Customs Valuation in Russia & EAEU: Methods and Control

 

April 9, 2024

BRACE Law Firm ©

 

When carrying out customs declaration, information on the value of the moved goods must be specified in accordance with commercial and other documents. At the same time, the amount of customs taxation of the goods directly depends on the magnitude of the customs value of the goods.

Currently, customs authorities are implementing a mechanism for controlling and adjusting the customs value of goods, which is primarily aimed at excluding the bad-faith behavior of foreign economic activity participants when paying customs duties, taxes, and other payments in full, and as a result – at replenishing the revenue side of the federal budget. In this regard, as well as for a number of other reasons, the procedure, system, and methods for determining customs value are of key importance for protecting the rights of the declarant.

Methods for Determining Customs Value

The customs value specified in the customs declaration for imported goods is a determinative element for calculating customs duties and taxes and also participates in the regulation of trade and economic relations. The Customs Code of the Eurasian Economic Union (the "EAEU Customs Code") identifies six methods for determining customs value, which are considered in Articles 39 and 41 – 45 of the EAEU Customs Code:

• method based on the transaction value of the imported goods (Method 1);
• method based on the transaction value of identical goods (Method 2);
• method based on the transaction value of similar goods (Method 3);
• the deductive value method (Method 4);
• the computed value method (Method 5);
• the fallback method (Method 6).

The selection of a specific method for determining customs value is carried out by the declarant sequentially (one after another), and the transition to the next method of customs evaluation in order can be applied in the case (and only in the case) when all possibilities provided for by customs legislation permitting the use of the previous method of evaluating goods for customs purposes have been exhausted in full.

In those cases where the customs value of goods cannot be sequentially determined by participants in customs legal relations using one of the established methods of customs evaluation, the customs evaluation of goods must be carried out using the fallback method (Method 6).

For exported goods, the same methods for determining customs value are used as for imported goods, with the exception of the deductive value method.

To confirm the calculations of the customs value of declared goods, the declarant, together with the declaration on goods, provides a customs value declaration (the "DVS"). When determining the customs value of goods under Method 1, DVS-1 is filled out, and when using Methods 2 – 6, DVS-2 is filled out.[1] For exported goods, DVS-3 is filled out (for Methods 1 or 6 based on Method 1) or DVS-4 (in all other cases).[2]

The most frequently used method is Method 1 (based on the transaction value of the imported goods). According to Article 39 of the EAEU Customs Code, the basis of the customs value of imported goods is the transaction value of these goods, that is, the price actually paid or payable for these goods when sold for export to the customs territory of the Eurasian Economic Union (the "PAPP") with the addition of such additional charges as expenses for packaging the imported goods, including the cost of packaging materials and packaging work, raw materials, materials, parts, semi-finished products, and other goods from which the imported goods are produced (consist), expenses for the carriage (transportation) of the imported goods to the place of arrival of such goods at the customs territory of the Eurasian Economic Union, and other expenses in accordance with Article 40 of the EAEU Customs Code.

If the imported goods are not the subject of a sale and purchase, Method 1 is not applied for the purposes of determining their customs value. Such cases take place, for example, when goods are imported under gift agreements, free-of-charge delivery (for example, delivery of advertising or exhibition samples), under lease agreements, or under intermediary agreements that do not contain the price at which the goods are sold for export to the customs territory of the Customs Union.

It should be noted that the customs value of the imported goods will be determined as the transaction value if the following conditions are met:

• there are no restrictions regarding the rights of the buyer to use and dispose of the goods. Thus, for example, there may be transactions under the terms of which the buyer, despite the fact that he has become the new owner of the goods, is restricted in his rights to the specified goods;
• the sale of the imported goods or their price does not depend on any conditions or obligations, the influence of which on the price of the goods cannot be quantitatively determined;
• no part of the income or proceeds from the subsequent sale, disposal in another way, or use of the goods by the buyer accrues directly or indirectly to the seller. Thus, the terms of a sale and purchase transaction may provide that the buyer is obliged to transfer a certain part of the proceeds from the subsequent sale of the imported goods to the seller;
• the buyer and seller are not related persons, or the buyer and seller are related persons in such a way that the transaction value of the imported goods is acceptable for customs purposes. [3]

If at least one of the conditions is not met, then Method 1 is not applicable.

