Plaintiff (Law Firm Cheong & Yang, Attorney Cho Jae-chul, Counsel for the plaintiff-appellant)

Head of Daegu Customs Office

September 21, 2018

Daegu District Court Decision 2017Guhap21908 Decided May 2, 2018

1. Revocation of the first instance judgment.

2. The Defendant’s disposition rejecting rectification of customs duties against the Plaintiff on July 19, 2017 shall be revoked.

3. All costs of the lawsuit are borne by the Defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On April 2009, the Plaintiff opened an online shopping mall (hereinafter “the shopping mall of this case”) in the name of Nonparty 1, his wife Nonparty 1 and U.K., where Nonparty 1 had been staying as a U.K. student. (hereinafter “instant shopping mall”).

If domestic consumers order the goods, such as the United Kingdom clothes, shoes, and bags (hereinafter “instant goods”) connected to the shopping mall of this case and posted there, they operated the shopping mall of this case by purchasing them in the United Kingdom and delivering them to domestic consumers.

B. From August 14, 2009 to March 17, 2012, the Plaintiff filed an import declaration on the instant goods on a total of 12,140 occasions. The Plaintiff: (a) designated domestic consumers as taxpayers and cleared imported goods subject to reduction or exemption pursuant to Article 94(4) of the Customs Act.

C. On November 19, 2012, the Defendant imposed and notified the Plaintiff of KRW 132,084,040, value-added tax, KRW 125,400,630, KRW 57,404,110, and KRW 60,809,040, respectively, for the reason that the Plaintiff violated the Customs Act by improper means while importing the instant goods in England during the pertinent taxable period (hereinafter collectively referred to as “the first imposition disposition”).

D. However, as the Plaintiff did not pay this, the Defendant again urged the Plaintiff to pay the same amount of tax as the initial imposition disposition on December 12, 2012 and on February 25, 2012, respectively.

E. On February 26, 2013, the Plaintiff filed a request with the Commissioner of the Korea Customs Service for a review of customs duties that sought the initial imposition and revocation of each of the above demands, but the Korea Customs Service rendered a decision of rejection on May 2, 2013 on the ground that the period of the request for review was exceeded.

F. On May 10, 2013, the Plaintiff filed a lawsuit with the Daegu District Court seeking the initial imposition and the revocation of each of the said demands (2013Guhap1142). As to the part of the Plaintiff’s lawsuit seeking the revocation of the initial imposition, the said court dismissed all of the Plaintiff’s lawsuit on the grounds that the Plaintiff’s claim for revocation of each of the said demands cannot be deemed an administrative disposition subject to an appeal litigation on the grounds that the period for requesting an examination and the period for filing a lawsuit are excessive and illegal. The said judgment became final and conclusive by both dismissal of the Plaintiff’s appeal and final appeal.

G. On the other hand, on April 12, 2012, the prosecutor of the Daegu District Prosecutors’ Office: (a) declared that the Plaintiff was the actual taxpayer for the instant goods; and (b) declared that the Plaintiff was subject to tax exemption by means of disguised use of the goods by domestic consumers; and (c) charged the Plaintiff as a crime of violating the Customs Act. The summary of the facts charged against the Plaintiff is as follows.

The Defendant, included in the main text, purchased goods ordered by domestic consumers from the English territory and sold them directly from domestic buyers for their own use, but had domestic consumers registered as taxpayers on an import declaration and had them enter them into customs clearance by simplified import declaration. On August 14, 2009, the Defendant purchased from the shopping mall of this case one point of 50 US dollars from the English territory and then delivered them to Korea through the point of modern home delivery, and received the reduction or exemption of 11,530 won from the customs duty imposed on the goods to be imposed on the said goods by requesting the entry of the taxpayer on the import declaration to Nonparty 2, a domestic consumer, in order to disguised small tax exemption pursuant to Article 94 of the Customs Act. In addition, the Defendant, on March 7, 2012, imported the goods of this case 15,390, which are subject to customs duty imposition, and received the reduction or exemption of customs duties on the goods at issue from domestic residents by reporting it to the domestic resident, and received the reduction or exemption of customs duties on the goods at issue.

