve method for determining customs value (method 6), indicated the following: "Method 2-5 customs value is not applied due to the lack of documentary evidence of the customs value of the goods, its structure, the amount of additional charges to the price actually paid or payable for imported goods in accordance with paragraph 3 of art. 66, paragraph 3 of art. 67 of the Code of the Republic of Kazakhstan "On Customs Regulation in the Republic of Kazakhstan."

At the same time, these statements of the defendant regarding the non-use of the previous 2-5 methods are untenable, since they violate the principles of determining customs value regulated by Chapter 6 of the Labor Code of the Republic of Kazakhstan. In particular, the absence of documentary evidence of the customs value of the goods may be a justification for not using the transaction method for imported goods (method 1), but not for using the following methods for determining the customs value: - the method for the transaction value of identical goods (method 2); - the method for the transaction value of similar goods (method 3); - the method of subtraction (method 4); - the method of addition (method 5). It was established that the plaintiffs stated the customs value determined by the transaction price of imported goods (method 1) and provided the defendant with evidence of the validity of the method.

In the case under consideration, the board considers that the customs authority formally checked the documents and information in the form of customs value control, in violation of Articles 14 and Chapter 6 of the Labor Code of the Republic of Kazakhstan, did not properly review the documents attached by the plaintiffs when submitting declarations to confirm the customs value. According to the disputed DT, LLP "A" No. 51426/150322/1000867 was used as the source of DT No. 55302/110221/1009897. Whereas the source is dated February 2021, according to which the tower crane is designed in disassembled form with a release date of January 2021.

Thus, at the time of registration of the source (February 11, 2021), a completely new tower crane was issued, respectively, the cost is stated as for a new product. A tower crane, used in 2012, was declared in the disputed DT No. 51426/150322/1000867. When adjusting the value of a used tower crane, the defendant unreasonably applied the customs value of a new tower crane as a basis, where the difference in output is 9 (nine) years.

In this regard, the court of appeal correctly concluded that it is incorrect to use this source as the basis for determining the customs value, since the cost of a new crane is many times more than the used one.

Therefore, the defendant had to select a source of price information based on the release date, that is, it was also used. Similarly, according to the contested DT of LLP "A" No. 51426/020322/1000722, the source of DT No. 55302/050321/1017031 was applied, the defendant also applied the cost of a new tower crane as a basis. According to the source, a crane with a release date of January 2021 was declared, whereas in the disputed DT No. 51426/020322/1000722 there is a used tower crane manufactured in 2018, thus, the difference in release is 3 (three) years. The cost of a tower crane at the source is 119 thousand. However, the defendant adjusts the cost by 83 thousand US dollars.

Thus, the defendant adjusted the customs value in violation of the requirements of paragraph 9 of Article 65 of the Labor Code of the Republic of Kazakhstan, according to which the determination of the customs value of goods should not be based on the use of arbitrary or fictitious customs value of goods.

Thus, when selecting sources of price information, the defendant used as a basis a customs value that did not meet the requirements of customs legislation.

Paragraph 8 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated November 29, 2019 No. 7 "On certain issues of the application of Customs legislation by Courts" (hereinafter – NP) it is explained that when assessing the validity of the first method of determining the customs value of imported goods, courts should be guided by the provisions of Articles 38, 39 and 40 of the EAEU Customs Code, bearing in mind that the transaction value of imported goods cannot be considered documented, quantified and reliable if the declarant has not provided evidence of the transaction, based on in which the product was purchased, in any form that does not contradict the law, either the price information contained in such a transaction does not correlate with the quantitative characteristics of the goods, or there is no information about the terms of delivery and payment for the goods, or there is evidence of its unreliability, as well as, if there is no other information relevant to determining the value of the transaction in the sense of the above norms of the EAEU Customs Code.

According to the explanation in paragraph 8 of the NP, the value of the transaction with imported goods according to the declarations for goods is considered documented, since the plaintiff provided evidence of the transaction.

Such a document is a purchase and sale contract that does not contradict the civil law on the basis of which the goods were purchased, the contract contains information about the terms of delivery, there is information about payment for the goods (prepayment or subsequent payment), the price information contained in such a transaction correlates with the quantitative characteristics of the goods.

The plaintiff provided reliable documentary evidence regarding the value of the transaction with imported goods according to the disputed declarations for goods according to method 1, however, the defendant ignored the evidence and the relevant legal assessment.

Thus, the court of appeal came to the reasoned conclusion that the actions of the customs authority are illegal, respectively, the customs payments paid to the plaintiff are subject to refund in connection with the introduction of changes and (or) additions to the information specified in the disputed data.

 

 

 

Attention!   

       Law and Law Law Law draws your attention to the fact that this document is basic and does not always meet the requirements of a particular situation. Our lawyers are ready to assist you in legal advice, drawing up any legal document suitable for your situation.  

 For more information,  please contact a Lawyer / Attorney by phone: +7 (708) 971-78-58; +7 (700) 978 5755, +7 (700) 978 5085. 

 

Attorney at Law Almaty Lawyer Legal Services Legal Advice Civil Criminal Administrative Cases Disputes Protection Arbitration Law Firm Kazakhstan Law Office  Court Cases