When using Method 2 (based on the transaction value of identical goods), the basis for calculating the customs value of goods is the transaction value of identical goods sold and imported into the customs territory within 90 calendar days before the import of the valued goods. Goods are considered identical if they are the same in all respects, including physical characteristics, quality, and reputation. In other words, the customs value of the valued goods will be the customs value of identical goods previously accepted by the customs authority under Method 1 during their declaration.

To select Method 2, the declarant verifies the fulfillment of the following conditions:

• there is no sale and purchase transaction and price actually paid or payable for the imported goods (for example, goods are moved under a free-of-charge agreement or under a lease agreement);
• there is no reliable and documented information about the price actually paid or payable and additional charges to the price;
• the selected goods are identical to the valued goods;
• the identical goods are sold for export to Russia;
• the identical goods were imported into Russia in the established period of time;
• the customs value of the identical goods was determined by Method 1 and accepted by the customs authority;
• the identical goods were sold at the same commercial levels and in the same quantity as the valued goods.

If at least one of the conditions is not met, then Method 2 is not applicable.

The method for calculating customs value (Method 3) is very similar to Method 2. The difference lies only in the concept of "similar goods." Similar goods are considered to be goods that are outwardly dissimilar but at the same time have similar characteristics, consist of similar components, and are produced from the same materials. Due to this, similar goods are capable of performing the same functions as the valued goods and can also be commercially interchangeable.

When using Method 3, the basis for calculating the customs value of goods is the transaction value of similar goods sold and imported into the customs territory within 90 calendar days before the import of the valued goods. The customs value of the valued goods will be the customs value of similar goods previously accepted by the customs authority under Method 1 during their declaration. The customs value determined by Method 3 is declared by the declarant in DVS-2. The conditions for applying Method 3 and Method 2 coincide. The customs value cannot be determined by Method 3 if at least one of the conditions is not met. [4]

At the basis of Method 4 (deduction) lies the unit price of the goods at which the imported, or identical, or similar goods were sold in the largest volumes on the territory of Russia in an unchanged state (without any improvements). In this case, the price is not taken in its pure form – expenses are deducted from it which are characteristic of the Russian market and should not be part of the customs price.

For example, such deductions include:

• remuneration to an intermediary or agent;
• a markup to the price to obtain profit;
• expenses for carriage, insurance, and other related expenses;
• customs duties, taxes, fees, local taxes, and fees of the constituent entities.

The conditions for applying the method in question are:

• the valued/identical/similar goods are sold in Russia in the same state in which they are imported into the customs territory;
• the valued/identical/similar goods are sold to persons who are not related to the persons carrying out the sale on the territory of the RF;
• the valued, identical/similar goods are sold on the domestic market of Russia in the same or corresponding period of time in which the import of the valued goods into the customs territory is carried out.

In the event that at least one of the conditions is not met, then Method 4 is not applied.[5]

The specific feature of Method 5 (addition) lies in the consideration of costs during the production of the goods. As a basis, the computed value is taken, obtained by adding:

• expenses for the manufacture and acquisition of materials and expenses for the production of the imported goods (determined on the basis of information provided by the manufacturer);
• the amount of profit and general expenses for sales of analogous goods in the counterparty country (determined on the basis of information provided by the manufacturer);
• expenses for the carriage and transportation of the imported goods to the place of arrival;
• expenses for loading, unloading, or reloading of the imported goods;
• insurance expenses.

The difficulty of determining the customs value by Method 5 consists in the fact that seller-counterparties quite rarely agree to provide calculation computations for the prime cost of the goods. The customs authority does not have the right to demand from a foreign person the presentation of documents for confirming the computed value of goods. Therefore, the information used by the declarant for calculating the customs value remains documented as unconfirmed, and, consequently, cannot be accepted as reliably declared information.

Method No. 5 is possible for application in the event that the declarant can present all the supporting documents necessary for calculating the customs value by the addition method.[6]

The specific feature of Method 6 (fallback) lies in the flexibility of approaches to calculating the customs value. In essence, the fallback method allows for the application of the basic rules for determining value by Methods No. 1–5 with a certain degree of loyalty.

At the same time, the declarant should not consider permissible deviations from the rules as an opportunity to declare a minimum amount of customs value or an arbitrary (fictitious) customs value.

