Comment on the ruling: “L., FE (TF31332-A) C/ DGA s/rec. direct from external organization (caf 19935/2023)»
1. Introduction
The April 8, 2025, ruling of the Third Chamber of the Federal Court of Appeals in the case "L., FE (TF31332-A) CAF 19935/2023" represents a regrettable setback in the defense of customs control and the public interest against under-invoicing schemes between related companies.
By reversing the decision of the National Tax Court (hereinafter TFN), which had confirmed the sanction imposed by the San Juan Customs under article 954, sections a) and c) of the Customs Code (hereinafter CA), it clings to a sterile formalism that disarms the inspection tools and rewards the opacity of the administered.
This post will attempt to shed light on the reasons why I assert that the TFN was correct on the merits (the technical issue of customs valuation) and that, on the other hand, the Supreme Court, with its excessive evidentiary requirements, betrays the principles that underpin the Argentine customs regime.
To delve deeper into the case, it should first be clarified that this is a case of "under-invoicing" between "related companies."
The dispute arises from auto parts exports made in 2003 by “Taranto San Juan SA” (hereinafter the exporter or the administrator) to a related company in Brazil, with declared FOB values - significantly lower - than those of operations with third parties in Uruguay and Paraguay (differences of 21% to 1423%) and the “2003 Launch Yearbook” of the company itself (up to 1700% difference).
The customs service adjusted the export value under Article 748, paragraph a) of the Civil Code, sanctioning the exporter for an inaccurate declaration resulting in fiscal losses and lower foreign exchange earnings than would have been appropriate.
The TFN, by majority, confirmed Resolution No. 93/12, applying the Arm's Length Principle (arts. 735, 746-748 CA; OECD Guidelines) and highlighted that the lack of justification of the declared price by the administrator, in the face of overwhelming evidence, was decisive in resolving the case.
2. The Chamber's ruling
The Federal Administrative Litigation Court of Appeals overturned the TFN's ruling, citing arbitrariness and insufficient evidence.
Their arguments—lack of comparative allocations, the inadequacy of the “Yearbook,” and the absence of currency verification—fall apart under a more rigorous legal analysis.
The reasons for the criticism will then be briefly outlined.
2.1. Excessive formalism in the face of compelling evidence
The Court demands that Customs attach copies of exports to Uruguay and Paraguay and detail their "quality, quantity, and commercial level," as if the preponderance standard, inherent to administrative sanctioning law, required the precision of a criminal trial itself.
Price differences (up to 1423%), extracted from official systems such as DISCOVERER and SIM ON-LINE, are sufficient indications to suspect underbilling between related companies. What else does the House need? An encyclopedic dossier when the risk of manipulation is evident? ...This formalistic rigor ignores the reality of customs operations and seems to overlook the fact that Article 747 of the Customs Code, specifically, shifts the burden of proof to the exporter in these cases (who must justify the declared price).
2.2. Disregard for the principle of full competition
The TFN was right to invoke this principle, incorporated into the AC since Argentina's accession to the OECD Inclusive Framework (1997). Transactions between related parties must reflect free market values, and differences of up to 1700% with the "Yearbook"—even if it is internal—reinforce the hypothesis of distortion.
The Federal Administrative Litigation Chamber, by dismissing it on technical grounds (lack of detail in comparisons), undervalues an international standard that protects the tax base and foreign exchange controls.
For example: if an iPhone is exported at USD 100 versus an external catalog at USD 1.000 (difference of 1000%), Would you also discard it for not including invoices from other countries?
We must accept that the response of the legal system, thus understood, would be absurd.
2.3. Incorrect interpretation of Article 954 of the CA
The Honorable Chamber maintains that there is no "inaccurate declaration" because the FOB value matches the invoices. This reasoning is flawed: Article 954 of the Civil Code does not penalize document falsification, but those statements that differ from economic reality and are, furthermore, capable of causing harm (among other possible effects).
If the exporter invoices USD 100 for a good whose current value is USD 1.000 (as in the case of the iPhone), the formal coincidence does not exempt him; it is a maneuver that should be considered designed to underinvoice. And the Supreme Court of Justice (Rulings 315:929) has emphasized that the legal right is substantial truthfulness, not the mere (bureaucratic) appearance that the Court ultimately upholds.
2.4. Reversal of the burden of proof
The Honorable Chamber criticizes the lack of currency research, but omits that Article 747 of the Civil Code requires to the exporter to prove that Its price, in short, did not differ from the current values determined by the CA.
Indeed, art. 747 of the CA provides that “The price paid or payable shall be accepted and in such case the goods shall be valued in accordance with the provisions of Article 746, paragraph 1, if the exporter demonstrates that said price does not differ substantially from…”The article is clear in stating who you have to try qué…says that “the exporter” must demonstrate “that said price does not differ from another value.”
In this case, at least, the client had years to present costs, bank statements, or a 2003 transfer pricing study (in short, to prove why there was such a price difference) and only offered one defense.
So why should Customs be such a thorough detective while the administrators sit back and do nothing?
The TFN understood this; the Honorable Chamber did not.
From this subtle but important difference of opinion, emerges the difference in the approach to the issue brought to the attention of both jurisdictional bodies.
2.5. Customs costs: an undeserved punishment
Imposing costs on ARCA is a low blow.
