Defendant 1 and 1

Defendants and Prosecutor

Anndong iron

Attorney Cho Jong-sik

Gwangju District Court Decision 2006 High Court Decision 447, 2006 High Court Decision 390 decided Nov. 23, 2007

Of the judgment of the court below, the part on Defendant 1 is reversed.

Defendant 1 shall be punished by imprisonment for eight months.

The thirty-five days of detention days prior to the pronouncement of the judgment below shall be included in the above sentence.

except that the execution of the above punishment shall be suspended for two years from the date this judgment becomes final and conclusive.

To order Defendant 1 to provide community service for 200 hours.

A penalty of KRW 855,472,575 shall be additionally collected from Defendant 1.

All appeals by Defendant 2 Co., Ltd. and prosecutor are dismissed.

1. Summary of grounds for appeal;

(a) misunderstanding of facts;

The crime of non-declaration import under the Customs Act is established when the act of bringing in goods to be imported through lawful customs clearance and the recognition thereof is required. Thus, in order to constitute a crime of non-declaration import, the Defendants’ act of bringing in goods from the manufacturer of the vessel parts of Japan, etc. to the Republic of Korea without filing a report, and only when the Defendants are aware of such act, shall be liable for the crime of non-declaration import. The Defendants’ special consignment import is exempted from customs by lawful list declaration. The mail import is also deemed as the receipt of goods that have been cleared through normal customs clearance after refering to customs clearance to the head of the Seoul International Postal Office and then the declaration was actually filed at the arrival of the customs clearance post office. Thus, it cannot be deemed that Defendant 1 received goods without filing a declaration, and even though Defendant 1 cannot be deemed as having awareness of non-declaration import, the lower court erred by misapprehending the facts, thereby adversely affecting the conclusion of the judgment by recognizing that the Defendants committed this part as stated in its holding.

B. Legal principles (Defendant 1)

According to Article 283(3) of the Customs Act, when it is impossible to confiscate goods from an offender, such as a crime of smuggling import, the domestic wholesale price of the goods that cannot be forfeited shall be collected from an offender. Article 266 of the Enforcement Decree of the Customs Act provides that "domestic wholesale price" means the price at which a wholesaler purchases imported goods from a trader and sells them openly through a fair transaction method at a domestic wholesale market. Under each of the above provisions, the domestic wholesale price means the price at which a domestic wholesaler sells them to a retailer in the course of a trade-domestic wholesaler-domestic wholesaler- retailer's transaction. Since the type of goods imported by the defendants can not be established because Defendant 1, a trader, supplies them to an actual retailer without going through a domestic retailer, the domestic wholesale price is equivalent to the sum of actual sales prices of the goods imported by Defendant 1, and the amount equivalent to KRW 613,11,171, which is equivalent to the sum of actual sales prices of goods imported by Defendant 1, despite the fact that the court below erred in calculating the market price by misunderstanding the legal principles on the import price.

C. Unreasonable sentencing (the defendants and the prosecutor)

The punishment sentenced by the court below against the defendants (the additional collection of 85,472,575 won in August of imprisonment, and the fine of 23,610,00 won in case of defendant 2 corporation) is deemed to be improper because the defendants are too unreasonable, and the prosecutor is too uneasible and unfair.

2. Determination

A. Judgment on the assertion of mistake of facts (defendants)

(1) Relevant statutes

(A) Customs Act;

Article 241 (1) of the Customs Act provides that "When it is intended to export, import or return goods, the name, standard, quantity and price of the goods concerned, and other matters prescribed by the Presidential Decree shall be reported to the head of the relevant customs office." Article 241 (2) of the Customs Act provides that "personal effects, consignments or unaccompanied goods, postal items exempted from customs duties under Articles 91 through 94, 96 and 97 (1) may be omitted from the declaration under paragraph (1) or declared in a simplified manner prescribed by the Commissioner of the Korea Customs Service under the conditions as prescribed by the Presidential Decree." Article 94 subparagraphs 3 and 4 of the same Act provides that "any postal items, the import or return of which are prescribed by the Ordinance of the Ministry of Finance and Economy, and small-amount goods received by Korean residents, shall be exempt from customs duties, and Article 256 (1) of the Customs Act provides that "any postal items, the import or return of which is required by the sender pursuant to the provisions of Article 25 (2) of the Foreign Trade Act."