Examples of the flexible application of Methods 1–5 within the framework of the fallback method are:

• the transaction value of identical or similar goods produced in a country other than the country in which the valued goods were produced can be taken as the basis for determining the customs value;
• when determining the customs value of goods on the basis of the transaction value of identical or similar goods, a reasonable deviation from the requirements that identical or similar goods must be imported in the same or corresponding period of time as the valued goods is allowed;
• the customs value of identical or similar goods determined by Methods 4 and 5 can be taken as the basis for determining the customs value of goods;
• when determining the customs value of goods on the basis of the deduction method, a deviation from the established period of 90 days is allowed.[7]

We draw attention to the possibility to defer the determination of the exact magnitude of the customs value of the imported goods if, as of the date of registration of the customs declaration, under the terms of the transaction, documents are missing that contain exact information for calculating the customs value.[8]

In the case of using the deferred determination of the customs value during the customs declaration of goods, it is possible to declare the preliminary magnitude of the customs value of the goods, and to determine the exact magnitude of the customs value of the goods already after the release of the declaration on goods.

This is possible in the following situations:

• if the imported goods, which are traded on international commodity exchanges, are placed under the customs procedure of release for domestic consumption and under the terms of the foreign economic agreement a fixed price is not established that is payable for these goods. But at the same time, the contract establishes a dependency of the price of the goods on exchange prices (exchange quotes, exchange indices) and a procedure (algorithm, formula) for calculating the price of the goods based on exchange prices (exchange quotes, exchange indices) as of a specific date established in this contract after the day of registration of the declaration on goods;
• if the imported goods are placed under the customs procedure of release for domestic consumption and by the terms of the agreement, taking into account which the transaction value of the imported goods must be determined (for example, a license agreement, an agreement on the transfer of copyrights, etc.), fixed amounts of license and other similar payments are not established for the use of intellectual property objects (including payments for patents, trademarks, copyrights) which relate to the imported goods. But at the same time, the agreement establishes a procedure for their calculation on the basis of information unknown on the day of registration of the declaration on goods;
• if by the terms of the agreement, taking into account which the transaction value of the imported goods must be determined, it is provided that a part of the income (proceeds) obtained as a result of subsequent sale, disposal in another way, or use of the imported goods, accrues directly or indirectly to the seller, and at the same time a calculation procedure is established for such part of the income (proceeds) on the basis of information unknown on the day of registration of the declaration on goods. The determination and declaration of the customs value of goods is then permitted on the basis of the documents and information available to the declarant. In other words, the preliminary magnitude of the customs value of the goods is determined for the calculation and payment of customs duties and taxes.

The preliminary magnitude of the customs value is declared in the customs value declaration. The declarant specifies a period by which he intends to declare the exact magnitude of the customs value of the goods. To confirm the declared preliminary magnitude of the customs value, it is necessary to present the documents on the basis of which it was determined and calculated.

The determination and declaration of the exact magnitude of the customs value of goods is permitted to be deferred for a period during which, under the terms of the contract, documented information must be obtained allowing for the determination and declaration of the exact magnitude of the customs value of the goods. At the same time, this period cannot exceed 15 months from the day of registration of the declaration on goods.

The declarant declares the exact magnitude of the customs value by making changes to the declaration on goods after the release of the goods. The customs authority verifies the reliability of the presented information about the exact magnitude of the customs value.

In the event that the exact magnitude of the customs value is not declared by the declarant within the established period or documents confirming the information used for its calculation are not presented, the declared preliminary magnitude of the customs value is considered as the customs value of the goods declared under Method 1 without applying the deferred determination of the customs value.

If the exact magnitude of the customs value is declared on time, but not confirmed by the declarant documentarily, then the customs value is also accepted by the customs authority on the basis of Method 1, and, for the entire period allocated for the exact determination of the customs value, interest is charged.

The payment of customs duties and taxes, additionally calculated based on the exact magnitude of the customs value of the goods, is carried out no later than the period for declaring the exact magnitude of the customs value of the goods.

The customs authority can carry out a check of the customs value on the basis of its discovery of signs indicating that the declared information on the customs value of goods may be unreliable or not confirmed in the proper way. We will consider such signs further.

