The customs valuation process plays a crucial role in international trade, ensuring fair and accurate assessment of imported goods. However, the interpretation of customs laws and regulations, particularly in relation to judicial decisions, can significantly impact the valuation process and create debates regarding their compatibility with international standards. This writing delves into the recent ruling by the Cassation Bench of the Federal Supreme Court in Ethiopia, examining its impact on customs valuation practices outlined in Customs Proclamation No. 859/2014 and the WTO customs valuation treaty. The focus is on the court’s endorsement of supplementary criteria outlined in Directive No. 158/2011 and the resulting controversies and conflicts. It explores the implications for importers challenging customs valuation decisions and highlights the complex interplay between judicial interpretation, customs legislation, and international trade agreements.
Pursuant to Proclamation No. 1234/2020 of the Federal Courts, it is stipulated that judicial interpretations promulgated by the Cassation Division of the Federal Supreme Court, contingent upon the concurrence of no fewer than five adjudicating justices, shall acquire binding force commencing from the juncture of their issuance.
In a recent adjudication by the Cassation Bench of the Federal Supreme Court, delineated in Case No. 234982, it was declared that the supplementary criteria for the repudiation of the transactional worth of imported merchandise, as delineated in Directive No. 158/2011, are congruent with the tenets of Customs Proclamation No. 859/2014. This judgment has engendered a modicum of disputation, given its potential interpretation as being in contravention of both the aforementioned Customs Proclamation and the customs valuation treaty of the World Trade Organization (WTO).
Customs Proclamation No. 859/2014 constitutes the legislative scaffolding underpinning the customs valuation of imports within Ethiopia. Despite Ethiopia’s non-membership in the WTO, this Proclamation draws heavily from the WTO’s customs valuation treaty, mandating that the transactional value of imported goods, defined as the remuneration tendered or payable in transactions among non-affiliated entities, should form the primary criterion for customs valuation.
Directive No. 158/2011, promulgated by the Ministry of Revenues, aims to augment the framework for customs valuation of imports, prescribing specific benchmarks for the negation of transactional value of such goods. Certain of these benchmarks merely reiterate stipulations of the Proclamation, encompassing scenarios of interrelated buyers and sellers or restrictions on the merchandise’s usage or disposal.
However, the Directive introduces additional conditions not contemplated within the Customs Proclamation, particularly the condition where the transactional value becomes dubious and subject to rejection if the disparity between the commercial invoice value of an import and its equivalent in the Customs Price Database exceeds certain prescribed thresholds.
It has been our interpretation that such conditions should not precipitate the automatic dismissal of transactional value, as the Directive mandates further scrutiny prior to such rejection. Nevertheless, in various litigations concerning this matter, it has been observed that officers of the Customs Commission hold a divergent view.
The Cassation Bench’s ruling endorsed these supplementary criteria set forth in Directive No. 158/2011 for the repudiation of transactional value. This implies that meeting the Directive’s criteria authorizes the Customs Commission to disregard the transactional value and employ an alternative valuation methodology.
This decision has sparked debate, with some asserting that it undermines the fundamental principle of customs valuation enshrined in the Customs Proclamation, specifically the transaction value. Moreover, this ruling might be interpreted as legitimizing other contentious aspects of Directive No. 158/2011, criticized for their stringency and the impracticality of substantiation. For instance, the Directive necessitates that the importer demonstrate, through tangible evidence, a recognized international price fluctuation, subject to validation by the Customs branch manager or an appointed official.
Such evidentiary rules, vesting the determination of relevance and acceptability of evidence in the hands of those engaged in the valuation dispute, are arguably more problematic and incongruent with the Customs Proclamation than the introduced conditions for suspecting the transactional value of goods. While the Cassation Bench’s ruling has elucidated the legitimacy of the additional requisites for rejecting transactional value as per Directive No. 158/2011, it concurrently raises questions regarding the overall compatibility of the valuation process, as predicated on the Directive, with that of the Customs Proclamation. The future impact of this ruling on the decision-making of importers challenging the Customs Commission’s valuation decisions remains an area of ongoing speculation and interest.
In conclusion, the ruling brings attention to the need for a harmonious and consistent approach to customs valuation that balances domestic legislative frameworks, international standards, and the fair treatment of importers. Clear guidelines and mechanisms for resolving disputes and addressing potential conflicts between customs legislation and international obligations are essential to ensure a transparent and predictable customs valuation process that facilitates international trade while upholding the principles of fairness and accuracy.
