31 July 2024

Customs Audits in Russia and EAEU: Procedure and Types

July 31, 2024

BRACE Law Firm ©

Foreign trade is inextricably linked to customs control. Pursuant to the EAEU Customs Code, customs control comprises a set of actions performed by customs authorities to verify and ensure compliance with international treaties and acts in the field of customs regulation, as well as the laws of member states on customs regulation. Customs audits represent one of its forms.

Note that when exercising customs control, customs authorities apply the following forms of control:

obtaining explanations;
verification of customs and other documents and (or) information;
customs inspection;
customs examination;
personal customs examination;
customs inspection of premises and territories;
customs audit.[1]

Given the similarity of the terms, it is necessary to distinguish between "customs audit" and "verification of customs and other documents and (or) information" as follows:

When verifying customs documents, the following are verified:

the customs declaration;
other customs documents, excluding documents prepared by customs authorities;
documents confirming information stated in the customs declaration;
other documents submitted to the customs authority in accordance with the EAEU Customs Code;
information stated in the customs declaration and (or) contained in documents submitted to the customs authority;
other information submitted to the customs authority or obtained by it in accordance with the EAEU Customs Code or the laws of the member states.

A customs audit consists of comparing information stated in the customs declaration and contained in documents submitted to customs authorities, as well as other information submitted to the customs authority or obtained by it in accordance with the EAEU Customs Code or the laws of the member states, with accounting and reporting documents and data, invoices, and other information obtained in the manner established by the EAEU Customs Code or the laws of the member states. At the same time, the verification of customs and other documents and information is conducted to verify the accuracy of information, the correctness of filling out and executing documents, compliance with the conditions for using goods in accordance with the customs procedure, compliance with restrictions on the use and disposal of goods in connection with the application of benefits for the payment of customs duties and taxes, compliance with the procedure and conditions for using goods established for certain categories of goods not subject to placement under customs procedures in accordance with the EAEU Customs Code, as well as for other purposes of ensuring compliance with international treaties and acts in the field of customs regulation and (or) the laws of the member states on customs regulation. [2]

Regulation of Customs Audits

The Federal Law No. 294-FZ dated December 26, 2008, On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Exercise of State Control (Oversight) and Municipal Control (the "Law No. 294-FZ") regulates relations in the field of organizing and exercising state control (oversight), municipal control, and the protection of the rights of legal entities and individual entrepreneurs. However, Clause 3.1 of Article 1 of the Law No. 294-FZ stipulates that the provisions of this law establishing the procedure for organizing and conducting audits do not apply to the exercise of customs control, the regulation of which is defined in Section VI of the Federal Law No. 289-FZ dated August 3, 2018, On Customs Regulation in the Russian Federation and On Amending Certain Legislative Acts of the Russian Federation. Based on this provision, the Letter of the FCS of Russia No. 01-11/43061 dated September 6, 2011, On Planned and Unplanned On-site Customs Audits, reflects that the provisions of the Law No. 294-FZ do not extend to the activities of customs authorities when organizing and conducting both planned and unplanned on-site customs audits.

In accordance with EAEU customs legislation, a customs audit is a form of customs control conducted by a customs authority after the release of goods using other established forms of customs control and measures ensuring the conduct of customs control to verify compliance by persons with international treaties and acts in the field of customs regulation and (or) the laws of the member states on customs regulation. [3]

Who May Be Audited?

A customs authority of an EAEU member state conducts a customs audit in the territory where the audited person is established, registered, and (or) has a permanent place of residence. Audited persons include:

the declarant;
the carrier;
a person performing temporary storage of goods in places that are not a temporary storage warehouse;
a person carrying out activities in the field of customs;
a person possessing powers in relation to goods after their release;
an Authorized Economic Operator;
a person directly or indirectly involved in transactions with goods placed under a customs procedure;
a person in respect of whom there is information indicating that they possess (or possessed) goods in violation of international treaties and acts in the field of customs regulation or the laws of the member states, including goods illegally moved across the EAEU customs border.

