Here we find the most common infringement figure that the customs service charges in import and export operations, which is described in the figure of article 954 of the Customs Code.
In order to begin the purpose of this note, it is therefore necessary to begin by determining what is intended to be protected by this figure, what in Criminal Law is called “the protected legal asset”. Thus, we can arrive at the conclusion that what is safeguarded turns out to be the veracity and accuracy of what is declared when carrying out a customs import or export operation, and it is then the legal obligation of the declarant, before the customs service, to do so in accordance.
From this point on, the infringement consists of a declaration that is different from that which arises as a result of the verification carried out by the customs; causing, or being able to cause, when noticed, some of the assumptions that the same article indicates in its sections: a) fiscal damage b) violation of an import or export prohibition, c) entry or exit from or to the exterior of an amount paid or payable other than that which actually corresponds.
The difference between what is stated and what is verified by the customs service is what gives rise to the inaccuracy of the declaration; and it may refer to different elements in the composition of the merchandise. Therefore, it is essential to correctly describe everything that refers to the operation (regime, tax, origin, tariff classification, value, etc.). Hence, the title of the infraction refers to “inaccurate declarations”.
Supreme Court ruling “Pioneer Argentina SRL TF 38718-A v. DGA”
Recently, the SCJN (29.02.2024/954/XNUMX) resolved a case in which it was debated whether the conditions were met to apply the sanction imposed by article XNUMX of the Customs Code, in the face of a possible declaration that would be inaccurate and for which, Customs applied the sanction that converges with this violation.
?Acts
The issue turned out to correspond to import operations, which have been observed at the declared value, based on the fact that the merchandise that entered Argentina (Pioneer Argentina SRL), coming from Brazil, had been acquired from a US seller (POCSM), who in turn had previously purchased it from the Brazilian company (Du Pont Brazil), the latter being the one in charge of the shipment - export from Brazil to Argentina.
In short, the importer in Argentina (Pioneer Argentina SRL) had purchased from the USA (POCSM) merchandise that the US company (POCSM) had previously purchased from Brazil (Du Pont). However, when the merchandise was sent to Argentina from Brazil, a difference in value was observed between what the importer in Argentina (Pioneer Argentina SRL) declared and what was set for the export from Brazil (Du Pont Brazil). This value was lower than that stated by the importer in Argentina (Pioneer Argentina SRL), who knew how to declare the value invoiced by the USA (POCSM) and that actually received by the USA.
The grounds for the observations made by the customs service were that there were no tangible contributions of added value that would justify the price increases declared by the importer from Argentina (Pioneer Argentina SRL). It should also be noted that the three companies (Argentina, USA, Brazil) were related in the terms of section 4 of article 15 of part I of the "Agreement on the implementation of article 7 of the General Agreement on Tariffs and Trade", approved by law 23.311, as they belonged to the same multinational economic group.
In this way, the disparity in value between the export from Brazil and the import in Argentina was the trigger for this discrepancy by the customs bodies, an aspect that involves the observance by the customs service of a triangular operation, which although this type of action gives rise to customs to investigate and collect information on the declaration made, in order to prove the existence of a difference between what was declared and what was verified, sufficient elements must be presented. Not constituting by itself a component that is suitable to be able to consider that the declared value does not imply being the real value of the transaction. To this, it must be added that any discrepancy in value must imply the concurrence of a due process of prior investigation, in accordance with what is mandated by the Valuation Agreement (GATT).
Based on the indicated difference in value, a complaint was filed for violation of article 954 of the Customs Code, based on paragraph c), which states: "Anyone who, in order to carry out any of the import or export operations or destinations, makes a declaration to the customs service that differs from what results from the verification and that, if it goes unnoticed, produces or could have produced:… c) the entry or expenditure from or to abroad of an amount paid or payable other than that which actually corresponds, will be sanctioned with a fine of one (1) to five (5) times the amount of the difference."
Thus, the Customs condemned (2) the importer and such decision was appealed before the National Tax Court, which confirmed the customs resolution. Then, the review was carried out before the Federal Administrative Litigation Chamber (Chamber III), which decided to revoke the imposed infraction sentence, concluding that it was not appropriate to apply such sanction to the importer from Argentina (Pioneer Argentina SRL), since it was proven that the prices declared by it corresponded to those actually paid for such merchandise to the USA (POCSM). That is, it limited the analysis of the rule to the last sale made, regardless of what the price paid in the previous sale by the US company (POCSM) to Brazil (Du Pont Brazil) had been, who exported said merchandise from Brazil directly to Argentina. The Court noted that the Tax Court had made an error in assessing the evidence produced in the case, since these proceedings did not discuss a value adjustment procedure - an issue referred to in the "Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade of 1994" - but rather the inaccuracy of a sworn statement in the terms of Article 954, paragraph 1, paragraph XNUMX. c) of the CA Likewise, the Federal Administrative Litigation Chamber (Chamber III) highlighted that the verification, through the use of the Indira computer system, that the merchandise had been exported from the Brazilian market at a price lower than that at which it was imported to Argentina does not constitute, by itself, a sufficient element to criticize the declaration made by the importer (Pioneer Argentina SRL), since the use of a triangular (successive) sales scheme and the fact that the companies were linked is not sufficient to consider that this is a simulated maneuver.