Inaccurate Determination of Customs Value

The signs of inaccurate determination of the customs value of goods are the following circumstances:[9]

• identification of an inconsistency of the information affecting the customs value of the imported goods and contained in one document with other information contained in the same document, as well as in other documents, including in documents confirming the information declared in the declaration on goods, information obtained from the information systems of the customs authorities, and (or) from other sources available to the customs authority at the time of the check;
• identification of a lower price for the imported goods in comparison with the price of identical or similar goods under comparable conditions of their import;
• identification of a lower price for the imported goods in comparison with the price of identical or similar goods determined in accordance with information on exchange quotes, exchange indices, auction prices, and information from price catalogs;
• identification of a lower price for the imported goods in comparison with the price of components (including raw materials) from which the imported goods are produced (consist);
• the existence of a relationship between the seller and the buyer of the imported goods in combination with a lower price for the imported goods in comparison with the price of identical or similar goods, the sale and purchase of which were carried out by independent seller and buyer;
• the existence of grounds to believe that the structure of the customs value of the imported goods is not complied with (for example, license and other similar payments for the use of intellectual property objects, expenses for carriage (transportation) of the imported goods, expenses for insurance, etc., have not been added to the PAPP or have been added in an incomplete volume).

Meanwhile, the specified signs are not considered as signs of inaccurate determination of the customs value in the event that these goods are imported within the framework of a foreign economic contract, in accordance with which identical goods were previously imported, with the simultaneous compliance with the following conditions:

• the imported goods and the previously imported goods are identical, imported within the framework of one foreign economic agreement (contract) under unchanged terms of the transaction (including in relation to the price of the goods and terms of their delivery);
• during the control of the customs value of the imported goods, the same signs from among those specified were identified as during the control of the customs value of previously imported identical goods;
• in relation to the previously imported identical goods, the customs value of the goods was determined by Method 1 and as a result of the control of the customs value of the goods, the reliability and (or) completeness of the checked information were confirmed;
• in the declaration on goods in relation to the imported goods, the registration number of the declaration on goods in relation to the previously imported identical goods is declared;
• the period from the date of release of the previously imported identical goods to the date of registration of the declaration on goods in relation to the imported goods does not exceed the period determined with the application of the risk management system (but not more than 180 calendar days).

Customs authorities are guided by analogous signs of inaccurate determination of customs value when exporting goods.[10]

Customs Value Control

In Clause 4 of Article 310 of the EAEU Customs Code, one of the main principles of carrying out customs control is consolidated – the principle of selectivity. It is applicable both in relation to the objects of customs control and in determining the forms of customs control and/or measures ensuring the conduct of customs control. In the same clause, it is established that selectivity is ensured with the help of using the risk management system (the "SURS"). According to Article 376 of the EAEU Customs Code, risk management is the systematized activity of customs authorities to minimize the probability of occurrence of events related to the non-compliance with international treaties and acts in the sphere of customs regulation and the legislation of the member states on customs regulation, and possible damage from their occurrence.

SURS allows the attention of customs authorities to be concentrated on declarants who have a medium and especially high level of risk, in order to identify as large a number of cases of unjustified understatement of the customs value of goods as possible, thereby ensuring a more rational and effective use of the resources of customs authorities. For declarants with a low level of risk, the application of SURS allows for the acceleration and simplification of the process of moving goods across the customs border, which reduces the time, financial, and labor resources of participants in foreign economic activity.[11]

To assign participants in foreign economic activity to one category or another, a fairly large number of criteria are analyzed. The blocking criteria for assigning participants in foreign economic activity to the low risk level category, for example, are:

• non-fulfillment of obligations to provide documents and information when conducting a customs check after the release of goods;
• the presence of the participant in foreign economic activity in the stage of liquidation or bankruptcy;
• the existence of an unfulfilled obligation to pay an administrative fine within the established period;
• the existence of an unfulfilled obligation to pay customs payments, interest, and penalties within the established period;
• the existence of a court sentence that has entered into legal force in relation to the goods under Art. 194 of the Criminal Code of the RF;
• assignment to a high level of tax risk based on the results of categorization by the Federal Tax Service.

If the cited criteria are not realized, then criteria are applied that positively or negatively characterize the participant in foreign economic activity.

The group of positive criteria for evaluating the activity of declarants includes:

• the size of the charter capital;
• the duration of foreign economic activity.

