Gill Nadel, Adv.
The Magistrates Court in Tel Aviv recently voided a value adjustment done by the Customs Authority to a parallel importer of vodka.
The case involved a parallel importer of Finnish vodka that imported the vodka from Holland. At first, the Customs Authority suspected that counterfeited goods were involved, but afterwards this claim was refuted by the importer itself. Later, the Customs Authority adjusted the price of the vodka by around 20%, based on the price that the exclusive importer paid for the goods.
The court rejected the price adjustment, for several reasons.
First, the Customs Authority did not establish a sufficient factual infrastructure that the importer paid a different price to the supplier, higher than the price declared by the importer, nor did it deny that price. In these circumstances, the court ruled that "when "the value of the transaction in which they were acquired" is not disputed, this value cannot be determined by another test, be the reason for establishing the other price what they may."
Secondly, and above what was necessary, the court found, based on the testimony of the wholesalers that purchased the vodka from the importer, that only acquisition at the transaction cost declared by the importer could have gained the importer a certain profit, while acquisition at the transaction cost that the Customs Authority set, considering the prices at which the importer sold those bottles, would in fact have earned it a loss.
Thirdly, and also beyond what was required, the court accepted the importer's explanation regarding the low acquisition price, in that a large part of the bottles included in that cargo were of the old design type, textured, while at that time, there was a greater demand for bottles with the new design- smooth. This explanation was confirmed by the wholesalers.
The court also emphasized that, based on previous rulings of the Supreme Court, one should not accept the assumption that the acquisition price of the exclusive importer is always lower than the acquisition price of other importers.
Another issue that was discussed in that decision was the demand for a deduction in the expenditure of the importer to pay goods duties, as two of the three of the Euro1 movement certificate issued for the goods were invalidated by the Holland Customs Authority.
Regarding this issue the court ruled that a deduction could not be issued for the third movement certificate that was not invalidated, since this certificate is presumed to be valid. The court added that even if the Customs Authority wished to argue that the reply of the Dutch Customs regarding the other two shipments affects the third shipment as well, it can be replied that there was not motive to request the reply of the Dutch Customs regarding the shipment either, and "if it was done, where is the reply? And if it was not done, why wasn't it done?"
Conversely, regarding the two certificates that were invalidated, the court ruled that the deduction regarding them was valid. The court rejected the importer's claims against the invalidation of the certificates, while ruling that even were the claims correct- the correct address for dealing with them is the Dutch Customs and not the Israeli Customs.
The Court also ruled that paragraph to the Law of Indirect Taxes, which discusses forgoing a deficit, will not help the importer in a case of invalidation of the movement certificate, since the importer gave incorrect information, that is- the certificate that was invalidated, and therefore it does not meet the requirements of sub-paragraph (1). According to the court, which repeated what it had said in previous decisions, "the incorrect information that the assessee submitted are an objective fact, that does not depend on the subjective though or knowledge of the assessee.
A number of interpretive notes:
Regarding the issue of price adjustment, it is important to emphasize the court's ruling according to which "when "the value of the transaction in which they were acquired" is not disputed, this value cannot be determined by another test, be the reason for establishing the other price what they may." In our opinion, there must be a sufficiently good factual infrastructure to justify the Custom Authority's not accepting the value.
Regarding the invalidation of the origin certificate, this decision did not express the question of admissible evidence, that is- whether the invalidating document issued by the Dutch Customs is admissible, and whether there is a need for a witness to verify the accuracy of what is said in the document.
Regarding the Law of Indirect Taxes, another approach can be suggest, different from the one raised by the court, and that is that in a case of Euro1 certificates, the subjective circumstances of the importer should be considered, since in the end that is involved is an official document produced by a foreign Customs Authority, and reliance of it is legitimate.
תא 42687/03 Magistrates Court of Tel Aviv, decision given 27.5.07 (the names of the sides were not listed)
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