H. On February 11, 2015, the first instance court ( Daegu District Court 2012 High Court 2012 High Court 3005) rendered a judgment of conviction against the Plaintiff, but the appellate court ( Daegu District Court 2015No714) rendered a judgment of innocence on January 19, 2017 on the following grounds. The Supreme Court dismissed the prosecutor’s appeal on May 31, 2017 (2017Do2867) and thus, the judgment of innocence became final and conclusive (hereinafter “relevant criminal judgment”).

In the case of each transaction described in the list (A) contained in the facts charged in this case, it is reasonable to view that the actual importer of the goods of this case is the domestic consumer, not the defendant, and the defendant filed a declaration with customs office as if the goods were imported as self-used goods by the domestic resident. (B) The shopping mall of this case was established only for the domestic consumer, and the return and refund were made in Korea. The plaintiff newly set the sales price of the shopping mall, but the transaction between the defendant and the domestic consumer occurred. However, the new sales price is determined based on the price set by the overseas seller, and the new sales price is determined based on the price set by the overseas seller, and (c) the defendant seems to be merely an auxiliary act in relation to the convenience of the domestic consumer.

(i) On July 18, 2017, the Plaintiff filed a claim for correction on the ground that the transaction or act, etc., which served as the basis of calculating the tax base and the amount of tax, becomes final and conclusive as different by the judgment in the lawsuit related thereto, based on the relevant criminal judgment, constitutes a case where the Plaintiff becomes aware of the excessive amount of tax paid. However, on July 19, 2017, the Defendant rejected the claim for correction on the ground that the Plaintiff’s allegation does not constitute an object of the claim for correction pursuant to Article 38-3(2) or (3) of the Customs Act (hereinafter “instant disposition”).

(j) On August 24, 2017, the Plaintiff requested the Commissioner of the Korea Customs Service to revoke the instant disposition, but the Commissioner of the Korea Customs Service dismissed the request for examination on the same grounds as the Defendant’s rejection on February 8, 2018.

[Ground of recognition] The fact that there is no dispute, Gap's 2 through 5, 7, 16 evidence, Eul's 3 through 7, 11 through 13, and 18 evidence (including paper numbers, hereinafter the same shall apply), the purport of the whole pleadings and arguments

2. Whether the instant disposition is lawful

A. Party’s assertion and the issues of this case

1) The plaintiff's assertion

The Defendant initially imposed customs duties, etc. on the import of the instant goods on the premise that the Plaintiff is the Plaintiff, and the facts charged in the relevant criminal case are also subject to reduction or exemption of customs duties by unlawful means on the premise that the Plaintiff is liable for duty payment following the import of the instant goods. However, the relevant criminal judgment recognized that the person liable for duty payment following the import of the instant goods, i.e., the actual owner who imported the instant goods, is not the Plaintiff but the Plaintiff as a domestic consumer and declared the Defendant not guilty on the ground of this. Therefore, the relevant criminal judgment constitutes a case where the determination of the relevant criminal judgment becomes final and conclusive as different by the judgment in the first declaration or rectification, which is the grounds for correction under Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act. Nevertheless, the Defendant rejected the Plaintiff’s request for correction on the ground that the Plaintiff’s request for correction is not subject to a claim for correction under Article 38-3(3) of the Customs Act, and thus is unlawful.

2) The defendant's assertion

Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act do not constitute a criminal judgment. Moreover, even if a criminal judgment is included in the judgment, the transaction or act, etc., which served as the basis of duty base and duty in the initial declaration or rectification concerning the import of the goods of this case, does not constitute a case where the judgment on the relevant criminal judgment becomes final and conclusive as different by the judgment on the relevant lawsuit. Accordingly, the disposition of this case rejecting the Plaintiff’s request for correction as a ground for correction after the final and conclusive judgment on the relevant criminal judgment is lawful.