The group of negative criteria for evaluating the activity of declarants includes:

• significant deviation of the value indicators of the declared goods from the average indicators available to the customs authorities thanks to the system for collecting and processing price information (deviations are also considered for the physical characteristics of the goods (weight, quantity, etc.));
• the existence of facts of committing questionable currency operations carried out for the withdrawal of monetary funds from the country;
• the volume of goods in relation to which violations of mandatory requirements were identified;
• the existence of administrative offenses.

In this case, their number and severity are taken into account; the existence of initiated criminal cases for crimes in the sphere of moving goods across the customs border. All criteria are considered in the system, while it is important to note that the triggering of negative criteria does not always mean that a person cannot be assigned to the low risk level category, as the scale of his violations is taken into account, as well as the activity of his actions to correct the violations. However, there is no full-fledged system for evaluating participants in foreign economic activity in open access, which leads to the relative non-transparency of the system, and participants in foreign economic activity cannot verify the objectivity and justification of assigning them to one risk category or another.[12]

The conduct of a check in relation to information and documents, which was started both before and after the release of the imported goods, acts as the ground for the application of forms of customs control in practical activity.

A check is conducted only in the case when the identification of one or several signs occurred, evidencing that the person incorrectly determined the main indicators of the customs value. Within the framework of conducting a check of documents and information, the Federal Customs Service is endowed with a number of powers in the sphere of requesting additional documents and information, as only additional documentation will allow for the authentic determination of whether the customs value of the goods is specified correctly. A vivid example of a document that is requested as an additional one is the price list of the manufacturer of the given goods, as all the prices on the basis of which a comparison can be conducted are specified in it. It is worth noting that such lists must meet certain requirements, the main of which is the purpose of the price list for an indefinite circle of persons, and not only for one buyer or another who declares a suspicious value.

In addition to the price list, the supporting documents can be:

• the customs declaration of the country of departure (origin, transit) of the goods, if the filling out of such a customs declaration is provided for in the country of departure (origin, transit) of the goods;
• documents on the payment of the imported goods;
• shipping (packing) lists;
• accounting documents on the acceptance of the imported, identical, similar goods for accounting;
• information about the value of the imported goods broken down by trademarks (brands), models, articles;
• agreements in accordance with which the imported, identical, similar goods are sold on the customs territory of the Eurasian Economic Union;
• explanations regarding the grounds and conditions for the provision of discounts by the seller to the buyer;
• documents and information about physical and technical characteristics, quality, and reputation of the imported goods, as well as about their influence on the price of the imported goods;
• documents and information on the carriage (transportation) of the imported goods, their loading, unloading, or reloading and the conduct of other operations related to the carriage (transportation) of the imported goods;
• documents and information confirming expenses for the construction, erection, assembly, installation, maintenance, or provision of technical assistance produced after the import of the goods into the customs territory of the Eurasian Economic Union in relation to such goods as industrial plants, machines, or equipment (estimate and schedule for the conduct of installation and commissioning work, acts of completed work, etc.);
• a license agreement, invoice, bank payment documents, accounting and other documents containing information about payments for the use of intellectual property objects that relate to the imported goods;
• documents confirming the absence of relationship between the seller and the buyer or the absence of the influence of the relationship between the seller and the buyer on the transaction value of the imported goods.[13]

The control of the customs value in the presence of a relationship between the seller and the buyer of the imported goods in combination with a lower price for the imported goods in comparison with the price of identical or similar goods, the sale and purchase of which were carried out by independent seller and buyer, presents a special interest.

Fairly often, customs authorities record cases where the declarant does not declare information about the existence of a relationship between counterparties in the corresponding box of the customs value declaration, which may be caused by the lack of liability for the declaration of unreliable information about the existence of a relationship between the seller and the buyer of the goods. At the same time, the existence of a relationship between counterparties can be confirmed only by indirect signs.[14] In such a case, for the purposes of confirmation/refutation, the customs authority has the right to request documents confirming the absence of a relationship between the seller and the buyer or the absence of the influence of the relationship between the seller and the buyer on the transaction value of the imported goods, including:

• documents and information about the voting shares of organizations of the member states and third countries belonging to the seller and (or) the buyer;
• documents confirming the transaction value with identical or similar goods during their sale to buyers who are not related to the seller by persons, for export to the customs territory of the EAEU;
• documents confirming the customs value of identical or similar goods determined by the deduction method (Method 4);
• documents confirming the customs value of identical or similar goods determined by the addition method (Method 5);
• other documents and information characterizing the circumstances accompanying the sale, including the way in which the buyer and the seller organize their commercial relations and the way in which the price of the goods was established.

