Rule 2.A and criminal jurisdiction

The exercise of customs control has a primary function in classification matters. Now, the discrepancies that may arise from a declaration that affects the Tariff Position due to the application of Rule 2.A, do not necessarily have to be classified as a criminal offense within the jurisdiction of the Court. 

On different occasions, due to the mere existence of an alleged violation of Rule 2.A, the courts are called in because it is considered that there is a smuggling-type situation, charging not only the importer, but also the customs agent. However, the guidelines invoked by the Law are not always met to be faced with a cause that requires the intervention of the Economic Criminal Court. If this occurs, a resolution must be issued to decide its incompetence and move on to the fiscal treatment of the Customs itself within the framework of the alleged infringement that may correspond, which generates an unnecessary procedural blunder with painful consequences for those who are identified as offenders. 

Tariff classification 

On January 5, 2005, Law 25.986 (Art. 47) repealed Article 957 of the Customs Code. Such legislation stipulated that, “Inaccurate tariff classification included in any declaration related to import or export operations or destinations shall not be punishable if all the elements necessary to allow the customs service to correctly classify the merchandise in question have been indicated.” That is, tariff discrepancies are not punishable as long as all the elements necessary to allow the customs service to correctly classify the merchandise are included.

Although this rule has been forgotten from the point of view of its exposition in the positive law that integrates the codification of customs regulations - Law 22.415 -, certainly, its spirit prevails as regards the fact that tariff classification is a technical space proper to the suitability and definition of the customs body. Consequently, every declaration will be in the first or second step of control traceability. (primary instance of verification prior to issuance and secondary instance after issuance) reviewed by Customs to verify whether the classification is in compliance. To this end, all the elements that have been provided as a result of customs requirements are used, plus those that may be useful for sound criticism in this matter.

Thus, it is eloquent that the classification priority, in our opinion, resides in the customs service, and although the declarant must proceed to classify in his declaration, any objection that may arise from the subsequent inspection must be duly reviewed to observe where it should be introduced in the plane of an infraction. This is because not every classification difference, in itself, has an impact on customs control in penal terms. Even when the genesis of such disagreement is the non-application of Rule 2.A.

We recall that there are different tariff classification systems and each one has its own particularities, its primary source being the Harmonized System of Description and Coding of Goods, as promoted by the World Customs Organization, giving rise to its use by most countries, whether from a national or multinational point of view due to unions that have been established between them. There are six General Rules for the Interpretation of Nomenclature (RGI) that establish the principles that govern tariff classification. The rules are included in the Preliminary Provisions of the Nomenclature and in more detail in the Explanatory Notes of the Harmonized System and are classified as: Rule 1 (1); Rule 2 (2) ( A,B,C); Rule 3 (3) (A,B,C); Rule 4; Rule 5 (A,B); Rule 6; General complementary rules. 

This scheme of immense technicality, observes a duty of the Customs to fit the correct application of the classification to a merchandise, which results, ultimately, in transferring the nature and type of a merchandise into a customs language that will result in the framework of the regime to be applied both in tax matters, as well as in terms of the possibility of being merchandise enabling its entry or exit from the customs territory.

For these purposes, any declaration made by the subject himself may be based on the rules imposed to achieve codification, but this in no way removes it, whether its classification definition is correct or not, from the scope of Customs, to which it will inevitably pass to give conformity to such action. Consequently, not all disagreement simply exposes an intention to evade customs control in order to obtain a benefit. 

It is here where the tax review in classification matters must keep two aspects of singular importance, the first, the determination of the classification, specifying whether the declared is compliant or not; the second, and based on the observation of the Tariff Position, the duty to assess whether there is the presence of an intention to avoid the correct classification by hindering customs control or if it is only an error that comes from the own choice at the discretion of the declaring subject. For this last case, aspects that deal with the elements that make up the radius of documents that support the classification must be evaluated and not the mere discretion of considering that such discrepancy imposes the figure of a criminal type in terms of smuggling due to the omission of Rule 2.A.

It has already been pointed out with great clarity by Dr. Juan Patricio Cotter that it is appropriate to be tolerant of discrepancies or modifications in classification, given that it is a technical task of manifest complexity. Now, just as the AFIP can and must review its technical conclusions and all subjects linked to customs activity must accept these revisions and classification modifications, which in many cases can lead to operational complications, it is appropriate to keep in mind that in the same way there should be a certain tolerance with classification errors in which a declarant could incur. In effect, just as AFIP officials can allow themselves to make a rectification in the technical assessment of a merchandise and then review its position, it is also appropriate to accept the declarant's technical error, obviously when this error is objectively understandable and reasonable. (4). 

