On December 15, the Department of Administrative Cases of the Supreme Court suspended legal proceedings in the case initiated on the basis of the application of SIA “Oriola Rīga” for cancellation of the decision of the State Revenue Service, whereby additionally to contribution to the budget the applicant shall pay the value added tax, late payment money and fine. The Supreme Court decided to refer a question to the Court of Justice of the European Union for a preliminary ruling. The proceedings are suspended until the judgment of the Court of Justice of the European Union enters into force.

In the case in question, applicant’s tax debt on imported goods (medicines from India) is calculated. Namely, a consignment agreement was concluded between SIA “Oriola Riga” and Ranbaxy Laboratories Limited of India (hereinafter - Ranbaxy Laboratories) in 2005, whereby Ranbaxy Laboratories Limited appointed the applicant as an exclusive supplier of consigned goods in Latvia, Lithuania and Estonia. The applicant, in accordance with the concluded consignment agreement, imported medicines produced by Ranbaxy Laboratories into Latvia, stored them in their warehouse and sold them to the customers of the said Indian company according to Ranbaxy Laboratories' instructions, first, by selling the previously imported goods with the shortest shelf-life.

When submitting goods for a customs clearance, the applicant filled in customs declarations stating herself as the consignee and the declarant. The applicant has calculated the customs value of the imported goods in accordance with transaction value method provided in the Article 29 (1) of the Council Regulation (EEC) No 2913/92 of 12 October 1992 on establishing the Community Customs Code (hereinafter – the Customs Code). The customs value was calculated by using pro forma-invoices drawn up for customs purposes by the Ranbaxy Laboratories lodged with the customs office, which provided information on the type and code number of goods imported, the current market price of one unit and the total price.

The State Revenue Service, when auditing the applicant's calculation, payment and accounting of customs duty and taxes administered by other customs authorities, considered that the applicant had incorrectly determined the customs value of the imported goods. The Service acknowledged that, in the particular case, the customs value of the imported goods was to be determined in accordance with Article 30 (2) (c) of the Customs Code, in the light of the information on the sale of the goods in question, which was indicated on the invoices issued by Ranbaxy Laboratories to the applicant after the sale of those goods to Ranbaxy Laboratories clients. The contested decision also concludes that the sales price of disputed goods indicated in the invoices is to be taken into account without the price discounts granted by Ranbaxy Laboratories to its customers. When determining the value of the disputed goods in accordance with Article 30 (2) (c) of the Customs Code, the Service took into account, inter alia, transactions relating to the sale of disputed goods that have been carried out 1-2 years after the importation of disputed goods, thus far exceeding the 90-day deadline stated in Article 152 (1) (c) of the Commission Regulation (EEC) No 2454/93 of 2 July 1993 (the Customs Code Implementing Regulation). In the opinion of the State Revenue Service, in certain circumstances, the flexible application (or violation) of 90-day deadline referred to above is based on the specifics of the applicant's activities. The Administrative Regional Court found the decision of the State Revenue Service correct.

When examining the case, the Supreme Court concluded that there is a reason to refer the matter to the Court of Justice of the European Union and ask whether, by establishing the customs value of imported goods in accordance with Article 30 (2) (c) of the Customs Code, derogations from requirement to respect the 90-day deadline set out in the Article 152 1 (b) of the Customs Code Implementing Regulation are admissible. At the same time, the Supreme Court asked the Court of Justice which data would then be preferred in that case if such derogations were admissible – data on transactions of the same goods or similar goods that were sold at a sufficiently large amount in order to determine the price of one unit, or data on further transactions with specific imported goods. In addition, the Supreme Court also asked whether, when determining the customs value of imported goods in accordance with Article 30 (2) (c) of the Customs Code, account must be taken of the discounts granted, which determined the price at which the goods actually were sold, as well as – how to determine which medicines should be considered as similar goods for the purpose of determining the customs value of the goods.


Information prepared by Baiba Kataja, the Press Secretary of the Supreme Court

Tel.: +371 67020396; e-mail: baiba.kataja@at.gov.lv