DS Law.Attorneys successfully represent their Client in a tax dispute with the Customs Authorities

Issue of
the project: Customs dispute on the lack of grounds of customs duties, penalties
and administrative fines for conditionally released equipment imported as a
contribution to the charter capital

Period: 09.2012
– 07.2014 (on first inspection)

11.2013 –
present (re-examination)

Value:
412900000 Rubles ($11,797,000). – The cost of equipment imported under the
conditional release

8.7 million
Rubles ($300,000) customs duties, fines and administrative penalties – on first
inspection

7.4 million
Rubles ($200,000+) customs duties and penalties – for a re-examination

Client: Ltd.
“Legnum”

The
project: When conducting a desk customs inspection, it was established by the
opinion of the customs authorities that the circumstances point to evidence of
infringement by the Client of preferential treatment on the conditional release
of equipment imported into Russia as a contribution to the charter capital with
full exemption from customs duties and VAT. The import was carried out in
2006-2007, during the period of in force status of the Customs Code of the
Russian Federation and the RF Government Decree of 23.07.1996 № 883. On August
18, 2011, the Decision of the Customs Union Commission introduced new
restrictions on conventionally produced products, including a ban on the
transfer of such products.

The basis
for denying the Client exemption from customs duties, charges and the
corresponding penalties, as well as bringing the Client to administrative
responsibility, according to the customs authority, was the fact of signing on
August 18, 2011,of the additional agreement, the purpose of which was to
confirm the terms of the automatic renewal of the aforementioned contract .

DS Law
lawyers successfully appealed the claims of the customs authorities. The request
for payment of customs duties and interest was declared illegal due to a
material breach of procedures in making such a claim. Production was terminated
by Article 16.20 of the Administrative Code and  the court recognized that the actions of the
company bear no administrative offense. The total estimated amount of claims
made by the customs officials was found illegal in the amount of 8.7 million
Rubles ($300,000).

In order to
address the procedural irregularities committed by the customs authorities a
repeat desk audit was performed for the same period on the same grounds with
identical conclusions. The amount of customs claims was found to be 7.4 million
Rubles ($200,000+). At present, work is underway to appeal the results of a
repeat customs inspection.

The lawyers
of DS Law are in the process of preparing a complaint to the Constitutional
Court of the Russian Federation on the violation of the constitutional rights
of the Client under the provisions of Articles 131, 211, 370 of the Customs
Code of the Customs Union.