Seoul High Court 2007Nu15898 Revocation of Disposition imposing customs duties, etc.

May 23, 2008

1. Revocation of a judgment of the first instance;

2. The Defendant’s disposition of imposition of the attached list against the Plaintiff is 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. The Plaintiff is a company established in Hong Kong by a company established with a principal office in Germany for the purpose of domestic sales of sports clothing, etc. attached with the trademark “ad○○○○”. The Plaintiff is a company established in Hong Kong by investing 51% among the distribution companies with a principal office in Germany, for the purpose of purchasing sports clothing, etc. attached with the trademark “ad○○○○”. The Plaintiff is a company established in Hong Kong by investing 100% from the manufacturers of each country, for the purpose of purchasing goods from the respective countries.

B. On May 14, 1998, the Plaintiff entered into a contract for purchase agency service with the content that the Plaintiff appoints A○ as a buying agent, and the Plaintiff paid an amount equivalent to an amount equivalent to 8.25% (5% prior to August 9, 201) of the manufacturer’s price for each import goods subject to imposition, such as customs duties, listed in the separate sheet (hereinafter “instant goods”).

The Plaintiff reported and paid customs duties and value-added taxes by calculating the amount of tax not included in the taxable value while filing an import declaration on the instant products.

C. From November 20, 2003 to November 28, 2003, the Defendant examined (the period subject to examination: November 20, 2008 to November 19, 2003) whether the Plaintiff is liable for taxation (the period subject to examination) and as a result, a ○○ does not constitute the Plaintiff’s purchasing agent in connection with the importation of the instant products, and thus, the instant fee does not constitute a purchase commission under the proviso of Article 30(1)1 of the Customs Act, deeming that the amount initially returned and paid by the Plaintiff does not constitute the purchase commission under the proviso of Article 30(1)1 of the Customs Act, the Defendant collected the difference between the customs amount initially returned and paid and the fees at the time when the customs value was calculated by adding them to the transaction value, and made a disposition of imposition (hereinafter “instant disposition”).

2. Whether the disposition is lawful;

A. The parties' assertion

1) According to the following circumstances as seen below, the Plaintiff’s assertion Plaintiff and the manufacturer formed a transaction relationship between the Plaintiff and the manufacturer with respect to the instant goods, and the manufacturer becomes the seller, and the Plaintiff becomes the buyer, and the ○○ is merely the Plaintiff’s purchasing agent. Thus, the instant fee should be deemed as falling under the purchase commission not included in the dutiable value pursuant to the proviso of Article 30(1)1 of the Customs Act, but the instant disposition based on the dutiable value included therein is unlawful.

A) According to a purchase agency service contract entered into between the Plaintiff and a AO and the Plaintiff, the services provided by AOO for the Plaintiff are physical descriptions of foreign manufacturers, including China, and notify manufacturers of the Plaintiff’s requirements, collecting samples, inspecting and verifying goods, and arranging all affairs related to the transportation of goods. Accordingly, the services provided by AOO for the Plaintiff are consistent with the scope of services by a purchase agent stipulated in subparagraph 3 of Article 3-1 of the Notice on Determination of Dutiable Value of Imported Goods, which are detailed guidelines for the enforcement of the Customs Act.

B) The manufacturer sent the invoice stating the Plaintiff’s purchase order number to a ○○. A○○ sent the invoice stating the price of the goods indicated in the invoice received from the manufacturer and its purchase commission to the Plaintiff. The products directly deliver and transport the invoice to the Plaintiff from the manufacturer. Pursuant to F.O.B. transport terms, the risks, costs, and ownership of the instant products are directly transferred to the Plaintiff after the shipment, and a ○○ does not bear any expenses incurred in acquiring ownership or selling the instant products.

C) In the import of the instant products, the Plaintiff has the right to decide on important matters in the transaction, such as manufacturer, transaction price, transportation method, etc., and even when a ○○ concludes a contract with a manufacturer, the Plaintiff’s agent is explicitly indicated.

d) If there is a defect in an imported good through a AO, the manufacturer is directly liable for the defect to the Plaintiff.