Declarants and carriers, who are directly involved in moving cargo across the customs border, are most frequently subject to customs audits.

Notably, if it is necessary to confirm the accuracy of information submitted by the audited person, the customs authority may conduct a counter unplanned on-site customs audit of persons established and registered in accordance with the laws of the member state whose customs authority is conducting the on-site customs audit, and who are associated with the audited person through transactions with the goods.[4]

When an audit is conducted, the audited person has the right to:[5]

request and obtain information from customs authorities regarding the provisions concerning the procedure for conducting a customs audit;
submit all documents and information at their disposal confirming compliance with acts in the field of customs regulation;
appeal the decisions and actions (inaction) of customs authorities in the established manner;
demand that the customs officials conducting an on-site customs audit present the decision (warrant) to conduct the on-site customs audit and their service certificates;
be present during the on-site customs audit and provide explanations on matters relating to the subject of the on-site customs audit;
exercise other rights provided for by the laws of the member states.

In addition to the norms established by the EAEU Customs Code, the Law No. 289-FZ establishes that the audited person has the right to:

appeal the decisions and actions (inaction) of customs authorities in the established manner;
with the permission of the head (deputy head) of the customs authority that conducted the customs audit, after receiving the customs audit report, review the customs audit materials that do not contain information constituting a state secret, or information constituting the commercial, tax, or banking secret of third parties and other secrets (secrets) protected by law; if federal laws provide for the submission of such information to the audited person, they may also review customs audit materials containing such information;
submit objections to the customs audit report to the customs authority in the prescribed manner.

Subject Matter of Customs Audits

During a customs audit, customs authorities may verify:

the fact of placing goods under a customs procedure;
the accuracy of information stated in the customs declaration and (or) contained in documents confirming information stated in the customs declaration;
compliance with restrictions on the use and (or) disposal of conditionally released goods;
the performance of duties by persons carrying out activities in the field of customs as provided for by the EAEU Customs Code for each type of activity in the field of customs;
compliance by a legal entity applying for inclusion in the register of Authorized Economic Operators with the conditions for inclusion in such a register, as well as compliance by an Authorized Economic Operator with the conditions for inclusion in the register and the performance of other duties provided for by the EAEU Customs Code;
compliance with the conditions for using goods in accordance with customs procedures provided for by the EAEU Customs Code;
compliance with other requirements established by international treaties and acts in the field of customs regulation and (or) the laws of the member states.

The decision (warrant) to conduct an on-site customs audit must contain the following information:

the date and registration number of the decision (warrant);
the type of on-site customs audit;
the name of the customs authority conducting the on-site customs audit;
the ground for scheduling the on-site customs audit — a reference to the audit plan (schedule) or the prescribed ground;
the name (surname, first name, and patronymic (if any)) of the audited person, their location (place of residence) and (or) the place (places) of their actual business activities, and their identification and (or) registration numbers;
the surnames, first names, patronymics (if any), and positions of the customs officials conducting the on-site customs audit;
the surnames, first names, patronymics (if any), and positions of officials involved in the on-site customs audit;
the subject of the on-site customs audit;
other information provided for by the laws of the member states on customs regulation.

Furthermore, despite most terms in the EAEU Customs Code being defined by a three-year period for customs procedures, which suggests audits can be conducted for this period, Article 320(2) of the EAEU Customs Code defines a document storage period of up to five years from the day of the occurrence of circumstances specified in the EAEU Customs Code, regardless of whether they were submitted when filing the customs declaration.

It is also important to note that, as a rule, challenging the activities of customs authorities by arguing that they have exceeded the subject of the audit generally does not lead to favorable court decisions. Examples of such decisions include:

Resolution of the Thirteenth Arbitration Appeal Court dated March 9, 2021, No. 13AP-35794/2020, 13AP-35800/2020 in Case No. A56-49973/2020;
Resolution of the Fourth Arbitration Appeal Court dated May 27, 2022, in Case No. A78-12182/2021.

