The cost of safety: customs classification of safety belts

11 January 2024
Tax Messenger
Decision No. 183 of the Eurasian Economic Commission (EEC) of 27.12.2023, which is due to come into effect on 28 January 2024, rules that safety belts designed to be fitted to seat frames in vehicles of headings 8701 to 8705 of the Commodity Classification (TN VED) of the EAEU in order to hold the driver and passengers in their seats in the event of a traffic incident or sudden braking are to be classified under TN VED EAEU subheading 8708 21.

Notably, in 2021 the Federal Customs Service of Russia issued a clarification to the effect that safety belts designed to be fitted to vehicle seat frames should be classified under TN VED EAEU heading 9401.

That clarification was prompted, of course, by numerous disputes between the customs authorities and cross-border businesses.
  • Cross-border businesses classified the belts in question under TN VED EAEU code 8708 21 900 9 (parts and accessories of the motor vehicles of headings 8701 to 8705, other parts and accessories of bodies (including cabs), safety belts, other).

The applicable import customs duty rate for that code is 5% of the customs value of the goods.

  • The customs authorities of various regions took the view that TN VED EAEU heading 8708 21 covered belts attached directly to the body (cab) of a vehicle, whereas belts intended to be fitted to seat frames should be classified under TN VED EAEU code 9401 90 800 9 (other parts of seats).

The applicable import customs duty for that code is 10% of the customs value of the goods plus 0.8 euros per kg of imported goods. That code has now been replaced by code 9401 99 000 9, but similar import duty rates apply.
By the end of 2022, the customs authorities’ approach of classifying belts designed to be fitted to seat frames under TN VED EAEU heading 9401 had formed the basis of several court rulings at cassation level (for example, Cases Nos. A78-10928/2018 and A60-29318/2020), and not a single dispute on this matter was referred by the Supreme Court for consideration by the Economic Disputes Panel of the Supreme Court.

It now turns out that the importers were right all along in their approach to the classification of safety belts which are fitted to seat frames, and that their rights and legitimate interests were infringed, including the right to pay lawfully established taxes and levies and the right to a refund of customs charges collected in excess.

EEC Decision No. 183 of 27.12.2023 is undoubtedly a “positive” New Year development. At the same time, we know of cases in which EEC decisions on the classification of various goods have been amended and even overturned after being ruled inconsistent with EAEU law by the EAEU Court.

Since EEC Decision No. 183 of 27.12.2023 improves the position of cross-border businesses by more than halving the fiscal load associated with customs duty, it would be logical to assume that no appeals to the EAEU Court will be made by businesses.

On the other hand, the customs authorities will most likely be keen to defend their approach to classification. As a rule, however, before making classification decisions that are binding on all EAEU countries, the EEC contacts the customs authorities to gather opinions and recommendations. There is reason to hope, therefore, that the EEC’s Decision will not be overturned or amended in the future.

Ruling No. 49 of the Supreme Court Plenum of 26.11.2019 established that new customs rules which worsen the position of participants in foreign trade cannot be given retroactive force, but there is no direct regulation regarding the reverse scenario.

Furthermore, according to the provisions of the Arbitration Procedure Code of the Russian Federation, an arbitration court may review a previously adopted ruling which has entered into force if new circumstances or information arise.

In our view, in the case concerned there are grounds for importers to seek redress for their violated rights and interests both by applying to make changes to goods declarations and through the courts, including by seeking a review of an adverse ruling.

How can we help?

  • Checking which classification codes apply.
  • Mapping customs risks associated with the declaration of incorrect TN VED EAEU codes.
  • Automatic checking of goods declarations based on set parameters using our “Customs Tool”.
  • Support in initiating the process of the adoption of a classification decision by the EEC.
  • Representing companies’ interests in customs disputes in Russian arbitration courts and the EAEU Court.

  • Vladislava Gritskova
    Global Trade and Customs
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