Lack of Subject-Matter Jurisdiction over Claims Arising from Customs Disputes

The lack of subject-matter jurisdiction over claims primarily arises where participants in an administrative procedure challenge interim acts of an administrative body in the absence of a final administrative act imposing a burden (such as a notice of an upcoming inspection, a customs audit report, etc.), whereas such acts cannot constitute independent subject matters of judicial proceedings. Interim acts of administrative bodies represent stages of an administrative procedure preceding the adoption by a state body of a final administrative act upon completion of that procedure. A total of 52 claims were returned on these grounds.

For example, a Limited Liability Partnership (LLP) filed a claim against the Republican State Institution “Department of State Revenue for Kostanay Region” challenging a notice of an inspection of customs and other documents and/or information relating to a customs declaration, documents confirming the information declared in the customs declaration, and information declared in the customs declaration and/or contained in documents submitted to the state revenue authorities, initiated after the release of goods.

The claimant substantiated its claims by arguing that an unscheduled inspection should concern facts and circumstances identified in relation to specific entities (facilities) subject to control and supervision, which served as grounds for ordering that unscheduled inspection. However, the contested notice contained general grounds without specifying particular facts and circumstances. Accordingly, the claimant argued that there were no grounds for conducting the unscheduled inspection.

The case materials established that the claimant was challenging a notice issued by the defendant pursuant to Article 426 of the Customs Code in the prescribed form (Appendix No. 1) under the Rules for Notifying a Person of an Inspection of Customs and Other Documents and/or Information Relating to a Customs Declaration, Documents Confirming the Information Declared in the Customs Declaration, and Information Declared in the Customs Declaration and/or Contained in Documents Submitted to the State Revenue Authorities, approved by Order No. 292 of the Minister of Finance of the Republic of Kazakhstan dated 26 February 2018.

The court correctly concluded that the claimant was not entitled to challenge the contested notice in administrative proceedings because it did not meet the criteria of an administrative act imposing a burden. The defendant’s actions constituted the initial stage of a post-clearance customs audit following the release of goods. The final decision is a notice issued in the form prescribed by Appendix No. 2, which may be challenged before a court.

Accordingly, the court issued a ruling returning the claim.

By a ruling of the Judicial Collegium for Administrative Cases of the Kostanay Regional Court, the ruling of the Specialized Interdistrict Administrative Court was upheld without modification.

Another example concerns cases in which the courts of Astana returned an LLP’s claim against the Republican State Institution “Department of State Revenue for Astana City” seeking a declaration that a notice was unlawful and its annulment. The claim was returned on the grounds that it was not subject to consideration under administrative proceedings because the contested notice did not possess all the characteristics of an administrative act.

Having analysed the provisions of the Customs Code and the Instruction on the Procedure for Using Transport (Shipping), Commercial and/or Other Documents as a Customs Declaration for Goods, approved by Decision No. 263 of the Customs Union Commission dated 20 May 2010, “On the Procedure for Using Transport (Shipping), Commercial and/or Other Documents as a Customs Declaration for Goods”, the Judicial Collegium for Administrative Cases of the Supreme Court upheld the judicial acts and explained that, since the inspection had not been completed and no customs audit report had been drawn up, while the contested notice had been issued for the purpose of verifying the absence of violations of customs obligations and procedures, the filing of such a claim was premature. Consideration of the claim on its merits by the court could predetermine the outcome of an inspection that had not yet been completed.

Furthermore, it cannot be ruled out that, if the Partnership provides documentary evidence confirming the declared goods, the defendant may adopt an administrative act favourable to the claimant, taking into account the Department of State Revenue’s administrative discretion in making decisions based on the results of a customs audit.

Thus, as noted above, having opted for the simplified procedure for declaring imported goods and, consequently, for an administrative act favourable to itself at the time of importation and release of the goods, the claimant voluntarily assumed the obligation to submit to further customs control should such control be initiated.

At the same time, challenging interim actions before a court may entail the cancellation of customs simplifications and a narrowing of the list of goods eligible for the simplified procedure, including for business entities engaged in foreign economic activity.

Accordingly, at this stage, the notice challenged by the LLP does not constitute an administrative act imposing a burden on it, as no notice of the inspection results has been issued.

Moreover, the contested notice does not possess the characteristics of an administrative act because it contains no findings regarding the results of the inspection, imposes no obligations on the participant in the administrative procedure, and does not otherwise worsen its legal position.

It follows from the foregoing that the notice challenged by the LLP is not an administrative act imposing any obligations on it or worsening its legal position. Rather, it is an interim act, meaning that it precedes the adoption of a final administrative act and, if challenged before a court, may serve as evidence in the administrative proceedings.

In the context of the foregoing, this means that the contested notice does not possess all the necessary and legally admissible characteristics required for recognition as an administrative act and, accordingly, does not fall within the scope of public-law relations (Case No. 6001-23-00-6ап/2624).

Legal Framework

1. The Constitution of the Republic of Kazakhstan dated 30 August 1995;
2. The Administrative Procedural and Process-Related Code of the Republic of Kazakhstan (hereinafter referred to as the APPC);
3. The Code of the Republic of Kazakhstan “On Customs Regulation in the Republic of Kazakhstan” (hereinafter referred to as the Customs Code);
4. 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 Customs Code);
5. 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”;
6. The Code of the Republic of Kazakhstan “On Taxes and Other Obligatory Payments to the Budget” (the Tax Code);
7. The Entrepreneurial Code of the Republic of Kazakhstan (hereinafter referred to as the Entrepreneurial Code);
8. The Code of the Republic of Kazakhstan on Administrative Offences (hereinafter referred to as the CAO);
9. The Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the CPC);
10. The Treaty on the Eurasian Economic Union dated 29 May 2014 (hereinafter referred to as the EAEU Treaty);
11. Acts constituting the law of the EAEU (hereinafter referred to as international treaties and acts in the field of customs regulation);
12. Decision No. 42 of the Board of the Eurasian Economic Commission dated 27 March 2018, “On the Specifics of Conducting Customs Control of the Customs Value of Goods Imported into the Customs Territory of the Eurasian Economic Union”.

Abbreviations Used

JCAA SC RK – Judicial Collegium for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;

JCAA – Judicial Collegiums for Administrative Cases of regional courts and courts of equivalent status;

SIAC – Specialized Interdistrict Administrative Courts of the regions of the country;

SI – State Institution;

RSI – Republican State Institution;

SRC – State Revenue Committee;

DSR – Department of State Revenue;

USR – Office of State Revenue;

LLP – Limited Liability Partnership;

IE – Individual Entrepreneur.

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