Importance of checking the form of certificate of origin

In order to apply FTA preferential tariff rates, importers shall prove imported products’ country of origin through a document conforming to the form stipulated in the relevant free trade agreement. If non-conforming certificate of origin (C/O) is presented, Korea Customs may not accept the application of FTA preferential tariff rates.

 

As Korea Customs checks the documents of imported goods which are selected to be examined or inspected by the Cargo Selectivity system,  the imported goods might be customs cleared with FTA preferential tariff rates applied illegitimately if importers or their contracted customs attorneys failed to find the non-conformance of C/O form. Of course, when such facts are detected by Customs before the end date of the limitation period for assessing customs duties (5 years in normal cases), saved duties shall be collected and penalties shall be imposed. In this case, it is natural that the importer shall bear all the burdens because he/she has failed in his/her duty of getting equipped with valid C/O.  Whether the importer can request indemnification to the customs attorney depends on the agreement concluded between them.

 

What if imported products were selected to be inspected by Customs, and Customs received a non-conforming C/O but accepted the application of FTA preferential tariff rates? Even in this case, shall the importer bear all the burdens when such facts are found? According to the decision of Tax Tribunal (Case No. 조심 2022관0114), the answer is yes.

 

If Customs had rejected the application of FTA preferential tariff rates during the import customs clearance, the importer might have been contacted the exporter and received conforming C/O. Because a request for the application of FTA preferential tariff rates can be filed within one year from the acceptance date of the relevant import declaration. This is the normal way that non-conforming C/O is processed. However, Customs doesn’t bear the duty of verifying the legitimacy of a request for the application of FTA preferential tariff rates prior to accepting the import declaration. In Article 8 (4) of the ACT ON SPECIAL CASES OF THE CUSTOMS ACT FOR THE IMPLEMENTATION OF FREE TRADE AGREEMENTS (자유무역협정의이행을위한관세법의특례에관한법률), it is stipulated that, if the head of a customs office receives a request for the application of a conventional tariff, he/she shall examine it after accepting the relevant import declaration.

 

Pursuant to Article 47 (3) of the ENFORCEMENT DECREE OF THE ACT ON SPECIAL CASES OF THE CUSTOMS ACT FOR THE IMPLEMENTATION OF FREE TRADE AGREEMENTS (자유무역협정의이행을위한관세법의특례에관한법률시행령), additional duties may not be collected for the following cases:

-      Where an importer notified of an error in a document evidencing origin makes a revised declaration before receiving notice on an investigation of origin, and the importer is not responsible for such error.

-      With respect to a request for verifying origin made by the Commissioner of the Korea Customs Service or the head of a customs office to the customs authority of a Contracting State, where the customs authority of the Contracting State fails to notify the outcome of such verification within the stipulated period.

-      Where an exporter or producer of a Contracting State has failed to submit materials requested by the Commissioner of the Korea Customs Service or the head of a customs office within the stipulated period or submitted materials by misrepresentation, or in other cases where an importer has justifiable reasons in relation to the collection of shortage of customs duties.

 

Tax Tribunal regarded that the importer’s responsibility for getting equipped with valid C/O doesn’t transfer to Customs through the act of cargo inspection and document examination so additional duties shall not be exempted.

 

To conclude, it is solely importer’s responsibility to check the form of C/O.  

 

KCS FTA information portal provides the summary of C/O modality as follows (https://www.customs.go.kr/engportal/cm/cntnts/cntntsView.do?mi=7320&cntntsId=2339):

 


To check each form of FTA C/O, you can visit this webpage:  https://www.customs.go.kr/engportal/cm/cntnts/cntntsView.do?mi=7323&cntntsId=2827, and easily download it.



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