Non-identification of other signs of unreliability of the customs value declared by the declarant, non-presentation by him of the above-mentioned documents, or the presentation of explanations about their absence (including the absence of information about the existence of a relationship) in practice does not allow the customs authority to confirm the existence of a relationship between counterparties in the case of the absence of corresponding information in the Register and, consequently, the very fact that such a relationship influenced the transaction price. In such a case, even a significant deviation of the customs value declared by the declarant to the lower side relative to the price information on the declaration of identical/similar goods available to the customs authority, and the existence of indirect signs of a relationship between counterparties, "cannot entail the adoption by the customs authority of a justified decision on the adjustment of the customs value."[15]

Determining Customs Value

For the purposes of analyzing the judicial practice related to the control of customs value, it is necessary to conduct an analysis of the results of the activity of the customs authorities of the Russian Federation presented in the official electronic resource of the Federal Customs Service of Russia for the period of 2020–2022. During this period, the most decisions of the customs authorities were appealed by participants in foreign economic activity on the issues of changing information about the customs value of goods, including after their release in accordance with the declared customs procedure. Such appeals accounted for 46% in 2022. Based on the results of the work of the Federal Customs Service in the direction of customs value control in 2022, more than 45 billion rubles were additionally collected into the federal budget by the customs authorities for 256 thousand declarations on goods as a result of making changes to the information on the customs value (in 2021, 40.09 billion rubles, and in 2020, 20.5 billion rubles), from which it can be concluded that in 2022 the indicator also grew by almost 1.125 times in ruble terms. This fact may speak of a possible increase in the number of violations or a tightening of control on the part of the customs authorities. [16]

Claims on the part of participants in foreign economic activity against customs authorities, resulting in court cases, relate to various aspects of customs value. These may be decisions of customs authorities on inaccurately declared customs value in connection with its lower level relative to the data available to the customs authorities. The customs authority may disagree with the lawfulness of the deductions produced from the magnitude of the customs value, for example, for transportation across the territory of the Eurasian Economic Union. The participant in foreign economic activity may disagree with the requirement for the additional calculation of license payments to the sum of the customs value, etc.

As the Plenum of the Supreme Court of the RF points out, taking into account the public nature of customs legal relations, when evaluating the compliance by the declarant with these requirements of the EAEU Customs Code, the courts should proceed from the presumption of the reliability of the information (documents, information) presented by the declarant in the course of customs control, the burden of rebutting which lies with the customs authority.

The customs value determined on the basis of the price of the goods established by the agreement cannot be considered quantitatively determinable and documentarily confirmed if the declarant has not presented evidence of the transaction on the basis of which the goods were acquired, in any form not contradicting the law, or the price information contained in the documents presented by him does not correlate with the quantitative characteristics of the goods, or information about the terms of delivery and payment of the goods is missing*."[17]

Thus, the reason for the consideration of one of the cases was that the customs authorities carried out an adjustment of the customs value of the imported goods on the ground that the value of such goods was lower than the value of identical, similar goods.

Having considered case No. A56-9947/2020, the court took the side of the importer, pointing out that "a set of documents fully confirming the declared customs value and not having discrepancies among the presented documents was transferred to the customs authority. Despite the fact that in the provided price list the price differed from that specified in the invoice, this is not an inconsistency due to the fact that the price list was presented to a wide circle of persons, and the price may change depending on the terms of delivery with a specific buyer. In addition to this, the declaration on goods taken by the customs authority as a basis for calculating the amount of security did not fully correspond to the terms of delivery for the goods under consideration." [18]

the specified example demonstrates the possibility of successfully contesting an increase in the customs value of the imported goods even in cases where the declared customs value is lower than the value of identical, similar goods, in the presence of supporting documents justifying such a value.

