[1] The purport of the former Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export that provides for a simplified fixed amount refund of customs duties, etc., and the meaning of the proviso of Article 1-2-3 of the Customs Duties, etc. Levied on Raw Materials for Export that

[2] In a case where goods, etc. taken out are brought back from North Korea to South Korea through the process of manufacturing, processing, etc., whether such goods, etc. fall under the proviso of Article 1-2-3 of the Act on the Refund of Customs Duties, etc. Levied on Raw Materials for Export to Korea (affirmative in principle)

[1] The purpose of the former Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export (amended by Act No. 10817, Jul. 14, 201; hereinafter “Special Act on Refunding Customs Duties, etc.”) is to contribute to efficient export support, etc. by refunding customs duties, etc. to exporters or producers in cases where domestic goods are used as raw materials for export and “export, etc.” under the Act on Special Cases Concerning Refunding Customs Duties, etc. Levied on Raw Materials for Export. Therefore, the term “where processing is entrusted within Korea” refers to cases where raw materials for export, which are domestic goods, are manufactured and produced by using domestic goods before “export,

[2] In cases where goods, etc. shipped out from North Korea are brought back to South Korea through the process of manufacturing, processing, etc. from North Korea, the phrase “export, etc.” is not yet made in relation to the simplified fixed amount refund under the former Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export (amended by Act No. 10817, Jul. 14, 201). Thus, if the processing of such domestic goods was entrusted, barring any special circumstance, it constitutes a case where the processing is entrusted within Korea” under the proviso of Article 1-2-3 of the Korea Customs Service Notice No. 2010-6 and the proviso of Article 2-3 of the Korea Customs Service Notice No. 2010-92, Jun. 10, 2010.

[1] Articles 3, 4, and 13(1) and (2) of the former Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export (Amended by Act No. 10817, Jul. 14, 201); Articles 2 subparag. 3, 12, and 26(2) of the Inter-Korean Exchange and Cooperation Act; Article 41(4) of the former Enforcement Decree of the Inter-Korean Exchange and Cooperation Act (Amended by Presidential Decree No. 24638, Jun. 28, 2013); Article 2 subparag. 2, 3, 4, and 13(1) and (2) of the former Act on Special Cases Concerning the Refund of Customs, etc. Levied on Raw Materials for Export (Amended by Act No. 10817, Jul. 14, 201); Article 2 subparag. 2, 2012; Article 36(2) and (4) of the Enforcement Decree of the Inter-Korean Exchange and Cooperation Act;

Taesung Industrial Co., Ltd. (Attorney Yoon-ju, Counsel for the defendant-appellant)

Head of Seoul Customs Office

Seoul High Court Decision 2012Nu39829 decided June 5, 2013

The part of the lower judgment on customs refunds is reversed, and that part of the case is remanded to the Seoul High Court. The remaining grounds of appeal are dismissed.

The grounds of appeal are examined.

1. As to the appeal on the payment of customs refunds

A. Article 13(1) and (2) of the former Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export (amended by Act No. 10817, Jul. 14, 201; hereinafter “Special Act on Refund”) provides that customs duties, etc. already paid on raw materials for export may be individually refunded (Articles 3, 4, etc.). In order to simplify the refund procedure of customs duties, etc. on specific export goods and small and medium enterprises export goods, the amount determined in the simplified fixed amount refund rate publicly notified by the Commissioner of the Korea Customs Service for each export shall be regarded as customs duties, etc. payable at the time of import as prescribed by the Presidential Decree (Article 13(1) and (2)). The proviso to Article 16(2) of the Enforcement Decree of the Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export (hereinafter “Korea Customs Service-Public Notice No. 2010, Feb. 10, 2010).

