2015Guhap23757 The revocation of the disposition imposing customs duties, etc.

A Stock Company

Law Firm LLC et al., Counsel for defendant-appellant

Attorney Kang Ji-hun, Kim Ho-chul, Madon, Madon

Head of Daegu Customs Office

April 20, 2016

May 18, 2016

1. On December 15, 2014, the imposition of customs duties of KRW 172,821,330 and value-added taxes of KRW 17,282,120 against the Plaintiff shall be revoked in entirety.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The plaintiff's status

The Plaintiff, a legal entity engaged in the manufacture and sale of diving and related music programs, imported diving, etc. from Cambodia, and transported the said goods from Cambodia to Vietnam, and transported them on the sea from Vietnam to Vietnam.

B. The plaintiff's initial import declaration (declaration No. B)

1) On February 17, 2010, the Plaintiff imported divings, etc. from Cambodia, and applied to the head of Seoul Customs Office for the application of conventional tariffs (tax rate of 0%) pursuant to the Framework Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation between the Government of the Republic of Korea and the Member Countries of the Association of Southern Asian Nations (hereinafter referred to as the “Agreement”), along with bills of lading (B/L), certificates of origin (C/O), commercial invoices, packing specifications (PACING LIT), and documents related to payment settlement (insurance documents, etc.) issued in relation to shipment in Vietnam.

2) On February 22, 2010, the Plaintiff demanded the Plaintiff to supplement the essential documents as follows. On March 4, 2010, the Plaintiff applied for a correction of the import declaration without complying with the request for document supplementation and on March 4, 2010, and paid KRW 16,653,800 in total by applying 8% of the customs duty and value-added tax, applying 8% of the customs duty rate.

○ Complemented documents: the documents that prove the fulfillment of the requirements of Annex 3 Article 9 (Principle of Direct Transport) concerning the original Certificate of Origin (as a result of the review of whether the Korea-ASEAN Convention Tariff Rate is applied): the essential documents required.

3) On March 5, 2010, the Plaintiff submitted a bill of lading (BL) and a certificate of origin written in Cambodia, a certificate of origin, TRUCK IMOFES (documents issued in relation to land transport, on which the place, route, destination, container number, container seal number, and customs seal number are indicated; hereinafter “T/M”) to be applicable ex post facto. Accordingly, on April 2, 2010, the Seoul Customs collector reviewed supplementary documents submitted by the Plaintiff, and notified the Plaintiff of the rectification of the amount of duty to be corrected as zero won for the import declaration pursuant to Article 38-3(3) of the Customs Act and Article 34 of the Enforcement Decree of the same Act, and notified the Plaintiff of the claim for refund of customs duties already paid (hereinafter referred to as “the supplementary documents submitted by the Plaintiff”).

(c) The plaintiff's second through twenty import declarations;

1) The Plaintiff filed an import declaration on the second or fifth import declarations on four occasions along with the relevant documents, and paid customs duties and then submitted supplementary documents later. The head of Seoul Customs Office received supplementary documents from the Plaintiff as follows, and then issued a notice of correction of the amount of customs duties applying the conventional tariff to the Plaintiff (hereinafter referred to as “revision of the amount of customs duties”), and refunded customs duties paid by the Plaintiff.

A person shall be appointed.

2) From May 12, 2011 to August 8, 2013, the Plaintiff filed a total of 15 import declarations by applying conventional tariffs, with the bill of lading, certificate of origin, commercial invoice, packing specifications, and T/M. The customs authority accepted the Plaintiff’s application.

D. The disposition of this case and the procedure of the previous trial

1) On August 5, 2014, the Defendant violated the principle of direct transport of the Korea-ASEAN FTA to the Plaintiff, and notified a third country of a written investigation requesting submission of "a certificate of origin, export and import declaration, commercial invoice, contract, commercial letter (e-mail), packing statement, verification document, etc., in accordance with Article 13(6) of the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements (hereinafter referred to as the "FTA") and Article 18 of the Enforcement Rule of the same Act in order to verify whether the requirements for direct transport of the Korea-ASEAN FTA are satisfied, such as the issuance of a through bill of lading after transshipment."

