Customs and foreign trade regulation
This case was unique because the client, together with Pepeliaev Group, has become a ground-breaker in applying the new customs duty connected with fuel for seismic survey ships, which was introduced by Federal Law No. 72-FZ dated 1 May 2019. This law provides that the procedure for the benefit to be applied should be established by the Russian Government. However, the Government has delayed adopting the resolution. At the client's request, Pepeliaev Group’s lawyers have prepared and presented, in the framework of public discussions, amendments to the draft resolution prepared by the Russian Ministry of Industry and Trade. Some of these amendments provided that the law could apply retrospectively. However, this proposal has been dismissed. As a result, when the company received the customs authority's refusal to apply the benefit for the reason that there was no resolution of the Russian government, it had to appeal it in the State Commercial Court.
Based on the legal position developed by Pepeliaev Group’s lawyers which took into account previous decisions on similar matters issued by the Russian Constitutional Court and the Russian Supreme State Commercial Court, the State Commercial Court of the Primorsky Territory by its Decision dated 4 December 2019 in case No. А51-20524/2019 upheld the client’s claims and invalidated the customs authority’s refusal to grant an exemption from export tax duty. By the Resolution of the Fifth State Commercial Appeal Court dated 17 February 2020 the decision of the first instance court was left unchanged and the customs authority's appeal was dismissed.
- obtained confirmation from the Russian Federal Customs Service that the legal position we developed regarding the customs clearance of sea vessels was lawful. The sea vessels were imported under bareboat charter contracts to be used for international and domestic shipments subject to exemptions from customs duties and taxes. Our lawyers also provided follow-up legal support;
- developed the conditions for the customs clearance of fuel as supplies with an exemption from export customs duties;
- analysed the possibility of clearing re-exports with a customs authority other than that with which the vessel was initially cleared when imported.
Given the lack of official clarifications and the case law, other carriers utilising vehicles for the international transportation of cargoes and passengers may apply the legal positions that our lawyers have developed.
Pepeliaev Group’s lawyers advised clients on a number of matters related to customs regulation, among them: (i) customs benefits applied in special economic zones, in free warehouses and in territories of advanced social and economic development; (ii) customs consequences of applying agency (commission-based) models for supplies of goods, and the use of consignment and leasing agreements; (iii) the possibility to import and export commercial cargo by branch offices of foreign companies, and the import of goods used as contribution to the issued capital of a foreign investor.
Pepeliaev Group’s lawyers successfully represented companies providing services in the area of mineral production. When contesting the decisions of the Sakhalin customs authorities regarding the application of customs duties for the contractor with regard to the goods imported for the Sakhalin-2 PSA, our lawyers managed build positive case law for the importer which was subsequently applied to the Sakhalin-1 PSA as well. Moreover, the practice’s lawyers challenged in a commercial (‘arbitration’) court a decision of the customs authority disallowing the application of a customs benefit with regard to equipment imported as contribution to the issued capital. Owing to the efforts of our lawyers the client managed to avoid the need to pay additionally accrued duties in the amount of RUB 20 million.
Pepeliaev Group’s lawyers developed the optimal scenario to import equipment taking into consideration its specific features, the possibility to ship it in assembled form, and contractual relations between the clients and their suppliers of equipment. Our experts also developed a scenario to import the equipment in parts and components and set up a schedule for supplies of such parts. In order to develop a fitting import model, the following factors also had to be taken in account: (i) assigning CCFT codes to the imported equipment and its parts, (ii) the possibility to apply zero import duties and VAT rates to production equipment manufactured outside Russia, (iii) whether it was necessary to obtain certificates of conformity for the equipment and its parts and components as well as special aspects of calculating their customs value, and (iv) whether it was possible to repair or recycle conditionally released equipment as well as the customs requirements when doing so.
Our lawyers provided legal assistance to a leading global car manufacturer in the context of building a car assembly plant in St Petersburg. The project involved negotiations with the representatives of regional state authorities on issues related to obtaining the status of a strategic investor, and providing support to the client in negotiations with the Russian Ministry of Economic Development and Trade, the Federal Customs Service, and other bodies. In addition, our lawyers provided support to the client when entering into an investment agreement, selecting a land plot, and provided advice on employment matters when putting the completed plant into operation.