2) The Defendant’s assertion a○○ has paid the price of the instant product to the manufacturer, and the Plaintiff received it from the Plaintiff. The Plaintiff cannot purchase a trademark “ad○” product without passing through a “○○” product, and the Plaintiff did not choose any foreign manufacturer to the Plaintiff, and the Plaintiff did not have any choice to the Plaintiff. The Plaintiff’s declaration completion certificate on the instant product is written only by a ○○, and the Plaintiff’s financial statement also includes the Plaintiff’s supplier’s “ad○” product purchase price in a “ad○○” product. The Plaintiff paid 8.25% fee to a “○○” without relation to a “○○”’s service. In light of the fact that the Plaintiff paid 8.25% fee to the Plaintiff without relation to a “○○”’s service, a○○ is an independent seller, not a Plaintiff’s purchasing agent

B. Relevant statutes

(1) In the early 1980s, the first company that manufactures and sells new, clothing, and sports goods and sold them through the distribution company established in each country. However, since the new launch in the Asian region and the textile manufacturers continued to temporarily temporarily temporarily influence the market. Since the early 1990s, instead of reducing the cost, it was required to reduce the cost, to purchase, and to increase the efficiency of logistics, and to take charge of only the manufacture of goods by reding the manufacturers in the China or the East Asian region. Accordingly, the GATT ○○-△△△△△△ established a ○○○○ and had them take charge of the purchase of trademark goods “ad○○○” from the manufacturing company.

2) On May 14, 1998, the Plaintiff and A○ entered into a contract for purchase agency service. Around July 1, 1999 and around August 1, 2001, the Plaintiff entered into an additional contract. The main contents are as follows (a.e., the trade name prior to the change of A.○○○).

1.1 The Plaintiff shall appoint a person A○ as a purchasing agent related to the purchase of a trademark product by a specified person.

2.2.AOO may, at the Plaintiff’s request, purchase and deliver the samples of the Plaintiff’s substitute for the Plaintiff, and the Plaintiff shall pay a sum of the purchase fees for AOO in the purchase price of the samples concerned to the Plaintiff (hereinafter omitted) 2.3 AOO does not have the ownership of the products purchased in accordance with the Plaintiff’s order. AOO may require a manufacturer to issue a invoice to a AOO in order to enable the products to be delivered in succession to the Plaintiff. AOO may indicate that it is a possible agent in a transaction for the Plaintiff, but a AOO does not have the right to purchase, even if it is not explicitly indicated. AOOO shall order a purchase agent’s own account only with the Plaintiff’s prior consent, and a AOO does not hold a stock for the purpose of sale to the Plaintiff. AOO shall separately indicate the supply price of the products at the time of preparation of invoices to the Plaintiff and the purchase fees for a manufacturer at the time of preparation of invoices to the Plaintiff.

2.6 If the Plaintiff provides samples, designs or raw materials, a○ shall, among manufacturers, color manufacturers who can meet the Plaintiff’s needs and standards, provide the Plaintiff with relevant information, such as terms and conditions on the manufacturer’s cost and delivery date.

2.9 Products purchased on behalf of the plaintiff are examined and confirmed by AOO prior to shipment. The plaintiff must obtain an approval of AOO with respect to the payment by credit or other means. AOO must meet the plaintiff's purchase orders and have no defects, the manufacturer shall provide documents necessary for customs clearance of the products in Korea, the products are packaged and marked according to purchase orders, the invoice is issued, and the invoice is safely packed for carriage.

2.11AOO shall place a purchase order with the consent of the plaintiff to the selected manufacturer and take such steps as may be necessary for the international carriage of the product. AOO shall inform the plaintiff of the name of the carrier, the vessel or the flight code, the port of importation and the date of arrival and deliver the relevant documents to the plaintiff or the plaintiff's Korean representative.

3.1 to 3.4 A. ○ does not have the authority to act without the written consent of the Plaintiff relating to pricing with manufacturers, price changes determined between the Plaintiff and manufacturers, price changes determined between the Plaintiff and the manufacturer, change of the date and sources of the products, extension of delivery and new dates, etc.

5.1 The plaintiff shall pay 8.25% of the supply price to a ○○ in return for services performed by the purchasing agent (5% of the supply price is changed to 8.25% in the additional contract on July 1, 1999).

5.4 The Plaintiff shall pay to the ○○ the amount stated in the invoice issued by a○○ within 20 days from the date of issuance of the invoice.

5 If the above payment deadline exceeds the above payment deadline, the plaintiff shall pay interest at the rate of 0.25% on the amount payable to him.

8.1The plaintiff has the right to make a final decision on the buyer selection, pricing, carriage and other related work.