2) As a result of the investigation of data on origin submitted by the Plaintiff, the Defendant confirmed that the goods imported by the Plaintiff were transported via Vietnam from Cambodia, an exporting country, but failed to submit the “through bill of lading issued by the exporting Party” among the documents stipulated in Article 9 of Annex 3 Rules of Origin of Korea-ASEAN FTA and Article 19 of the Operational Procedures for Certification of Origin for Rules of Origin 1, Appendix 1 (hereinafter “Rules of Origin Certification”).

3) On October 8, 2014, the Defendant notified the Plaintiff of the findings of origin that each of the instant imports cannot be applied on the ground that the Plaintiff failed to submit an essential transit bill of lading, which is an essential document, via a third country without customs control.

On November 4, 2014, the Plaintiff pursuant to Article 13(9) of the Customs Act and Article 18 of the Enforcement Rule of the FTA.

Although the Defendant filed an objection, on November 7, 2014, the Plaintiff dismissed the Plaintiff’s objection, and on December 15, 2014, notified the Plaintiff of the rectification of the amount of customs duties of KRW 172,821,30, value-added tax of KRW 17,282,120, and KRW 46,867,860 and penalty tax of KRW 46,860 pursuant to Article 16 of the FTA and Article 38-3 of the Customs Act. 4) The Plaintiff appealed against the notification and filed an appeal with the Tax Tribunal on February 5, 2015. The Tax Tribunal revoked the disposition of imposition of penalty tax on July 13, 2015, and dismissed the remainder of the Plaintiff’s appeal (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1 through 14, and 19, each statement (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Defendant issued the instant disposition under the premise that the Plaintiff did not submit a transit bill of lading pursuant to the instant agreement at the time of the import, and thus, cannot be subject to the conventional tariff. However, the meaning of the transit bill of lading is not explicitly stated in the instant agreement. Therefore, the instant disposition is unlawful as it is based on the provision against the principle of no taxation without law and clarity of the requirements for taxation

2) The Plaintiff received a notice of rectification of the amount of duty to which the conventional tariff is applied from the customs authority by submitting the instant supplementary documents (bill of lading, certificate of origin, commercial invoice, packing specifications, T/M) upon filing a declaration of importation of the first or fifth import of the instant case. This constitutes a public statement of opinion by the tax authority that the instant supplementary documents may be subject to the conventional tariff when submitting the instant supplementary documents, and thus, the instant disposition is unlawful in violation of the principle of prohibition of retroactive taxation and the principle of good faith.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the instant disposition goes against the principle of clarity

A) Whether a taxpayer goes against the principle of clarity of taxation requirements is required to make a comprehensive judgment in accordance with the criteria such as what act is expected to be subject to taxation because it falls under the pertinent phrase, which is a taxation requirement, and whether the uncertainty of the pertinent phrase accords the possibility of applying the law in a arbitrary and discriminatory manner from the standpoint of an administrative agency, or whether it is possible to expect the choice of more conclusive phrases technically in legislation (see Supreme Court Decision 2002Du1588, Sept. 23, 2004).

(B) The Agreement provides that the rules of origin and the procedures for the operation of certification of origin applicable to the goods covered by the Agreement in Article 5 (Rules of Origin) shall be set out in Annexes 3 and the Appendix thereto. Article 9 of Annex 3 of this Agreement provides for the principle of direct carriage, and Appendix 19 of Annex 3 provides that “in the event of carriage through the territory of one or more intermediate transit countries, other than the territory of the exporting Party and the importing Party, the transit bill of lading issued in the exporting Party, ② the original certificate of origin, ③ the duplicate of the original copy of the commercial invoice of the goods, ④ any other evidentiary document that satisfies the requirements in Article 9 of Annex 3, the document must be submitted to the relevant government authority of the importing Party.”

