גיל נדל משרד עורכי דין

 

Forgiveness for a Delay or a Technical Fault in the Filing of a Certificate of Origin - Not in All C

 

Adv. Gill Nadel, Adv. Omer Wagner

 

Recently, the Beit Shemesh Magistrates Court rejected an importer's claim against the Israel Customs Authority and ruled that even though it is possible to have a forgiving policy towards technical faults in the filing of certificate of origin or a slight delay in its filing - this is not the case in this matter. 

 

The meaning of this verdict is that the importer will be required to pay customs on goods which both parties agree are entitled to a customs exemption according to trade agreements, only because the importer did not present the certificate of origin on time. 

 

In spite of the results of the verdict, it includes statements that might encourage importers, as the court decided that in the proper cases it might embrace a forgiving policy towards importers who did not file a certificate of origin on time or have filed certificates with technical faults, and the customs benefit will not be revoked because of it.

 

The Case Details:

 

Comasco Construction Machinery & Systems Ltd. imported to Israel in 2007 two grinding rock machines from the United States and paid customs of 290,000 NIS on them. The company's customs agent stated in the import documents that it is a "regular" import and in the attached document the certificate of origin was not mentioned, thus varying from the "market" entry which enables obtaining a customs exemption while presenting a certificate of origin. 

 

After the release of the goods, the importer presented customs with a certificate of origin which indicates the United States as the source of origin of the goods, and asked for the paid customs to be returned.

The Customs Authority rejected the request and the importer turned to the court.

 

 

The importer claimed that according to the trade agreement with the United States, the state of Israel is entitled to renounce the presentation of a certificate of origin in certain cases if it is convinced that the goods uphold the origin rules, and that the state of Israel is entitled to apply judgment regarding technical faults in certificates.

 

The Customs Authority replied that it decided to renounce the presentation of certificate of origin only in exceptional cases in which the importer notifies beforehand that the certificate of origin would be presented at a later date and deposits a bank guarantee equivalent to the value of the customs, which is held until the presentation of the certificate, and this was not done in this case. Regarding the technical faults, the Customs Authority claimed that a certificate filed in a delay such as in this matter is not considered as a technical fault.    

 

The Verdict:

 

In this case, the court ruled that the matter in question was not a delay in filing the certificate but a certificate which was yet created at the time the goods were released from customs, as the certificate was signed by the exporter in the United States after the goods were already released in Israel. 

 

In addition, the court criticized the importer and the customs agent due to the fact that the process of producing the import documents was incorrect and that the goods were not defined as entitled to a customs exemption.

 

Nevertheless, the court commented that there is a certain sense of unease in having the importer pay customs for goods originated from the United States, and so it was stated:

 

"There is a certain sense of unease due to the fact that there is no dispute that the goods were indeed manufactured in the United States and could have been entitled to a customs exemption if the rules would have been upheld. One's tendency is to rule that in this case he should turn a blind eye from the faults and enable the plaintiff to enjoy the customs exemption".

 

However, in these circumstances the court ruled that it should not allow the importer to have a customs exemption, due to the fact that there is no minor technical fault, forgetfulness or human error, but a certificate which was not produced at the time the goods were released from customs.

 

Therefore, the court rejected the claim and charged the importer with relatively low legal expenses totaling 10,000 NIS, noting the fact that the importer paid customs which apparently he could have been exempt for.  

 

[Civil Case (Beit Shemesh Magistrates Court) 1201-08 Comasco Construction Machinery & Systems Ltd. vs. the state of Israel - Customs Authority - Customs Department, verdict given on April 22nd 2014 by Justice Mack-Kalmanovitz. The importer was represented by our firm. The Customs Authority was represented by the Israel State Attorney Jerusalem District - Civil]. 

 

Commentary:

 

It shall be noted that our firm represented the importer in this proceeding and currently we are considering filing an appeal to the District Court.

 

In spite of the fact that the results of the verdict in this specific case do not benefit the importer, all importers could be encouraged by various statements made in this verdict, according to which the court might "forgive" the importer for technical faults, a slight delay or a human error regarding certificates of origin, and in this case, the court still acknowledges the revoked customs exemption.

 

This verdict joins an additional verdict which was given in June 2013 in which an importer filed a certificate of origin, which indicates an American source of the goods, two months late. In that case it was factually determined that the delay in the filing was significant (two months), therefore it was not possible to enable the delayed filing; however, it was stated that it is possible to be lenient with the importer when there is a slight delay due to technical constraints or human errors.  It shall be also noted that in that case the certificate did exist at the time of the import but due to human error it was not filed on time. 

 

[Civil Case (Beit Shemesh Magistrates Court) 1040/07 Metro Motors vs. the state of Israel - Customs Authority, verdict given on June 10th 2013]

 

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This document provides a general summary and is for information purposes only. It is not intended to be comprehensive nor does it constitute legal advice. If you are interested to obtain further information or wish to follow the legal developments on this matter, please contact Adv. Gill Nadel - Chair of the firm's Import, Export and International Trade Law Practice, Tax and Executive Compensation Department. Email: Gill.Nadel@goldfarb.com, phone: +972-3-6089848.