VALUE ADJUSTMENT. INTERNAL TAXES. INACCURATE DECLARATION. MARIA SYSTEM.
In Buenos Aires, on the 25th day of the month of April 2003, the Judges of Chamber E, Drs. D. Paula Winkler, Gustavo A. Krause Murguiondo and Catalina García Vizcaíno, with the second of the aforementioned presiding, met to issue a new ruling in the proceedings entitled: DISPORTEKO SA, file TFN No. 9174-A;
Dr. Winkler said:
I.- That, in what is now of interest, on pages 192/193 and back, the Honorable Court of jurisdiction resolved, imposing the costs in order, to return the case to this Court for the purpose of ruling on the charge for tax differences duly formulated by the customs service in art. 4 of ANCO ruling No. 450/97.
That, in the statement of 24.2.99 of this Court (see pages 154/156) as well as that of 26.3.99 (pages 162 and back) it is not considered that any specific arguments have been made regarding this issue, which is now to be resolved, it is appropriate for this Court E to resume its jurisdiction for the purposes indicated by the Court of Appeal.
That art. 4 of the aforementioned ruling provided for a charge to be made for tax differences in the amount of $7.346,23. This sum arises from the liquidation recorded on page 136 ref. of the administrative file that runs separately and that arrives at this amount by calculating the difference between the import taxes formalized through di IC04-025126-C, paid by the appellant, and those resulting from adjusting the value of the merchandise, in addition to adding the internal tax, which considers the applicable customs service with respect to the merchandise included in sub-items 39 to 47 and 67 (bracelets); 50 to 66 (rings); 68 to 80 (pendants) and 81 to 109 (earrings). It should be clarified that the internal tax is applied in this case because it is considered that the tariff classification of the merchandise involved must be made, in what is of interest now, in the SIM 7113.11.000 and not in the residual one reported by the plaintiff, that is, 7117.90.900 (note that the effective rate is applied to the total VAT taxable base on the total of the merchandise recently mentioned. See fs. 136, which was the one taken into account by the judgment now in view, and also the report on fs. 121 of the proceedings).
Furthermore, as I said, in what is of interest now, it should be noted that the tax base was also adjusted by the value adjustment made (see pages 148 and catalogues in copy of pages 140/147) and the response to the measure ordered in the proceedings on pages 71 (pages 186/189 of the previous administrative proceedings, specifically pages 187/188 and 189).
II.- That, prior to issuing the pending ruling, it should be noted that the plaintiff disputes the value adjustment made and that it consents to the application of the internal tax with respect to the rings, pendants and earrings. Not so with the bracelets and necklaces, it should be noted that the latter have not been considered in the charge, according to the liquidation recorded on fs. 136, which determined a difference in taxes of $ 7.346,23, which is the amount claimed, plus interest in point 4 of the judgment in question. The latter arises from the presentation of fs. 129/130 and vta. ref. from the written summary of the now appellant's argument - in which the existence of a classification error is admitted as regards the rings, earrings and pendants that should have been classified under tariff item 7113.11.000.000 (not because they are jewellery, but because it is the only item that provides for payment of inmates and there is no specific item provided for costume jewellery made with noble metals) (see also fs. 169 of the expression grievances, which made the Court consider that this Court should issue this item).
Therefore, for the purposes of determining whether the charge under review is legally admissible or not, there are two issues to consider: the first is whether the adjustment is admissible with respect to the merchandise involved in this case, as set out in the previous section, and the second is whether internal taxes should be paid with respect to the bracelets, since the plaintiff disputes the application of the aforementioned tax with respect to this merchandise.
III.- That in relation to the first question, that is, the adjustment made, it should be mentioned that the prices declared in pesetas in the shipment in question coincide with those that appear on the invoice (see fs. 70, on the shipment container and its respective invoice).
That the customs office acknowledges in its report on fs. 148 that it is not possible to attach records of the value of merchandise identical to that valued, simply because they do not exist. It adds that the Office subject to the proceedings was the 1st. with a RED Selectivity Channel and that similar merchandise would have to take into account the following parameters: – same origin and different brand (there are no records in the Branch) different origin (there are no comparable merchandise since Majorica Jewelry is solely Spanish and made with a procedure (user manual), sic. Catalogs of merchandise of the same brand, tax-free, from the free shop are attached, in which only suggested prices of earrings and pendants appear, without model numbers, when from invoice 16035, found in the container envelope on fs. 70, it is possible to deduce price differences according to the model of each declared sub-item). It is also not possible to determine the date of these catalogs.
That pursuant to the provisions of Law 23.311 and Article 18 of Decree 1026/87, as of 1.1.88, Articles 641 to 650 and 652 to 659 of the General Agreement on Tariffs and Trade were repealed. Law 23.311 approved the agreement on the application of Article VII of the General Agreement on Tariffs and Trade and the Protocol to that agreement on its application, signed in Geneva on 12.4.79 and 1.11.79, respectively.
In turn, Law 24.425 approved, among other provisions, the agreement regarding the application of Article VII of GATT 1994. This law does not apply to the present, as it is an order from 1994, having entered into force on 14.1.95.