(b) Enforcement Decree of the Customs Act

Article 246 (2) of the Enforcement Decree of the Customs Act provides that "any person who intends to file an import, import or return declaration under Article 241 (1) of the Act shall file a declaration thereon stating the kind, number and number of packages, and the name, size, quantity, price, etc. of the relevant goods with the head of the relevant customs office." Article 246 (3) of the Enforcement Decree of the Customs Act provides that "any consignment or unaccompanied goods, etc. prescribed by the Commissioner of the Korea Customs Service as deemed necessary for prompt customs clearance, such as mail (excluding those falling under Article 258 (2) of the Act) and other documents and small-value duty-free goods, etc. shall be omitted pursuant to Article 241 (2) of the Act." Article 241 (4) of the Enforcement Decree provides that "any person shall be deemed to have accepted an import declaration on the relevant goods at the time of completion of the inspection, and Article 261 subparagraph 3 of the Enforcement Decree provides that "any goods paid or payable for customs clearance shall meet the standards prescribed by Presidential Decree."

(C) Enforcement Rule of the Customs Act

Article 45(2)1 of the Enforcement Rule of the Customs Act provides that “The total dutiable value of the relevant goods shall not exceed 150,000 won (10,000 won until the Enforcement Rule of the Customs Act was amended by Ordinance No. 375 of March 30, 2004) for the relevant goods exempted from customs duties pursuant to Article 94 subparag. 4 of the Act.”

(D) Notice on the handling of import clearance

As above, Articles 241(2) and 258 of the Customs Act, Articles 246(2) and 261 of the Enforcement Decree of the Customs Act stipulate that “Public Notice on the Handling of Customs Clearance of Imported Goods” under the delegation of the Customs Act provides for simplified customs clearance procedures in Chapter III (hereinafter referred to as “Public Notice on the Handling of Customs Clearance of Imported Goods”) shall be exempted from customs clearance, stating that “the duty-free goods which are brought into foreign diplomatic clubs (Article 88 of the Customs Act)”, “the head of a foreign country located in the Republic of Korea and his family members, and articles subject to specification (Article 93 subparag. 10 of the Customs Act) belonging to the head of the foreign country located in the Republic of Korea (Article 93 subparag. 10 of the Customs Act).” (Article 3-3-1 of the Customs Act); “The total dutiable value of the relevant goods received by a resident in the Republic of Korea shall be 150,000 won or less (100,000 won prior to the amendment of the above Public Notice”).

Meanwhile, with respect to the customs clearance of goods sent under special consignment, the customs clearance of goods sent under special consignment shall be classified into "goods sent under special consignment" into the list of goods sent under Article 3-3-2 (1) 1 and 2, with the exception that the customs clearance price of which is not more than US$60 is less than US$600 and the import price of which is limited, and goods the import price of which is more than US$600 is limited (Article 3-2-4). The customs clearance of goods sent under special consignment for special consignment for customs clearance shall be based on the customs list to be submitted by the special consignment company, and any person who intends to file a declaration of goods sent under special consignment for special consignment for special consignment shall file a declaration stating the matters under Article 3-3-2 with the customs collector, and any person who intends to file a declaration of goods sent under special consignment for special consignment for general declaration shall submit documents under each subparagraph of Article 21-7 (1) to the customs collector (general import declaration).