Article 19(a) of the above Act provides that " through bill of lading issued by the exporting Party" shall be translated into the Korean language of "Abrue Part I". In general, " through bill of lading" in trade practice is issued when the consignor enters into a contract for the carriage of the whole section between one carrier and another carrier. Even if the carrier takes a subcontract for a part of the carriage, it is sufficient for the shipper to pay to the carrier, who is the other carrier, the other party to the contract, the shipper shall be liable for the carriage of the entire section, in principle, in the relationship with the consignor. Therefore, "through bill of lading" shall not be defined as "the first shipping company to be responsible for the carriage of the entire section through shipping and inland transit", and shall not be defined as "the first shipping company's submission of the bill of lading in accordance with the principles of the Free Trade Agreement and shall not be defined as "the first shipping company's submission of the bill of lading to the port of destination," and shall not be defined as "the first shipping company's submission of the bill of origin through the Free Trade Agreement."

C) Therefore, the Plaintiff’s assertion that the instant disposition was unlawful because it was based on a provision against the principle of clarity is without merit.

2) Whether the instant disposition is against the principle of good faith

A) In general, for the purpose of applying the principle of good faith to the acts of tax authorities in tax law relations, (1) the tax authorities shall order taxpayers to express their public opinion that is the subject of trust, and (2) the taxpayer has no reason attributable to the taxpayer to believe that the name of the tax authorities is justifiable, (3) the taxpayer has to trust the name of the opinion and to what extent it is, and (4) the tax authorities has to impose a disposition contrary to the above name of the opinion, thereby infringing on the taxpayer’s interest.

In addition, the public opinion statement of the tax authority needs to be made by a tax official who is in a position of responsibility in principle. However, the principle of trust and good faith or the principle of closed speech is applied to a case where there are special circumstances deemed to be consistent with the justice and equity to protect taxpayer's trust even if it sacrifices the legality, and there is an essential element of the legal principle that the protection of taxpayer's trust is the protection of taxpayer's trust. Thus, in determining whether there is a public opinion statement of the tax authority which is one of the above requirements, it does not necessarily necessarily lead to the formal authority and authority division of the administrative organization, but should be determined by the person in charge in light of the person's organizational position and duties, specific circumstances leading to the relevant speech and behavior, and the taxpayer's trust possibility (see, e.g., Supreme Court Decisions 94Nu12159, Jun. 16, 195; 95Nu13746, Jan. 23, 1996; 208.)

B) The Customs Act of Korea requires Korea to implement a free trade agreement entered into with a Contracting State.

Article 3(1) of the Free Trade Agreement provides for matters concerning special cases of customs duties, such as the imposition, collection and reduction of or exemption from customs duties, customs clearance of exported or imported goods, and other matters necessary for cooperation with contracting states prescribed in the Free Trade Agreement. Article 3(1) of the Free Trade Agreement provides that any person who intends to be subject to conventional tariffs (hereinafter referred to as “importer”) shall apply to the head of a customs office for the application of conventional tariffs, as prescribed by Presidential Decree, before an import declaration is accepted. In such cases, the importer shall submit documents evidencing the origin of the conventional tariffs to the head of a customs office (Article 10(1) of the Free Trade Agreement), and the head of a customs office in receipt of an application for the application for the application for the application of conventional tariffs shall examine the application (Article 10(7) of the Free Trade Agreement). On the other hand, Article 3(3) of the Customs Act provides for the application of conventional tariffs in preference to customs duties, and provides for the application of the relevant conventional tariffs within one year before the import declaration is accepted (Article 5(1).

