Having received the judgment of the Court of Justice of the European Union, on 19 August, the Department of Administrative Cases of the Supreme Court upheld the judgment of the Administrative Regional Court, which satisfied the application, filled by “Latvijas propāna gāze” Ltd., and revoked the decision of the State Revenue Service to pay tax payment to the state budget. The Supreme Court reviewed the case in written procedure concerning the cassation complaint of the State Revenue Service on the judgment of the Administrative Regional Court. Previously, the Supreme Court stayed the proceedings in the case, until the Court of Justice of the European Union will adopt a decision regarding preliminary question. The Supreme Court wanted to specify, whether the code of the Combined Nomenclature of the European Union applied by the declarant in this case, or the code applied by the State Revenue Service is applicable to gas.

In period between 20 March 2009 and 15 January 2010, the applicant “Latvijas propāna gāze” Ltd., imported liquefied oil gas from Russia to Latvia, and performed classification of goods in accordance with code 2711 19 00 of the Combined Nomenclature of the European Union, applying  import duty rate of 0% from customs value of goods.

The State Revenue Service, when carrying out applicant’s tax audit for unified administrative documents submitted in the foregoing period, recognised that propane and butane were dominating substances in imported goods, and thus, it conforms to codes 2711 12 97 or 2711 13 97. Observing the above mentioned, the State Revenue Service calculated import duty, value added tax and overdue fee and penalty to be paid by the applicant.

Having examined the case under appellate procedure, the Administrative Regional Court recognised that, in order to make tariff classification of goods, it must be determined what material goods consist of is the one, which provides fundamental characteristics to the goods. The Administrative Regional Court concluded that in the case it is not proved that dominating substances in imported goods, justified by the State Revenue Service, determine fundamental characteristics of goods. Furthermore, even if this would be relevant, it is not proved that the substances in imported goods, justified by State Revenue Service, are dominating. 

Information prepared by Baiba Kataja, the Press secretary of the Supreme Court
Telephone: +371 67020396; e-mail: baiba.kataja@at.gov.lv