ECJ: Customs must justify customs value

In its ruling of 9 November 2017, the European Court of Justice (ECJ) issued a preliminary ruling on the obligation of the customs administration to state reasons for the choice of the method to be used to calculate the customs value. It requires customs to apply the customs valuation methods in sequence and to justify the refusal of a method in a comprehensible manner. Companies should take this decision as an opportunity to review their customs valuation and, if necessary, to enforce their position vis-à-vis the customs authorities.

Customs must justify exclusion of a customs value method

Among other things, the Latvian Supreme Court asked the ECJ for a preliminary ruling on whether the customs administration had to explain why in the specific circumstances the customs value cannot be applied on the basis of the purchase price (transaction value method). In the event of a dispute, the goods were transported to Russia under the transit procedure. Customs chose the final method without justification.

This question was answered in the affirmative by the ECJ. In accordance with its established case-law, it emphasised the subsidiarity of the methods used to determine customs values. Only when a method mentioned above is inapplicable in a specific case can the method laid down in the Customs Code be applied. In applying the final method, the customs authorities would therefore have to justify why they have excluded the use of any other method.

Customs value must be transparent for debtors

The debtor must be able to decide whether he wishes to appeal against the decision on the basis of the reasons given. The justification also enables the courts to review the legality of the decision. Therefore, the justification for fixing the level of import duties must also include all the data on which the calculation of the customs value was based.

Check your customs value calculation now

Companies should check their customs value calculation. It is true that the customs authorities are obliged to justify their choice of customs value method. However, it is primarily up to the declarant to calculate and declare the applicable customs value himself. Companies need to know exactly which circumstances of the case could be relevant for customs value.

With reference to the ECJ ruling, companies should enforce the applicability of a specific customs valuation method where appropriate. Whoever’s here exactly can save a lot of trouble and money. Because with errors not only considerable additional payments threaten, but also always criminal consequences.