Challenging Notices on the Results of the Examination of Customs and Other Documents
As follows from judicial practice, customs disputes may be divided into several subcategories:
- disputes challenging notices requiring the elimination of violations identified as a result of an on-site customs audit and decisions declaring such notices unfulfilled;
- disputes challenging notices on the results of the examination of customs and other documents;
- disputes challenging decisions to amend (supplement) the information declared in goods declarations;
- disputes challenging notices demanding repayment of customs payment arrears.
Disputes challenging notices on the results of the examination of customs and other documents arise from the failure of customs control authorities to comply with the fundamental provisions of the Customs Code (hereinafter referred to as the “CC”) governing these legal relations.
Thus, pursuant to paragraph 9 of Article 417 of the CC, following a desk customs audit, a desk customs audit report shall be drawn up, which constitutes the formal completion of the desk customs audit.
Where violations of the customs legislation of the Eurasian Economic Union and/or the Republic of Kazakhstan are identified, a notice on the results of the audit shall be issued. The form of the desk customs audit report shall be approved by the authorized body.
The date of completion of the desk customs audit shall be the date on which the desk customs audit report is drawn up. The report shall be prepared in two copies and signed by the officials who conducted the customs audit. The first copy of the desk customs audit report shall be attached to the materials of the desk customs audit, while the second copy shall be sent or delivered to the audited person no later than five calendar days from the date of completion of the desk customs audit, in accordance with the procedure established by Article 416 of this Code.
Pursuant to paragraph 9-1 of Article 417 of the CC, before the desk customs audit report provided for in paragraph 9 of this Article is drawn up, the customs authority shall send or deliver a preliminary desk customs audit report to the audited person in accordance with the procedure established by Article 416 of this Code.
For the purposes of this Code, a preliminary desk customs audit report means a document prepared by the customs authority setting out the preliminary results of the desk customs audit.
The preliminary desk customs audit report shall be prepared in the form approved by the authorized body. The audited person shall have the right to submit written objections to the preliminary desk customs audit report.
For example, a violation of the above provisions constituted grounds for granting the claim brought by an individual entrepreneur against the Republican State Institution “Department of State Revenue for Turkistan Region” seeking to declare unlawful the defendant’s actions in drawing up the desk customs audit report and the notice on the audit results, and to annul the notice on the audit results.
The courts established that, during the desk customs audit conducted in respect of the entrepreneur, the Department of State Revenue had failed to comply with the requirements of paragraph 9-1 of Article 417 of the CC by not sending or delivering the preliminary desk customs audit report to the audited person before drawing up the desk customs audit report.
Paragraph 9-1 of Article 417 of the CC refers to a subordinate regulatory legal act under which the authorized body is to approve the procedure and time limits for sending or delivering the preliminary desk customs audit report to the audited person, the procedure and time limits for submitting written objections to the preliminary report, and the procedure for considering such objections.
In this regard, the cassation judicial panel identified a conflict between regulatory legal acts. Such a conflict is to be resolved, pursuant to Article 10 of the Law “On Legal Acts”, by applying the legal act having greater legal force.
Pursuant to Article 11 of the Law “On Legal Acts”, all regulatory legal acts shall have direct effect unless otherwise provided for in the regulatory legal acts themselves or in the acts introducing them into force.
No additional instructions are required for the application of regulatory legal acts that have entered into force.
Where a regulatory legal act provides that a particular legal provision is to be applied on the basis of an additional regulatory legal act, that provision shall be applied in accordance with both the primary and the additional regulatory legal acts.
Until the additional regulatory legal act is adopted, the regulatory legal acts governing the relevant legal relations shall remain in force.
The cassation judicial panel noted that, in light of the foregoing provisions, the proper application of the law by the administrative authority should have included interpreting and applying the legal provision having greater legal force in accordance with its literal meaning. In the present case, that provision was a statutory provision.
Accordingly, by its ruling dated 12 December 2023, the Judicial Panel for Administrative Cases of the Supreme Court of the Republic of Kazakhstan (hereinafter referred to as the “JPAC of the Supreme Court”) set aside the ruling of the Judicial Panel for Administrative Cases of the Turkistan Regional Court dated 14 February 2023 and upheld the decision of the Specialized Interdistrict Administrative Court of Turkistan Region dated 17 October 2022 (Case No. 6001-23-00-6ап/960).
The cassation judicial panel upheld the findings of the court of first instance that the defendant had issued Notice No. 4 dated 23 July 2021 on the audit results without proper grounds. This was because, pursuant to paragraph 10 of Article 417 of the CC, a notice on the audit results must be sent or delivered to the audited person simultaneously with the desk customs audit report, in accordance with the procedure established by Article 416 of this Code.
The judicial panel also emphasized that the authorized body’s failure to approve the procedure for sending and delivering the preliminary desk customs audit report in a timely manner must not infringe upon the rights and legitimate interests of the declarant.
Legal Framework
- The Constitution of the Republic of Kazakhstan dated 30 August 1995;
- The Administrative Procedural and Process-Related Code of the Republic of Kazakhstan (hereinafter referred to as the “APPC”);
- The Code of the Republic of Kazakhstan “On Customs Regulation in the Republic of Kazakhstan” (hereinafter referred to as the “CC”);
- The Customs Code of the Eurasian Economic Union, ratified by Law No. 115-VI of the Republic of Kazakhstan dated 13 December 2017 (hereinafter referred to as the “EAEU CC”);
- Regulatory Resolution No. 7 of the Supreme Court of the Republic of Kazakhstan dated 29 November 2019, “On Certain Issues Concerning the Application of Customs Legislation by Courts”;
- The Code of the Republic of Kazakhstan “On Taxes and Other Mandatory Payments to the Budget” (Tax Code);
- The Entrepreneurial Code of the Republic of Kazakhstan (hereinafter referred to as the “Entrepreneurial Code”);
- The Code of the Republic of Kazakhstan on Administrative Offences (hereinafter referred to as the “CAO”);
- The Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the “CPC”);
- The Treaty on the Eurasian Economic Union dated 29 May 2014 (hereinafter referred to as the “EAEU Treaty”);
- Acts constituting the law of the EAEU (hereinafter referred to as “international treaties and acts in the field of customs regulation”);
- Decision No. 42 of the Board of the Eurasian Economic Commission dated 27 March 2018, “On the Specifics of Customs Control of the Customs Value of Goods Imported into the Customs Territory of the Eurasian Economic Union”.
Abbreviations Used
JPAC of the Supreme Court – Judicial Panel for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;
JPAC – Judicial Panels for Administrative Cases of regional courts and courts equated thereto;
SIAC – Specialized Interdistrict Administrative Courts of the regions of the country;
SI – State Institution;
RSI – Republican State Institution;
SCSD – State Committee of State Revenues;
DSR – Department of State Revenue;
USR – Unit of State Revenue;
LLP – Limited Liability Partnership;
IE – Individual Entrepreneur.
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