3) Issues of the instant case

Therefore, the issues of the instant case are: (a) whether a criminal judgment is included in the “judgment” as a ground for post-explosion correction, as stipulated in Article 38-3(3) of the Customs Act, and Article 34(2)1 of the Enforcement Decree of the Customs Act; and (b) whether a transaction or act, etc., which served as the basis for the tax base and the amount of tax due to the import of the instant goods, has become final and conclusive by the relevant criminal judgment, is different.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

The purpose of Article 38-3(3) of the Customs Act and Article 34(2) of the Enforcement Decree thereof is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction of their tax base and amount of tax in cases where there are changes in the basis of calculation of their tax base and amount of tax due to the occurrence of a certain later cause after the establishment of tax liability. Here, “when transactions or acts, etc. become final and conclusive as different by a judgment in a lawsuit against them” referred to in Article 38-3(3) of the Customs Act among the grounds for the later filing of a request for correction refers to cases where a dispute over the transactions or acts, etc., which are the basis of calculation of their tax base and amount of tax, becomes final and conclusive by a judgment on the lawsuit against them, and thus the first declaration, etc. cannot be maintained properly because the existence of such transactions or acts, etc., or the legal effect thereof becomes final and conclusive by a judgment on the grounds of Article 38-3(3) of the Customs Act’s first filing of a request for correction, etc.

2) Whether the criminal judgment is included in the grounds for subsequent request for correction

Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree thereof provide that “a judgment” is simply “a judgment without specifying the type of a lawsuit on the grounds of a request for ex post facto correction.” This differs from that of Article 21(2)3 of the Customs Act stipulating special cases concerning the limitation period for the imposition of customs duties when a certain grounds for ex post facto correction arise, which is one of the grounds for a request for ex post facto correction under the Administrative Litigation Act.”

In addition, in light of Article 34(2)2 of the Enforcement Decree of the Customs Act regarding the meaning of “ex post facto cause”, it should be deemed that Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree thereof allow a request for rectification with regard to the fact that the transaction or act itself, which is the basis for calculating the duty base and the amount of duty, becomes final and conclusive as different by a ruling on the relevant lawsuit, rather than whether the transaction or act itself becomes final and conclusive as different by a ruling on the relevant lawsuit.

On the other hand, the absence of a certain transaction or act, or the existence of grounds for invalidation exists in the point of the act, and the invalidation or absence of such act is not so formed or created only through a civil judgment. Likewise, a criminal judgment can determine whether a certain transaction or act, which is the basis for calculating the tax base and the amount of tax, is null and void or not, in order to discuss the establishment of a crime in a criminal judgment.

Therefore, just because the purpose, function, and principle of lawsuit are distinguishable as the defendant's assertion, it is not wholly excluded from the "judgment" which is the ground for filing a claim for correction after a criminal judgment is rendered.

Therefore, whether the relevant criminal judgment became final and conclusive in this case constitutes a ground for filing a subsequent claim for correction under Article 38-3(3) of the Customs Act ought to be determined based on the following: (i) After the first declaration was made, disputes arose in relation to transactions or acts, etc., which served as the basis for calculating the tax base and the amount of tax; and (ii) the existence of such transactions or acts, etc., or the legal effect thereof, becomes final and conclusive by a judgment in a lawsuit related thereto, and (iii) whether the first declaration, etc.,

3) In the instant case:

In full view of the following circumstances, the evidence mentioned above, Gap evidence Nos. 8 through 10, Eul evidence No. 14, and Eul evidence No. 16 and the overall purport of the pleadings, the fact that the judgment of innocence was concluded in relation to the import of the goods of this case by the plaintiff is justifiable to regard the fact that the judgment of innocence was concluded in relation to the import of the goods of this case as the ground for filing a subsequent claim for correction under Article 38-3 (3) of the Customs Act and Article 34 (

① Article 19(1) of the former Customs Act (amended by Act No. 11062, Jan. 1, 2013) provides that “any of the following persons shall be liable to pay customs duties.” The main sentence of subparagraph 1 stipulates that “the owner of an article, the import of which was reported, shall be the person liable to pay customs duties.” The term “the owner of an article, the person liable to pay customs duties,” who is the person liable to pay customs duties, refers to the actual owner of the article, the actual owner of which was imported (see, e.g., Supreme Court Decision 2014Du2270, Nov. 27, 2015):

② The Defendant deemed the Plaintiff as the actual owner who imported the instant goods, i.e., the actual owner who imported the instant goods, and thus, issued the initial disposition. Therefore, the transaction or act, which served as the basis for calculating the tax base and the amount of tax, constitutes a transaction or act of importing the instant goods to a foreign seller and selling them to the domestic consumer.