Types of Customs Audits

The EAEU Customs Code establishes that a customs audit may be cameral (desk) or on-site. [6] On-site customs audits are subdivided into the following types:

a planned on-site customs audit, conducted based on audit plans developed by customs authorities;
an unplanned on-site customs audit, conducted without restrictions on the frequency of such audits;
a counter unplanned on-site customs audit, conducted to confirm the accuracy of information submitted by the audited person. [7]

The main differences between a cameral customs audit and an on-site audit are as follows:

cameral audits are conducted without visiting the audited person, their frequency is not limited, and there is no audit warrant;
on-site audits are conducted in accordance with an approved audit plan and involve a visit to the audited person; the frequency is not limited for unplanned audits, while planned audits for the same audited person are conducted by customs authorities no more than once a year (or once every three years for Authorized Economic Operators).

Cameral Customs Audit

A cameral customs audit is a set of measures involving the study and analysis of information contained in customs declarations and commercial, transport, and other documents submitted by the audited person during customs operations and at the request of customs authorities, documents and information of state bodies of member states, as well as other documents and information available to customs authorities concerning the audited person. [8]

Regarding the use of other documents available to customs authorities, the FCS of Russia has expressed the opinion that the use of documents obtained as a result of operational-search activities during customs control is permissible.[9] Operational-search activities must be conducted in compliance with the necessary procedures to prevent foreign trade participants from challenging their legality. Furthermore, when rendering judicial acts either in favor of or against customs authorities, courts must proceed from the presumption of the accuracy of information submitted by the declarant, the burden of rebutting which lies with the customs authority. [10]

A cameral audit is conducted by customs authorities at the location of the customs authority without a visit to the audited person and without issuing a decision (warrant) by the customs authority to conduct the cameral customs audit. The customs authority notifies the audited person of the cameral customs audit by sending a notification on the day the audit begins by registered mail with acknowledgment of receipt or as an electronic document via the Internet. The Order of the FCS of Russia No. 258 dated February 14, 2019, On Approval of the Forms of Documents Prepared by Customs Authorities During Customs Audits, the Procedures for Filling Them Out, and the Procedure for Amending a Decision to Conduct an On-site Customs Audit (the "Order of the FCS No. 258") approved the forms of customs documents for audits.

When a notification of a cameral customs audit is sent by registered mail, it is deemed received:

on the day of delivery specified in the postal acknowledgment of receipt or other information sources, if such acknowledgment (information) is received before the sixth working day from the date the registered letter was sent;
on the 6th working day from the date the registered letter was sent, if the postal acknowledgment (information) containing the date of delivery is not received by the customs authority within that period.

The duration of a cameral customs audit may not exceed 90 calendar days from the date the notification of the cameral customs audit is sent to the audited person. This period does not include the time between the date the request for documents and (or) information is sent to the audited person (or handed to the head/representative of the audited person) and the date such documents and (or) information are received. A cameral customs audit may be extended by 120 calendar days if it is necessary to:

conduct a customs expertise;
send a request to persons associated with the audited person through transactions (operations) with the goods under audit for copies of documents and other information on operations and settlements conducted with the audited person or with third parties related to the transactions (operations) with such goods;
send (initiate the sending of) a request (demand) in accordance with Article 240, 241, or 242 of the Law on Customs Regulation;
send (initiate the sending of) a request to a competent authority of another EAEU member state or a non-member state;
send (initiate the sending of) an instruction to conduct customs control to the customs authorities of other EAEU member states in accordance with Article 373 of the EAEU Customs Code.

Within one cameral customs audit, its duration may be extended only once. The extension is made by decision of the head of the customs authority conducting the audit, or an authorized deputy head, of which the audited person is notified, stating the period and reason for the extension.

Cameral audits are conducted without restrictions on their frequency, and the results are documented in accordance with the laws of the member states on customs regulation. Based on the results of a cameral customs audit, including instances where documents and (or) information are not submitted within the established period at the request of the customs authority, an on-site customs audit may be scheduled.

