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Рractical recommendations in respect of documental confirmation of customs value, determined by declarant

26 May, 2010 Newsletters

Dear Sirs,

We avail ourselves of this opportunity to express to you assurances of our highest consideration and feel it appropriate to draw your attention to the information, which may be useful during customs clearance of goods, imported in Ukraine.

First of all we note that recently quite frequently customs authorities do not accept customs value, determined by declarant. Grounds used for such non-acceptance of customs value are various. However, from the practical standpoint in most of the cases customs authorities adopt decision based on pricing information contained in their internal database. If declared price is lower than information in the base, the declarant commonly receives the card of refusal in acceptance of declaration with customs value.

In such cases customs authorities usually inform that it is denied in the customs clearance of goods because of the lack of documents, submitted by declarant for confirmation of customs value. Respectively, the customs authorities indicate the list of documents, which should be additionally submitted by declarant in order to confirm customs value.

In most cases, of which we are aware, the following list of documents to be additionally submitted is indicated:

  • catalogues, specifications, price lists of manufacturing company;
  • calculation of manufacturing company;
  • conclusions on quality and value characteristics of goods, issued by specialized expert organizations that have respective authority in accordance with the legislation;
  • information from foreign trading and stock exchange organizations regarding the value of raw materials from which the goods are produced.

In some cases also other documents from the list of documents, which may be additionally required by customs authorities, are requested.  This list is envisaged in para. 12 of the Order of declaring of customs value of goods, crossing the customs border of Ukraine, and submitting of information for its confirmation, adopted by the Resolution of Cabinet of Ministers of Ukraine of December 20, 2006 № 1766. However, the documents, as mentioned above, take part in most cases, when refusal in application of customs value, determined by declarant, was received.

As the rule there is no issues with submission of “catalogues, specifications, price lists of manufacturing company” and “information from foreign trading and stock exchange organizations”. Therefore we will not dwell on these documents any further in this letter.

At the same time in many cases we are aware of the issues arisen with submitting to the customs authorities of such documents as calculation of manufacturing company and conclusions on quality and value characteristics of goods, prepared by specialized expert organizations.

As far as calculation of manufacturing company is concerned we should note that considering confidential nature of such information, in most cases declarants are not able to provide such document to the customs authority.

In such case we suggest receiving the letter from partners, in which it is stated that they have received the request from your company to provide calculation, but this document cannot be provided since respective information is confidential. This document can be submitted to the customs authorities as confirmation of reasonable excuse for non-submitting of calculation. We believe that in such case customs authorities shall not be entitled to use the absence of such document as the ground in favour of impossibility of application of customs value, determined by declarant.

This conclusion is based on following:

Firstly, in accordance with part 2 of Art. 272 of the Customs Code of Ukraine “the officer of customs authority cannot demand or force any person, that is not a resident, to submit for examination or to permit an access to any account or other records in order to determine the computed value…” We believe that this rule can be applied also to the discussed situation, i.e. request to provide calculation. Thus, the customs authorities have the right to require this document, but if the manufacturing company refuses to provide it, the demand to obligatory provide the calculation, which is the confidential information, will not be legitimate.

Secondly, based on court practice in favour of declarant it is possible to conclude that courts accept the letter from partners, containing the refusal to provide calculation due to its confidentiality, as the proof in favour of declarant (please see, e.g., the Decision of Vinnycya  district administrative court as of November 20, 2009 in the case № 2-а-3923/09/0270).

As regards conclusions of specialized expert organizations, in many cases declarants do not submit this proof of customs value. In some cases non-submitting of this document is explained by the absence of precise understanding, which exactly organization the declarant should address for such conclusion.

In connection with this it is worth noting that such expert organization is State informational-analytical centre of monitoring of external commodity markets (DZI) of the Ministry of Economics of Ukraine. Thus, the said organization is directly mentioned as authorized expert organization in sub-para. 3.3 of Methodical recommendations (Guidance) on application of certain provisions of Customs Code of Ukraine regarding issues of determination of customs value of goods, imported to the customs territory of Ukraine, adopted by the order of State Customs Service as of January 31, 2007 № 74.

In other cases the demand to provide such document is often simply ignored by declarants.

Please note that in this letter we do not consider the question whether the demanding of such document by customs authority is in line with legislation. This question is to be considered separately in each specific case.

At the same time in case of respective demand we believe it advisable to obtain the expert conclusion of DZI and submit it to the customs authorities (of course, if this conclusion confirms the customs value of declarant). Thus, the analysis of court practice (unfortunately, still not numerous), when the decision was adopted in favour of declarant, evidences that the court accepts conclusions of DZI as strong proof of accuracy of customs value, determined by declarant (e.g., see the Decision of Vinnycya district administrative court as of November 20, 2009 in the case № 2-а-3923/09/0270 and ruling of Supreme administrative court of Ukraine as of March 16, 2010 № К-40508/09). In all cases, known to us, when the decision was adopted in favour of declarant, the conclusion of DZI was provided. Hence there are grounds to speak of tendency arising in this respect.

Therefore, in case of receiving of request from the customs authorities regarding submitting of additional documents we would rather recommend submitting the conclusion of expert organization (DZI). It would be our company’s pleasure to provide qualified legal assistance in obtaining conclusion of pricing expertise of DZI, considering solid experience of our specialists as to working with this organization.

We trust that the above information will be useful for you. Please do not hesitate to contact us in case of any questions to the above or if any additional information might be required.

The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

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Kind regards,

© TOV "KM Partners", 2010

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