Important clarifications on setting the customs value of imported goods are contained in the Resolution adopted on 25 December 20131 by the Plenum of the Russian Supreme Commercial (‘Arbitration’) Court (the “SCC”) to replace the Plenum’s Resolution No. 29 dated 26 July 2005.
- Presumption that information supplied by a declarant is accurate
The Plenum has enacted the principle that information supplied by a declarant is accurate. The practical expression of this principle is encountered in the following positions put forward in the Resolution of the Plenum.
Information supplied by a declarant with regard to the customs value is regarded as accurate unless a customs authority proves otherwise. In particular, if there is a significant discrepancy between the transaction price and the information contained in the customs authorities’ databases in relation to transactions with identical or similar goods imported into the customs territory of the Customs Union, this may be only a factor pointing to the inaccuracy of the information supplied by the declarant (clause 1). However, if such factors are identified, this is not cause for a decision to be taken to adjust the customs value and it serves only as a reason for an additional check to be carried out; this is because when factors are identified which point to the inaccuracy of information supplied by the declarant, only assumptions that the information is inaccurate arise on the part of the customs authority (clause 3). Should the declarant fail to provide additional documents or information to substantiate the customs value it has declared for goods, this may not in itself trigger a decision from the customs authority that the customs value of the goods be adjusted, if there were objective reasons why they requested documents or information could not be supplied and if the corresponding explanations have been given to the customs authority (clause 5). The customs authority has an obligation to prove that there are grounds which preclude the first method for setting the customs value of goods from being applied, and also that it is not possible to apply other methods in accordance with the sequence established by law. In particular, such grounds may be: (i) the fact, proved by the customs authority, that documents supplied by a declarant and information contained in them are not authentic; and (ii) there is conflicting information regarding the conditions for setting the customs value (clause 7).
However, this principle does not relieve the declarant of the obligation to exercise due care and circumspection when it enters into a foreign trade transaction2 , nor of the obligation to act in good faith when implementing requests from the customs authorities. Thus, a foreign trade contract should contain information about the price, which should correspond to the quantitative characteristics of the goods, as well as information about the conditions of delivery and payment for the goods. Otherwise, the value of the transaction with the goods may not be regarded as confirmed by documents, defined in terms of quantity, and accurate (clause 1). In response to a request from the customs authority, the declarant must either supply the documents and information that the customs authority has requested, or explain in writing the reasons why such documents and information may not be supplied (clause 5).
The above clarifications of the Plenum are aimed at improving the practice of the customs authorities taking decisions to adjust solely based on a discrepancy between the declared customs value and the pricing information available to them. For a customs authority to take such decisions, specific factors must be identified which prove that the documents and/or information based on which the declarant set the customs value are inaccurate.
Regrettably, the Plenum’s Resolution gave no expression to the following position, which the Presidium of the SCC previously pronounced in several resolutions on particular cases: it is necessary to take into account that, further to a request of a customs authority, a declarant is obliged to supply those documents which it actually has at its disposal, or those which it should have by virtue of the law or business custom. In our view, this does not mean that the SCC has renounced the above position, so a party may rely on it as before when asserting its interests.
- What is a sale?
We remind readers of clause 3 (method 1) of the Rules for Applying the Method for Setting the Customs Value of Goods in Relation to a Transaction with Imported Goods (the “Rules”), which were approved by Resolution No. 283 of the Board of the Eurasian Economic Commission dated 20 December 2012. Under clause 3, it is provided that when goods are sold to be imported into the customs territory of the Customs Union, such goods are the subject matter of a sale and purchase under a foreign trade agreement (contract).
Clause 2 of the Resolution being discussed in this alert gives a wider definition to this concept, indicating that for customs purposes “sold to be imported” may cover any transaction aimed at ownership title passing for a consideration. Accordingly, the first method for setting the customs value may also be applied in cases when goods are imported under an exchange contract or contract terminating a right for a fee, as well as other contracts involving title to imported goods being transferred.
- Conditions which influence on the sale or the price of goods it is not possible to determine in terms of quantity
In clause 6 of the Resolution, the Plenum of the SCC stated that when, in terms of a ground for making a decision to adjust customs value, use is made of the fact that the sale of goods or the price of them depends on terms and conditions being complied with and the effect of this may not be defined in terms of quantity, such terms and conditions should be understood as referring to a term/condition of the transaction itself under which the goods are acquired, as well as other terms and conditions which affect the price of goods under the transaction, including terms and conditions in relation to which the declarant has not supplied information to the customs authority.
From our perspective, it is difficult to call this clause a clarification, since against a background of the general requirement (which can be traced through all the other provisions of the Resolution) in relation to claims of the customs authorities being specifically defined, the Plenum has in this case freed the imagination of the customs authorities from any boundaries. There are particular dangers caused by the wording “terms and conditions in relation to which the declarant has not supplied information to the customs authority”: it is unclear whether this clarification relates to a case in which the customs authority has requested specific information about such terms and conditions, or if the Plenum is allowing for the possibility of the customs authority taking a decision to adjust if there are certain terms and conditions in relation to which the customs authority has not requested information. Our view is that it will be possible to justify a decision to adjust only if the customs authority shows that the sale or the price of goods was influenced by specific terms and conditions, examples of which are cited in clause 8(b) of the Rules.
- Providing additional evidence
Clause 9 of the Resolution, in relation to disputes concerning customs value, restates the position on whether additional evidence may be provided to a court, which was previously expressed in the Plenum of the SCC’s Resolution No. 57 dated 30 July 2013 ‘On certain issues arising when the commercial courts apply the first part of the Russian Tax Code’.
In enshrining the general rule that both the customs authority and the declarant should present evidence at the customs control stage before the customs authority takes a decision to adjust the customs value, the Plenum recognised that the persons involved in the case have a right to submit additional evidence in court. This gives the declarant an opportunity to file with the court documents and information which for one reason or another was not supplied to the customs authority. Accordingly, the courts should examine whether a decision of the customs authority is lawful not only based on an analysis of the documents and information based on which the decision in question was taken, but also based on any other evidence submitted by the declarant.
However, the wording of clause 9 is in contrast to the original form that was in the draft version of the Regulation in question, and it may be interpreted in such a way as to grant the right not only to the declarant to submit additional evidence, but also to the customs authority whose decision is being appealed. In addition, in formal terms, such additional evidence may be not just evidence which refutes the additional evidence put forward by the declarant but any other evidence. Our view is that such an interpretation would contradict the legal positions expressed in clause 3.2 of the Russian Constitutional Court’s Resolution No. 9-P dated 14 July 2005.