Meanwhile, Article 2 Subparag. 3 of the Inter-Korean Exchange and Cooperation Act (hereinafter “Inter-Korean Exchange and Cooperation Act”) defines “taking and bringing in” as “the movement of goods, etc. between South Korea and North Korea for the purpose of sale, exchange, lease, loan for use, donation, use, etc.” The main text of Article 26(2) provides that “the Act on the Imposition, Collection, Reduction, Exemption, Refund, etc. of Taxes shall apply mutatis mutandis to taxes related to taking out or bringing in goods, etc., as prescribed by Presidential Decree,” and Article 41(4) of the former Enforcement Decree of the Inter-Korean Exchange and Cooperation Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter “Enforcement Decree of the Inter-Korean Exchange and Cooperation Act”) upon delegation shall be deemed “taking goods, etc., under this Act as “export, etc.,” provided for in Article 2 of the Act on Special Cases concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export.”

B. citing the reasoning of the judgment of the court of first instance, the court below acknowledged the following facts: ① the Plaintiff made an entrustment contract with Taesung (hereinafter referred to as " Taesung") established in the Gsung Industrial District in full by her own investment in North Korea; ② the Plaintiff purchased raw materials such as ABS and SN from domestic enterprises, etc. and supplied them to Taesung, and subsequently re-enters the containers of cosmetics (hereinafter referred to as "concid goods"), which are finished products produced by Tae Sungsung under the consignment processing contract, and exported them to a third country, etc. without additional processing; ③ the Plaintiff filed an application for a simplified fixed amount refund under Article 13 of the Act on Special Cases concerning Refund of Customs Duties from May 26, 2010 to March 11, 201; ② the Plaintiff did not constitute a person who is entitled to file an application for a simplified refund under the proviso of Article 1-23 of the Act on Special Cases concerning Refund of Customs Duties; and the Defendant did not constitute a customs refund of 181,719,815

Based on such factual basis, the lower court determined that the part of the instant disposition is lawful on the grounds that: (a) South and North Korea treat South Korea as separate customs territory, such as: (b) Article 26(3)10 of the Inter-Korean Exchange and Cooperation Act, Article 41(3)1 of the Enforcement Decree of the Inter-Korean Exchange and Cooperation Act, and Article 41(3)1 of the Enforcement Decree of the Inter-Korean Exchange and Cooperation Act applies mutatis mutandis to the release or bringing in of goods between South and North Korea; and (c) even if Article 41(4) proviso of the Enforcement Decree of the Inter-Korean Exchange and Cooperation Act provides that the refund of customs duties, etc. is not possible for the removal of goods to North Korea as they fall under export, etc. under the Act on Special Cases Concerning Refunding Customs Duties, etc.; and (b) it does not regulate whether South Korea and North Korea are separate customs territory.

C. However, the lower court’s determination is difficult to accept for the following reasons.

(1) The Act on Special Cases Concerning Refund or Public Notice of Refund Affairs do not separately define “Korea” in relation to a simplified fixed amount refund, and thus, the Act on Special Cases Concerning Refund does not have to be interpreted in light of the purport of stipulating a simple fixed amount refund of customs duties, etc., the provision system of the Customs Act and the Act on Special Cases Concerning Refund, and the regulation of trade between South and North Korea under the Inter-Korean Exchange and Cooperation Act, etc.

The purpose of the Act on Special Cases concerning Refund of Customs Duties is to stipulate a simple fixed amount refund of domestic goods as raw materials for export in order to contribute to efficient support for export, etc. by refunding customs duties, etc. to exporters or producers when they use domestic goods as raw materials for export under the Act on Special Cases concerning Refund of Customs Duties, etc. Therefore, “where processing is entrusted within Korea” refers to cases where raw materials for export, which are domestic goods, are entrusted with the manufacture and production of goods, before a “export, etc.”

