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There is no obligation to pay “trash duty” at customs despite judicial cancellation of acts aimed at abolition of the procedure of customs clearance of goods imported in packaging

01 February, 2013 Newsletters

On January 31, 2013 the District Administrative Court of Kyiv considered the united claims filed by the State Company “Ukrekoresursy” against the State Business Service and the Ministry of Justice of Ukraine. The SC “Ukrekoresursy”, to which importers paid money for organizing recycling of packaging as envisaged by the Joint Order¹, came to the conclusion that its rights have been violated by the acts adopted by defendants and aimed at abolition of the Joint Order.

Namely, the State Business Service adopted the Decision No.7². In compliance with Article 28 of the Law on State Regulatory Policy, due to the failure of fulfillment of the Decision No.7, the Joint Order was suspended since December 31, 2012. In practice, this meant that importers were not obliged to conclude an agreement with the SC “Ukrekoresursy” and to pay for its services anymore. The Ministry of Justice, in its turn, in compliance with the Regulation on State Registration of Normative Acts, issued the Order No. 101/5 abolishing the decision on state registration of the Joint Order.

The court satisfied the claims of the SC “Ukrekoresursy” in full. By adopting the resolution court declared both acts unlawful and cancelled them. However, this resolution has not yet entered into force and is not binding until completion of the appeal stage. Only in case the court resolution comes into force the procedure of the customs clearance of the goods imported in packaging will be renewed, similarly as the “trash duty” at customs.

Therefore, currently the importers are not obliged to pay “trash duty” at customs.

At the same time, the court adopted determinations on interim relief which suspended (1) the Decision No. 7 and (2) the Order No.101/5. However, it should be noted that such determinations have no practical consequences for importers as far as they do not restore the Joint Order and, consequently, the obligation to pay the “trash duty”.

Strictly speaking, the abovementioned determinations only suspend the further validity of the Decision No. 7 and the Order No. 101/5. They do not have the retrospective action and by no means change the fact of suspension of the Joint Order and cancellation of the decision on its state registration.

The only practical consequence of these determinations is that the Joint Order’s state registration has not been cancelled completely. Namely, state registration is envisaged as a mandatory step for validation of any normative act. It includes adoption of the decision on state registration of the respective act and its incorporation into the register of the normative acts. In its turn, for invalidation of the normative act its state registration shall be cancelled.

According to the Regulation on State Registration of Normative Acts, the cancellation of the state registration includes adoption of respective decision, on the basis of which the act is excluded from the register of the normative acts. The court determination on interim relief prevented the exclusion of the Joint Order from the register of the normative acts. In other words, the Joint Order is still contained in the register of the normative acts.

However, it shall be noted that the presence of the Joint Order in the register of the normative acts does not restore its force. Why? First, the Joint Order was suspended on the basis of the Decision No.7 since December 31, 2012. The Decision No.7 is valid until the court resolution comes into force and that is why its legal effects are in force.

Second, the court determination on interim relief which suspended the Decision No.7 also does not restore the Joint Order. Thus, the Joint Order was suspended not under the Decision No. 7, but under the Article 28 of the Law on the Regulatory Policy. The Decision No. 7 simply informed the authorities (who adopted the Joint Order) on the necessity of its cancellation by them and that in case of non-cancellation during stated period it will be suspended. Upon expiry of that period the legal action of the Decision No. 7 was exhausted, which is why its suspension shall not bring any legal or practical consequences.

Thus, currently the suspension of the Joint Order remains effective until the court resolution will come in force. Most probably, however, it will not happen soon due to the expected appeal against this resolution. It means that at the current moment importers are not obliged to conclude agreements with the SC “Ukrekoresursy” and to pay the “trash duty”.

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,

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