The lawyers of Pepeliaev Group’s customs practice won the case for the client, a major shipping company, before the Economic Panel of the Russian Supreme Court.
After conducting a customs audit, Novorossiisk Customs Office decided that the client had violated the terms and conditions of the customs procedure involving the temporary import of a tanker in connection with entering into a time charter contract for such tanker. This decision resulted in the company being charged more than RUB 220 million. The client appealed this decision in the Kasnodar Territory Commercial (‘Arbitration’) Court, which decided in favour of the Company (Case No. А32-9485/2016). The court of appeal left this decision unchanged. The North-Caucasian Circuit Commercial (‘Arbitration’) Court quashed the judgments of the lower-level courts and handed down a resolution in favour of the customs office. The Supreme Court’s Economic Panel accepted the circuit court’s resolution for review and, after examining the client’s complaint, cancelled such resolution and upheld the decisions of the trial court and court of appeal.
“The unique feature of the project is that in this case customs rules depend on the civil law nature of the time charter contract, which is debatable," says Alexander Kosov, Partner at Pepeliaev Group. "Such rules also depend on specific circumstances showing whether the ship remained in the actual possession and use of the company after the time charter contract had been concluded or whether, as a result of such time charter contract, it was transferred into the possession and use of the charterer. Several legal opinions of famous experts in the sphere of domestic civil law and customs laws as well as a legal opinion from English lawyers were presented to defend the position in court. The existing case law on similar customs cases is unfavourable for declarants. To recognise that to transfer a vessel imported under a temporary import procedure into a time charter is at variance with the terms and conditions of the customs procedure merely by virtue of the type of time charter contract would essentially mean that customs is placing a ban on a legitimate way of conducting economic activities envisaged by Maritime Law. Another focus of the litigation was whether a violation of the temporary import customs procedure constitutes a ground for disallowing the customs duty benefits and VAT benefits that do not depend on the customs procedure being applied. To answer this question correctly, it is required not only to interpret the provisions of customs legislation systematically, but also to understand the purposes for which the relevant customs duty benefits and VAT benefits are granted. In this context the Russian Supreme Court’s ruling on Case No. А32-9485/2016 is of great consequence for the formation of precedent-based practice and for the entire marine transport industry”.