On-site Customs Audit

An on-site customs audit is conducted by a customs authority with a visit to the location of a legal entity, the place of business of an individual entrepreneur, and (or) the place where such persons actually carry out their activities. Such audits are subdivided into the following types:

planned on-site customs audit;
unplanned on-site customs audit;
counter unplanned on-site customs audit.

An on-site customs audit is scheduled by the head of the customs authority, or an authorized deputy head, by adopting a decision to conduct the on-site customs audit. In accordance with the Federal Law No. 289-FZ dated August 3, 2018, On Customs Regulation in the Russian Federation and On Amending Certain Legislative Acts of the Russian Federation (the "Law No. 289-FZ" or the "Law on Customs Regulation"), an on-site customs audit is scheduled by the head of the customs authority that will conduct the audit, or an authorized deputy head, by adopting a decision to conduct the on-site customs audit, which is prepared in two copies. [11]

The decision to conduct an on-site customs audit must contain the following information:

the date and registration number of the decision (warrant);
the type of on-site customs audit;
the name of the customs authority conducting the on-site customs audit;
the ground for scheduling the on-site customs audit—a reference to the audit plan (schedule) or the prescribed ground;
the name (surname, first name, and patronymic (if any)) of the audited person, their location (place of residence) and place of actual business activities, and their identification and registration numbers;
the surnames, first names, patronymics (if any), and positions of the customs officials conducting the on-site customs audit;
the surnames, first names, patronymics (if any), and positions of officials involved in the on-site customs audit;
the subject of the on-site customs audit;
other information provided for by the laws of the member states on customs regulation.

The form of the decision (warrant) to conduct an on-site customs audit is established by the Order of the FCS No. 258.

Before a planned on-site customs audit begins, customs authorities send the audited person a notification of the planned on-site customs audit by registered mail with acknowledgment of receipt or by another method confirming receipt. Notably, the return of the registered letter with a notation indicating non-delivery due to the absence of the audited person at its location is not a ground for canceling the planned on-site customs audit. A planned on-site customs audit may begin no earlier than 15 calendar days from the date the audited person receives the notification or from the date the customs authority receives the returned registered letter. The refusal of the audited person to receive the decision to conduct an on-site customs audit is not a ground for canceling the audit. In this case, the audit start date is deemed the date on which a record of the refusal to receive the decision is entered into the decision itself.

During an on-site customs audit, the audited person may not amend (supplement) the audited documents related to its activities.

What Documents Must Be Verified for Customs Officials During an Audit?

When conducting a customs audit, the audited person permits the access of customs officials based on the decision (warrant) to conduct the on-site customs audit and the service certificates of the customs officials.[12] Additionally, it is important to ensure that:

the officials conducting the audit are listed in the decision (warrant) to conduct the on-site customs audit;
the officials conducting the audit have special authorization to access the audited person's facility if such authorization is required by law.

During a customs audit, customs officials must:

respect the rights and legitimate interests of the audited person and prevent harm to the audited person through unlawful decisions and actions (inaction);
use information obtained during the customs audit solely to perform the tasks and functions assigned to customs authorities;
ensure the safekeeping of documents obtained and prepared during the customs audit and not disclose their contents without the audited person's consent, except as provided by the laws of the member states;
comply with professional ethics;
inform the audited person of their rights and duties during the customs audit, the scheduling of a customs expertise, and the sampling of goods, as well as the rights and duties of customs officials;
not violate the established work schedule of the audited person during the on-site customs audit;
provide, at the request of the audited person, the necessary information on the provisions of the EAEU Customs Code and the laws of the member states concerning the procedure for conducting a customs audit;
present the decision (warrant) to conduct the on-site customs audit and their service certificates to the audited person's representatives;
perform other duties provided for by the laws of the member states.

What Is the Period for Conducting an On-site Customs Audit?

The period for conducting an on-site customs audit must not exceed 2 months. This period does not include the time between the date the request for documents and information is handed to the audited person and the date such documents and information are received. The period for conducting an on-site customs audit may be extended by 1 month by decision of the customs authority conducting the audit.