C) With respect to the instant case, the Plaintiff paid customs duties on imported goods without filing an application for conventional tariffs on the first and fifth import declarations of this case, and subsequently filed a request for correction to the effect that the application of conventional tariffs was changed by attaching “bill of lading, certificate of origin, commercial invoice, packing specifications, and TR.” As a result of the review by the customs authority, the customs authority deemed that the Plaintiff’s request for correction is reasonable, and upon applying the conventional tariff rate, refunded the customs duties on the said imported goods as zero won. Accordingly, the Plaintiff filed the import declarations of this case, along with the bill of lading, certificate of origin, commercial invoice, packing name, T/M, accompanied by the bill of lading, certificate of origin, certificate of packing, and the fact that the customs authority accepted the request, as seen earlier.

In addition to the relevant laws and regulations relating to the above application for the ex post facto application of conventional tariffs, the customs authority determined that the documents evidencing the Plaintiff’s request for rectification meet all the requirements required in the rules of origin verification, including the instant transit bill of lading, and approved the application of conventional tariffs, and accordingly, appears to have been corrected. If so, it is reasonable to deem that the notice of rectification of each duty, which the customs authority accepted the Plaintiff’s request for rectification on imports 1 through 5, constitutes a disposition of the customs authority, and ultimately, constitutes a public opinion statement on the fact that the documents evidencing origin submitted by the Plaintiff fall under the instant transit bill of lading or satisfies

D) In general, the Defendant asserts that not only acceptance of the respective import declarations of this case, but also acceptance of the Plaintiff’s application for ex post facto application of conventional tariffs on the first and fifth import declarations of this case by the customs authorities, which are subject to protection of trust, is nothing more than a factual act, but not a confirmatory disposition (see Supreme Court Decision 95Nu1184, Dec. 6, 1996). The Defendant asserts that not only acceptance of the respective import declarations of this case 6 through 20, but also acceptance of the Plaintiff’s application for ex post facto application of conventional tariffs on the first and fifth import declarations of this case by the customs authorities.

On the other hand, if an importer applied for the application of conventional tariffs to the head of a customs office before the import declaration is accepted, the head of a customs office shall examine the application after the import declaration is accepted (Article 10(1) and (7) of the FTA). Thus, the acceptance is merely a mere factual act. However, if an importer requests correction of the amount of customs duties already paid when applying for the application of conventional tariffs within one year from the date on which the import declaration is accepted, the head of a customs office shall examine the application and notify the applicant of whether to rectify the amount of customs duties within two months, and if necessary, refund customs duties (Article 10(3) through (5) of the Act). Therefore, it is reasonable to view that the correction of each amount of customs duties in this case is a notification made pursuant to the legal obligation of the customs office following a substantive

E) Furthermore, the Defendant asserts that the rules for proving origin stipulate the “through bill of lading issued by the exporting Party” as an essential document, and that the application of the principle of protection of trust should be excluded inasmuch as there is a cause attributable to the Plaintiff, who did not submit such rules, to the Plaintiff.

However, the “official statement of opinion” of the customs authority recognized in the instant case is not limited to questioning, guide, and tax guidance, but also to the Plaintiff’s request for correction of applying conventional tariffs. The amount of customs authority’s tax is adjusted by examining the requirements, such as supplementary documents, submitted by the customs authority. The Plaintiff filed an import declaration on conventional tariffs when submitting the same documents as those submitted in the earlier request for correction after correcting the amount of customs duties over five occasions and refunding the customs duties already paid. As such, it is difficult to deem that the instant disposition is a cause attributable to the Plaintiff who filed an application for conventional tariffs, with the trust of correcting each of the instant duties, based on the bill of lading, certificate of origin, commercial invoice, packing statement, and T/M, and thus, it is unlawful to deem that the instant disposition is in violation of the principle of trust and good faith.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.

Judges of the presiding judge;

Judges Yellow-gu

Judges Lee Young-young

1) Although the defendant expressed in the preparatory document that it is "repair", it is merely a notice of rectification of duty issued by the customs authority after examination.

It is not ‘repair', which is a fact-finding act.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.