Once again, the Italian Supreme Court has ruled on the issue of penalties imposed in the event of a false indication of the origin of goods in the import declaration, upholding the sanctions regime provided in Article 303 of the Italian Single Text of Customs Law (T.U.L.D.) as admissible.
This decision is the first to depart from a developing body of case law, based on a literal interpretation by the Courts of the said Article.
It is widely known that Article 303 T.U.L.D. provides penalties only in the case of erroneous indications to the Customs authorities of some of the elements of the import declaration. In particular, false indications with regard the “quality, quantity and value of goods destined for importation”.
Not a single reference is made to the “origin” of the goods.
Up until the issuing of the judgment under examination, Italian Courts (except in a few minor cases) have:
- applied a literal interpretation to Article 303 T.U.L.D.; and
- stated that the presentation of an irregular import declaration to the Customs authorities, which contains an erroneous indication of the “origin” of the goods, could not be followed by a penalty as set forth in Article 303 T.U.L.D.
The purpose of this case law was to protect the principle of legality and punishability of a crime, by excluding a wider interpretation of the law providing for limits to the sanctionability of the conduct.
Moreover, the Italian Supreme Court dismissed the missing reference to “origin” in Article 303 T.U.LD. as irrelevant, on the basis that the notion of “quality” (as provided for in Art. 303 T.U.L.D.) would extend to all legal qualities of the goods, and thus also their “origin”.
The consequence of this decision is that the sanction (provided for by Art. 303 T.U.L.D.) would be applicable not only in the case whereby the import declaration presents differences in value, quantity and quality with respect to the imported goods, but also in the event of a false indication as to the origin of the goods.
The judgment has been subject to a number of criticisms.
Indeed, the Italian Supreme Court seems to have misinterpreted not only the concept of “customs origin” minimizing it to a feature of “quality”, but also the principle of legality which requires the imposition of a penalty only in cases expressly provided by Law.
The Supreme Court, in supporting the Customs authority and widely interpreting Article 303 T.U.L.D. reached a decision which departs far from the general rule, its literal meaning and the legislator’s real intention.
The principle of legality in applying an administrative penalty should be disregarded in order to safeguard fiscal reasons.
We must await a new intervention by the Supreme Court, which provides remedies to resolve the uncertainty that could derive from the application by the Customs authorities of this controversial judgment.
In this regard, we may affirm that:
- one the one hand, the analyzed judgment stands on its own and does not represent an established precedent, and is not binding nature on other Courts (such as the Tax Commission);
- on the other, however, we cannot exclude the fact that the Customs authorities may appeal the judgment in order to extend their own activities of investigation and review into false indications of the origin of the goods.
If this wider interpretation of Article 303 T.U.L.D. were to be subsequently followed by other Courts, the importers could become the subjects of an appeal of notices of review and contested sanctions.
We shall return to the issues raised by this judgment as soon as its framework is clarified, which shall enable us to better comprehend whether it shall remain an “isolated case”, or rather whether the importers shall have to face sanctions as pursuant to Article 303 T.U.L.D.