Successfully providing legal support to a client in obtaining official clarifications from the Russian Federal Customs Service
A major Russian shipping company specialising in sea transportation of hydrocarbons instructed us to assist it in obtaining official clarifications of the Russian Ministry of Finance on whether it was required to obtain the customs authority’s permission and perform customs transactions in the situation as follows.
Sea vessels that can carry out both international and domestic shipments may wait at an anchorage in Russian sea ports for several months. To ensure normal operation, technical maintenance and repair of the sea vessel during such a stay, the ship owner purchases spare parts, equipment and supplies for the vessel from Russian companies. A specialised customs authority demanded that the company issued a formal instruction for such goods to be loaded on the vessel, if it was located in the zone of customs control. In order to do so, according to the customs authority, the spare parts had to be declared for customs purposes by way of filing a declaration for goods and such goods being placed under the customs procedure of export. The customs authority was making these demands despite that the vessel was not scheduled for an international voyage and therefore those spare parts and supplies that would be placed under the customs procedure of export could in fact be consumed / spent without being carried outside the Eurasian Economic Union. At the same time, as the customs authority in question had limited powers to register customs declarations with respect to certain categories of goods, the vessel’s spare parts, equipment and supplies had to be declared to another customs authority.
With a view of forming a unified approach to the customs declaration of the above goods, the Company sought advice from the regional customs department (the "RCD") responsible for the area where the goods in question may be declared. Although the RCD’s advice was generally favourable for the Company, it did not contain any definite answers to the questions asked. Moreover, given that the customs authority that does not report to a particular RCD is not guided by such RCD’s clarifications, the Company applied to the Federal Customs Service. However, the Federal Customs Service referred to the Administrative Regulations for Providing Public Consulting Services approved by the Federal Customs Service’s Order No. 492 dated 11 June 2021 and noted that it provided consulting services through its regional customs departments, rather than directly, so it left the Company’s questions unanswered. In view of the above, the Company planned to apply for a clarification to the Russian Ministry of Finance.
Based on our experience, customs authorities are not always guided by letters of the Ministry of Finance, unless these letters have been brought to their attention by a letter of the Federal Customs Service. At the same time, we understood from our preliminary analysis, that the lack of a uniform position of the customs authorities is due to the fact that, unlike the previous Customs Code of the Customs Union, the current EAEU Customs Code contains rules regarding only those spare parts that are intended for repairing another vessel, and that the orders of the Federal Customs Service, which determine the procedure for departure-related customs operations, do not set out any specific provisions regarding the spare parts that are not goods. Consequently, if an application had been filed with the Ministry of Finance, there would have been a risk of it refusing to clarify the substance of the issues that were regulated by orders of the Federal Customs Service, because these clarifications could be viewed as criticism of the Federal Customs Service.
Bearing this in mind, we proposed that the client file a repeat application with the Federal Customs Service. With a view of obtaining the Federal Tax Service’s answer on the substance of the matter, we showed that lower-level customs authorities did not have a uniform position, so the Federal Customs Service had to interfere. In doing so, we also provided an analysis of the current regulation showing that, when interpreted comprehensively, it did not require a formal instruction to be issued for such goods to be loaded on the vessel and that spare parts of the vessel be declared separately and placed under the customs procedure of export merely on the ground that spare parts, equipment and supplies were loaded on board the vessel that was not leaving the customs territory of the Union. Owing to the matter having been so thoroughly and expertly processed, the client was able to receive an official clarification of the Federal Customs Service with specific answers to its questions, which fully eliminated the problem.
Sea vessels that can carry out both international and domestic shipments may wait at an anchorage in Russian sea ports for several months. To ensure normal operation, technical maintenance and repair of the sea vessel during such a stay, the ship owner purchases spare parts, equipment and supplies for the vessel from Russian companies. A specialised customs authority demanded that the company issued a formal instruction for such goods to be loaded on the vessel, if it was located in the zone of customs control. In order to do so, according to the customs authority, the spare parts had to be declared for customs purposes by way of filing a declaration for goods and such goods being placed under the customs procedure of export. The customs authority was making these demands despite that the vessel was not scheduled for an international voyage and therefore those spare parts and supplies that would be placed under the customs procedure of export could in fact be consumed / spent without being carried outside the Eurasian Economic Union. At the same time, as the customs authority in question had limited powers to register customs declarations with respect to certain categories of goods, the vessel’s spare parts, equipment and supplies had to be declared to another customs authority.
With a view of forming a unified approach to the customs declaration of the above goods, the Company sought advice from the regional customs department (the "RCD") responsible for the area where the goods in question may be declared. Although the RCD’s advice was generally favourable for the Company, it did not contain any definite answers to the questions asked. Moreover, given that the customs authority that does not report to a particular RCD is not guided by such RCD’s clarifications, the Company applied to the Federal Customs Service. However, the Federal Customs Service referred to the Administrative Regulations for Providing Public Consulting Services approved by the Federal Customs Service’s Order No. 492 dated 11 June 2021 and noted that it provided consulting services through its regional customs departments, rather than directly, so it left the Company’s questions unanswered. In view of the above, the Company planned to apply for a clarification to the Russian Ministry of Finance.
Based on our experience, customs authorities are not always guided by letters of the Ministry of Finance, unless these letters have been brought to their attention by a letter of the Federal Customs Service. At the same time, we understood from our preliminary analysis, that the lack of a uniform position of the customs authorities is due to the fact that, unlike the previous Customs Code of the Customs Union, the current EAEU Customs Code contains rules regarding only those spare parts that are intended for repairing another vessel, and that the orders of the Federal Customs Service, which determine the procedure for departure-related customs operations, do not set out any specific provisions regarding the spare parts that are not goods. Consequently, if an application had been filed with the Ministry of Finance, there would have been a risk of it refusing to clarify the substance of the issues that were regulated by orders of the Federal Customs Service, because these clarifications could be viewed as criticism of the Federal Customs Service.
Bearing this in mind, we proposed that the client file a repeat application with the Federal Customs Service. With a view of obtaining the Federal Tax Service’s answer on the substance of the matter, we showed that lower-level customs authorities did not have a uniform position, so the Federal Customs Service had to interfere. In doing so, we also provided an analysis of the current regulation showing that, when interpreted comprehensively, it did not require a formal instruction to be issued for such goods to be loaded on the vessel and that spare parts of the vessel be declared separately and placed under the customs procedure of export merely on the ground that spare parts, equipment and supplies were loaded on board the vessel that was not leaving the customs territory of the Union. Owing to the matter having been so thoroughly and expertly processed, the client was able to receive an official clarification of the Federal Customs Service with specific answers to its questions, which fully eliminated the problem.