1. Introduction
This article addresses the analysis of the “burden of proof of value” in cases of triangulations between related companies, noting the obstacles that customs administrations face in proving the transaction value (and/or eventually sanctioning for customs infringement) when the exporter and importer are related, and the price does not respond to the classic standards of free supply and demand.
To this end, it is worth mentioning that on November 24, 2023, in the case "MALTERIA PAMPA SA (TF 35390-A) v. DGA s/RECURSO DIRECTO DE ORGANISMO EXTERNNO (File 19276/2021)", a judgment was issued, the reflections of which could help us unravel how situations such as those referred to in the first paragraph should be interpreted, in light of the most recent jurisprudence and certain pragmatic ideas on the matter.
2. Initial paradigm
Export valuation problems may require three types of responses from the Treasury: (1 °) the formulation of a supplementary charge (1); (2 °) the imputation of the infringement of inaccurate declaration (2) or, directly, (3st) the charge of smuggling (3) and, then, we must ask ourselves when each case would be appropriate?
The case law is a real quagmire, but it could provide us with some clues to help us understand how we should interpret the rules and how we should subsume the facts under the applicable law.
Art. 954 of the Customs Code (hereinafter, “CA”) penalizes the declaration that differs from the result of the verification when it produces -or has the potential to produce- a fiscal loss, a violation of a prohibition or the entry or expenditure of foreign currency different from that which actually corresponds.
In turn, simple smuggling (4) occurs when someone, through any act or omission, prevents or hinders, through trickery or deception, the proper exercise of the functions that the laws grant to the customs service for the control of imports and exports.
Likewise, there is a specific type of smuggling (5) that occurs when an action or omission is carried out that prevents or hinders the control of the customs service with the purpose of subjecting the merchandise to a customs or tax treatment other than that which corresponds, for the purposes of its import or export.
The so-called “double invoicing” is an act that – through trickery or deceit – hinders customs control (art. 863 of the CA). It could also be said that, in cases of double invoicing (apocryphal invoicing), there would be an action that would prevent (or at least hinder) customs control, and if, in addition, this action has the purpose of subjecting the merchandise to a customs or fiscal treatment other than that which corresponds, it would constitute the crime defined in art. 864, paragraph b) of the CA.
Therefore, we should conclude that in cases where double billing is proven (apocryphal billing), what is obtained is “proof of smuggling.”
Basically, in cases where Customs detects double accounting, what it finds is smuggling and not an infraction, much less a case in which it is appropriate to simply adjust the value and make an additional charge.
3. Can there be an infringement?
Having established the above, it is worth referring to the precedent “PLAXS SA (TF 23.986-A)” (6), where, although it was a case of a link between an import operation (the Agreement for the Implementation of Article VII of the GATT was applied, hereinafter, the “GATT Valuation Convention”, unlike the case analyzed), the majority vote led to an interesting reflection.
The Members explained that in the Uruguay Round negotiating group discussions on valuation, developing countries expressed concerns about adopting the GATT Valuation Code, due to the problem of “false invoicing and government revenues.”
One of the proposals, submitted by India, would have referred to the burden of proof in cases of suspected fraud by the importer.
Furthermore, as explained in the commentary of the judgment (Recital VIII), the proposal would have been supported by Brazil, which would have difficulties with the fraudulent overinvoicing of importers to avoid currency controls.
The analysis is based on the fact that the GATT Valuation Code imposed too great a burden on Customs by requiring them to prove that a declared price was false before being able to reject the transaction value, because where there is a link, importers (and their suppliers) could act in collusion to conceal the fraud.
For this reason, the ruling states that the GATT Valuation Agreement must be interpreted taking into account that in the event of doubts by the customs administration regarding the truth and accuracy of the value, the "reversal of the burden of proof" is enabled, with the obligation to demonstrate the accuracy of the declaration falling, in these cases, on the importer.
In this way, it is interpreted -implicitly- that it is obviously not possible to demand proof of smuggling from Customs, since it intends to sanction only as an infraction.
For there to be an infringement, it is only necessary to demonstrate that the price is inaccurate and that this inaccuracy produces (or has the capacity to produce) some of the effects provided for in the regulation (7) for the purposes of applying export duties (taxable value) - therefore, literally the regulation imposes the need to resort to these values in order to apply the sanctions provided for in art. 954 incs. a) and c) of the CA.
On the contrary, the norm only requires observing the export value of the Customs Code in order to determine the taxes; nothing more.
It follows that for there to be an infringement, it must only be proven that the price is “inaccurate” and nothing more. And the determination of the export value, for the purposes of applying the sanction, can undoubtedly be carried out by means of reconstructing the direct or indirect facts.
In this order of ideas, it can be stated as a partial conclusion that there may be an infringement and that, obviously, the proof of the same will not be the proof of the falsity (double billing).
At this point, art. 2 of the Civil and Commercial Code of the Nation compels us to interpret the law in general terms, without limiting how the law should be interpreted to civil and commercial regulations.
The law must be interpreted “taking into account its words” but also “its purposes, analogous laws, provisions arising from human rights treaties, legal principles and values, in a manner consistent with the entire legal system.”
That is, respecting the coherence of the entire system.