Furthermore, with respect to customs clearance of postal items, the customs clearance for postal items other than the goods under Articles 3-4, 3-4 and 3-4-4 of the Enforcement Decree of the Customs Act provides that the customs clearance for postal items shall be based on the International Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Postal Nos. 261

(e) Notice of the processing of customs clearance for express shipments;

With respect to customs clearance procedures for express shipments, a notice on the execution of customs clearance for express shipments (established by the Korea Customs Service No. 2003-1, Jan. 22, 2003) stating matters necessary for customs clearance for imported express shipments, provides that “the prices of goods among those that are used or exempted by a domestic resident shall be US$ 100 (60 US dollars prior to the amendment of March 25, 2004) and not subject to the confirmation by the customs collector as prescribed in Article 226(2) of the Customs Act shall be the list of special goods for customs clearance; the price of goods shall be more than US$100 and not more than 2,000 and not subject to the confirmation by the customs collector as prescribed in Article 226(2) of the Act shall be divided into the list of special goods for delivery and delivery and the price of goods shall be more than US$2,000 and the list of goods subject to the declaration by the customs collector shall be divided into the list of goods subject to the declaration by the customs collector.”

(2) Determination as to whether the goods imported by the Defendants through international mail or mail transmission companies are imported after filing a declaration under Article 241 of the Customs Act

(A) According to the evidence of the lower judgment, Defendant 1, while importing components for repair of a small weight vessel at a high price for sale, requested an exporter to prepare and arrange a invoice at a price lower than the actual purchase price (the price at which customs clearance is possible if the goods are self-used). In the case of import by mail, Defendant 1, using the “simplified import declaration” or “import declaration agenda” in which the head of a post office submits a “mail list” pursuant to Article 3-4-1 of the Public Notice on the Handling of Customs Clearance Affairs, and, in the case of import through a special invoice, can be acknowledged the fact that customs clearance (tax clearance) was done using the “Simplified import declaration” in which a special invoice submits a customs list pursuant to Articles 3-2-4 and 3-2-6 of the Public Notice on the Handling of Customs Clearance Affairs.

(B) As such, in light of the various relevant laws and regulations as seen earlier, if commercial goods imported for sale are cleared through the “import declaration agenda” or “simplified import declaration”, whether such goods can be deemed imported through a declaration under Article 241 of the Customs Act, the importer shall make a regular import declaration, regardless of revenue stamps or revenue stamps through a special transmission company, and if it is apparent that such goods are used during customs clearance, customs officers should take measures to regulate customs clearance (whether customs clearance is exempt from customs clearance or on-site customs clearance). Thus, even if customs officers did not know of such fact, it cannot be deemed as lawful customs clearance (see, e.g., Supreme Court Decision 2004Do8786, Mar. 25, 2005). The act of importing commercial goods imported for sale constitutes an act of importing customs duty declaration under Article 269(2)1 of the Customs Act.

(3) Determination as to whether Defendant 1 had awareness of the unreported import

In light of the following facts acknowledged by the evidence duly admitted by the court below, i.e., (i) from 1975 to 197, Defendant 1 was indirectly involved in the import of vessel components while working for a company carrying on the maritime transportation business of Honam tank; (ii) since around 1997, Defendant 2 was in direct charge of the import business of vessel components; (iii) Defendant 1 appears to have considerable knowledge and experience in the import clearance procedure of vessel components; and (iv) Defendant 1 requested exporters to prepare invoices at a price lower than the actual purchase price for prompt customs clearance when importing vessel components at a price lower than the actual purchase price; and (iv) in order for them to be possible, the list of vessel components by presentation of the mail list (in the case of postal items) or the customs clearance (in the case of consignments), the above import declaration procedure should not be applied to the goods imported by Defendant 1, as well as the price of the imported goods should be stated in the invoice, and there is no need for Defendant 1 to obtain the import declaration procedure at the time of the general mail delivery.

