VienN Health Management Co., Ltd. (Attorney Cho Jae-soo, Counsel for the defendant-appellant)

Head of Incheon Airport Head

September 19, 2014

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s imposition of additional tax on September 17, 2013 against the Plaintiff is revoked.

1. Details of the disposition;

A. From November 6, 2012 to January 30, 2013, the Plaintiff imported “(product name omitted)” from a Chinese company from BEI JINING KGE ZGGGGGGGGGGGGGGGGGGGY QUGGGGGGGEE. On January 7, 2013 and January 30, 2013, the import declaration number of 43785-13-10027U and 43785-13-10086 U.S. (hereinafter “the goods of this case”) to the Defendant by means of Article 2106.90-909 (basic tariff classification) that belongs to the “other import declaration” under the Consolidated Tariff Schedules.

B. Meanwhile, on December 18, 2012, the Defendant requested on December 17, 2012, the Central Customs Analysis Agency to analyze the goods identical to the instant goods as the Plaintiff declared on December 17, 2012 as the import declaration number of 43785-12-1085 U.S.. on December 17, 2012. On February 15, 2013, the Central Customs Analysis Agency sent a reply that the instant goods are red ginseng products with their intrinsic characteristics classified as red ginseng by red ginseng 8.75%, sewage, glusation, glusation, glusation, verification, and static water, and thus, the instant goods are classified as “red red ginseng products” under Article 2106.90-3029 (U.S. tariff concession rate of 754.3%).

C. On February 25, 2013, the Defendant directed the Plaintiff to correct the tariff classification of the instant goods while notifying the Plaintiff of the result of the analysis, but failed to comply with it, on May 1, 2013, the Defendant: (a) determined the tariff classification number of the instant goods as No. 2106.90-9099; and (b) on May 1, 2013, the Plaintiff: (c) KRW 2,069,79,791,990 (= KRW 947,330,220 + KRW 122,461,70); (d) KRW 206,979,200 (= KRW 94,73,020 + KRW 112,246,186,240); and (e) notified the Plaintiff of the tariff classification number as to the instant goods 4375-13,10027U; and (e) notified of the scheduled tax amount to be KRW 2636,1536,75637

D. On May 8, 2013, the Plaintiff filed an export declaration on part of the instant goods to the Incheon Customs Office on the grounds that the content of Katechin’s own component inspection of the instant goods falls short of contractual standards, and returned the instant goods via the inner port on May 14, 2013.

E. On June 4, 2013, the Plaintiff filed an application for refund of customs duties with the Defendant pursuant to Article 106(1) of the Customs Act and received a refund on June 11, 2013.

F. On June 17, 2013, the Plaintiff filed a request for pre-assessment review against the Defendant’s above traditional taxation (hereinafter “instant disposition”). However, on September 10, 2013, the Defendant rendered a non-adopted decision on September 17, 2013, and on September 17, 2013, the Plaintiff issued a notice of correction and notification of the aggregate of KRW 296,443,010 as stated in the attached list 1 (hereinafter “instant disposition”); on the remainder of the goods for which customs duties have not been refunded, KRW 39,356,10 (= 25,341,640 + 14,014,00 + 14,014,470), value-added tax + KRW 3,935,610,00 + 1,401,401 + penalty tax + KRW 1401,406,36,3086,306,4085).

G. The Plaintiff appealed and filed an appeal with the Tax Tribunal on December 16, 2013, but was dismissed on April 2, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2, 3, 4, 7 through 11, Eul evidence Nos. 1 through 4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

If the customs collector confirms that the imported goods are in breach of duty at the time of import declaration and return the tax paid at the time of import declaration in accordance with Article 106 of the Customs Act, unlike normal exports under the Act on Special Cases concerning the Refund of Customs Duties for General Imported Goods, the customs duty is deemed to have been withdrawn, and thus, it is reasonable to view that the amount of duty determined at the time of import declaration should exist in order to correct this case, and that there is no tax base and object of duty determined at the time of correction, and that there is no shortage of duty. Accordingly, if the customs collector did not impose a principal tax (tax) in order to collect a shortage of duty, the additional tax is deemed to lose the ground for imposition. Accordingly, if the customs collector confirmed that the customs duty was in breach of duty at the time of import declaration and returned the amount of tax paid at the time of import declaration, the additional tax should be deemed to have been refunded at the time of payment, without considering such legal environment and the difference between the amount of tax paid at the time of import declaration and the amount of tax paid at the time of refund.

B. Relevant statutes

Attached Table 2 shall be as stated in the relevant statutes.

C. Determination

In light of the following circumstances, the instant disposition is lawful in light of the aforementioned facts and the purport of the entire arguments, which can be seen as having been comprehensively taken into account. Accordingly, the Plaintiff’s above assertion is without merit.

① The penalty tax is administrative sanctions. While the Plaintiff’s import of the instant goods falls under No. 2106.90-3029 (unrecommendedd tariff concession rate 754.3%) under the Consolidated Tariff and Statistics Schedules, the Plaintiff made an erroneous determination in the tariff classification of the instant goods by failing to comply with the notification on the correction of the tariff classification even after being notified by the Defendant.

② The reason why the instant goods fall under Article 2106.90-3029 (Unrecommendedd Tariff Rate 754.3%) is because red ginseng (8.75%) made a mixture of red ginseng, such as sewage, glusium, glusium, glusium, glusium, examination strus, and static water, and its intrinsic characteristics are red ginseng products made of red ginseng. Therefore, even if the kin’s content of the instant goods falls short of the contractual standards as alleged by the Plaintiff, such circumstance does not have any relation with the tariff classification number of the instant goods, and thus, the Plaintiff erred in the tariff classification of the instant goods.

③ In accordance with the Plaintiff’s assertion, if an importer classified certain goods into a lower tariff rate as an imported item while importing them, and subsequently declared as a higher tariff rate, then the importer would not be subject to any sanctions if he/she returns the goods in breach of contract, claiming that they are different from the content of the contract.

(4) Article 4-3-4 of the Public Notice on the Handling of Customs Duties for the Korea Customs Service, which is the public notice, provides that the amount of refund for goods different from the contents of the contract shall be the full amount of the customs duties and taxes already paid and the additional dues imposed on the relevant goods shall

⑤ According to Articles 106 and 46(2) of the Customs Act, when a refund of customs duties is made, the head of a customs office can only appropriate the amount of refund when the refundee pays customs duties, other taxes, surcharges, additional taxes, or expenses for disposition on default. Therefore, the instant disposition cannot be deemed unlawful solely on the ground that the Defendant did not appropriate the additional tax from the refund to the Plaintiff, and the Defendant issued the instant disposition imposing additional tax after the refund was made.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment Omission]

Judges Ba-hee (Presiding Judge)