The National Union of Milk Producers (SOYUZMOLOKO) and the Union of Juice, Water and Beverage Producers (SOYUZNAPITKI) reported difficulties with customs control. For a little less than six months, the Northwest Electronic Customs adopted a number of ambiguous decisions on the classification of goods "orange pulp (cell)," "mashed cranberries," "mashed blueberries," "mashed red currants," "mashed black currants" with the assignment of new classification codes of commodity items 0810 and 0811 TN VED EEU. Based on these classification decisions, the NWEC refused to release these goods as prohibited for import into the Russian Federation in accordance with Russian Government Decree No. 778 of August 7, 2014.
Previously, the companies classified such goods with 2008 TN VED code throughout the entire period of their activities and believe that the decisions on the reclassification of goods were made by the Northwestern Customs Directorate taking into account the results of customs expert examinations, which established that that physico-chemical and organoleptic characteristics of fruit puree and orange pulp (cells) (the disputed goods) have not been changed, based on which the NWEC came to the conclusion that such goods have not been subjected to heat treatment and therefore, according to the NWEC, subject to classification in group 08 HS. But the business points out that the disputed goods are products of fruit processing, subjected during their production to gentle pasteurization, carried out under pressure, without contact with water and (or) steam to preserve unchanged the basic properties of the disputed goods, which is confirmed by the information on the technology of their production provided by the suppliers.
Disagreeing with the NWEC’s decisions, the Union member companies petitioned the customs authority to take samples of goods and conduct an independent examination, but received an unjustified refusal. The companies then initiated a departmental (pre-trial) appeal of the NWEC’s decisions to a higher customs authority, the Northwestern Customs Directorate, but also received negative conclusions.
Denis Rudenko, Head of Customs Practice at RI-Consulting Law Office for Forbes:
QUESTIONS: Businesses are still trying to get the Ministry of Economy involved in the dispute. How long may it take to solve the problem and what are the chances of success in getting the importing companies to revise the customs' decisions?
The situation with the TN VED code is not new. Now not only the North-Western Customs Directorate conducts cameral customs inspections, the result of which is deprivation, which leads to changes in the codes of goods, and hence to issues of release or change in value, or rather, changes in customs payments on this product. And it's not just the Northwest Customs Directorate. I do not think that the Ministry of Economic Development can help in this matter. Since the issue of determining the correctness of the TN VED code lies solely with the customs authority and the person who takes the decision to issue the customs declaration. In terms of appealing such decisions to a higher customs authority, the procedure for departmental control of advantage provided for by the Federal Law on Customs Regulation does not always bring the participant in the necessary result. As a rule, such large inspections are always coordinated and controlled by a superior customs authority. We, of course, in this case always recommend to apply to the arbitration court and provide the necessary documents and evidence.
What are the prospects for considering such disputes in court?
As a rule, these courts, of course, take a long period of time, because the customs authority in the case of a decision not in their favor by the judiciary goes with the appeal to the end, i.e. up to the Supreme Court of the Russian Federation - that is, to appeal against the decision rendered not in their favor.
We have similar cases that last more than a year. The first instance, the appeal and the district, the customs usually goes all the way to the Supreme Court to appeal against decisions not in favor of customs. There are always prospects of appeal in arbitration. It is always possible and necessary to appeal to the available practice on the classification of goods. Plenum 49 of the Supreme Soviet is not hard to set out. But this work is painstaking, we must not forget that this is the budget of the Russian Federation. In addition, practice shows an advantageous percentage of court decisions in favor of the customs authorities.
And do I understand correctly that the company cannot import the disputed goods while the proceedings are underway?
No, you cannot import because all the declarations that will also be filed under the old code will be subjected to customs control, customs inspection and a decision will be made to change the code to whatever code the customs deems correct. In this case, the code that is listed in this case will be correct. The customs will stand to the end, so the goods can be imported, but only under the conditions that the customs agrees to.
We can also add to all of the above that, given the fall in imports, the work of the customs authorities intensified in the line of control measures and additional charges.
The customs authority, along with a change in the commodity nomenclature code and, as a rule, additional customs payments, at the same time will always consider the possibility of initiating administrative proceedings against a participant in foreign economic activity for false declaration of goods transported across the border. That is, we can say so that the customs during the control measures at the same time as considering changes in the code, will also consider the issue of initiating administrative cases, if the change in code resulted in additional charges, and, accordingly, administrative cases will be initiated.
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