2. Each disposition of imposition of customs duties of KRW 468,422,390 (including additional taxes) and value-added tax of KRW 53,467,820 (including additional taxes) listed in the attached Table 1 List against the Plaintiff on March 10, 2015 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

A. From March 29, 2013 to May 9, 2013, the Plaintiff: (a) imported the instant imported goods (hereinafter “instant imported goods”) produced by the nikel Achy Trad (hereinafter “distributor”) which is a Singapore corporation through (e.g., selling company’s import declaration number omitted); (b) imported them into four other parts; (c) attached an origin declaration issued by the selling company (the British country was indicated as the origin; hereinafter “first origin declaration”); and (d) submitted an import declaration to apply 0% of the conventional tariff rate pursuant to the Free Trade Agreement between the Republic of Korea, the European Union, and its member countries (hereinafter “instant Free Trade Agreement”); and (d) the Defendant accepted the import declaration.

B. On March 13, 2014, the Defendant conducted a written investigation on the origin of the primary origin declaration submitted by the Plaintiff, and as a result, confirmed that the primary origin declaration was issued by a third country ( Singapore) company, not a Contracting Party (the Contracting Party) of the instant FTA, and requested the Plaintiff to submit the revised origin declaration to the Plaintiff on April 18, 2014.

Accordingly, the plaintiff revised and submitted an origin declaration issued by a production company of the English legal entity (hereinafter referred to as "the second origin declaration") on the imported goods of this case.

However, the second origin declaration that the plaintiff revised and submitted is also issued by the production company that is the English legal entity, but there was no indication of the date of issuance and it was prepared separately from the commercial document.

C. Accordingly, the Defendant: (a) deemed that there exists a doubt as to the validity and authenticity of the instant origin declaration; and (b) requested verification on August 14, 2014 on the validity of each origin declaration; (c) the validity of an approved exporter’s qualification and approved exporter’s number; and (d) whether the standard of origin and the rules of origin are satisfied, along with the first and second origin declaration submitted by the Plaintiff to the customs authority of the United Kingdom on August 14, 2014.

D. On February 26, 2015, the English customs authority presented to the Defendant the result of the verification that “The instant imported goods subject to the verification, based on the invoice, were manufactured and sufficiently performed in the United Kingdom; thus, the origin standards and the rules of origin stipulated in the instant FTA are satisfied; the company’s certified exporter qualification and approved exporter number are true; ② the first origin declaration was made by the company rather than by the company that is the approved exporter; ② the second origin declaration, written separately from the commercial document, is not issued by the certified exporter, but not by the certified exporter; and the second origin declaration, written separately from the commercial document, is not confirmed by the date of issuance.”

E. On March 10, 2015, the Defendant: (a) determined and notified the customs duties amounting to KRW 40,865,520, customs duties amounting to KRW 77,767,260, value-added tax amounting to KRW 12,60,30, and KRW 12,02,30 of value-added tax (hereinafter “instant disposition”) on the instant imported goods on the grounds that “the submission of origin declaration issued by an approved exporter was not satisfied; (b) the application of the conventional tariff pursuant to the instant FTA was excluded from the application of the conventional tariff rate of KRW 8%; and (c) applying the tariff rate of KRW 408,65,130; and (d) the attached list 1.

F. On June 3, 2015, the Plaintiff appealed to the instant disposition and requested an inquiry to the Tax Tribunal, but was dismissed on November 17, 2015.

[Ground of recognition] Facts without dispute, Gap 1, 2, 3, 4, 7 evidence, Eul 7 evidence (which include a number; hereinafter the same shall apply) and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The instant imported goods are originating in the United Kingdom, and are practically satisfied the origin criteria stipulated in the instant FTA, and even if there exist defects in the first and second origin declarations submitted by the Plaintiff, which do not meet the formal requirements stipulated in the instant FTA and relevant statutes, insofar as the Defendant received the reply that the instant imported goods meet the origin criteria and the rules of origin in accordance with the instant FTA upon request from the customs authority of the United Kingdom, which is the exporting Party, in relation thereto, upon receipt of the reply that the instant imported goods meet the origin criteria and the rules of origin under the instant FTA, the instant disposition that did not apply to the instant imported goods is in violation of Article 2.5(1) of the instant FTA and the Act on Special Cases of the Customs Act for the Implementation of the Free Trade Agreement (hereinafter “Free Trade Agreement Customs Act”), and thus, should be revoked.

