[1] The scope of payments included in actual payment prices of imported goods, which are the basis for assessing dutiable value of imported goods

[2] The purport of Article 20(6)4 of the Enforcement Decree of the Customs Act, and whether additional financial expenses incurred in the process of extending the payment deadline at the buyer’s request fall under “financial expenses” as referred to in the above provision, and is included in the customs value (negative)

[3] The case holding that so-called painting costs are not included in the dutiable value of customs

[1] In full view of Article 30(1) and (2) of the Customs Act, the customs value of imported goods generally is the price actually paid or payable by a buyer for the pertinent imported goods with respect to goods sold to be exported to Korea. The indirect payment amount, etc., which can be seen as the price for the pertinent imported goods, is included in the actual payment price as above, but the amount clearly distinguishable from all kinds of expenses, the relation of which cannot be recognized, cannot be included in the initial payment price.

[2] Article 20(6)4 of the Enforcement Decree of the Customs Act, which provides that “where a buyer pays financial expenses, etc. which are normally borne by a seller, the amount paid is equivalent to the “indirect payment” included in the actual payment price as stipulated in Article 30(2) of the Customs Act, and Article 20(6)4 of the Enforcement Decree of the Customs Act provides that since financial services were provided for a seller’s interest, it is merely an indirect payment where a seller transfers financial expenses that a seller should bear to a buyer by a special agreement with the buyer. On the other hand, if an additional financial expenses were incurred in the course of extending the payment deadline at the buyer’s request, it is difficult to view such additional financial expenses as falling under the price or transaction conditions of the relevant imported goods by nature. Thus, the said additional financial expenses can not be included in the actual payment price if they can be clearly distinguishable from the price of the relevant imported goods by the import-related document,

[3] The case holding that, in case where a raw milk dealer, at the request of a buyer who is an importer, has engaged in hosting transactions at a discount on condition that the export bill be made free from an overseas financial institution in order to extend the time limit for the payment of the price, the marketing costs, which are additional financial costs paid by the seller to a foreign financial institution, do not be included in the customs value of customs duties.

[1] Article 30 (1) and (2) of the Customs Act / [2] Article 30 (1) and (2) of the Customs Act, Article 20 (6) 4 of the Enforcement Decree of the Customs Act / [3] Article 30 (1) and (2) of the Customs Act, Article 20 (6) 4 of the Enforcement Decree of the Customs Act

Moo Bank Co., Ltd. (Law Firm Sejong, Attorneys Seo Sung-sung et al., Counsel for the plaintiff-appellant)

Head of Seoul Customs Office

Seoul High Court Decision 2006Nu16009 Decided February 16, 2007

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

1. In full view of Article 30(1) and (2) of the Customs Act (amended by Act No. 6305, Dec. 29, 2000; Article 9-3(1) and (2) of the former Customs Act (amended by Act No. 6305, Dec. 29, 200), the dutiable value of imported goods is the price actually paid or payable by a buyer as the price for the imported goods sold to be exported to Korea (hereinafter “actual payment price”). The indirect payment amount, etc., which can be seen as the price for the imported goods, is included in the actual payment price; however, it cannot be included in the initial payment price if it is clearly distinguishable from all kinds of expenses not recognized as such. Meanwhile, since Article 20(6)4 of the Enforcement Decree of the Customs Act provides that “where a buyer pays financial expenses, etc., to be borne by a seller, the payment amount constitutes an additional payment amount under a special agreement between a seller and a buyer, which can be seen as having been included in the actual payment price.

2. According to the reasoning of the lower judgment, the lower court determined that: (a) the seller of the instant case had engaged in marketing transactions to extend the payment deadline at the request of the buyer, who is the importer, in the process of purchasing the instant crude oil from the original supplier to a buyer; and (b) caused the buyer to bear the additional financial costs that the seller would have paid to a foreign financial institution; (c) the seller would clearly be distinguished from the transaction price of crude oil, which is the relevant imported goods, by the relevant import document, such as the transaction proposal, etc. issued by the seller, and thus, the marketing costs should be excluded from the dutiable value.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and the above hosting expenses cannot be deemed to be included in the actual payment price under Article 30 (2) of the Customs Act (Article 9-3 (2) of the former Customs Act). Thus, the court below did not err in the misapprehension of facts against the rules of evidence or misunderstanding of legal principles as to the determination of dutiable value under the Customs Act, as otherwise alleged in the ground of appeal.

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 Jeon Soo-ahn (Presiding Justice)