③ The summary of the facts charged in the relevant criminal case is that the Plaintiff, who actually imported the instant goods from a foreign seller, sells them to the domestic consumer, and the Plaintiff breached the Customs Act by means of disguised purchase of the instant imported goods directly from a foreign seller for the purpose of self-use. On the other hand, the Plaintiff asserted that the actual owner of the instant goods, who actually imported the instant goods, was a domestic consumer and was not a duty payer. Accordingly, in the relevant criminal case, the Plaintiff argued that the actual owner of the instant goods is the domestic consumer and the domestic consumer is not a duty payer. As such, in the relevant criminal case, the Plaintiff asserted that the Plaintiff is a domestic consumer because the import agent of the instant goods is the import agent transaction, and the Prosecutor argued that the duty payer following the import of the instant goods is the Plaintiff on the premise that the transaction of the instant goods is an import shopping mall transaction. The Defendant also issued a disposition imposing customs duty on the Plaintiff under the presumption that the import agent transaction constitutes an import shopping mall transaction and thus the Plaintiff was the original taxpayer).

④ Based on the aforementioned circumstances, the relevant criminal judgment acknowledged the fact that the actual owner of the instant goods was a domestic consumer, not the Plaintiff, and rendered a judgment of innocence to the Plaintiff accordingly. The relevant criminal judgment acknowledged the fact that the actual owner of the instant goods was a domestic consumer, beyond a reasonable doubt as to the fact that there was insufficient proof that the Plaintiff was the actual owner of the instant goods, and actively imported the instant goods beyond a reasonable doubt, and confirmed the fact that the actual owner was a domestic consumer. This was based on the fact that the Plaintiff was a transaction or act, which was the basis for calculating the tax base and the amount of tax in the initial disposition, that is, a transaction or act that was the basis for calculating the tax base and the amount of tax

⑤ In light of the fact that the Plaintiff established a business registration only within the Republic of Korea without filing a business registration and opened a credit card payment concerning the price of the instant goods; the Plaintiff newly set the domestic sales price based on the overseas sales price; the Plaintiff submitted a confirmation document that it is the actual owner at the time of the tax investigation; and the Plaintiff reported the import price for certain goods to obtain small tax exemption at the time of the tax investigation to the extent that it was acknowledged that the original tax disposition could not be properly maintained, by the relevant criminal decision. However, the Plaintiff’s establishment of a business registration only within the Republic of Korea for the payment and delivery of credit cards; and the actual owner of the instant goods was not directly related to the Plaintiff’s domestic sales price based on the overseas sales price; the Plaintiff posted the new domestic sales price on the shopping mall site; the Plaintiff’s new sales price is constituted by the English local sales price and the English import price, value-added tax, domestic delivery card, and purchase fee, and the Plaintiff’s submission of the confirmation document to the Plaintiff, which is the actual owner of the instant goods at the time of the tax investigation.

4) Sub-committee

Therefore, the final and conclusive judgment of the relevant criminal case constitutes grounds for subsequent correction as stipulated in Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act. The instant disposition rejecting the Plaintiff’s request for correction on a different premise is unlawful.

3. Conclusion

Thus, the plaintiff's claim of this case should be accepted on the grounds of its reasoning, and since the judgment of the court of first instance differs from this conclusion, the judgment of the court of first instance is revoked, and it is so decided as per Disposition by the assent of all participating Justices.

[Attachment]

Judges Jeong Jong-sung (Presiding Judge)