Article 2 Subparag. 2 of the Act on Special Cases Concerning Refunding Customs Duties, Etc. provides that "export, etc." means any of the subparagraphs of Article 4, notwithstanding the provisions of the Customs Act, and Article 4 of the same Act provides that "export, etc. for which an export declaration is accepted under the Customs Act (main sentence of subparagraph 1)," other than "export, etc. for which a foreign currency is acquired within the Republic of Korea," and "supply to occupant enterprises in a certain area or a certain area of a bonded area under the Customs Act (subparagraph. 2), etc. for which a refund of customs duties, etc. is subject to the refund of customs duties, etc., it cannot be said that the area of the refund of customs duties, etc. under the Act on Special Cases Concerning Refunding Customs Duties, etc. conform

Article 12 of the Inter-Korean Exchange and Cooperation Act declares the principle of inter-Korean trade, “The inter-Korean trade between South and North Korea shall be deemed as a trade between countries, not a trade between countries, but a trade within the nation.” However, with respect to the refund of customs duties, etc. under the Act on Special Cases of Refund, etc., North Korea shall be deemed as “export, etc.” but it shall not be deemed as “export, etc.” in cases where the goods, etc. taken out are carried in to South Korea through manufacturing, processing, etc. from North Korea (Article 26(2) of the Inter-Korean Exchange and Cooperation Act and Article 41(4) of the Enforcement Decree of the Inter-Korean Exchange and Cooperation Act). In light of these provisions, the Inter-Korean Exchange and Cooperation Act regulates cases where the refund of customs duties, etc. is carried out to North Korea and carried in

Thus, in cases where goods, etc. taken out from North Korea are brought back to South Korea through the process of manufacturing, processing, etc. from North Korea, there is no "export, etc." in relation to a simplified fixed amount refund under the Act on Special Cases concerning Refunding, so if the processing of such domestic goods is entrusted, it shall be deemed to constitute "a case where the processing of such domestic goods is entrusted in Korea" under the proviso of Article 1-2-3 of the Public Notice of Refunding Affairs Act,

(2) According to the above facts, the Plaintiff entered into an entrustment processing contract with Taesung, an enterprise established by the Plaintiff’s full investment in the Gsung Industrial District, and supplied (out) raw materials, such as ABS and SN, purchased from domestic enterprises, etc. to Taesung, and then exported goods produced from Taesung to the Republic of Korea in the original condition without additional processing. Thus, the Plaintiff may receive a simplified fixed amount refund pursuant to the proviso of Article 1-2-3 of the Public Notice of Refund Management Act as “manufacturer (referring to a truster in the case of entrusting the processing within the Republic of Korea)” under the proviso of Article 1-2-3 of the Refund Management Act.

(3) Nevertheless, the lower court determined that the part of the disposition of this case in question is lawful, on the ground that the case where goods, etc. taken out from South and North Korea are brought in South Korea through the process of manufacturing, processing, etc. in North Korea as the goods, etc. are treated in separate customs territories separate from South and North Korea, and that the part of the customs refund of this case in this case does not constitute “the case of entrusting the processing within Korea” under the proviso of Article 1-2-3 of the Notice on the Management of Refund Affairs. In so doing, the lower court erred by misapprehending the legal doctrine on “a person eligible to apply for a simplified fixed amount refund” under the proviso of Article 1-2-3 of the Notice on the

2. As to the appeal on the additional dues

The court of final appeal may investigate and determine only to the extent of filing an appeal based on the grounds of final appeal. As such, the grounds of final appeal should specify the grounds of final appeal and explain specific and explicit reasons as to which part of the judgment below violated the statutes (see Supreme Court Decision 2011Du26015, Feb. 23, 2012, etc.).

However, the petition of appeal in this case did not state the grounds of appeal as to the portion of the surcharge in this case, and the appellate brief rejected the plaintiff's claim as to the portion of the surcharge in this case, and did not state specific and explicit grounds as to which part of the judgment below rejected the plaintiff's claim as to the surcharge in this case was in violation of the law, and therefore, it cannot be viewed that legitimate grounds of appeal are not included.

3. Conclusion

The part of the lower judgment regarding customs refunds among the judgment is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion, and the remaining grounds of appeal are dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Sang-hoon (Presiding Justice)