If it is necessary to conduct a counter unplanned on-site customs audit, a customs expertise, or send requests to competent authorities, the on-site customs audit may be suspended by decision of the head of the customs authority conducting the audit, or an authorized deputy head. The suspension period for an on-site customs audit may not exceed 9 months, unless a longer period is established by the laws of the member states.

The suspension and resumption of an on-site customs audit are performed by decision of the head of the customs authority conducting the audit, or an authorized deputy head.[13] The suspension period is not included in the duration of the on-site customs audit.

Access of Customs Officials to the Territory of the Audited Organization

An audited person may refuse access to its facility for customs officials and officials of other state bodies involved in the on-site customs audit in the following cases:

the officials fail to present the decision (warrant) to conduct the on-site customs audit and (or) their service certificates;
the officials are not listed in the decision (warrant) to conduct the on-site customs audit;
the officials do not have special authorization to access the audited person's facility if such authorization is required by the laws of the member states. [14]

In the event of an unjustified refusal by the audited person to grant access to customs officials conducting the on-site customs audit, a report is prepared in the presence of two witnesses. [15] This report is signed by the customs officials conducting the audit, the audited person or its representative, and the witnesses. A copy of this report is handed to the audited person or its representative. If the audited person or its representative refuses to sign the report, the customs official conducting the audit makes a corresponding entry in the report. The audited person has the right to provide a written explanation of the reason for refusing to sign the report.

Procedure for Filling Out the Decision Form to Conduct an On-site Customs Audit

The Order of the FCS No. 258 provides the procedure for filling out the audit form, which stipulates that the decision to conduct an on-site customs audit is issued as a document on the general letterhead of the customs authority. Information is provided in Russian and includes:

the date and registration number of the document;
the position (surname, initials) of the head of the customs authority or an authorized deputy head who adopted the decision;
a reference to the audit plan or the corresponding ground;
the type of on-site customs audit;
information on the audited person: – name; – Main State Registration Number (OGRN); – Taxpayer Identification Number (INN); – Code of the Reason for Registration (KPP); – location, address, and place (places) of actual business activities.
the subject of the customs audit;
the period for which the on-site customs audit is scheduled (in DD.MM.YYYY format), if the audit is conducted for persons carrying out activities in the field of customs;
the types and numbers of customs declarations or documents used as a customs declaration, if the on-site customs audit is conducted after the release of goods;
the name of the goods or other information on the object of customs control.

If the on-site customs audit is not conducted for all goods in the customs declarations, the item numbers of the goods in the customs declarations are additionally indicated in parentheses after each customs declaration number, separated by commas.

When the decision to conduct an on-site customs audit is presented, the head of the audited person or its representative makes a notation in the decision acknowledging that they have been informed of the rights and duties of the audited person and customs officials, and records the date and time the copy of the decision was received. For a representative, the name and other details of the document confirming their authority are additionally provided. Furthermore, if a copy of the decision is sent by registered mail, the customs official records the postal address, the date it was sent, their surname, initials, and signature. If receipt of the copy of the decision is refused, the customs official records the refusal.

In the event of suspension or resumption of the on-site customs audit, the dates of such suspension and resumption, and the position, surname, and initials of the head or deputy head of the customs authority are recorded in the customs authority's copy of the decision. These entries serve as the record of the official's decision and are signed by that person.

Grounds for Conducting a Customs Audit

A planned on-site customs audit is conducted based on audit plans developed by customs authorities, but no more than once a year for the same audited person. Planned on-site customs audits for Authorized Economic Operators are conducted no more than once every three years.

Persons subject to a planned on-site customs audit are selected using information from the following sources:

results of customs control before and after the release of goods;
information resources of customs authorities;
results of previous customs audits;
banks, non-bank credit (credit and financial) organizations, and organizations performing certain types of banking operations in member states;
customs and (or) other state bodies of member states;
mass media;
other information sources.

