2018Du61888 Revocation of Disposition Rejecting Customs Duties

Plaintiff:

Law Firm Cheong & Yang, Attorney Cho Jong-chul, Counsel for the plaintiff-appellant-appellant

Head of Daegu Customs Office

Daegu High Court Decision 2018Nu3111 Decided October 19, 2018

January 9, 2020

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal are examined.

1. Case summary

A. On April 2009, when the Plaintiff was staying as his wife Nonparty and U.K. student, the online shopping mall of ○○○○ (Internet address omitted) in the name of the Nonparty (hereinafter “the shopping mall of this case”).

After opening the shopping mall, the shopping mall of this case was operated by domestic consumers in a way that the Plaintiff purchases them from the territory of the United Kingdom and delivers them to domestic consumers.

B. From August 14, 2009 to March 17, 2012, the Plaintiff filed an import declaration that constitutes a small amount of goods subject to tax payment under Article 94(4) of the Customs Act by having domestic consumers as a taxpayer for the said goods (hereinafter “instant goods”) on a total of 12,140 occasions.

C. On November 19, 2012, the Defendant imposed and notified the Plaintiff of customs duties of KRW 132,084,040, value-added tax of KRW 125,40,630, and penalty tax of underreporting of KRW 57,404, 110, and penalty tax of underreporting of KRW 60,80,09,040, respectively, on the ground that the Plaintiff violated the Customs Act by improper means while importing the instant goods in the UK during the said taxable period (hereinafter collectively referred to as “the initial imposition disposition”).

D. Meanwhile, on April 12, 2012, the prosecutor of the Daegu District Prosecutors’ Office prosecuted the Plaintiff as a crime of violating the Customs Act according to the facts charged that the Plaintiff imported the instant goods subject to the imposition of customs duties and sold them to domestic residents, but the customs office reported as being imported by domestic residents as their own goods and received the reduction of customs duties imposed on the relevant goods in an unlawful manner.

E. On February 11, 2015, the first instance court (Seoul District Court 2012 High Court 3005) found the Plaintiff guilty of the facts charged, and sentenced the Plaintiff to a fine of KRW 24,282,00. However, the appellate court ( Daegu District Court 2015No714) rendered a judgment of innocence on January 19, 2017 on the ground that the actual owner who imported the instant goods was not the Defendant but the domestic consumer. The Supreme Court dismissed the prosecutor’s appeal on May 31, 2017 (2017Do2867) and thus, the said judgment of innocence became final and conclusive (hereinafter referred to as “related criminal judgment”).

F. 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 on the lawsuit related thereto, 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 assertion 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”).

2. Regarding ground of appeal No. 1

(a) Article 38-3 (3) of the Customs Act provides that "where a taxpayer becomes aware that any transaction, act, etc. which is the basis of calculating the duty base and the amount of duty in the initial declaration or rectification becomes final and conclusive as different by a judgment (including reconciliation or other act having the same effect as the judgment) on the relevant lawsuit, or that any other cause prescribed by Presidential Decree has occurred and the paid duty is excessive, he/she may request the head of a customs office to rectify the amount of duty, as prescribed by Presidential Decree, within two months from the date on which he/she becomes aware that such cause has occurred, regardless of the period under paragraph (2)." Article 34 (2) 1 of the Enforcement Decree of the Customs Act provides that "any transaction, act, etc. which is the basis of calculating the duty base and the amount of duty in the initial declaration or rectification becomes final and conclusive as different by a judgment (including any reconciliation or other act having the same effect as the judgment) on the relevant lawsuit."

The purport of the ex post facto request for correction 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 when there is a change in the basis for calculating the tax base and amount of tax due to the occurrence of a certain subsequent cause after the establishment of the tax liability. In this context, “where the transaction, act, etc. becomes final and conclusive as different by a ruling on the relevant lawsuit” under Article 34(2)1 of the Enforcement Decree of the Customs Act refers to cases where a dispute over the transaction, act, etc., which served as the basis for calculating the tax base and amount of tax after the first declaration, becomes final and conclusive by a ruling in the relevant lawsuit (see, e.g., Supreme Court Decision 2017Du41740, Sept. 7, 2017).

B. Meanwhile, even if the judgment became final and conclusive on the basis of the determination on the existence or scope of tax liability in a criminal trial proceeding, it shall not be deemed as falling under “where a transaction or act, etc., which served as the basis of calculating the duty base and the amount of duty in the initial declaration or rectification, becomes final and conclusive as different by the judgment of the relevant lawsuit, barring any special circumstances.” Specific reasons are as follows.

1) Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act stipulate only “a judgment without specifying the type of litigation by stipulating the grounds for later filing of a request for correction.” However, criminal proceedings are aimed at identifying the existence of the State’s penal authority and the proper scope of punishment, and it is difficult to view that criminal proceedings are lawsuits aimed at resolving disputes arising from transactions or acts, etc. which are the basis for calculating the tax base and the amount of tax, and transactions or acts in private law are not null and void or cancelled only with the final judgment in criminal cases. Accordingly, the judgment in criminal cases cannot be seen as “the existence of transactions or acts, etc., which are the basis for calculating the tax base and the amount of tax in the initial return or rectification thereof, or the legal effect thereof becomes different.”

2) The taxation procedure is to determine the tax base and tax amount for proper and fair taxation in accordance with the principle of substantial taxation. While the criminal procedure aims to determine the existence and scope of the State’s penal authority for the purpose of adjudication on the facts charged pursuant to the principle of no accusation, the criminal procedure is to determine the existence and scope of the crime of tax evasion and the amount of illegal income. As such, even if the criminal procedure is to determine the establishment of the crime of tax evasion and the amount of illegal income, its purpose differs from the taxation procedure, and the procedure for its confirmation is also different from each other. In addition, the criminal procedure does not include a procedure for its confirmation through the submission of methods of offence and defense, such as defense and re-argument, as to whether the transaction or act, which served as the basis for calculating the tax base and tax amount, is revoked between the opposing parties. 3) Furthermore, the admissibility of evidence is limited under the strict evidence law and the principle of presumption of innocence is applied. Accordingly, the judgment of conviction can only be recognized based on evidence with probative value to the extent that the judge is true enough to have no reasonable doubt.

C. Nevertheless, under the different premise, the lower court determined that the transaction or act that was the basis for calculating the tax base and amount of tax in the initial imposition disposition by the relevant criminal judgment that acquitted the Plaintiff on the grounds stated in its reasoning, and that the transaction or act that the Plaintiff imported the instant goods from the overseas seller and sold them to the domestic consumer was different from the content. In so determining, the lower court erred by misapprehending the meaning and scope of the judgment as the ground for filing a subsequent request for correction under Article 38-3(3) of the Customs Act, and by misapprehending the legal doctrine on the subsequent request for correction, thereby adversely affecting the conclusion

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok

Justices Noh Jeong-chul

Jeju High Court Decision 201No. 50

Justices Kim In-bok