However, there is also another position. The judicial instances in case No. A56-9947/2020 established "non-confirmation by the Company documentarily of the fact of payment for the goods supplied under the Contract, in particular the non-presentation by it of SWIFT documents, which prevented the customs authority from establishing the amount paid by the Company to the supplier. The courts evaluated the price list of the manufacturer of the goods presented by the Company critically, as it does not specify the start and end dates of its validity, it did not allow the customs authority to analyze the actual value of the imported goods. The Company did not present transport and forwarding documents confirming the fact of payment and the value of the corresponding services. Under such circumstances, the customs authority, having established the unreliability of the information on the customs value declared by the Company during declaration, lawfully issued decisions on making changes (additions) to the information declared in the disputed DTs on the basis of the available information about the value of the goods."[19]

Thus, having analyzed the specified and court cases similar to them, we recommend paying attention to the price list at the prices of which the goods are acquired. It must extend to an unlimited circle of persons, contain the period of validity, the size of the provided discounts, and the conditions for their application. It is also recommended, in addition to the price list, to provide payment documents confirming the payment for the goods at the prices of the price list, and written confirmations from the counterparty on the provision of a discount (in the case of its application).

Also, an adjustment of the customs value can be produced due to the absence in the structure of the customs value of certain payments, for example, license payments.

According to the position of the Judicial Collegium for Economic Disputes of the Supreme Court of the Russian Federation on court cases No. A40-20125/2021, A09-1751/2021, A09-1129/2021, the inclusion of royalties in the customs value is not limited to cases where the directly imported goods are the subject of license agreements (the trademark is applied to the goods), and in the sale and purchase agreement there is a clearly expressed indication of the need to conclude a license agreement and pay royalties as a condition of the sale of the goods. The inclusion of license payments in the customs value is also not directly determined by the way the size of the royalty is determined (depending on the value of the imported goods or other indicators of the financial and economic activity of the importer), the frequency of the payment of license payments, or other similar circumstances.

Payments for the use of intellectual property objects (royalties, license payments) are subject to accounting for the purposes of the customs evaluation of the imported goods as one of the components of the customs value when determining it by the first method (based on the transaction value of the imported goods) to the extent that they influence their economic value. [20]

A case in which the customs authorities referred to the understatement of the customs value of the goods in connection with the non-inclusion by the declarant of the value of goods and services directly related to the purchase of the vessel and its commissioning for internal carriage on the territory of Russia can serve as an interesting example. In the opinion of the customs authorities, the expenses for the survey of the vessel, materials for repair work, and spare parts were not included in the customs value. Refusing to satisfy the declared claims, the courts lawfully pointed out that "the customs value also includes expenses related to the purchase and registration of the vessel under the buyer's flag."[21]

As was noted earlier, the relationship between counterparties under a foreign economic transaction is a sign of the unreliability of the customs value. Thus, the judicial instances during the consideration of case No. A40-119605/2023, refusing to satisfy the declared claims, proceeded from the "existence of evidence presented by the customs authority indicating that the existence of a relationship between counterparties influenced the value of the foreign trade transaction for the valued goods, which was expressed in the fact that the price of the goods formed within the framework of the contract brings the seller of the goods proceeds in the amount of 10 Euros. At the same time, the applicant did not present documents confirming that the price of the goods in question was established in the same way as the seller establishes the prices of goods during sales to buyers who are not related to this seller." [22]

Thus, we see that as of today, when carrying out the control of the customs value of goods, a complex system of criteria is applied which allows for the comprehensive analysis of the activity of participants in foreign economic activity to determine the degree of the need to conduct one or another control measure before and/or after the release of goods. Such a system allows not only for the simplification of the processes of moving goods across the customs border for participants in foreign economic activity assigned to the low risk level category, but also ensures a reduction in the administrative burden of the customs authorities and the concentration of their resources on bad-faith declarants.

_____________________________

References

[1] Decision of the Board of the Eurasian Economic Commission No. 160 dated October 16, 2018, On Cases for Filling out the Customs Value Declaration, Approval of Customs Value Declaration Forms, and the Procedure for Filling out the Customs Value Declaration.

[2] Order of the Federal Customs Service of the RF No. 152 dated January 27, 2011, On Approval of Customs Value Declaration Forms (DVS-3 and DVS-4) and the Procedure for Declaring the Customs Value of Goods Exported from the Russian Federation.