B. Judgment on the misapprehension of legal principles (Defendant 1)

Article 266 of the Enforcement Decree of the Customs Act provides that the term "domestic wholesale price" means the price at which a wholesaler purchases imported goods from a trader and openly sells them at a domestic wholesale market in a fair transaction manner. The domestic wholesale price under the Customs Act refers to the price at which the goods arrive at the cost of the goods, including taxes such as customs duties, customs procedures, expenses for customs clearance, and appropriate profits of the company, and so long as the calculation in accordance with the "Market Price Schedule", which is one of the calculation methods of the domestic wholesale price, includes taxes such as customs duties, customs procedures, expenses for customs clearance, and appropriate profits of the company based on the price at the port of arrival or appraised price of the imported goods, unless there is a good evidence that the domestic wholesale price calculated by such method differs from the actual price (Supreme Court Decision 2005Do4614 Decided September 30, 2005).

According to the records, the domestic wholesale price as stated in the facts charged of this case is calculated by applying the market price rate according to the public notice on the determination of the customs value of imported goods after the price of each of the goods imported by the defendants for each of the goods imported by each financial account transaction. Since there are no objective data to recognize that the domestic wholesale price calculated as above is different from the actual price (i) the actual sales price alleged by Defendant 1 is calculated by multiplying the actual sales price of approximately 61.7% of the imported vessel's parts by the average profit rate, and then the average profit rate is multiplied by the total import vessel's admission price. In addition, even some of the imported vessel's parts, the actual sales price of which is investigated, as seen above, are not included in customs duties, taxes, customs procedures, and customs procedures. ② In the case of vessel repair parts as acknowledged by Defendant 1 himself, it is difficult to investigate the domestic wholesale price in light of the fact that the above type of transaction is directly sold to the person who requires the above importer, and thus it is also difficult to investigate the domestic wholesale price).

C. Determination on the assertion of unfair sentencing

(1) Defendant 1

In light of the following: (a) the cost of the goods imported by the above defendant without an import declaration exceeds KRW 500 million; (b) the above defendant denies his criminal act until the above defendant was in the trial; (c) the above defendant was the first offender; (d) the circumstances and results of the crime of this case; (e) the additional collection of the above defendant against the above defendant and the fine against the defendant 2; (e) the fact that the above defendant's economic losses are deemed to be reasonable due to the above defendant's imposition of penalties against the above defendant; (e) the amount of evaded customs duties was immediately paid; and (e) all other conditions that form the basis for sentencing on records, such as the above defendant's age, character

(2) Defendant 2 corporation

In light of all the conditions that serve as the basis for sentencing as shown in the record, such as the background of the instant crime, the circumstances after the instant crime, and the degree of punishment against Defendant 1, the lower court’s punishment against Defendant 2 corporation cannot be deemed to be adequate, too heavy or unreasonable. Thus, the Defendant and the prosecutor’s assertion in all are without merit.

3. Conclusion

Therefore, since all appeals filed by Defendant 2 and the prosecutor are without merit, they are all dismissed under Article 364(4) of the Criminal Procedure Act. Since Defendant 1’s appeal is well-grounded, the part of the judgment below against Defendant 1 among the judgment below is reversed under Article 364(6) of the Criminal Procedure Act, and it is again decided as follows.

Since each corresponding column of the judgment of the court below is the same as that of the judgment below, all of them shall be cited in accordance with Article 369 of the Criminal Procedure Act.

1. Article relevant to the facts constituting an offense and the selection of punishment;

Each Customs Act Article 269(2)1, Article 241(1)(a) and Article 270(1)1(a)(a) of each Customs Act and the choice of each imprisonment, respectively,

1. Aggravation for concurrent crimes;

Article 37 (former part), Article 38 (1) 2, and Article 50 of the Criminal Act

1. Inclusion of days of detention in detention;

Article 57 of the Criminal Act

1. Suspension of execution;

Article 62 (1) of the Criminal Act (Consideration Grounds, etc. for Destruction)

1. Additional collection:

Article 282(3) and (2) of the Customs Act

1. Social service order;

Article 62-2 of the Criminal Act, Article 59 of the Probation, etc. Act

Judges Lee Jae-jin (Presiding Justice)