Gill Nadel, Adv.
In two different paragraphs the Customs Tariff Code gives significant "procedural leniencies" to the state in the field of burdens of proof. Paragraph 229 to the Code states that when "a question arises in a customs accusation, or in a procedure under paragraph 192 for the return of a ship, a transport vehicle, or goods seized by the customs official, as to whether or not customs has been paid on the goods, or whether the goods were brought to Israel, taken out from Israel, transported along the shore, loaded or unloaded, lawfully, the burden of proof that the customs were paid or that the above actions regarding the goods were conducted lawfully, will lie, in a customs accusation- on the accused and in the above procedures- on the plaintiff." Paragraph 239a to the Code states that: "in the procedures to which paragraph 229 does not apply, one who claims to have paid the necessary customs or to have filed an invoice lawfully or that the goods were lawfully allowed, bears the burden of proof."
The idea behind these "breaks" given to the state is principally attached to the fact that the facts are better known to the importer than to the Customs Authority and therefore it makes sense that the importer should be the one to bear the burden of proof. The legislation of the above paragraph 239 followed a similar stipulation in the Law of VAT. There is no question that when regarding criminal customs convictions, this paragraph contradicts the fundamental concepts of the criminal law, according to which the accused has a presumption of innocence and the accuser- the state- must prove his guilt beyond any reasonable doubt. The court has expressed its dissatisfaction with this paragraph, and the legal practice, as well, does not use this paragraph in customs accusations. However, we will not devote this note to that aspect, but rather specifically to the civil aspect, as will be explained shortly.
Courts have flipped the above paragraphs and noted that while, from a substantive perspective, the state is the one suing the importer, since it is the one that issued the notice of debts or seized the goods, etc, the above paragraphs, from a procedural perspective, switch things around and make the importer into the plaintiff. The question is how far these paragraphs go- do they completely cancel the understanding that, from a substantive perspective, the plaintiff is still the state, or are we in the center of the field with considerations on each side?
The decisions of the Supreme Court on questions of VAT clarified the matter. In 3646/98, CVG Building Ltd. v. VAT, it was ruled on the corresponding paragraph of the Law of VAT that "there is no requirement in the paragraph that the business prove that the invoice was lawfully issued. The paragraph deals with simple technical facts in the process of setting the tax and the obligation. That is, if the party involved claims that he paid the tax that he owed or that he filed an report or that the tax was deducted according to the tax invoice, he must prove that he did, in fact, pay the tax, file the report, or that the tax was deducted according to the tax invoice. The essence of this requirement is to prove the existence of a written support. In the case of tax deduction according to tax invoice, that support is the tax invoice." The goal of the paragraph, then, is to prevent a claim that the administration must bring all the proofs itself. On the other hand, if the assessed brings the required proofs, then the burden is passed to the authorities to prove whether the assessment was issued.
Similarly, it was ruled in customs matters for value correction: "At this stage, I rule that the order of bringing proofs should be "regular", that is, that the applicants bring their proofs to prove their claims, and the burden of proof rests on the applicants; at the same time, I will say that it is not impossible that at the end of the proceedings, if the applicants succeed in proving their factual claims regarding the price of the goods, and the court is convinced of the 'reality' of the value of the goods and that the documents are correct and credible, then the burden will pass to the respondent, as burdens pass from one side to another under the evidence brought." In other words, in the first stage, the importer must prove the accuracy of his documents and proofs. When the importer meets this burden, then the burden passes to the state to convince the court when it did not accept the proofs and why it attempted to amend the price.
Another case involved a parallel importer of Finnish vodka who imported the vodka from Holland. The Customs Authority amended the price of the vodka by around 20%, based on the prices that the exclusive importer of the goods paid. Following the importer's action, the court rejected the amendment of the price, for several reasons. Firstly, since the Customs Authority did not lay a sufficient factual infrastructure that the importer had paid another price to the supplier, higher than the price declared to the importer, nor did it even deny that price. Secondly, and beyond what was required, the court found, based on the testimonies of retails who purchased the vodka from the importer, that only by purchasing at the transaction cost declared could the importer have turned a profit, which purchasing at the transaction cost set by the Customs Authority, and considering the prices at which the importer sold the bottles, would have, in practice, generated a loss. Thirdly, and also, beyond what was required, the court accepted the explanation of the importer for the cheap price, that a large portion of the bottles included in shipments were of the old, textured design while at that point there was a greater demand for the bottles with the new, smooth design. This explanation was confirmed by the retailers.
An interesting and important decision was recently issued by the District Court of Rishon L'Tzion (11169-02-09 Target Point v. P. Lauren Company et al, decision given 24.3.09, for the importer- Adv. Zinger, for the state, Adv. Stayf), in which the court ruled that the above paragraphs regarding the reversal of the burden of proof do not apply in cases where the goods have been seized by the Customs Authority because of a suspicion of breach of intellectual property rights. The court ruled that that evidential relief does not apply in the relationship between the importer and the bearer of the rights, since, although the state was the one to conduct the seizure, the rights bearer is the one standing behind it, claiming that the rights have been infringed, and the legislator did not intend cases of this kind when he granted the evidential relief to the state.
In the next part of the survey, we will go into the above more deeply, and sharpen the meaning of the expression burden of proof- if this means the burden of bringing evidence (that is, who has to bring witnesses and proofs) or the burden of convincing (who must convince the court at a level of 51% of the justice of his claim).
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