The Supreme Court’s position on the distinction between the offences of non-declaration and incorrect declaration of goods

25 April 2023
Tax Messenger
On considering case No. A33−21 320/2021, the Economic Disputes Panel of the Supreme Court of the Russian Federation ruled that stating the wrong classification code for a part of goods when the total quantity of goods is correctly stated does not constitute a failure to declare goods.
Facts of the case

According to the case file, a Russian exporter submitted a customs declaration to the customs authority for a product classified under the EAEU product classification code 4407 11 930 0 — "sawn lumber of common pine — beams, bars and planks". The total quantity was stated as 1,398 pieces.

Before releasing the goods, the customs authority undertook a customs inspection, as a result of which it found that only some of the declared products (1,304 pieces) constituted sawn lumber, while the rest (94 pieces) was roughly squared timber (rough edge with bark), for which the EAEU classification code is 4403 22 100 0.

The customs authority instituted administrative offence proceedings under part 1 of Article 16.2 of the Administrative Offences Code of the Russian Federation for the non-declaration of goods. A merchandise examination carried out as part of the administrative investigation confirmed the customs authority’s position.

Following the completion of the administrative investigation, the customs authority prepared an administrative offence report in relation to the exporter under part 1 of Article 16.2 of the Administrative Offences Code.

The exporter disagreed with the administrative offence ruling and appealed to an arbitration court for it to be declared unlawful.

All three court instances rejected the exporter’s claims. However, the Supreme Court overturned the decisions of the lower courts and ruled that the administrative offence report was unlawful.
The Supreme Court’s conclusions

Citing case law review No. 1 (2018) approved by the Presidium of the Supreme Court of the Russian Federation on 28.03.2018, the Supreme Court noted that "…an error in classifying a product for customs purposes, where not accompanied by inaccurate declaration of its quantitative characteristics, cannot serve as a basis for imposing sanctions under part 1 of Article 16.2 of the Administrative Offences Code".

In particular, the Supreme Court observed that the exported goods had been fully declared as to quantity, with a total of 1,398 pieces specified. That quantity included the 94 pieces of rough timber discovered by the customs inspection.

Thus, the error made in classifying the goods related to information about the qualitative characteristics of the goods. Giving inaccurate information about the qualitative characteristics of goods when the goods have been declared in full does not constitute the offence for which sanctions are prescribed by part 1 of Article 16.2 of the Administrative Offences Code.

At the same time, the Supreme Court notes that such an error may constitute the offence for which sanctions are prescribed by part 2 of Article 16.2 of the Administrative Offences Code. The offence in question is result-based, meaning that liability only arises if the inaccurate declaration of goods resulted or may have resulted in the non-payment of customs charges.

Given that the administrative offence proceedings did not establish any failure to pay customs charges, the Supreme Court had no obligation to reclassify the exporter’s action under another part/article of the Administrative Offences Code as provided in clause 20 of Resolution No. 5 of the Plenum of the Supreme Court of the Russian Federation of 24.03.2005 "Concerning Certain Issues Arising for Courts in Applying the Administrative Offences Code of the Russian Federation".


It should be pointed out that a similar position, i.e., that entering the wrong classification code for a product while the quantity of the product is correctly declared does not constitute the offence stipulated by part 1 of Article 16.2 of the Administrative Offences Code, was expressed by the Supreme Court back in 2017 (Resolution No. 78-AD17−7 of the Supreme Court of 13.03.2017).
In practice, however, the customs authorities do not always heed the Supreme Court’s position and classify such errors as non-declaration offences.

Notably, in considering this dispute the Supreme Court not only assessed the substance of the offences under part 1 of Article 16.2 of the AOC (non-declaration) and part 2 of Article 16.2 of the AOC (inaccurate declaration) but also assessed the social danger posed by the offences and the level of applicable sanctions. See the figure below for more detail.
We hope that the Supreme Court’s comprehensive assessment will inform future approaches to the classification of the offences provided for in parts 1 and 2 of Article 16.2 of the AOC.

How can we help?

  • Checking classification codes used.
  • Mapping customs risks associated with entering incorrect EAEU product classification codes and preparing recommendations to mitigate identified risks.
  • Automatic checking of goods declarations according to set parameters using the “Customs Tool”.
  • Legal support during administrative investigations.
  • Representing companies’ interests in arbitration courts in disputes with customs authorities.

  • Wilhelmina Shavshina
    Global trade and Customs
  • Vladislava Gritskova
    Assistant Manager
    Global trade and Customs
  • Ekaterina Mazurova
    Global trade and Customs
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