The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Case summary

A. On January 7, 2013 and January 30, 2013, the Plaintiff filed an import declaration applying 8% of the basic rate for C, which is a health functional beverage imported from an exporter of China (hereinafter “instant product”), and paid customs duties and value-added taxes accordingly.

B. On May 1, 2013, the Defendant deemed that the tariff classification was erroneous because the essential characteristics of the instant goods were red ginseng products, and notified prior to imposing customs duties and value-added taxes on which 754.3% of the tariff concession rate was applied.

C. Meanwhile, the Plaintiff filed an export declaration pursuant to Article 106 of the Customs Act on May 8, 2013, on the ground that some of the instant products (hereinafter “the instant product”) were different from the content of the contract as a result of quality verification twice immediately after the import declaration, and returned the instant products to China via the inner port on May 14, 2013.

Accordingly, on June 11, 2013, the Defendant refunded the full amount of customs duties and value-added taxes paid at the time of import declaration with respect to the instant pharmaceutical product to the Plaintiff.

After that, on September 17, 2013, the Defendant notified the Plaintiff of the correction of the total amount of KRW 296,443,010 (hereinafter “instant penalty tax”) of the respective penalty tax and value-added tax related to the instant pharmaceutical product.

(2) Of the grounds of appeal No. 1, in the case of a tax administrative litigation that contests the illegality of a taxation disposition regarding the reference point for determining the illegality of the disposition, whether the pertinent disposition is lawful or not is determined depending on whether the amount of taxation exceeds a reasonable tax amount, and the parties concerned may assert individual grounds supporting or disputing the amount of tax obligations at the time of the closing of argument and submit relevant evidence.

(see, e.g., Supreme Court Decisions 87Nu448, Jun. 27, 1989; 2016Du53180, Nov. 29, 2018). The instant liability to pay penalty tax is subject to the duty to pay penalty tax.