Busan District Court 2009Guhap1793 Disposition of Imposing Value-Added Tax

Do○

Head of Busan Customs Office

August 27, 2009

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s imposition of value-added tax of KRW 1,440,140 for the first term of December 23, 2008, KRW 2,022,580 for the second term of 2006, KRW 4,949,690 for the second term of 2007, KRW 1,871,720 for the second term of 207, KRW 1,871,720 for the second term of 2007, and KRW 1,268,430 for the first term of 208 (the date on which the written complaint was written seems to be written in writing) shall be revoked, respectively.

1. Details of the disposition;

A. From April 24, 2006 to June 25, 2008, the Plaintiff imported the bicycle parts from Taiwan’s “○○” company, etc. (hereinafter “instant bicycle parts”), and reported the dutiable value as stated in the attached “ dutiable value reported” to the Defendant.

B. On December 23, 2008, the Defendant corrected and notified the total of 11,552,560 won of value-added tax as stated in the attached Form “value-Added Value-Added Tax” by correcting the dutiable value as stated in the attached Form on the ground that it was omitted at the time of filing an import declaration, even though USD 112,004.44 was production support expenses for the manufacture of bicycle parts paid by the Plaintiff to Taiwan’s “○○○” company, etc. for the manufacture of bicycle parts.

(2) The instant disposition is lawful. The Plaintiff’s assertion did not include the money that the Plaintiff remitted to the exporter company in Taiwan as gold development expenses in the import declaration price. However, when selling the imported bicycle in Korea, the Plaintiff sold the product at a price that does not reflect the above gold development expenses and paid the value-added tax accordingly, thereby selling the product at the price that includes gold development expenses. As such, the instant disposition imposing value-added tax is unlawful.

B. Relevant statutes

Article 13 (Tax Base) (4) of the Value-Added Tax Act shall be the sum of taxable prices of customs duties, customs duties, individual consumption tax, liquor tax, education tax, special tax for rural development, and traffic, energy and environment tax. (1) Article 4 (Imposition and Collection of Local Taxes, etc.) of the Customs Act (hereinafter referred to as "in-house national taxes, etc.") which the customs collector imposes and collects on imported goods, but including additional dues, additional taxes, additional taxes, and disposition fees for arrears, etc., the Framework Act on National Taxes, the National Tax Collection Act, the Value-Added Tax Act, the Individual Consumption Tax Act, the Liquor Tax Act, the Education Tax Act, the Traffic, Energy and Environment Tax Act, the Act on Special Rural Development Tax, and the provisions of this Act shall take precedence over the provisions of this Act.

Article 30 (Principle of Determination of Dutiable Value) (1) The dutiable value of imported goods shall be the transaction price adjusted by adding the amount falling under each of the following subparagraphs to the price paid or to be paid by a buyer for the goods sold for export to Korea: Provided, That the addition of the amount falling under each of the following subparagraphs shall be based on objective and numerical data, and if such data are unavailable, the dutiable value shall not be determined using the methods provided for in this Article and Articles 31 through 35:

(2) The term "the price paid or to be paid actually by a buyer" in the main sentence of paragraph (1) means a total amount paid or to be paid by such buyer for the price of the relevant imported goods, and such total amount shall include the amount offsetting the debt of a seller by the price of the relevant imported goods, the amount repaying the debt of a seller by a buyer and other indirect payments: Provided, That when the amount falling under each of the following subparagraphs is clearly distinguishable from the total amount paid or to be paid by a buyer, it means

(c) Markets:

Article 13 (4) of the Value-Added Tax Act provides that "The tax base of value-added tax on the import of goods shall be the sum of the taxable value of customs duties, customs duties, individual consumption tax, liquor tax, education tax, special tax for rural development, and traffic, energy and environment tax," and Article 30 (1) and (2) of the Customs Act provides that the taxable value of imported goods shall be the transaction price adjusted by adding the expenses, etc. to the price actually paid or payable by the buyer to the goods sold to be exported to Korea by the buyer, and the "price paid or payable by the buyer" means the total amount paid or payable by the buyer

On the other hand, the gold development expenses that the Plaintiff did not include in the dutiable value at the time of filing an import declaration of the bicycle parts of this case are actually paid to the exporter for the price for the imported bicycle parts, and thus, they should be included in the dutiable value of the bicycle parts pursuant to Article 30(1) and (2) of the Customs Act. The Defendant should calculate the dutiable value of the goods imported by adding customs duties, individual consumption tax, etc. to the dutiable value of the customs duties pursuant to Article 13(4) of the Value-Added Tax Act. Thus, where customs duties are increased including gold development expenses and customs duties are included in the dutiable value of the bicycle parts of this case, the tax base of the value-added tax shall also be the amount including gold development expenses, regardless of whether the Plaintiff actually reflected the gold development expenses when selling the bicycle parts imported by the Plaintiff. Accordingly

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.