That, under the law now applicable when the transaction value is not applicable, imported goods must be valued by other methods that are applied in descending order. The first is the transaction value, then the price of identical goods to those imported must be adopted and, in the absence of these, the price of similar goods following the deductive method of the internal market value. The value reconstructed from additions to the cost of production of the goods continues, ending with the method of last resort that allows a flexible application of reasonable criteria compatible with the Gatt agreement. The transaction value is a positive criterion of value, which with the exceptions of art. 8 of the agreement, cannot be subject to recomposition.
I have ruled that this does not prevent the Treasury from having the right to verify the veracity of the value declarations. In addition, vile or ridiculous prices can be investigated. Therefore, the transaction value contained in commercial invoice No. 16.035 can be reviewed by the customs service in the opinion of the undersigned - but on the basis of reliable elements (case No. 9982-A, judgment of 25.6.99 of Chamber E, among others), which unlike other cases ruled by this Chamber in this species, in my opinion, do not exist.
This is supported by the provisions of Article 17 of Law 23.311, which literally reads: None of the provisions of this agreement may be interpreted in a way that restricts or calls into question the right of the Customs Administrations to verify the truth or accuracy of any information, document or declaration presented for the purposes of customs valuation.
It should also be added that in this case it is possible to analyse the issue of adjustment even though the judgment of 24.2.99 had decided to approve ANCO ruling No. 450/97 in what was considered subject to appeal at that time, that is, in relation to the acquittal of the accused, since this was brought about by the application of art. 898 of the CA, having considered that there was a reasonable doubt as to the very configuration of the inaccurate statement, so in my opinion there is no impediment to analysing this issue, nor a contradiction between both rulings in doing so.
IV.- That, based on what has been set out in section III, in my opinion, the plaintiff is right in that the adjustment of the tax base made by customs is not appropriate. Therefore, the declared prices must be maintained for the purposes of determining the tax due.
V.- As regards the internal tax, I refer to the opinions on pages 115/120 and 121, which I share, in the sense that bracelets with gold-plated silver clasps, with or without zircons, are not included in the scope of the internal tax - art. 87 of the DR of the internal tax law (to in 1979 and its amendments). Said art. literally reads: the exemption provided for in art. 64, last paragraph of the law, extends to objects simply plated in silver, gold, platinum or palladium (...) The presence of gold, silver, platinum or palladium in the form of threads, ferrules, guards, corner pieces, monograms, clasps or other similar attachments does not determine the application of the tax, but they will be subject to tax when sold loose.
That, therefore, said merchandise, that is, the ninety-four bracelets, must be excluded from the calculation of the internal tax.
Since, as I said, the appellant does not dispute the imposition of this tax on the remaining merchandise, it is appropriate in this sense to confirm the customs requirement.
That, taking into account what has been stated above and especially the appellant's recognition regarding the rings, pendants and earrings, it is not appropriate in my opinion to enter into the classification issue.
VI.- That, then, it is appropriate to partially modify art. 4 of the appealed judgment, ANCO No. 450/97, providing that the plaintiff owes customs the sum of $1.781,90 (one thousand seven hundred and eighty-one pesos, with ninety cents) in the concept of tax differences, without prejudice to the interest accrued pursuant to art. 794 of the CA, sum that arises from the following calculation:
Rings x 192 ……… $ 3.300,98
Pendants x 185 …… $ 2.626,79
Earrings x
1.126 ……………….. $ 14.410,74
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Total ………………….. $ 20.338,51 (+ $ 462,04 Freight + $ 459,27 Insurance) =
Taxable base $ 21.259,82
Rights (12,5%) … $ 2.657,48
Stat. (10%) ………. $2.125,98
VAT base $ 26.043,28 (x 1,3 for internal taxes) = $ 33.856,26 (see General Resolution DGI 2206/79 et seq. and art. 2 of Decree 533/91, which modifies art. 76 of the Internal Tax Law (as of 1979) by reducing the percentage provided for therein)
Rate 5%
Effective rate: 100 x rate = 5, 2631578
100 – rate
Internal tax ………….. (effective rate on VAT taxable base x 1,3) = $ 1.781,908.
The costs are imposed, according to the mutual due dates. The plaintiff shall pay the action fee - law 22.610 within the fifth (5th) day, under penalty of the General Secretariat of Customs Affairs issuing the respective debt note. I VOTE SO.
Dr. Krause Murguiondo said:
Which substantially adheres to the preceding vote.
Dr. García Vizcaíno said:
I substantially agree with Dr. Winkler's vote.
Pursuant to the above vote, it is unanimously RESOLVED;
1.- Partially modify art. 4 of the appealed judgment, ANCO No. 450/97, ordering that the plaintiff owes customs the sum of $1.781,90 (one thousand seven hundred eighty-one pesos, with ninety cents) in the concept of tax differences, without prejudice to the interest accrued pursuant to art. 794 of the CA, according to the calculation arising from recital VI of Dr. Winkler's vote.
2.- Costs according to mutual due dates.
3.- The plaintiff pays the action fee law 22.610 within the fifth (5th) day, under penalty that the General Secretariat of Customs Affairs will issue the respective debt note.
Register, notify, promptly return and archive the administrative records.