Unplanned on-site customs audits are conducted without restrictions on frequency. The grounds for scheduling such audits may include:

data obtained from the analysis of information in the resources of customs authorities and other state bodies of member states indicating a possible violation of international treaties and acts in the field of customs regulation and (or) the laws of member states;
information indicating a possible violation of international treaties and acts in the field of customs regulation and (or) the laws of member states;
an application by a person for inclusion in the register of Authorized Economic Operators;
the submission by an Authorized Economic Operator of information regarding changes to the information declared upon its inclusion in the register concerning facilities, premises, and (or) open areas intended for the temporary storage of goods;
the need to conduct a counter unplanned on-site customs audit; [16]
a request from a competent authority of a non-EAEU state to audit a person who conducted transactions related to moving goods across the EAEU customs border with a foreign person;
an instruction (request) from preliminary investigation bodies (criminal prosecution bodies) of member states based on materials from a report of a crime or a pending criminal case;
an instruction from a customs authority of one member state to a customs authority of another member state to conduct an on-site customs audit of a person established and registered in accordance with the laws of the member state to which the instruction is sent, on grounds provided for by the EAEU Customs Code;
other grounds provided for by the laws of the member states on customs regulation.

Additional grounds for scheduling unplanned on-site customs audits may include:

the submission by an Authorized Economic Operator of information regarding changes to its address;
the need to conduct an unplanned on-site customs audit to confirm the validity of arguments set out in objections to a customs audit report received by the customs authority.

Furthermore, due to various domestic and global situations affecting business and trade activities, state authorities may decide to temporarily suspend audits. [17] This occurred in 2020, with exceptions made only for customs audits scheduled on the grounds provided for by Sub-clauses 3 and 8 of Clause 16 of Article 333 of the EAEU Customs Code, as well as on-site customs audits based on harm to life or health, or the occurrence of natural or man-made emergencies.

Customs Audit Report, Decision, Appeal

Article 333(26) of the EAEU Customs Code stipulates that the results of an on-site customs audit are documented by preparing a customs document, the form of which is defined by the Order of the FCS No. 258. The customs document prepared to record the results of an on-site customs audit must include:

the place and date the document was prepared;
the registration number of the document;
the name of the customs authority conducting the on-site customs audit;
the ground for scheduling the on-site customs audit—a reference to the audit plan (schedule) or the prescribed grounds;
the date and number of the decision (warrant) to conduct the on-site customs audit;
the type of on-site customs audit;
the name (surname, first name, and patronymic (if any)) of the audited person, its location (place of residence) and (or) place (places) of actual business activities, and its identification and (or) registration numbers;
the surnames, first names, patronymics (if any), and positions of the customs officials conducting the on-site customs audit;
the surnames, first names, patronymics (if any), and positions of officials involved in the on-site customs audit;
the start and completion dates of the on-site customs audit, as well as any periods of suspension and (or) extension;
the types of documents audited;
information on the forms of customs control and other actions performed during the on-site customs audit;
a description of established facts indicating violations of international treaties and acts in the field of customs regulation and (or) the laws of the member states, citing the specific provisions violated, or information on the absence thereof;
conclusions based on the results of the on-site customs audit;
other information provided for by the laws of the member states on customs regulation.

An on-site customs audit report must also contain information on: [18]

the subject of the on-site customs audit;
the period under audit, if the audit was conducted for persons carrying out activities in the field of customs;
the details of the current (settlement) account and other accounts of the audited person (if any);
information on administrative offense cases initiated during the on-site customs audit;
other information defined by the federal executive body authorized to exercise control and oversight in the field of customs.

The conclusions based on the results of cameral and on-site customs audits must also include information on the estimated amounts of customs duties, taxes, and special, antidumping, and countervailing duties subject to additional assessment and payment (recovery), if facts are established indicating violations of international treaties, acts in the field of customs regulation, and (or) the laws of the Russian Federation that result in a change in the amount of such duties and taxes.