[3] Decision of the Board of the Eurasian Economic Commission No. 283 dated December 20, 2012, On Application of the Method for Determining the Customs Value of Goods Based on the Transaction Value for Imported Goods (Method 1) (together with the Rules for Application of the Method for Determining the Customs Value of Goods Based on the Transaction Value for Imported Goods (Method 1)).

[4] Decision of the Board of the Eurasian Economic Commission No. 202 dated October 30, 2012, On Application of the Methods for Determining the Customs Value of Goods Based on the Transaction Value for Identical Goods (Method 2) and Based on the Transaction Value for Similar Goods (Method 3) (together with the Rules for Application of the Methods for Determining the Customs Value of Goods Based on the Transaction Value for Identical Goods (Method 2) and Based on the Transaction Value for Similar Goods (Method 3)).

[5] Decision of the Board of the Eurasian Economic Commission No. 214 dated November 13, 2012, On Application of the Deductive Value Method (Method 4) when Determining the Customs Value of Goods (together with the Rules for Application of the Deductive Value Method (Method 4) when Determining the Customs Value of Goods).

[6] Decision of the Board of the Eurasian Economic Commission No. 273 dated December 12, 2012, On Application of the Computed Value Method (Method 5) when Determining the Customs Value of Goods (together with the Rules for Application of the Computed Value Method (Method 5) when Determining the Customs Value of Goods).

[7] Decision of the Board of the Eurasian Economic Commission No. 138 dated August 6, 2019, On Application of the Fallback Method (Method 6) when Determining the Customs Value of Goods (together with the Rules for Application of the Fallback Method (Method 6) when Determining the Customs Value of Goods).

[8] Decision of the Board of the Eurasian Economic Commission No. 103 dated June 19, 2018, On Approval of the Procedure for Deferred Determination of the Customs Value of Goods.

[9] Decision of the Board of the Eurasian Economic Commission No. 42 dated March 27, 2018, On Specifics of Conducting Customs Control over the Customs Value of Goods Imported into the Customs Territory of the Eurasian Economic Union (together with the Regulation on the Specifics of Conducting Customs Control over the Customs Value of Goods Imported into the Customs Territory of the Eurasian Economic Union).

[10] Order of the Ministry of Finance of Russia No. 175n dated August 26, 2020, On Establishing the Procedure for Customs Control of the Customs Value of Goods Exported from the Russian Federation.

[11] Sidorova E.Y., Khusainova V.Y., Application of a Risk-Oriented Approach in Controlling the Customs Value of Goods. Khozyaystvo i Pravo Journal, No. 9, 2023.

[12] Ibid.

[13] Decision of the Board of the Eurasian Economic Commission No. 42 dated March 27, 2018, On Specifics of Conducting Customs Control over the Customs Value of Goods Imported into the Customs Territory of the Eurasian Economic Union (together with the Regulation on the Specifics of Conducting Customs Control over the Customs Value of Goods Imported into the Customs Territory of the Eurasian Economic Union).

[14] Iordanova V.G., Boyko A.R., Improving the Mechanisms of Customs Value Control. Russian Economic Development Journal, Vol. 30, No. 3, 2023.

[15] Resolution of the Plenum of the Supreme Court of the RF No. 49 dated November 26, 2019, On Certain Issues Arising in Judicial Practice in Connection with the Entry into Force of the EAEU Customs Code.

[16] Agapova A.V., Control of the Customs Value of Goods: Analysis of Judicial Practice. Vestnik Arbitrazhnoy Praktiki Journal, No. 5, 2023.

[17] Resolution of the Plenum of the Supreme Court of the RF No. 49 dated November 26, 2019, On Certain Issues Arising in Judicial Practice in Connection with the Entry into Force of the Customs Code of the Eurasian Economic Union.

[18] Resolution of the Arbitration Court of the North-Western District dated January 31, 2023, regarding Case No. A56-1862/2022.

[19] Resolution of the Arbitration Court of the North-Western District dated April 7, 2021, regarding Case No. A56-9947/2020.

[20] Resolution of the Arbitration Court of the Moscow District dated March 27, 2024, regarding Case No. A40-19678/2023.

[21] Resolution of the Arbitration Court of the Far Eastern District dated March 14, 2024, regarding Case No. A73-1495/2023.

[22] Resolution of the Arbitration Court of the Moscow District dated March 15, 2024, regarding Case No. A40-119605/2023.