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 a 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 may provide encouragement for importers, as the court decided that in certain cases it might embrace a forgiving policy towards importers who did not file a certificate of origin on time or who filed certificates with technical faults, and not revoke the customs benefit.
The Case Details:
Comasco Construction Machinery & Systems Ltd. imported to Israel in 2007 two rock grinding 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 this was 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 the Customs Authority 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 a certificate of origin only in exceptional cases in which the importer gave advance notice of the fact that the certificate of origin would be presented at a later date and deposited a bank guarantee equivalent to the value of the customs, which was 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 delay in filing a certificate such as in this matter is not considered a technical fault.
In this case, the court ruled that the matter in question was not a delay in filing the certificate but a certificate which was not yet created at the time the goods were released from customs, as the certificate was signed by the exporter in the United States only 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 originating 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 had been upheld. One's tendency is to rule that in this case the court should turn a blind eye to the faults and enable the plaintiff to enjoy the customs exemption".
However, in these circumstances the court ruled that it would not allow the importer to enjoy the customs exemption, since there was no minor technical fault, forgetfulness or human error, but rather a certificate that was not yet produced at the time the goods were released from customs.
Therefore, the court rejected the claim and charged the importer relatively low legal expenses totaling 10,000 NIS, noting the fact that the importer had paid customs from which he apparently could have been exempt.
[Civil Suit (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].
It should be noted that our firm represented the importer in this proceeding, and currently we areconsidering 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 can find encouragement in various statements made in this verdict, according to which the court may forgive importers for technical faults, slight delays or human errors regarding certificates of origin. Even in this case, the court still acknowledged the revoked customs exemption.
This verdict joins an additional verdict,given in June 2013, in which an importer filed a certificate of origin indicating an American source for 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 should 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 Suit (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 in obtaining further information or wish to follow the legal developments in 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.