Despite this extensive regulation of customs authorities' actions, foreign trade participants have the right to appeal the decisions and actions (inaction) of customs authorities or their officials within the procedure and timeframes established by the laws of the member state where the customs authority or official being appealed is located. [19]

Law No. 289-FZ also stipulates that any person may appeal a decision or action (inaction) of a customs authority and its official if, in that person's opinion, such decision or action (inaction) has violated their rights, freedoms, or legitimate interests, created obstacles to their exercise, or unlawfully imposed an obligation. Decisions and actions (inaction) may be appealed to:

customs authorities;
a court.

In the case of an appeal through customs authorities, the complaint is filed with the higher customs authority through the customs authority whose decision or action (inaction) is being appealed. A complaint against a decision or action (inaction) of a customs post is filed with the customs house.

Appealing decisions and actions (inaction) of a customs authority in court is governed by the relevant Russian procedural legislation:

Chapter 24 of the APC RF;
Chapter 22 of the CAS RF.

A complaint may be filed within 3 months:

from the day the person became aware or should have become aware of the violation of their rights, freedoms, or legitimate interests, the creation of obstacles to their exercise, or the unlawful imposition of an obligation;
from the day the period for the customs authority to adopt a decision or perform an action established by international treaties, acts in the field of customs regulation, or Russian laws on customs regulation expires.

Disputes with customs authorities in the course of foreign trade activities are quite common in judicial practice, including disputes related to audits conducted by customs authorities.

For example, Clause 23 of the Review of Judicial Practice of the Supreme Court of the Russian Federation No. 1 (2023) [20] stipulates that a customs authority has the right to exercise customs control over goods released in the region of activity of another customs authority. In one case, a company submitted declarations for goods to the Moscow Regional Customs. After their release, the St. Petersburg Customs conducted a cameral audit, which revealed that the company had unlawfully claimed a VAT benefit. This served as the basis for issuing decisions to amend (supplement) the information stated in the declarations. Based on these decisions, the company was sent notifications of the need to pay additional customs payments. Disagreeing with these decisions and notifications, the company applied to an arbitration court to have them declared illegal.

The court of first instance, whose decision was upheld by the courts of appeal and cassation, granted the claims. The courts concluded that the St. Petersburg Customs lacked the authority to conduct the customs audit and adopt the contested decisions because the declarant and its customs representative were not located in the St. Petersburg Customs region, and the goods were cleared in the Moscow Regional Customs region. The Judicial Chamber of the Supreme Court of the Russian Federation overturned these judicial acts and denied the company's claims. It reasoned that, based on an analysis of customs legislation, a customs audit is conducted by the customs authority of the member state where the audited person is established, registered, and (or) has a permanent place of residence. The acts constituting EAEU law and Russian legislation on customs regulation establish no other restrictions on the regional principle for customs audits. A strictly territorial principle for exercising control powers does not follow from the essence of customs relations, given that customs control is exercised over all goods imported into the customs territory, including on the basis of databases containing information on customs operations performed at various customs houses. [21]

A fairly frequent ground for disputes with customs authorities is the customs value adjustment (the "CVA") by the customs authority of the value of imported goods based on the results of an audit. In this regard, based on the provisions of the EAEU Customs Code, the customs authority adopts a decision to amend (supplement) the information on customs value stated in the customs declaration based on the results of a verification of customs and other documents and (or) information initiated before the release of goods, if the correspondence of the declared customs value to the actual value was not confirmed, including where signs of inaccuracy remain. [22] Therefore, when resolving disputes concerning the correctness of determining the customs value of imported goods, courts should consider what signs of inaccurate determination of customs value were established and confirmed during customs control, including in light of documents (information) collected by the customs authority and additionally provided by the declarant. The failure of the declarant to provide documents (information) justifying the declared customs value cannot, in itself, result in the customs authority adopting a decision to amend the declared customs value if the declarant had objective obstacles to providing the requested documents and provided corresponding explanations to the customs authority.

