The company imported goods - special-purpose paper from the United Kingdom of Great Britain. The company filed and registered declarations for the specified goods under the code 4811 59 000 9 "Paper, cardboard, cellulose wadding and a sheet of cellulose fibers, coated, impregnated, laminated, painted or decorated, or printed, in rolls or rectangular (including square ) sheets of any size, except for goods of commodity item 4803, 4809 or 4810 ", which is subject to the rate of import customs duty - 5%.
In the process of documentary control, the customs authority decided to conduct additional checks on the classification of goods in accordance with the Common Commodity Nomenclature of the EEU Eurasian Economic Union (CN FEA EEU), requested additional documents confirming the declared classification code of goods and appointed a customs examination. The results of the customs examination revealed the absence of any substances in the product, and, therefore, coating or impregnation in it.
According to the results of the conclusion of the customs expert, the customs authority made decisions on the classification of goods, according to which the goods code was determined - 4805 91 000 0 (import customs duty rate is 10%) “Other uncoated paper and cardboard, in rolls or sheets, without further processing or processed , as indicated in Note 3 to this group ”- that is, without coating or impregnation.
The company has been assessed customs duties.
Disagreeing with the classification decisions made by the customs authority, the Company decided to go to court. At that time, practice in such cases was controversial.
Lawyers sent to the court applications for invalidation of decisions of the customs authority. It was important to prove that the product has a certain substance in its composition and is covered or impregnated with it.
The task was complicated by the fact that the manufacturer refused to provide the production technology of this product.
The Company used Explanatory Notes to the CN FEA EEU. The purpose of the document is to ensure uniform application of the nomenclature.
According to the Explanatory Notes, a product will join heading 4811 if it has a coating or impregnation, and heading 4805 if the product is uncoated or not impregnated.
Lawyers used the CN FEA EEU as follows: according to Notes No. 7 to group 48 Explanatory Notes The CN FEA EEU 's "paper, cardboard, cellulose wadding and webs of cellulose fibers, which can be included in two or more commodity items 4801 to 4811, are included in the heading the last in ascending order of codes among the named commodity items ”, that is 4811, which was chosen by the Company when declaring goods.
Additionally, the Company presented as a justification of the stated requirements the results of two (2) pre-trial examinations, which confirmed the presence of a certain substance in the composition of the goods. The company contrasted them with customs expertise, in which there were conflicting conclusions about the properties of the goods. But the pre-trial examination of the Company confirmed the presence of a certain substance in the product, but due to the lack of methods for determining how to add it to the product - by coating or impregnating, they could not answer the question that is essential for resolving the dispute.
The question of the presence or absence of coating or impregnation remained open.
As part of the trial, the experts of the Company and the customs authority who conducted the product survey were additionally questioned, and on their part, the court also presented additional conclusions on the studies conducted.
The Company's experts in their supplementary explanations with due argumentation criticized the methods and results of customs expertise. The customs expert could not refute the criticism and substantiate the correctness and sufficiency of the methods chosen for the study and the conclusions themselves.
In addition, within the scope of the proceedings, the Company submitted a letter from the manufacturer stating that certain substances are added to the goods at the final stage of production. On the basis of this information, the Company applied the provisions of the Notes to the commodity group 48 of the CN FEA EEU, in which it is indicated that the production of paper takes place in three stages: the preparation of paper pulp, the flow of sheet or sheet and finishing operations. Explanatory notes to the CN FEA EEU of the EEU conclude that finishing operations, which is the third stage in the paper-making chain, is the last / final stage of paper production.
Consequently, the product was subjected to processing - coating or impregnation of a certain substance.
The Court of First Instance, taking into account Notes No. 7 to group 48 of the Explanatory Notes, the CN FEA EEU, the results of pre-trial examinations, additional expert opinions, the manufacturer’s letter, satisfied the Company's application and declared the decisions on the classification of goods invalid.
The customs authority appealed the decision of the court of first instance to the court of appeal. The appeals instance upheld the findings of the court of first instance and refused the customs authority to satisfy the appeal and set aside the decision of the court of first instance.