In this regard, if the elements show that the merchandise is reasonably supported by Rule 1, which should be prioritized from the scale of the harmonized coding system, should not be subject to criminal treatment due to the presumption of smuggling, not because of the eventual observance that may be made a posteriori with respect to Rule 2.A, which would generate a discretionary criterion without a factual source to justify such a commitment. 

The customs agent

From what has been pointed out so far, it is appropriate to introduce the figure of the customs agent and his actions in classification matters. To which it should be noted that, if the customs agent receives documents that support the criterion of classification towards Rule No. 1 and not Rule No. 2, even when there may be differentiated operations, this should not be sufficient to give a criminal nature to such classification discrepancy. 

It is therefore necessary to point out here that, the clearing agent, upon his intervention, if independent commercial transactions are carried out and in accordance with this, on the basis of documents that can conceive duly legalized certifications, such as the certificate of origin and/or the commercial invoices themselves, must make the declaration in accordance with what is mandated by the classification regulations for these cases in order to Rule No. 1. Taking into account that the degree of intention to act contrary to the law cannot be considered, and if in fact, it may later present a classification discrepancy, this should not be punishable in terms of a criminal reproach stage. 

It is worth remembering that in the area of ​​infractions, considerations have been upheld as to the fact that, "the wrong that arises is corrected by differentiating the assumptions of responsibility. In this sense, I must not fail to point out that guilt is not an autonomous element to prove administrative sanctioning responsibility, since there are those obligated who do not have the capacity to act, and consequently, the possibility of attributing subjective attribution factors is even less likely. Although this implies that the criterion of legality is conceived without taking into account any subjective element, it is no less true that, in the hypothetical case that the person or persons in charge consider that the sanction is unreasonable because its application is disproportionate in light of their diligent behavior, a scrutiny of reasonableness must be made regarding the possibility of abstract compliance with the requirement imposed, which in this case is limited to the fact that the exporting firm and the intervening customs agent should have known the material properties of the declared merchandise. We consider that this doctrine deserves special emphasis. Not all classification disputes merit reproach for infringement. It is necessary, as in all cases of a repressive nature, to analyze the conduct of the administrator. (5). 

The above leads us to further state that discrepancies such as those mentioned should not be classified as criminal cases when there is evidence of no violation of customs control, no intentional action, and no documentation has been provided that could be considered untrue after its legalization by the competent authority, showing diligent action. In short, in these cases of alleged failure to apply Rule 2.A, the case for any action that requires a trial should clearly be brought before the competent judge, which is the administrative judge of the General Directorate of Customs, since this is an alleged violation in terms of Article 954 of the Customs Code and not smuggling. 

Otherwise, an advance of the judgment of unlawfulness would be configured, as the result of a fact is attributed to it, disregarding subjective elements, such as the intentionality of the subject. What in cases where there was no declaration far removed from the components that support it, especially if these suitable elements are legalized, showing that the action of the dispatcher does not imply a risk that could have created, a risk not permitted on the protected legal asset. This is expressed on the basis that the dominability of the fact is negative and this occurs when the means are notoriously inadequate to obtain the ends; in other words, when the choice of the means is grossly suitable to achieve a determined end, defined as such by its action lacking interest in producing a result that is seen in circumventing, obstructing, deceiving, evading customs control. Consequently, the imputation must be excluded, since the actions of the Customs Service as custodian of the legality of the operation mean that the cause of the cause is not considered the cause of the result, thus excluding the objective imputation (Mir Puig, cited in Resolution No. 137 dated 14/09/02006 of the Superior Court of Justice of the Province of Río Negro, issued in File No. 20699/05.)

As such, any charge, as long as it cannot clearly show the intention to participate in a fraudulent act, implies an accusation based on a mere principle of risk, legitimizing a reproach and a penalty by way of prevention, but not by the adequate interpretation of the conduct. It must be kept in mind that, if the operations are real and within the margin of the law, leading to equate some alleged falsehood in commercial invoices with the possible illegality of the criminal type charged, based on a classification discrepancy resulting from the non-application of Rule 2.A, would be, at the very least, exaggerated, especially if the legalization of such instruments can be observed in these documents, as can usually happen. 