This led Customs to file an extraordinary appeal (REX) that gave rise to the decision of the SCJN, which is the subject of comment here.
?Decision of the Court
The Court relied on the guidelines and grounds provided by the Office of the Attorney General of the Nation, without prejudice to other considerations that we will highlight.
In this sense, it is appropriate to mention that the Attorney (3) before ruling, reflected something of utmost importance, that "The appeal has been granted only with regard to the scope and interpretation of federal regulations, and rejected with regard to the arbitrariness attributed to the ruling."
Based on this, the Public Prosecutor highlights that the legal right protected by the provision that sanctions inaccurate declarations is the principle of truthfulness and accuracy of the statement or declaration of the merchandise that is the object of a customs operation or destination. Likewise, it refers to article 954, section 1, subsection c), of the CA, stating that "the primary function of the customs agency consists of 'exercising control over the international traffic of merchandise, for which the inspection of the correspondence between the amounts arising from the declarations committed by those who act in this area and those attributable to the operations actually carried out cannot be indifferent. It is from this broad perspective that it exceeds the strictly collection purposes - protected by section a) of art. 954- and is linked to and consistent with the exercise of the police power of the State (cf. concurring vote of Judges Belluscio and Petracchi in the precedent “Subpga”, already cited), as must be appreciated in accordance with the provisions of paragraph c) of the aforementioned article, the text of which, moreover, does not authorize a contrary interpretation since it refers to amounts other than those that actually correspond -which obviously covers both differences in pluses and differences in minuses- whether it is a question of import or export operations or destinations.” (Rulings: 321:1641, cons. 7°; criterion reiterated in Fallos: 322:355, among others).”
And based on this settled interpretation of art. 954, par. 1, inc. c), of the CA, the Attorney General rules that, “the Chamber, based on the facts and evidence presented in the case, found that the prices declared by the importer (Pioneer Argentina SRL) corresponded to those actually paid by it to the US seller (POCSM) for the purchases made, which eliminates any possibility of the alleged infringement being configured.” Such statement was based on the assessment of the factual elements and evidence in the file, considering it unreviewable in this instance, as the Attorney General again emphasized that, “the order granting the extraordinary appeal was sufficiently explicit in that it limits the admissibility of the appeal to the federal issue and the appellant did not file a complaint regarding the denied arbitrariness.”
The Public Prosecutor concluded that, “from this perspective, it is necessary to conclude that the necessary elements of the infringement provided for in art. 954, paragraph 1, paragraph c) of the CA are not met, since the existence of differences between the declaration committed by the importer (Pioneer Argentina SRL) and the result of the verification of its payments to its US supplier (POCSM) has been ruled out, an unavoidable requirement for the configuration of the criminal type under consideration.”
?Relevance of the ruling
Without prejudice to the notoriety involved in issues relating to the value of the merchandise and consequently the possibility of carrying out controls on this matter from the orbit of customs and its power to reach a value adjustment, it is certain that in the case, the appeal has been granted only in relation to the scope and interpretation of federal regulations, regarding whether the conditions for applying the violation of article 954, paragraph c) of the Customs Code are met.
From here, what was decided by the CSJN turns out to be of great importance, mainly because it recalls the principle of the duty of judges to apply the law, without assuming a legislative role that is not their responsibility.
Indeed, the core of the ruling denotes a revaluation of a vital concept in justice, which is the care of the law at the time of resolving, as mandated by the first interpretive source, which is its letter. Even above the judgment that may exist regarding other issues, in this case, which exceed the customs matter. This is of utmost relevance, because, in the case here discussed, aspects are noted that involve, indirectly, issues on the control of entry and exit of foreign currency, which in recent years have led to the transfer of inspection powers to customs that are not within its jurisdiction, as is the case of the liquidation of foreign currency that has been inspected by customs bodies and even required to be complied with under penalty of preventive measures such as suspensions from being able to exercise the activity of importer or exporter.
?Interpretation of article 954, paragraph c) of Law 22.415
Thus, based on this significant decision of the Court, the Supreme Court of the Nation not only shared the grounds of the opinion of the Attorney General, but also added categorical aspects when analyzing article 954 of the Customs Code, maintaining that "the text of art. 954, ap. I, inc. c, of the Customs Code, by not contemplating the assumption of successive sales of the same merchandise, also does not foresee that - for the purposes of establishing the price that "effectively corresponds" - the price of the last sale should be disregarded and the prices of previous sales should be taken into account." To which it should be added that, "no presumption arises from said rule that, in the case of successive sales between related parties, establishes that the price difference that may exist is due to said connection, imposing for this reason the reversal of the burden of proof and placing on the head of the importer or exporter the demonstration that the connection did not affect the price or that such price is typical of a transaction carried out between independent parties."
