Recognition of Actions Involving Amendments and/or Additions to Information Specified in a Customs Declaration as Unlawful
The fact that the customs authority had conducted only a formal review of documents and information submitted to substantiate the customs value at the time of filing customs declarations was established during the court proceedings. As a result, the plaintiffs’ claims were upheld by the appellate court.
LLPs “A” and “B” filed a claim with the court against the State Institution “Committee of State Revenue of the Ministry of Finance of the Republic of Kazakhstan”, seeking to have the actions involving amendments and/or additions to information specified in customs declarations declared unlawful.
In support of their claims, the plaintiffs stated that, during customs clearance, the state revenue authority, without examining the documents and information declared in the customs declarations and in breach of the requirements of customs legislation, had sent the declarants, through the automated customs and tax administration system “Astana-1”, forms securing the fulfilment of obligations to pay customs duties and taxes, without first issuing a request for additional documents and information.
By the judgment of the Specialized Interdistrict Administrative Court of Nur-Sultan dated 4 July 2022, the claim was dismissed (Case No. 7194-22-00-4/1049). By the ruling of the Judicial Chamber for Administrative Cases of Astana dated 8 November 2022, the judgment was set aside and a new judgment was issued granting the claim. By the ruling of the Judicial Chamber for Administrative Cases of the Supreme Court of the Republic of Kazakhstan dated 21 July 2023, the appellate court's ruling was upheld (Nos. 001-22-00-6ап/2740 and 6001-22-00-6ап/2740(2)).
The courts established that, in March 2022, the plaintiffs declared, under preliminary customs declarations, the importation of various goods from the People's Republic of China into the Republic of Kazakhstan, namely: a mobile crane valued at USD 20,000; tower cranes valued at USD 20,100 and USD 14,950; and fresh ginger valued at USD 0.80 per kilogram.
The appellate court disagreed with the conclusions of the court of first instance dismissing the claim, having established during the proceedings that the customs value declared in the goods declaration filed by LLP “B” had been determined using the transaction value method (Method 1).
The legitimacy of the declarant's actions was confirmed by the fact that the information declared in the goods declaration corresponded to the information contained in the Chinese export customs declaration, which had been obtained through the electronic online exchange of advance information with the People's Republic of China, as evidenced by the case materials.
With respect to the disputed goods declarations, the plaintiff had submitted all documents confirming the applicability of the transaction value method (Method 1).
Nevertheless, without issuing an administrative act in the form of a formal notice, on its own initiative and without specifying the grounds for the adjustment as required by the prescribed form of such notice, the defendant made amendments and/or additions to the information contained in the disputed goods declarations of LLPs “A” and “B”.
These actions of the customs authority violated the requirements of Section VI of Decision No. 289, Paragraph 1 of Article 183 of the Customs Code of the Republic of Kazakhstan, and Paragraph 11 of Article 410 of the Customs Code.
The appellate judicial panel concluded that the customs authority had conducted only a formal review of documents and information in the form of customs value control and, in violation of Article 14 and Chapter 6 of the Customs Code, had failed to duly examine the documents submitted by the plaintiffs together with their customs declarations to substantiate the declared customs value.
Furthermore, as of the date on which the reference source was issued (11 February 2021), the tower crane in question was brand new, and its value had accordingly been stated as the value of a new product. However, the disputed goods declaration concerned a used tower crane manufactured in 2012.
When adjusting the customs value of the used tower crane, the defendant unreasonably relied on the customs value of a new tower crane, despite the nine-year difference in their years of manufacture.
Accordingly, the appellate court concluded that using this reference source as a basis for determining the customs value was incorrect, since the value of a new crane was several times higher than that of a used crane. Therefore, when selecting a source of price information, the defendant was required to take the year of manufacture into account and use information relating to a comparable used product.
Consequently, the actions of the customs authority were unlawful. Accordingly, the customs payments made by the plaintiff as a result of the amendments and/or additions to the information contained in the disputed goods declarations are subject to refund.
Legal Framework
- Constitution of the Republic of Kazakhstan dated 30 August 1995;
- Administrative Procedural and Process-Related Code of the Republic of Kazakhstan (hereinafter referred to as the “APPC”);
- Code of the Republic of Kazakhstan “On Customs Regulation in the Republic of Kazakhstan” (hereinafter referred to as the “Customs Code of the Republic of Kazakhstan”);
- Customs Code of the Eurasian Economic Union, ratified by the Law of the Republic of Kazakhstan dated 13 December 2017 No. 115-VI (hereinafter referred to as the “EAEU Customs Code”);
- Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated 29 November 2019 No. 7 “On Certain Issues of the Application of Customs Legislation by Courts”;
- Code of the Republic of Kazakhstan “On Taxes and Other Obligatory Payments to the Budget” (Tax Code);
- Entrepreneurial Code of the Republic of Kazakhstan (hereinafter referred to as the “Entrepreneurial Code”);
- Code of the Republic of Kazakhstan on Administrative Offences (hereinafter referred to as the “Code of Administrative Offences”);
- Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the “Civil Procedure Code”);
- 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 of the Board of the Eurasian Economic Commission dated 27 March 2018 No. 42 “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 Chamber for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;
JCAA – Judicial Chambers 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;
CSR – Committee of State Revenue;
DSR – Department of State Revenue;
USR – Управление государственных доходов (State Revenue Department);
LLP – Limited Liability Partnership;
IE – Individual Entrepreneur.
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