In order to do so, the eventual classification discrepancy that may arise in the framework of customs operations, taking into account the truthful documentation, even in the face of the difference in the application of Rule 2.A, arises that we are faced with the presence of an infraction and not a crime and deciding to transfer jurisdiction to the Justice system implies removing the accused from due process, without at least a prior and exhaustive investigation by the Customs Service itself. 

The Economic Criminal Court has held that the lack of deceit or in this case due to the type of deception and has even gone further by pointing out that, in some cases, it is difficult to differentiate concealment for the purpose of evading customs control from simple concealment for security reasons. Pointing out that, in this sense, the doctrine and jurisprudence admit that in certain cases and, even, in the hypothesis of acting fraudulently, their conduct would not exceed the scope of an offence. Indeed, in different rulings it has been held that, “In order to determine whether the act or omission charged is a crime or customs infraction, each specific case must be analyzed, placing emphasis on the manner or way in which the illegal entry or exit of merchandise via baggage was attempted and not, as often occurs, on the quantity, quality or value of the same…in this case, there are not sufficient elements of conviction to consider that there was a fraudulent proceeding… On the contrary, the attitude of the accused -… is the usual one of every passenger and, as I already mentioned, cannot be understood as constituting a ruse or deception intended to prevent or hinder customs control” (6). The considerations made by the Court of Justice and its judges when referring to the particular topic in doctrines are noteworthy.(7), through which it supplies applicable to the present, despite referring to another stage of infringement, finds acceptance that, in the absence of an action that does not disturb the control and that the mere discrepancy effect of the customs service cannot be channeled into the criminal identity. 

For his part, Dr. Hector Vidal Albarracin has considered that, “a malicious conduct may fall within the category of infringement, as long as it does not have an added value to make control difficult”(8), which and in the face of the state of a situation of observance, ultimately classificatory, such as the one referred to here, must reach the nature of an infraction and not subject to the course of a criminal process facts that respond in their state to an inaccuracy that resides in the customs service itself to substantiate whether it has been presented or not. 

In short, the framing of a classification discrepancy cannot be influenced at the discretion of the mere action of deciding to involve the Justice system, without observing anything other than its support in the presumption of inaccuracy. 

It is important to insist on the moderation and prudence that must prevail in any criminal approach, since it is truly alarming that a situation in which a problem of interpretation of legal norms arises, which is also debatable for the same customs officials, can lead to an accusation of the crime of smuggling, with all the irreparable consequences that this entails. (9) -Prohibition of leaving the country, embargoes, suspension of the dispatcher's registration, impossibility of working, impossibility of self-support, family, employees due to the effects of being involved in a criminal case and bringing about the suspension of their profession.. All of this, even when in the end it is arranged in the sense of being faced with an infraction, but the difference between placing the fact here in the course of a criminal action, will turn in times proper to this type of criminal cases, to a result of irreparable damage, which occurs even in the face of the state of the guarantee of presumption of innocence, due to the mere circumstance of a claim to enter the criminal sphere what should have been noted within the administration, in its eventual case, of an infraction that can clearly be subject to review by the customs bodies around what here, in these cases, would turn out to be an alleged inaccuracy, just that. 

Conclusion 

The Economic Criminal Court itself has pointed out that, “in any case, a solution was chosen that ab initio appears possible, having made available to the National Customs Administration all the necessary elements to resolve the case. This case is, and according to the records, a discrepancy between the importer and some officials of the customs agency regarding the interpretation of certain regulations; this discrepancy has precise rules for its elucidation.” (11)– “Finally, it should be noted, and although this is obvious, that not every interpretation favourable to the importer among several possible ones, made by him, constitutes smuggling. For this, it is essential, I repeat, that there is also a deliberate concealment or distortion of the elements that the National Customs Administration considers necessary for its assessment and, as I have already stated, such an element for the configuration of the rate is totally absent in the proceedings.” (10). To which the Drs. Vidal Albarracín have served to clearly observe that, “in this regard, we believe that it is logical that the importer, faced with various legally acceptable interpretations, leans towards that which is most favorable to him. In this regard, Tiedemann's observation is illustrative, when referring to international criminal regulations in tax matters: “However, the purpose of economizing on the payment of taxes is lawful in all legal systems.”  

In order to do so, we estimate that the activity of the declaring subject with a view to bringing the state of a declaration compromised to the nature of the truthfulness required by the rule, cannot, therefore, discretionally consider that in the face of the alleged classification discrepancy sustained in Rule 2. A, it could lead to the degree of criminal liability. Especially when there would be no intention to prevent or hinder customs control, acting in accordance with the law and therefore, declaring regarding each commercial transaction operation imposed by the framework of the rule for these cases (Rule No. 1), observing the truthfulness of the instruments through the pertinent legalization, which imply correct conduct, leading to his declaration being aligned with the observed facts of the documentation that supports the destination. 

