As per a Foreign Trade Contract, a company with foreign investors has imported goods from Belgium. The goods' customs valuation was calculated according to the value of the transaction. However, the Customs Authorities have expressed doubt as to the authenticity of the declared customs valuation and, in addition, have requested 30 more documents. The company is unable to provide the papers requested, and the Customs Authorities have adjusted the valuation of the goods increasing the duty on them by more than 75%..
The problem was that several of the documents had to be requested from the foreign counterparty. But the foreign partner found it difficult to understand what some of the Russian Customs' demands related to. For example, why did they have to provide a price list from the manufacturers, and not only that, but one certified by the Chamber of Commerce in the exporter's own country?
The way out of this dispute with Customs was to turn to the Court of Arbitration. It established that the participant in foreign trade activity had presented to Customs all the documents it had in its possession as part of the normal course of business, and that the Customs Authorities had no legal grounds to cast doubt on the validity of the declared customs valuation or for the subsequent adjustment.
For their part, Customs were unable to prove in court that the information provided by the importer was false. Incidentally, the court further ordered the Customs Authorities to reimburse the plaintiff the court costs arising from this dispute.
Today, up to 35% of all cases against the Customs Office heard by the Court of Arbitration concern adjustments to customs valuations. Approximately 80% are found in favour of those engaged in foreign trade activity.
An enterprise operating in Russia has brought a timber-milling machine over from Germany. In support of the customs valuation, they have provided the contract, certification, bill, payment orders, agreements with the expediter and haulier, as well as the price list and copy of the export declaration. But on studying the documentation, the Customs Authorities take issue with the accuracy of the customs valuation and arrive at the decision to increase the duty by 53%.
So as not to place the goods in temporary storage, and thereby incur the associated costs, the company took the decision to pay a security deposit into the Customs Office's account. Once the goods had been released according to the established customs regime, the enterprise then petitioned the court.
The adjudicating authority drew attention to the fact that the declarer's obligation to present the Customs Authorities with explanations and further documentation arises in only two cases: namely, where there are signs that information relating to the customs valuation is false, and where the declared information is not duly supported. The court revoked the decision taken by Customs, and ordered them to return the excess money paid.
Here it is important to remember once again: the entrepreneur estimates the customs valuation himself. To do this, there has been set out in law a range of methods, the first and foremost of which is the calculation of the customs valuation according to the value of the transaction in imported goods.
A company is importing agricultural equipment from The Netherlands. The customs valuation was assessed according to the value of the transaction. On analysing the documents, as well as the background to the deal, the Customs Authorities come to the conclusion that vendor and buyer are Related Parties and that the customs valuation has been calculated improperly. A raft of documents is requested. After they are presented, the Customs Authorities inform the declarer in writing that it is not possible to use the main method of calculating customs valuations for goods, and so they adjust the amount. As a result, they increase the amount of duty payable by more than 200%.
It is true that often vendor and buyer in a foreign trade contract are related parties. In such cases, for customs clearance it is important to prove that this fact has not unduly influenced the price of the goods. Unfortunately, it is often a lot simpler to do so in court, rather than at the Customs Office.
The company appealed to the court which, on analysing the very same documents, came to the exact opposite conclusion as Customs: the information contained in the documentation was wholly sufficient to prove the absence of any influence over the price of the goods arising from the vendor and buyer being related parties. As a result, the decision was made in favour of the import company, and Customs reimbursed all costs incurred by having to seek representation.
In order to “clear entry” for the goods, businessmen present the relevant package of documents to the Customs Authorities. If any doubts arise at Customs as to the validity of the customs valuation that has been calculated, they usually request further information and documentation, and carry out an inspection. In order to minimise the costs which come with the goods being in temporary storage for the duration of the inspection, the Customs Office propose making a provisional evaluation of the goods, and then for the owner of the goods to pay the difference in duty between the valuation he has made and the one arrived at by Customs. It is only once the money has been received in the Customs Office's account that the goods can be released according to the established customs regime.
Often businessmen pay the difference, collect their goods and then undertake no further action for fear of starting a dispute with Customs. However, one cannot assume such a passive role in such situations: the Customs Authorities' decision has to be appealed by either administrative or legal means. Through the court is better: there, there is less of a risk of vested interests affecting the way the dispute is looked at.
An enterprise operating in Russia has imported some plumbing equipment from Italy. The declared customs valuation of the goods was calculated using the main method i.e. according to the value of the transaction. From the point of view of the import company, the documents presented for customs clearance fully support the accuracy of the valuation. However, at the inspection stage, Customs refuse the company the right to calculate the customs valuation themselves, motivated by the fact that the risk management system has brought to light certain factors indicating, as they put it, the invalidity of the information presented. They adjust the duty of the imported goods, increasing it by 180%.
After the goods had been released, the import company applied for arbitration and won their case. The main thrust of their argument was that Customs were obliged to prove that the importer's valuation was in fact false, but they were unable to do so.
Customs referred to the fact that one of the fundamental points of the risk management system is to employ the principle of selectivity when carrying out customs control and to thereby reduce the number of inspections which are only to be carried out in cases where so-called “risk profiles” are in operation or when resulting from the statement provided by the declarer himself when required to identify the goods of which he is in receipt. However, without casting doubt on the competency of the Customs Authorities themselves, it is worth pointing out that, in any case, improper activity on the part of the importer has to be proved. This is the case all the more so in situations where it is a matter of adjustments (in this case substantial increases) to customs duties. Flaws in the Customs Administration ought not to constitute a barrier to trade and economic activity.