법무법인(유한) 율촌 | Yulchon LLC

In a suit seeking cancellation of the customs duty assessment, Yulchon represented Yokogawa Electric Korea Co., Ltd., a Japanese company, and obtained the court decision in favor of the Plaintiff. The Korean Customs Authority ("KCS") investigated foreign companies that import products from their overseas parent company on the appropriateness of the import price of the products, and as a result, denied the price discount made by the overseas parent company for the purpose of strengthening competitiveness of the Korean subsidiary and assessed customs duty and VAT by increasing the dutiable value of such products. KCS, as the basis for its assessment, presented the logic that price discount made between related parties falls under "conditions or circumstances by which determination of the price of imported goods is affected", which is the reason for denial of the import price of products prescribed under Article 30(3)(2) of the Customs Act. KCS"s such logic flatly contradicted a number of foreign companies" transactional practice of importing products from their overseas parent company at a discounted price and indicated the possibility of customs duty assessment on foreign companies that have a similar transactional practice.

Yulchon represented Yokogawa Electric Korea to whom the largest amount of customs duty was imposed and proceeded with a lawsuit. With respect to interpretation of "conditions or circumstances" under the Customs Act, referring to the Commentary to WTO Customs Valuation Agreement based on which Article 30(3)(2) of the Customs Act was legislated, Yulchon presented that "conditions or circumstances" refer to cases where "compensational relation or liability" existing between transaction parties is linked to price determination. Yulchon pointed out that KCS"s argument does not correspond to the purport of WTO Customs Valuation Agreement by meticulously analyzing domestic and foreign documents relating to WTO Customs Valuation Agreement and introducing foreign legislations made in accordance with WTO Customs Valuation Agreement. As a result of Yulchon"s efforts, the first-instance court accepted Yulchon"s logic and determined that the assessment in this case should be cancelled in its entirety.

This decision is meaningful in that Yulchon successfully defended KCS"s attempt to assess foreign companies through its broad interpretation of WTO Customs Valuation Agreement.