9.1 The plaintiff may directly order the manufacturer to purchase the product at its own discretion without the help of a AOO, and in this case aO does not receive any consideration for the purchase order of the plaintiff.

11.1 If a specific manufacturer is unable to perform the Plaintiff’s order, a ○ shall notify the Plaintiff of this fact, and a ○○ may not enter into a purchase contract with another manufacturer without the Plaintiff’s express consent.

3) The Plaintiff’s purchase process for the trademark “ad○○” product, including the instant product, is as follows.

A) Australia ○-△△△△ has prepared a basic design for the product and sought opinions from the selling companies, has been provided from the selling companies with the latest tendency, prices, and requirements of the market, including Lone Star, and revised the proposal after having received analysis data from competitors, and then having sought opinions from the selling companies.

After that, selling companies shall attend marketing meetings (GM) or RM (RM) to confirm the sampling produced by manufacturers, and receive reference price information collected from manufacturers by AOO from manufacturers, and then deliver the purchase price that they wish to obtain from the manufacturers through AOO.

Afterward, ○ shall receive the expected demand for the product sought from the selling company and ask the manufacturer whether it is possible to manufacture the product by notifying it to the manufacturer, and if the manufacturer approves the manufacture, the distributor shall be notified of it, and the price shall be determined by making the final price negotiations with the manufacturer.

B) The Plaintiff’s order is based on a web-be system (web-backed, electronic transaction system connected between ○○ and manufacturers). If the Plaintiff orders ○○ to the said system by either inputting product numbers, quantity, etc. or by e-mail (e-mail), a “○○” orders a manufacturer to send a purchase contract (P/O) stating the Plaintiff’s customer numbers, order numbers, and F.O.B. transport terms.

C) When the manufacture of a product is completed in accordance with the order, a○○ shall inspect the product prior to the delivery of the product and prepare a certificate of examination, and upon completion of shipment to the shipping company designated by the Plaintiff, shall confirm the relevant shipping documents and notify the Plaintiff thereof.

D) The carriage of the product is directly conducted from the manufacturer to the Plaintiff under the terms of F.O.B. The bill of lading (B/L) is written by the manufacturer, the consignee, the Plaintiff, and the freight, respectively.

The plaintiff subscribed to the Korean fire & Marine Insurance Co., Ltd. for imported products, and paid transportation marks.

e) The manufacturer shall issue the invoice indicated by “the importer”’s agent a “O”, and a “O” shall establish a letter of credit (L/C) in its own name with the manufacturer’s beneficiary and pay the price for the good to the manufacturer first.

a0 The invoice is issued to the Plaintiff, on the basis of the invoice received from the manufacturer, stating the manufacturer’s supply price and the instant fee, and the Plaintiff shall pay the above amount to a A0 within 50-80 days thereafter.

4) The certificate of import declaration prepared by the Plaintiff while clearanceing the instant goods is written by a○○ in the supplier column. The Plaintiff’s financial statements on the Plaintiff’s audit report also indicate “ad○○” trademark products are purchased at a ○○.

5) In the event of a defect in a product, when the Plaintiff requested a ○○○○ to dispose of the defect, the ○○, upon contact with the manufacturer, consulted on the manufacturer to dispose of the defect, dealt with the defect by informing the Plaintiff of the manufacturer’s result of the defect disposal.

6) The Plaintiff is also a number of cases where a trademark product “ad○” was purchased through Washington without acting as a buying agent of a A○○.

D. Determination

1) According to Article 30(1) of the Customs Act, the dutiable value of imported goods shall be the transaction price adjusted by adding the commission and intermediary fees to the price actually paid or to be paid by the buyer to the goods sold for export to Korea. Since the issue of the instant case is not added to the purchase commission to be paid by the buyer to the buyer’s agent, the issue of the instant case is whether the commission the Plaintiff paid to the buyer to a ○○ constitutes the purchase commission the Plaintiff paid for the purchase agent’s act of a ○○ for the instant goods. Ultimately, whether a A○○ purchases the instant goods from the manufacturer as the Plaintiff’s buying agent or whether a separate seller sells them to the Plaintiff.

A ○○ intends to sell the instant products to the Plaintiff, on its premise, a ○○ should acquire ownership of the instant products, and a ○○○’s acquisition of ownership of the instant products constitutes a case where a ○○ purchases the instant products from the manufacturer, where a ○○ owns ownership of raw materials, and a case where a ○○ makes the instant products process only with the manufacturer.

