Gill Nadel, Adv.
The saga of the raisins that masqueraded as blackberries is still not over. Recently, a decision was given by the Supreme Court (on an appeal on the decision of the District Court), which rejected the appeal of the importer, Poliva Company (עא 9647/05, for the importer- Adv Kenan; for the state- Adv Atila).
For the purpose of manufacturing purees, the importer imported into Israel certain fruits (currants) which it described on the importer directories as dried blackberries. After inspection of the goods, customs realized that they were dried grapes, which are subject to a security excise for their import from the US, and according requested that the importer pay this tax.
The importer filed suit under paragraph 50 to the Law of Commercial Excises on the decision of customs, making a number of claims: that its classification stance was correct, that a security excise should not be levied against these goods no matter what the classification might be, since it deserves an exemption under paragraph 3 to the Law of Indirect Taxation, and that the finished good leaves Israel and therefore it deserves a tax refund. The District Court of Tel Aviv rejected the importer's appeal. Therefore, the importer filed an appeal with the Supreme Court, which was rejected.
On the question of classification, the Supreme Court saw no reason to interfere with the decision of the District Court, as the rule is that appeals courts do not interfere with the factual findings of the court of first-instance, unless it is an instance when the decision gives rise to a blatant legal mistake or things are obviously ridiculous or unreasonable.
Regarding the validity of the security excise- the Supreme Court held that the excise was levied in accordance with the law by the Minister of Industry, Trade, and Labor, after consulting with the Agricultural Ministry, with the goal of protecting local production of dried grapes against competing importation. The court noted that there is no significance to the fact that this specific variety of goods does not grow in Israel, given the testimony given before the court of the existence of local substitute production of dried grapes of other varieties and that permitting importation would cause concrete damage to local manufacture.
The Supreme Court also rejected the claim of the importer regarding paragraph 3 to the Law of Indirect Taxation which enables the receipt of an exemption for tax deductions. The court found that the importer gave incorrect information by describing the goods in the directory in an inaccurate manner, and therefore ruled that the importer should have known that these were raisins and not blackberries.
An interesting point not decided in the Supreme Court's ruling is the significance of another decision, between another importer and the Customs Authority, in which it was ruled, to the benefit of the importer, that there was a commercial practice according to which the relevant goods were called “dried blackberries” and only the Customs Authority had doubts as to the classification of the product and therefore, it was ruled in that case that the description of the goods in the import directory as dried blackberries was not an inaccurate description. In our case, the importer tried to rely on that decision and argued that the Customs Authority is subject to that decision given against it, against which it didn't even appeal. The Supreme Court did not rule on this issue, while noting that the ruling on this issue will not affect anything, since it established that the importer gave incorrect information and anyway would not have met the conditions of the Law of Indirect Taxation.
(On the additional decision see:
http://www.nadel-law.co.il/Index.asp?ArticleID=156&CategoryID=235&Page=1 )
Another point that the court dealt with was the argument of the importer that it deserved a refund of 90% from the sum of the excise that it owes, as it exported the goods out of the country. Unlike the District Court, which summarily rejected this claim by ruling that without a physical inspection at the time of the export of the goods the importer may not enjoy this refund, the Supreme Court was willing to consider forgoing the physical inspection. However, this was not enough to help the importer, since it was not able to supply other good proofs that what it exported was what it imported.
עדכוני מכס ורגולציה
