On June 21, the Department of Administrative Cases of the Supreme Court annulled the judgment of the Administrative Regional Court, which satisfied the application of “Veloserviss” Ltd and annulled the decision of the State Revenue Service regarding the applicant's obligation to pay customs duties and penalty, and value added tax and penalty. The Supreme Court handed the case for reexamination before the Court of Appeal.
The Supreme Court reviewed the case due to the cassation appeal by the State Revenue Service regarding the judgment of 27 March 2014of the Administrative Regional Court. In January of the last year, the Supreme Court stayed proceedings in this case to refer to the Court of Justice of the European Union for a preliminary ruling. By referring to the Court of Justice of the European Union for a preliminary ruling, the Supreme Court wanted to specify, how importer’s obligation to act in good faith, which is mentioned in Article 220 (2) (b) of the Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, should be made concrete in general, if the report presented by the European Anti-Fraud Office (OLAF) contains acquired data, which is indicative of false information provided by the exporter, and information indicating the fact that customs authority of the exporting state made a mistake, when issuing A certificate. Moreover, it was necessary to specify, what legal significance should be given to assessment of facts and laws carried out in respective decision adopted by OLAF and the European Commission in domestic proceedings, where actual situation has been compared only partly.
The Supreme Court in its judgment states that in accordance with the reasoning given in the judgment of 16 March 2017of the Court of Justice of the European Union, Article 220 (2) (b) of the Customs Code is to be interpreted as meaning that in order to object the accounting for customs duty on imports, an importer may rely on the legitimate expectation under that provision, referring to his good faith, only if three cumulative (all) conditions are met: the failure to collect the tax was due to an error made by the competent authorities themselves; the error committed by the competent authorities would be such as would not reasonably be detected by the bona fide person responsible for payment; the person responsible for payment would have complied with all provisions laid down in the legislation in force concerning the customs declaration.
In discussing the first criterion in comparison with the present case and the arguments put forward by the Court of Justice of the European Union, the question is whether the Cambodian customs authorities acted "actively" to issue false certificate of origin. If this is not the case then it should be verified whether the certificate was issued on the basis of an incorrect declaration made by the exporter, the falseness of which was not discovered and could not be discovered by customs authorities of Cambodia. If it is proven, the applicant is responsible for the tax consequences.
If the first criterion is fulfilled, then when discussing the second criterion it should be examined whether the applicant could detect or must have detected the obvious errors committed by the customs authorities of Cambodia. What regards the allocation of burden of proof, it is to be concluded that the State Revenue Service must provide evidence that the customs authorities of Cambodia issued false A certificate of origin due to a false statement of facts provided by the exporter. If, due to the negligence of the exporter, it is not possible for the State Revenue Service to provide this evidence, the applicant should prove that the certificate was drawn up on the basis of a true factual statement by the exporter.
The Supreme Court states in the judgment that neither the court of first instance nor the appellate court has examined such facts, therefore the case is to be referred to the Administrative Regional Court for reexamination.
Circumstances in a case:
The applicant, “Veloserviss” Ltd., imported bicycles from Cambodian company Atlantic Cycle Co.Ltd. for issue for free circulation in the European Union. On the basis of the A certificate issued to the Cambodian exporter, did not pay the customs tax and the value-added tax.
The State Revenue Service carried out customs audit for the period, when bicycles the dispute relates to were imported, and did not establish any non-compliance in this respect. The applicant enforced the decision adopted in result of the audit.
In investigation carried out in June 2009, the European Commission’s European Anti-Fraud Office found out that the A certificate of origin of goods that was issued to the Cambodian company on 16 February 2007 was false. The State Revenue Service received this information on 15 February 2010.
Observing the established circumstances, the State Revenue Service carried out repeated audit of unitary administrative document processed in respect of the applicant. Following information provided in the report by OLAF, the Service recognized that finished article must be applied an agreed rate of import duty, namely, 14 per cent of customs value of goods. The State Revenue Service imposed an obligation to the applicant to pay customs tax and penalty, and value-added tax and penalty.
Information prepared by Baiba Kataja, the Press Secretary of the Supreme Court
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