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. Determination

1) Relevant legal principles

The purpose of the Free Trade Agreement Customs Act and the instant FTA is to create new employment opportunities and to ensure the enhancement of living standards and the sustainable increase of real income by establishing a free trade zone between the Parties to the Agreement at the same time by removing barriers to trade and investment flows between the Parties. To this end, the Free Trade Agreement Customs Act and the instant Free Trade Agreement provide that the customs authority of the importing Party shall apply conventional tariffs to the import and export of goods originating in the Parties, eliminating or gradually reduced customs duties, and shall share their roles on the basis of mutual trust between the Parties for verification of origin that serves as the applicable requirements. In other words, the customs authority of the importing Party shall, in principle, respect the results of verification conducted by the customs authority of the exporting Party upon request of the customs authority of the importing Party regarding an origin declaration prepared by the exporter or producer of the Party, and, if sufficient information to determine the authenticity of the relevant documents within 10 months or the origin of the goods is not included in replys, the customs authority of the importing Party may, in principle, limit the submission of information to the customs authority of the importing Party and the objective verification period, 4.

2) Specific determination

Based on the foregoing legal doctrine, comprehensively taking account of the facts as seen above and the overall purport of the arguments and arguments on the instant imported goods in the Health Team and the “1. Disposition,” the first and second origin declarations on the instant imported goods are not issued by an approved exporter, but are deemed to have failed to meet the formal requirements prescribed in the relevant statutes, such as the Free Trade Agreement Customs Act and the instant Free Trade Agreement, by omitting the date of issuance (see, e.g., Articles 9-2 and 10 of the Free Trade Agreement Customs Act; Article 9-6 of the Enforcement Rule of the Free Trade Agreement; Article 16 of the Protocol on the Definition of Origin Products and Methods of Administrative Cooperation (hereinafter “Protocol”).

However, the defendant found the formal requirements of the origin declaration of this case 1 and 2, requested the customs authority of the United Kingdom, which is the exporting Party, to verify the validity and origin of the imported goods of this case as prescribed by the relevant laws and regulations. As a result, the defendant received a reply from the customs authority of the United Kingdom, which is the exporting Party, to the effect that "the imported goods of this case were manufactured and sufficiently conducted in the United Kingdom, and thus meet the origin standards and rules of origin stipulated in the Free Trade Agreement, and the manufacturer's qualification exporter and approved exporter's number are true." The above reply clearly contains sufficient information to determine that the country of origin of the imported goods of this case is the United Kingdom which is the country subject to the Free Trade Agreement, and any other specific circumstance or circumstance exists to suspect the credibility of the verification result or response.

Ultimately, with respect to the imported goods of this case, sufficient verification and verification have been conducted regarding the fact that they meet the origin criteria in accordance with the procedures and methods stipulated in the Free Trade Agreement and relevant statutes, and so long as such verification results were submitted in the phase 3) and brought about the verification process of actual origin, the application of a new conventional tariff cannot be ruled out on the ground of the lack of formal requirements of an origin declaration.

3) Sub-determination

Therefore, the Defendant’s disposition that excluded the application of the conventional tariff pursuant to the instant FTA with respect to the instant imported goods on different premise is unlawful.

3. Conclusion

Therefore, since the disposition of this case is unlawful, the plaintiff's claim seeking its revocation is accepted on the grounds of its reasoning, and the judgment of the court of first instance is unfair on the grounds of its conclusion, and it is so decided as per Disposition with the assent of all of the judgment of first instance and the disposition of this case revoked.

[Attachment]

Judges Dok-ho (Presiding Judge)

1) According to Article 29(2) of the former Value-Added Tax Act (amended by Act No. 11873, Jul. 1, 2013), the tax base of value-added tax on imported goods is “the total amount of taxable prices and customs duties, individual consumption tax, liquor tax, education tax, special tax for rural development, and traffic, energy and environment tax on the imported goods.” The Plaintiff reported and paid value-added tax on the imported goods of this case on the basis of the tax base calculated on the premise of the application of the conventional tariff rate (0%) at the time of import declaration. However, when the application of the conventional tariff is excluded, the amount of value-added tax is increased as the tax base of the increased tax base.

2) According to each relevant provision relating to the origin declaration system under the instant FTA (see, e.g., Articles 15, 24, and 28 of the Annex 1, Article 27 of the Protocol, Article 9-2 and Article 16 of the Free Trade Agreement, and Article 14 of the Enforcement Decree of the Free Trade Agreement), the customs authority of the exporting Party shall conduct verification at the request of the customs authority of the importing Party in cases where there are reasonable grounds for doubt as to the authenticity of the origin declaration submitted, the origin status of the relevant product, etc., and where it is difficult to confirm the origin or additional verification is necessary as a result of an investigation conducted against the importer, and shall determine the preferential qualification according to the result of the investigation.

3) In full view of the purposes and purport of the instant FTA, and relevant provisions, in a case where the origin declaration system merely seeks to ensure the efficiency of the verification procedure for origin by enabling the import goods to be simply simplified only with a declaration meeting certain formal requirements and methods, and where the requirements and methods are not satisfied or there are circumstances to suspect the validity or truth of the declaration in light of the contents of the entry, it is reasonable to deem that the application of the conventional tariff is to be decided in accordance with the standards of origin actually confirmed and determined as a result of the investigation and verification in accordance with the relevant provisions.