2014Du8391 Revocation of Disposition of Imposing customs duties, etc.

Samsung C&T Co., Ltd., a lawsuit taking over the lawsuit of Samsung C&T

Head of Seoul Customs Office

Seoul High Court Decision 2013Nu20792 Decided May 1, 2014

August 24, 2016

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. In accordance with Article 16(1) of the former Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements (amended by Act No. 9918, Jan. 1, 2010; hereinafter “FTA”), with respect to restrictions on the application of customs duties on imported goods originating from any Contracting State upon the elimination of customs duties or the progressive annual reduction of the tariff rate (hereinafter “ conventional tariffs”), the head of a customs office may choose not to apply conventional tariffs to the relevant imported goods in any of the following cases, except as otherwise provided in the relevant agreement. Article 16(2) of the former Act provides that “where the Commissioner of the Korea Customs Service or the head of a customs office requests confirmation of the origin to the customs authority of any Contracting State pursuant to Article 13(1) fails to reply to the request within a period prescribed by Ordinance of the Ministry of Strategy and Finance, or where the head of a customs office fails to respond to such request within a period prescribed by Ordinance of the Ministry of Strategy and Finance to verify the accuracy of the origin pursuant to Article 9 of the Free Trade Agreement:

On the other hand, Article 10.2 of the Free Trade Agreement between the Republic of Korea and the EFTA States (hereinafter referred to as the "FTA") provides that the Annexes and Appendix to the Agreement shall be an integral part of the Agreement. Accordingly, Article 24 of Annex I to the Free Trade Agreement provides that "the customs authority requesting the verification shall receive the results of verification, including the findings and facts, and all the evidentiary documents of the exporter as far as possible" in paragraph (6). Paragraph (7) provides that the customs authority requesting the verification shall have the authority to exclude preferential tariff treatment except for "in exceptional cases" where there is no reply within 10 months from the date of the request for verification or where there is no sufficient information to determine the authenticity of the relevant documents or the origin of the goods.

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 trade barriers between the Parties and expanding trade and investment flows. To this end, the Free Trade Agreement Customs Act and the instant FTA provide that the customs authority of the importing Party shall apply conventional tariffs to the import and export of goods originating in the country of the Party, 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 importing Party, but, if no information sufficient to determine the authenticity of the relevant documents or the origin of the goods is included in replys, the customs authority of the importing Party may, in principle, limit the application of the conventional tariff treatment and the objective reasons for verification to the extent that it can be justified.

2. A. The lower court found the following facts based on the evidence duly admitted. (1) The Plaintiff imported each of the instant gold bars produced by the Switzerland et al. (hereinafter referred to as the “Switzerland”) and the IMS SP sP (hereinafter referred to as the “MS”) through an overseas exporter, and filed an import declaration by attaching an origin declaration on the Switzerland with the origin declaration attached thereto, and applying a conventional tariff rate of 0% as stipulated in the instant Free Trade Agreement. (2) Even though the Defendant requested the verification of the origin of each of the instant gold bars in accordance with the instant Free Trade Agreement, the Switzerland customs authority did not reply to the result of origin verification within 10 months, which is the response period.

3) Accordingly, the Defendant rendered the instant disposition imposing customs duties, value-added taxes, etc. on the Plaintiff on the ground that the Switzerland customs authority did not reply to the result of origin verification within the response period.

4) After the lapse of the response period, the Swiss customs authority responded to the instant reply with the purport that the entire gold bars produced by Mesler and IMS are originating.

5) The Defendant added the instant reply sent by the Switzerland customs authority after the lapse of the response period to the grounds for disposition that it does not include sufficient information to determine the authenticity of the pertinent documents or the origin of the goods.

B. The lower court determined that the Switzerland customs authority failed to provide detailed explanation to support the content of this case and evidence and reply to each of the following facts in light of the following facts: (a) the Switzerland customs authority did not provide information on the origin of this case, and the head of the gold bars produced by Switzerland was found to meet the origin requirements due to a specific process; and (b) the head of the gold bars produced by Switzerland did not provide any such objective data to the customs authority upon considering the following facts: (c) the delay in the reply of this case was not considered to have substantially affected external factors, such as filing a lawsuit; and (d) the customs authority did not provide any such information to the Switzerland customs authority; and (e) the head of the Switzerland did not provide any such information to the Switzerland customs authority during the appellate trial, and did not provide any further reply to the determination of the origin of this case; and (e) the head of the Switzerland customs authority did not provide any more objective data to the Switzerland customs authority.

C. Examining the above determination by the lower court in light of the above provisions, legal principles, and records, the lower court’s conclusion is acceptable, but it did not err in its conclusion by misapprehending the legal doctrine on the interpretation of “in exceptional cases” under Article 24(7) of Annex I to the Free Trade Agreement, or by erroneously recognizing facts contrary to logical and empirical rules, which affected the conclusion of the judgment by misapprehending the legal doctrine on the interpretation of “in exceptional cases” under the Harmonized System and Coding, and Annex I to the Free Trade Agreement, or by erroneously recognizing facts contrary to logical and empirical rules.

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Shin-chul

Chief Justice Park Poe-dae

Justices Park Young-young

Justices Kim Jong-il