Current Customs Union customs law allows the declarer (the company carrying out foreign trade import/export operations) to exercise both the means of defending its rights that existed before the formation of the Customs Union, and remedies such as challenging Eurasian Economic Commission (EEC) decisions to the EEC or the EurAsEC Court.
The annual percentage of customs authority decisions subsequently overturned is more than 55% when appealed to higher customs authorities, and more than 60% when appealed in court.
The statistics on appeals against decisions and actions/omissions of the EEC to the EEC or the EurAsEC Court are not as significant as the statistics on challenges to customs authority decisions. This is mainly because this practice is still in its initial stages, although it is already indicative. In 50% of cases the EurAsEC Court finds in favor of the company. EurAsEC Court decisions have a far more wide-ranging effect than decisions by RF courts and higher customs authorities. EurAsEC Court decisions that overturn or substantially amend EEC decisions modify the legislative base of the Customs Union. EurAsEC Court decisions are therefore decisions with mass applicability, compared to the targeted decisions of the higher customs authorities and courts.
Appeals may challenge:
- Decisions, actions, and omissions of customs authorities in customs cases
- Resolutions in administrative offense cases
- Decisions, actions, and omissions of the EEC
Challenging decisions, actions, and omissions of the customs authorities in customs cases, and resolutions in administrative cases to the higher customs authority or in court
In the course of customs clearance and control, the customs authorities make a large number of decisions and carry out a range of actions, most of which can subsequently be appealed by companies. Customs authority decisions are mainly written decisions on paper using a standard form, or an electronic message. Oral comments or advice from the customs authorities cannot usually be appealed due to the absence of documentary evidence of the customs authority decision that resulted in adverse consequences for the company and/or violated customs law.
Therefore, it is advisable to obtain written decisions from the customs authorities, or written refusals to perform any act from the customs authorities. This approach gives a company a much better chance of defending its position in court.
Applicable Customs Union customs law provides other additional means for companies to provide evidence of inaction by the customs authorities. For example, companies have the right to use photo and video recordings, and witness testimony to confirm that the company filed a customs declaration and that the customs authority failed to accept and register the documents (article 206.3 Federal Law No. 311-FZ on Customs Regulation in the RF of 27.11.2010). This kind of omission previously occurred mainly at the registration of customs declarations by customs authorities. With the introduction of mandatory electronic declarations from January 1, 2014, it is now practically impossible for the customs authorities to orally refuse to accept and register customs declarations, as the filing of the declaration is recorded by the software used to make the electronic filing.
The reports generated by the customs authorities in certain circumstances (for example, the customs inspection report generated by customs authorities when undergoing customs control procedures with respect to goods presented for the purpose of declaration) cannot usually be appealed. However, a customs check report can be appealed separately if it contains any kind of decision.
Any company whose rights or lawful interests are infringed by an appealed decision, act or omission of the customs authorities may apply to the higher customs authority and/or court independently or through a representative by power of attorney. The deadline for appeals is three months from the date the customs authority adopted the decision or from the date the deadline for making such decision expired. A missed three-month deadline may be reinstated upon a motion by the company.
For instance, if a decision was adopted by a customs post, the company has the right to appeal the decision throughout the ladder of higher customs authorities: customs, regional customs department, and Federal Customs Service (FCS). A rejection of the appeal by a higher customs authority (e.g., customs) does not prevent the company applying to an even higher customs authority (e.g., regional customs department) with an appeal of the same scope. The company can go straight to the FCS, or, after receiving a negative decision at the level of customs, to the FCS or court. Legislation also permits appeals to be filed with the higher customs authority and in court in parallel, subject to certain conditions.
Practice shows that the main customs authority decisions appealed are: (1) decisions relating to the classification of goods in the Goods Nomenclature for Foreign Economic Activities of the Customs Union (TN VED CU); (2) decisions adjusting the customs value.
Appeals can be made against the following decisions relating to the classification of goods in accordance with the TN VED CU: (1) classification decisions – customs authority decisions to classify goods with a different code from that in the declaration, taken during the process of declaration or after release of the goods; (2) preliminary decisions on the classification of goods taken by the FCS or regional customs departments; (3) decisions on the cancelation of preliminary decisions.
Arguments concerning procedural breaches committed by the customs authorities when adopting the classification decision are the most effective in appeals.