A. However, if ○○○ had a manufacturer process the instant products in advance, a “○○” should pay only a processing fee to the manufacturer, and the Plaintiff should be paid the sum of the above processing fee and raw material price. As seen earlier, if ○○ paid to the manufacturer and the commission equivalent to 8.25% of the price of the goods that the Plaintiff paid to the manufacturer, and there is no additional amount paid, the amount in the name of the price of the goods that the Plaintiff paid to the manufacturer is not a simple processing fee, but a sales fee for the finished products, and thus, it cannot be deemed that ○○ only allows the manufacturer to process the instant products.

2) Therefore, the case where a ○○○ is a seller of the instant product is only the case where a ○○ purchases the instant product from a manufacturer to acquire ownership, and then sells it to the Plaintiff. As such, we examine whether a ○○ purchases the instant product from a manufacturer and sells it to the Plaintiff.

A) Whether ○○ purchased the instant product from the manufacturer or not depends on whether the ownership of the instant product was transferred from the manufacturer to ○○○, thereby resulting in the risk (such as loss, loss, damage, etc. resulting from the price fluctuation of the goods) a○○ bears the burden.

However, as seen earlier, if the Plaintiff orders the instant product to a ○○○, a○○ shall deliver the product to the manufacturer by specifying the Plaintiff’s order number, customer number, and F.O.B transportation terms and conditions, etc. The manufacturer shall, as the request, deliver the product to the manufacturer. The manufacturer shall carry the product under F.O.B transportation terms and conditions; the consignor shall be stated in the bill of lading; the manufacturer and the consignee shall be the Plaintiff; the Plaintiff subscribed to the insurance against the risks of transportation of the instant product; and the Plaintiff paid the transportation charges of the instant product, the Plaintiff and the manufacturer shall be deemed to have sold the instant product under F.O.B transportation terms and conditions, and ownership of the instant product shall be deemed to have been transferred directly from the manufacturer to the Plaintiff.

B) In addition, the purchase agency service contract between the plaintiff and a AOO does not hold ownership of the product, and the right to final decision on the buyer selection, price determination, transportation and other related affairs is agreed to have the plaintiff. AOO made physical inspection to the plaintiff as stipulated in the above purchase agency service contract and notified the plaintiff's requirements to the manufacturer, and made good arrangements related to the transportation of the product. AOO stated the plaintiff's order number and customer number when ordering the product to the manufacturer. AOO issued a invoice indicating the plaintiff's agent's agent; aOO issued a invoice indicating a AOOO's agent; aOO delivered the plaintiff's request for defective treatment of the product imported through AOO; and aOO delivered the plaintiff's request to the manufacturer and consulted only on the process of defective treatment between the plaintiff and the manufacturer; and a non-manufacturer bears responsibility for the defect in the contract between the plaintiff and the manufacturer.

C) Therefore, a○○ is the Plaintiff’s purchasing agent for the instant products, and the instant fee should be deemed as the purchase commission paid to the buying agent.

3) Meanwhile, even if the Plaintiff opened a L/C and paid the price for the goods to the manufacturer prior to the payment of the price to the Plaintiff, it can be deemed that a ○○○ has paid the price for the goods on behalf of the Plaintiff to the first manufacturer. Even if the Plaintiff is limited to the right of choice to the foreign manufacturer because ○○○-△△△△△△, a principal company, actually selected and controlled foreign manufacturers, the Plaintiff’s agreement is reflected in the process of selecting the manufacturer, and it is difficult to see that the Plaintiff purchased the goods from the limited manufacturer selected by the head office to the ○○○, because the Plaintiff purchased the goods from the limited manufacturer selected by the head office to the ○○, and the Plaintiff did not go through a ○○, but rather, purchased the goods from the limited manufacturer selected by the head office to the ○○, the Plaintiff appears to have been normal since the Plaintiff’s fee paid to the ○○○○○ was 8.25% of the purchase agent’s price for the goods, and it appears that the Plaintiff purchased the goods to be merely the Plaintiff’s financial statements.

3. Conclusion

Therefore, the disposition of this case is unlawful and therefore, it shall be accepted as the plaintiff's claim of this case is reasonable, and the judgment of the court of first instance which has different conclusions is unfair, so the judgment of the court of first instance shall be revoked, and the plaintiff's claim shall be dismissed and it is so decided as per