In turn, art. 3 of the Civil and Commercial Code of the Nation imposes on the Judge the duty to resolve the matters that are submitted to his jurisdiction, through a reasonably founded decision. Reasonably founded is not necessarily based on the letter of the law. It is the law taking into account the entire system, coherently.
Therefore, I understand that we must interpret what we specifically require Customs to prove, in order to prove the infraction of inaccurate declaration in the cases of export valuation between related parties; and that obviously we cannot demand the same, or the same level of certainty, when it is intended to sanction for infraction as when it is intended to sanction for smuggling.
It supports the above, that the infringement only requires failure to comply with the duties inherent to the regime, operation, destination (art. 902 of the CA) and that, for the purposes of the Customs Code, the term infringement is equivalent to that of contravention (art. 892 of the CA) for smuggling.
4. The ruling “MALTERIA PAMPA SA (TF 35390-A) v/ DGA s/DIRECT APPEAL BY EXTERNAL ORGANIZATION (File 19276/2021)”
As I mentioned earlier, on November 24, 2023, a judgment was issued in the case “MALTERIA PAMPA SA (TF 35390-A) v. DGA s/DIRECT APPEAL BY EXTERNAL AGENCY (File 19276/2021)”.
In this ruling, the Administrative Litigation Appeals Chamber summarized the positions regarding the matter discussed here.
The ruling analyzed whether the price was influenced by the link in an export scenario (the GATT Value Agreement does not apply) and, in that case, the minority vote stated that: “(…) in the absence of specific customs legislation, the existence of a difference between the price declared by the exporting firm for the sale to Maltería Uruguay SA and the price received by the latter from the importer Ambev, may be considered as an indication but not as sufficient proof that the link effectively influenced the price (…)” ; while the majority vote indicated that “(…) the plaintiff was responsible for proving that the intermediary company was something more than a legal-accounting fiction, issuing invoices and receiving differential income, since it was the plaintiff who was in the best position to demonstrate conclusively that Maltería Uruguay SA meets the three requirements for not applying the determination of the amount corresponding to the triangular transaction between related parties that is received by art. 15 of the LIG; on the contrary, if its only purpose is to re-invoice amounts that should have been invoiced in Argentina, the typical conduct that is repressed by art. 954, section 1, subsection c) of the CA is configured for the receipt -real or potential- of an amount other than that which would have corresponded (…)”.
The question to be resolved lies in determining when we can consider the data held by Customs to constitute a mere indication and when we can consider that said indications act as a presumption hominis that imposes the burden of proof on the exporter.
The first conclusion I come to is that there is no rule that expressly establishes this and therefore we must resort to interpretive work.
The rule must be interpreted in accordance with the Customs Code as a whole, harmoniously and also, of course, in keeping with the high constitutional and conventional values and principles applicable to our legal system.
In view of the above, I must demand from Customs the proof that it would obviously not be in a position to provide (remember that we are talking about operations between related parties where the price is based on a price that does not necessarily respond to the free play of supply and demand; in a case where the parties have a certain joint operational capacity), it would certainly be unreasonable.
In this order of ideas, I consider that the existence of grays provides us with a coherent interpretive horizon for the specific case analyzed in this work.
I mean that the theoretical existence of the infraction of inaccurate declaration for cases of export value, reveals to us the theoretical existence of a case in which proof of double invoicing, basically of smuggling, cannot be required.
The fact that this is not a criminal law (such as smuggling) but rather an administrative sanctioning law (the infringement is, technically, a contravention), allows us to explore the accreditation of the fact with less proof of certainty.
5 conclusion
For the reasons stated above, I conclude then, that the important thing is to give the taxpayer the opportunity to explain the declared value and to use what is a priori an indication to reverse the burden of proof of the value.
This is taking into account the possible collusion between the companies involved and that if Customs proves double invoicing, we would not be dealing with an infraction, but rather a possible crime of smuggling.
In this way, it is not black or white (nothingness or smuggling) and the existence of the grey areas becomes an obvious guiding pattern.
It may not be smuggling, but it may be a value adjustment (determination of taxes) and/or an infringement; basically, we are involved in administrative law, which is not -strictly speaking- criminal law and allows the reconstruction of an unknown fact through circumstantial and indirect evidence.
Therefore, Customs cannot be required to provide proof of smuggling in order to impose sanctions for customs violations, a circumstance that confirms the proposed solution.
- Art. 9 Ap. 2° inc. d) of Decree 618/1997
- Art. 954 of the CA
- Art. 863 et seq. of the CA
- Art. 863 of the CA
- Art. 864 inc. b) of the CA
- Judgment of August 22, 2022 of the Tax Court of the Nation, Chamber G, 20th Chamber.
- That may produce (actually or potentially) a fiscal loss, a violation of a prohibition or the entry or expenditure of foreign currency other than that which actually corresponds.
Lawyer (UNLZ), Notary (UESXXI), Diploma in Complex Economic Crimes (UNSAM), Diploma in Customs, Tax and Economic Criminal Litigation (USAL), Diploma in Professional Development (TFN) and advisor to the General Subdirectorate of Customs Legal Technicians (AFIP DGA). He also served as a professor at the Customs Training Institute and the International Navigation Center, among others. He is a member of the Argentine Institute of Customs Studies (IAEA), the Argentine Association of Fiscal Studies (AAEF) and the Customs Law Institute of the Argentine Association of Justice.
