Attorney Gil Nadel, Gilad Paz
Many importers enlist the services of the warehouses under Customs supervision for storing their cargo without having to pay import taxes. In this way, they can choose to pay the import taxes only after they have found buyers for their wares and then pay the taxes upon their release.
But what happens if the cargo is stolen while it was stored in the warehouse- who must claim responsibility for this and who will be required to pay the import taxes to the Customs Authority?
As per the Customs directive, the warehouse is responsible for paying the taxes in this case, since the importer had yet to release his goods, whereby the obligation for payment was not yet consolidated.
But couldn't the warehouse be exempt from this responsibility in certain cases? This issue had recently been debated in a verdict given by the magistrates court of Tel Aviv.
The case:
Goods that were stored in a warehouse under Customs supervision were stolen from said warehouse. Customs demanded the warehouse pay the import taxes for these goods at a total of over 1.5 million NIS, and the warehouse submitted a lawsuit against Customs claiming to be exempt from paying these taxes.
A dispute arose between the parties regarding the relevant clause in this law: whether it was clause (1)150 of the Customs directive or clause 92 of the Customs directive, both of which allow the Customs administrator, under certain circumstances, to cede the import taxes due to goods being lost or damaged.
The court ruled that the clause relevant to this case is clause 92, dealing with goods that were lost or destroyed due to an unavoidable occurrence.
Customs claimed that this clause deals with loss, not theft, but the court decided not to rule on this claim since it was discovered that, in any case, the warehouse had been negligent and did not fulfill the rest of the conditions mentioned in this clause.
In this case, Customs claimed that the warehouse could have prevented the burglary and was negligent in the security measures it implemented on the site, and therefore does not fulfill the conditions of the clause. The court sustained this claim.
Furthermore, the court determined that the warehouse is in fact a paid guardian as per the Guardian Law. According to this law, the paid guardian is responsible for losing the asset, unless the asset was lost under circumstances that "he was unable to foresee and thus was unable to prevent the consequences". In this case, the court determined that a burglary is an event which can be foreseen and the warehouse had not lived up to this standard.
Based on the evidence, the court determined that the security company hired by the warehouse was negligent in fulfilling their duties which is why the burglars were successful in executing their theft. In addition, Customs presented the court with the statement of claim submitted by the warehouse against the security company for this very same occurrence, claiming that they had recently failed to fulfill their duties thereby resulting in a burglary.
Alternatively, the warehouse claimed that even if they are responsible for paying the taxes, they are entitled to an exemption as per clause 3 of the Indirect Tax Law. The court accepted the Customs' claim that clause (3)3 of this law determines that the law is applicable only if the tax-payer sold his goods in good faith without taking the deficit into consideration, and in this case, the warehouse had not proven that the goods were sold and what their price was, and so they do not fulfill the conditions of this law.
Thus, the court rejected the claim and ruled that the warehouse could have prevented the burglary, and charged the warehouse with paying expenses at a sum of NIS 30,000.
[Civil suit (magistrates court of Tel Aviv) 39864-06 Danel Bonded Warehouse Ltd. vs. the State of Israel, Judge Ayala Gazit, verdict of July 5, 2012 party representatives were not mentioned].
Notes:
First of all, we would like to note that this verdict is in keeping with the Supreme Court ruling in a similar case that was determined in 2010 [Civil appeal 5694/07 Sharkat Yamho Leletageria Alama vs. the State of Israel]. In this case, shipping containers full of cigarettes that were meant to be marketed in the Palestinian Authority, were stolen in broad daylight from a Customs licensing warehouse in Ashdod Port, but after the Customs agent received approval for its release.
In this case the importer (not the licensing warehouse) was required to pay import taxes at a sum of approximately 2 million NIS for the cigarettes.
The importer sued the Customs Authority claiming that he should be exempt from this tax, since this was an event that he was unable to control.
In this case, the court determined that the licensing warehouse could have prevented this burglary by implementing tighter security measures, and therefore, the importer is entitled to be exempt from paying the taxes. In addition, it was ruled that the warehouse is a paid guardian as per the Guardian Law, which increases its responsibility for loss or theft of cargo.
Secondly, from a different viewpoint and unrelated to the Sharkat Yamho ruling, we should note that the Indirect Tax Law makes it possible for importers, in extreme cases, to be entitled for exemption from import tax deficits. The court's decision which states the warehouse does not fulfill the conditions of the law, since they could not prove that the goods were sold and at what price, is too severe in our opinion. A warehouse, as opposed to an importer, is liable to be charged with import taxes by Customs primarily in cases where the goods were lost, destroyed or stolen, and it is clear that in these cases, the warehouse will never be able to prove that the goods were sold and at what price.
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