Customs acted in good faith and correctly; it detected a maneuver that it believed was affecting the public treasury and acted accordingly.
The Honorable Chamber penalizes it for not meeting an unrealistic evidentiary standard, which will also have the effect of discouraging the oversight of operations that, a priori, everyone realizes are unlikely to be genuine.
2.6. The standard of preponderance. The Honorable Chamber betrays it.
Administrative sanctioning law requires preponderance, not criminal certainty.
The Customs Service demonstrated that it was more than likely that the exporter had under-invoiced, and that, for this reason, the burden of proving the truthfulness and accuracy of the price fell on the exporter.
The TFN saw it clearly: in the face of clear, compelling evidence, it was the administrator who should have refuted it.
However, by requiring comprehensive documentary evidence (destinations, currencies, etc.), the Chamber is raising the intended evidentiary standard to a level incompatible with the nature of the customs administrative procedure, ignoring the fact that computer systems and catalogs are valid tools for inspection.
Let's imagine again the example of an iPhone exported for USD 100 versus an external catalog for USD 1.000.
The TFN would correctly sanction because a 1000% difference in a standardized product is unsustainable, or at least unsustainable without concrete evidence from the exporter to justify such a large difference.
The Honorable Chamber, applying its logic, would acquit him for lack of "objective verification," ignoring the fact that preponderance does not require such rigor.
What's even worse, this precedent, in the face of sophisticated maneuvers, nullifies the application of Article 954 of the Civil Code (on the violation of inaccuracy).
3.Conclusion
The TFN defended the public interest.
His ruling was, from my point of view, correct in substance: he protected customs control by suppressing under-invoicing, based on serious and solid indications.
In this regard, it should be noted that the conduct of the parties during the proceedings may constitute evidence.
For this reason, it was taken into account la ostensible inaction of the main interested party in demonstrating the true price of the merchandise.
When analyzing the application of this framework, it is worth considering Article 1174 of the Civil Code of the Nation (CA), which provides for the supplementary application of the National Civil and Commercial Procedural Code. Article 163, paragraph 5, paragraph 2, of the CPCCN (Constitutional Code of the Nation) provides that the conduct of the parties during the proceedings may constitute evidence.
It's not lost on me that Article 1174 of the Customs Code establishes that, in matters of violations, the Federal Code of Criminal Procedure shall apply.
However, art. 1181, section 2 of the CA refers to the procedure established in the Civil and Commercial Procedural Code of the Nation for freely granted appeals (without differentiating between violations) and art. 164 of the CPCCN provides that the final judgment of the second or subsequent instance must contain, where relevant, the statements and requirements established in the previous article (art. 163, section 5, paragraph 2 of the CPCCN).
At the same time, without intending to delve into the criminal aspects (since this is, in essence, administrative sanctioning law and not criminal law), the Federal Criminal Procedure Code does not prohibit the assessment of the conduct of the parties; it allows the evaluation of elements of conviction, both direct and indirect.
Likewise, going to more specific (or valuation) rules, it is worth reflecting on the fact that accredited doctrine (when speaking of imports - GATT system, law 23.311 and 24.425 -, a system much less theoretical than that of exports, cf. Brussels 1950) indicates that Advisory Opinion 19.1 It confirmed the role of national law in the investigation of fraud and assigned it the power to legislate on the burden of proof in determining the value. (see Daniel Zolezzi. “Customs Value” 3rd Ed, LaLey (2022), p. 427); then the more a theorized value must prevail in the face of indications that make it even somewhat ridiculous to maintain the opposite. (a difference in value above 1000% in a conjectural example - an iPhone - which, in fact, is even below the 1423% of the test case analyzed here).
The Honorable Chamber, with its formalist shortsightedness, dismantles a logical protection of the system, rewarding a lack of transparency and weakening the export regime.
If the objective of the CA, at this point, is to avoid fiscal losses and ensure the proper flow of foreign currency, the Chamber fails miserably.
The TFN, acting within the evidentiary limits at its disposal, at least tried (it genuinely sought the material truth of administrative law, expressly received for its process, by application of arts. 1143 and 1156 of the CA).
On the contrary, the Honorable Chamber of Administrative Litigation, in requesting such conclusive evidence, requests proof of smuggling in the context of a process for infractions (e.g., administrative sanctioning) and, in this way, annuls the application of art. 954 of the CA.
Note that it leaves the "smuggling report" as the only possible option (or reaction of the customs control system) ... and thus, via judicial interpretation - outside the scope of the law - directly annuls Article 954 of the Civil Code.
I honestly believe that a jurisprudential review is urgently needed to restore the balance between form and substance, before customs control, in terms of repelling customs violations and valuation problems, becomes a sort of mere spectator... it will be able to visualize what is happening, it will even be able to investigate, but when it comes to combating fraud, it will remain completely immobile.
It is regrettable that the legal interpreter equates the evidence of the violation (art. 892 of the CA) to that of the crime, a criminal offense with a prison sentence.
Lawyer (UBA), Customs Law Specialist (ECAE PTN), Customs Management Specialist (UNLaM), and Researcher (ECAE PTN). Professor of undergraduate and graduate customs law, member of the AAEF, IAEA, and the Customs Law Institute (CPACF). The opinions expressed in this publication are the author's own, technical, and should not be considered the opinions of any institution to which the professional is affiliated.