Appealing a non-regulatory act, action, or omission of the customs authority in a commercial court differs only procedurally from appeals to the higher customs authorities. Challenging a non-regulatory act, action or omission of the customs authority in the arbitration court has the following stages:
- Consideration of the claim by the arbitration court
- Consideration of an appeal by the arbitration appeal court
- Consideration of a cassation appeal by the federal arbitration court
- Supervisory review of the case by the RF Supreme Court
The relevant court practice on customs value set out in RF SAC Plenum Resolution No. 96 on Certain Issues of Practice in Considering Disputes Relating to the Determination of the Customs Value of Goods Imported into the Customs Territory of the CU of December 25, 2013 is as follows:
- If the declarer does not present additionally requested documents to the customs authority, but does submit a written explanation of the reasons why the documents were not presented, this fact is not sufficient grounds in itself for the customs authority to adopt a decision adjusting the customs value
- The declarer may submit additional documents to confirm customs value in court that were not previously submitted to the customs authority
SAC Plenum Resolution No. 79 on Certain Issues Concerning the Application of Customs Law of November 8, 2013 sets out the relevant enforcement practice, including with respect to classification. The use of a mistaken TN VED CU code by the declarer, when not related to incomplete or false information on the quantity, properties, and characteristics of goods affecting classification, cannot as such serve as grounds for holding the declarer to administrative liability under clause 2 of article 16.2 RF Administrative Code.
The principal differences in appealing resolutions in administrative violations cases are procedural matters related to filing the appeal. The company that is the subject of the proceedings in the administrative violation case may appeal a resolution through its lawful representative or advocate. The appeal must be filed within 10 days of the service or receipt of a copy of the resolution in the administrative violation case (a missed deadline may be reinstated upon a motion). The term for consideration of the appeal is 10 days from receipt of the appeal with all documentation by the regional customs department or the FCS. The RF Administrative Code provides for consideration in the presence of the company. The company has the right to attend, but is not under obligation to do so.
Upon consideration of an appeal against a resolution in an administrative violation case, one of the following decisions is issued:
- To uphold the resolution and deny the appeal
- To amend the resolution, provided the administrative penalty is not increased or the position of the person otherwise worsened
- To set aside the resolution and dismiss proceedings in the case, provided certain grounds exist (including the insignificance of the administrative violation)
According to FCS Russia figures, the average annual share of administrative violations cases in which resolutions were issued imposing penalties and proceedings were not dismissed due to an appeal or protest represented 90% of the total number of decisions in administrative violations cases.
Appealing decisions and/or actions/omissions of the EEC to the EEC or the EurAsEC Court
An appeal to the EEC is a mandatory preliminary phase for the purpose of appealing EEC decisions and/or actions/omissions to the EurAsEC court.
As of July 1, 2012, the Eurasian Economic Commission (EEC) is the single permanently functioning regulatory authority of the Customs Union. The EEC has the status of a supranational governing body – it is not subordinated to any government of the CU. EEC decisions are binding in the CU. EEC decisions with respect to the interpretation and clarification of CU customs law are most frequently adopted on matters relating to classification, prohibitions and restrictions, customs benefits and customs value. Such decisions, along with actions/omissions of the EEC, can subsequently be appealed to the EEC and the EurAsEC court.
Legal entities from member states of the CU and foreign companies may act as appellants in the pre-court appeal procedure. The appellant must file a written application with the EEC asking that the EEC’s decision or action be deemed contrary to international agreements of the CU or a violation of the appellant’s rights and lawful interests. The application must be considered within two months.
If a negative decision is received from the EEC, the judicial appeal stage takes place in the EurAsEC Court.
The EurAsEC Court is the Court of the Customs Union. The EurAsEC Court began functioning on January 1, 2012 and considers claims by companies challenging the decisions (or elements thereof) and/or actions/omissions of the EEC.
Legal entities from CU member states and foreign companies may act as claimants in the judicial proceedings. Filing of the claim is not grounds for suspension of the appealed EEC decision. The case must be considered within three months.
The EurAsEC Court decision is binding on the parties to the dispute unless appealed to the Court's Appeal Chamber (comprising all judges not involved in the case) within 15 days. The terms of consideration by the appeal instance have not been established.
EurAsEC Court statistics show that the court currently has six cases proceeding: two antidumping cases, two customs classification cases, one case concerning denial of a request for interpretation of international agreements, and one case concerning a request by Kazakhstan for interpretation of an agreement on state procurements. Eight cases have been considered since the court began functioning: three cases concerned customs procedures and classification, three cases concerned customs benefits, and two cases concerned antidumping measures. The EurAsEC Court decisions were enforced in three cases, meaning that the corresponding EEC decisions were set aside or the appealed EEC decisions were amended.
For example, in case No. 1-7/1-2012, the EurAsEC court established that, as of July 1, 2011, customs clearance of goods originating from the Republic of Belarus, Republic of Kazakhstan and the Russian Federation and moving between the territory of CU member states was abolished. However, section 1 of CUC Resolution No. 335 retained customs declaration for goods in TN VED CU goods group 27 transferred from the Russian Federation into other CU member states. A decision of the Panel of the EurAsEC Court of September 5, 2012 granted the company's claim for recognition of CUC Resolution No. 335 of August 17, 2010 as contrary to customs law and EEC decision No. 7 of January 22, 2012 removed paragraph 4 of section 1 of CUC Resolution No. 335 of August 17, 2010. The Grand Panel of the EurAsEC Court also clarified that a court decision to declare a disputed EEC decision contrary to CU customs law terminates its regulatory effect with respect to an undefined group throughout the CU as of the adoption of the decision, unless otherwise established by the EurAsEC court.