On 1 March, the Department of Administrative Cases of the Supreme Court upheld the judgement of the Administrative regional court, which satisfied the application, filed by the applicant, and revoked the decision of the authority regarding payment of extra import duty, delay penalty and fine, and value-added tax, delay penalty and fine. The Supreme Court recognised conclusions of the appellate instance court as reasoned, considering arguments brought by the State Revenue Service, namely, that customs value was determined in inappropriate amount, to be ill-founded.

In the particular case, the court had to resolve an issue whether the customs authority had a reason to doubt customs value of goods, pointing out the transaction between related persons, if the transaction was concluded between a private person and foreign company, where the brother of this person is a company director.  Article 143 (1) (h) of the Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code refers the concept of related persons only to cases, when the transaction is concluded between private persons (relatives), and, because of this reason, the Administrative regional court revoked the decision of the State Revenue Service. The Court of Justice of the European Union, answering to reference for preliminary ruling requested by the Supreme Court in the case C-430/14, in this situation admitted assessment of actual opportunity of buyer’s relative employed by the foreign company to affect the price. Therefore, the Supreme Court recognised that the State Revenue Service with good reason paid attention to the circumstance of existence of kinship relations between the applicant and the official (director) of the American company.

However, the Supreme Court pointed out in the judgement that transaction value must be accepted, if interrelation has not affected the price.  Even admitting that the applicant and the seller, observing the kinship existing between the applicant and the director of the selling company, are related persons, this circumstance itself does not mean the abandonment of transaction value method, but the State Revenue Service must point out circumstances, which, in particular case, cause doubts regarding the value of transaction.  

In particular case, doubts of the State Revenue Service were caused by uncertainty, who should pay and who had paid for delivery of goods. However, the Administrative regional court established that the applicant had included delivery costs in customs value of the goods; therefore, the Supreme Court joins the conclusion of the regional court that this uncertainty may not serve as a ground to believe that customs value was reduced. Also, observing the specificity of imported goods (used clothing), which encumbers comparing thereof with similar goods, the argument of the State Revenue Service, namely, that transaction value of goods imported by the applicant differs significantly from information at the disposal of the customs authority regarding value of such goods was rejected.

Information prepared by Baiba Kataja, the Press secretary of the Supreme Court
Telephone: 67020396; e-mail: baiba.kataja@at.gov.lv