Thus, it is vital to be careful in the use of that “presumption” held by the customs service, as it is not possible to establish the criminal type by merely relying on the presumed condition, giving intervention to a judge who is not competent, as mandated by Law 22.415 and the Legumbres ruling of the Supreme Court of Justice of the Nation. Otherwise, the guarantees that resonate in Art. 18 of the National Constitution and Art. 8 of the San José Pact of Costa Rica are being affected, and which set forth, with legal force, the due right to be judged by whoever is the competent judge. Otherwise, one would be faced with an improper process, which is null in terms of justice.

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References:

 1.RULE 1: The titles of sections, chapters and subchapters are for information purposes only. Classification is legally determined by the texts of the headings and any section or chapter notes and, provided they do not conflict with the texts of the headings and notes, by the following rules:

2. RULE 2: a. Any reference to an article in a particular heading applies to the article even if it is incomplete or unfinished, provided that it has the essential characteristics of the complete or finished article. It also applies to the article that is complete or finished, or considered as such by virtue of the preceding provisions, when it is presented in a disassembled or unassembled state,

b. Any reference to a material in a given heading applies to that material, whether or not mixed or combined with other materials. Likewise, any reference to articles of a given material applies also to articles consisting wholly or partly of that material. The classification of such mixed products or composite articles shall be made in accordance with the principles set out in Rule 3.

3.RULE 3: Where goods could in principle be classified under two or more headings by application of rule 2 b) or in any other case, classification shall be made as follows:

a. The heading with the most specific description shall take precedence over headings with a more general scope. However, where two or more headings each relate to only part of the materials constituting a mixed product or composite article or to only part of the articles, in the case of goods presented in sets or assortments subject to a) two conditions for retail sale, those headings are to be considered as equally specific to that product or article, even if one of them describes it more precisely or completely.

b. Mixed products, articles composed of different materials or made up of different articles, and goods presented in sets or assortments put up for retail sale, the classification of which cannot be made by applying Rule 3(a), have been classified according to the material or article which gives them their essential character, if it is possible to determine this, and

c. When rules 3 a) and 3 b) do not permit classification, the goods shall be classified in the last item in order of numbering among those that can reasonably be taken into account.

4. Dr. Juan Patricio Cotter, Some considerations on classification controversies and the infringement of misrepresentation, 4.08.2023/XNUMX/XNUMX, Customs News.

5. Dr. Juan Patricio Cotter, Some considerations on classification disputes and the infringement of inaccurate declaration, 4.08.2023, Aduana News.

6. «APPEAL INCIDENT FILED BY THE DEFENSE OF TOMÁS IVÁN MORO, FORMED IN CASE No. 6601, ENTITLED: MORO, TOMÁS IVÁN S/ATTEMPTED SMUGGLING» Case No. 58.247, folio 117, order No. 25.650 – National Economic Criminal Court No. 7, Secretariat No. 13 – Room «A» – 25.07.2008.-

7. (Cfr.: BONZÓN RAF ART, JC, The culpability required in customs infringement law, Practical Guide for exporters and importers No. 397 of January 1990 and Doctrinal confusion regarding the differentiation between the crime of smuggling and the infringement of the baggage regime, ED 1. 154-153).

8. Dr. Hector G. Vidal Albarracín and Dr. Guillermo Vidal Albarracín – Customs Crimes – 3rd. Expanded Ed. – Mave Editorial – page 201. 

9. Dr. Hector G. Vidal Albarracín and Dr. Guillermo Vidal Albarracín – Customs Crimes – 3rd. Expanded Ed. – Mave Editorial – page 203. 

10. Resolution issued on 28.9.85 by the judge in charge of the Nat. Pen. Economic Court No. 1, Dr. Susana Pellet Lastra, in case 2029/84, which was processed before Sec. No. 2 – referenced by Dr. Héctor G. Vidal Albarracín and Dr. Guillermo Vidal Albarracín – Customs Crimes – 3rd. Expanded Ed. – Mave Editorial – page 203

11. Dr. Héctor G. Vidal Albarracín and Dr. Guillermo Vidal Albarracín – Customs Crimes – 3rd. Expanded Ed. – Mave Editorial – page 203.