Furthermore, in violation of Russian legislation on customs audits, customs authorities sometimes conduct audits that are subsequently challenged by foreign trade participants. For example, the introduction of a moratorium on audits served as a ground for canceling the imposition of liability on a company due to the lack of a proper ground for conducting the audit. [23] The Instruction of the Government of the Russian Federation dated March 18, 2020, provided instructions aimed, in particular, at suspending the scheduling of on-site tax and planned on-site customs audits. Specifically, various types of audits were suspended, including customs audits. However, in practice, cases occurred where customs authorities conducted audits in violation of the above norm. Courts, considering the lack of legal grounds for conducting the audit and the occurrence of significant violations of the customs control procedure, declared the actions of the customs authorities illegal. [24]

Customs audits allow oversight bodies to verify compliance with customs legislation requirements, amend customs declarations based on facts established during the audit, identify violations of customs legislation, and impose liability upon the discovery of violations of current Russian legislation and acts of international law.

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References

[1] Clause 1 of Article 322 of the EAEU Customs Code.

[2] Clause 2 of Article 324 of the EAEU Customs Code.

[3] Article 331 of the EAEU Customs Code.

[4] Clause 17 of Article 333 of the EAEU Customs Code.

[5] Clause 1 of Article 336 of the EAEU Customs Code.

[6] Clause 7 of Article 331 of the EAEU Customs Code.

[7] Clause 2 of Article 333 of the EAEU Customs Code.

[8] Clause 1 of Article 332 of the EAEU Customs Code.

[9] Review of the practice of the FCS of Russia in considering complaints against decisions and actions (inaction) of customs authorities and their officials in the field of customs for 2020.

[10] FCS of Russia Information "On the judicial practice of applying the provisions of the Resolution of the Plenary Session of the Supreme Court of the Russian Federation dated May 12, 2016, No. 18, On Certain Issues of the Application of Customs Legislation by Courts in Cases Challenging Decisions and Actions (Inaction) of Customs Authorities and Their Officials Concerning the Determination, Declaration, and Control of the Customs Value of Goods."

[11] Clause 3 of Article 229 of Law No. 289-FZ.

[12] Clause 1 of Article 334 of the EAEU Customs Code.

[13] Clause 18 of Article 229 of the Law on Customs Regulation.

[14] Clause 3 of Article 334 of the EAEU Customs Code.

[15] Clause 1 of Article 230 of the Law on Customs Regulation.

[16] Determination of the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation dated October 28, 2021, No. 306-ES21-10075 in Case No. A55-39440/2019. Based on the results of a counter on-site customs audit, it was established that imported goods were declared as goods in disassembled (unassembled) form; however, the audit established that the goods possessed the essential characteristics of a complete and finished product. As a result, amendments were made to the declarations, increasing the customs payments due.

[17] Clause 13 of the Decree of the Government of the Russian Federation dated April 3, 2020, No. 438, On the Features of the Exercise of State Control (Oversight) and Municipal Control in 2020 and On Amending Clause 7 of the Rules for the Preparation of Annual Plans for Planned Audits by State Control (Oversight) and Municipal Control Bodies.

[18] Clause 4 of Article 237 of the Law on Customs Regulation.

[19] Article 358 of the EAEU Customs Code.

[20] Approved by the Presidium of the Supreme Court of the Russian Federation on April 26, 2023.

[21] Determination of the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation dated September 6, 2022, No. 305-ES22-9875 in Case No. A41-25502/2021.

[22] Clause 13 of the Resolution of the Plenary Session of the Supreme Court of the Russian Federation dated November 26, 2019, No. 49, On Certain Issues Arising in Judicial Practice in Connection with the Entry into Force of the Customs Code of the Eurasian Economic Union.

[23] Resolution of the Arbitration Court of the North-Western District dated March 30, 2022, No. F07-1471/2022 in Case No. A26-3253/2021.

[24] Resolution of the Arbitration Court of the North-Western District dated December 16, 2021, No. F07-17742/2021 in Case No. A05-11569/2020.