Thus, leading to the consideration that if, when declaring the operation, the price corresponding to what was actually paid was transferred, there would be no stage that supports an inaccurate declaration, in accordance with what is determined by article 954 of the CA. Remembering for this, that the law (art. 954 of the CA) does not contemplate the case of successive sales of the same merchandise, nor does it foresee that when referring to the concept of “effectively applicable” it should deviate from the price of the last sale.
To this end, it indicated that the type of infraction in art. 954, section I, paragraph c, of the Customs Code, when sanctioning the customs declaration that differs from what results from the verification and that, if it goes unnoticed, produces or could have produced "the entry or exit from or to the exterior of an amount paid or payable other than that which actually corresponds", limits the examination of the discrepancy between the declared price and the amount spent - in the case of imports - to the last sale in cases of successive sales.
?Interpretation of the Valuation Agreement Law 24.425
The Court added that, “this interpretation of art. 954, par. I, inc. c, of the Customs Code coincides with the interpretation made by the Technical Committee on Customs Valuation of the World Customs Organization, the body responsible for ensuring, at a technical level, the uniformity of interpretation and application of the “Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade of 1994” (hereinafter, “Valuation Agreement”), approved by Law 24.425 (conf. art. 18 and Annex II, art. 1).” Indicating that, “in Commentary 22.1 of the Technical Committee on Customs Valuation, referring to the “Meaning of the expression 'sold for export to the country of import' when there is a series of sales” adopted at the 24th Session on April 26, 2007 (compiled in Zolezzi, Daniel, Customs Valuation (Universal WTO Code), 2nd updated and expanded edition, La Ley, Buenos Aires, 2008, p. 471 et seq.) it is analyzed which of the sales, in a series of sales, should be used to determine the transaction value in accordance with arts. 1° and 8° of the Valuation Agreement”.
Furthermore, “Art. 1.1 of the Valuation Agreement provides that “the customs value of imported goods shall be the transaction value, i.e. the price actually paid or payable for the goods when they are sold for export to the country of import, adjusted in accordance with the provisions of Article 8…”. In this regard, Comment 22.1 notes that the transaction value (the price) is the first basis for determining the customs value. The comment then refers to the case of “successive sales” by stating that “in the case of a series of sales, it is necessary to establish which of the sales determines the price actually paid or payable for the goods when they are sold for export to the country of import. The series of sales implies a last sale that is made in the commercial chain before the introduction of the goods into the country of import (the last sale) and a first sale (or previous sale) in the commercial chain.”
Noting that, “Commentary 22.1 concludes that “The price actually paid or payable for imported goods when they are sold for export to the country of importation is the price paid on the last sale taking place before the introduction of the goods into the country of importation and not on the first (or previous) sale.” This is consistent with the underlying hypothesis and with the objectives and general text of the Agreement.”
Confirming the decision of the Federal Administrative Litigation Chamber (Chamber III), which, as mentioned, considered that the violation of article 954, paragraph c) of the Customs Code is not applicable to the case.
In accordance with this, this ruling eliminates any possibility of applying sanctions on facts based on aspects that are not contemplated in the letter of the Law in order to resolve them. On the contrary, it visualizes a fundamental premise, in many cases forgotten, on the incorrect interpretation that can be made with a view to objectives that are not related to customs matters.
Conclusion
The principle of the duty to apply the law may not seem transcendental, since it is a fundamental basis when making a decision, but its reminder by the Supreme Court of the Nation transcends the particular issue being decided, highlighting that the Law must be applied, without prejudice to the judgment of devaluation that may be deserved by some aspect that goes beyond customs matters, such as exchange or tax matters, thus stating that it is not up to the judges to judge the correctness or convenience of the provisions adopted by other powers in the exercise of their own powers, and must limit themselves to their application as they conceived them.
As Dr. Enrique C. Barreira (4) states, in order to speak in a known language and articulate a coherent solution with the legal assets to be protected, the interpretation of customs institutes must first be sought within the same legal system that contains them. Above all, if it has penal consequences. This does not mean denying the hermeneutical plenitude of the law in its entirety, but rather ordering the path to follow it by beginning to understand the same system that contemplates the sanction.
Thus, this decision of the SCJN recalls that the letter of the law is what must prevail over interpretations that, in many cases, tend to arise from an interest unrelated to what responds to customs matters and, therefore, even when there may be a purpose in the State based on issues within its scope, but not customs-related, it does not give rise to or justification for the possibility of deviating from the law.
- Pioneer Overseas Corporation Supply Management
- Resolution of the General Directorate of Customs (DE PRLA) 3.211/17
- Dr. Laura Mercedes Monti, Attorney General of the Nation, opinion 21.4.2021
- Dr. Enrique C. Barreira, “The use of transfer pricing to impute a customs infringement due to inaccurate declaration”, 24.10.2021. Tradenews.
The author is a lawyer and member of the Institute of Customs Law and International Trade of the Argentine Association of Constitutional Justice.
