Taxpayers were surprised earlier this year by an important decision of the Superior Court of Justice (STJ) in the case file of Special Appeal 1.826.124/SC. The 1st Class of the Court unanimously recognized the possibility of customs review even after the customs clearance has been submitted to verification procedures (i.e., having gone through inspection channels that require more detained analysis of imported goods). The decision is in line with what has been strongly defended by taxpayers, especially in cases relating to the tax classification of products.
In order to understand the discussion and why the Position of the Supreme Court is relevant to all those who import goods, it is important to recall some concepts.
The import customs tax procedure consists of four phases: declaration processing, customs verification, customs clearance and customs review.
At the customs verification, the tax auditor identifies the importer, checks the goods and the correction of information relating to nature, tax classification, quantification and value, in addition to confirming compliance with all obligations, tax and customs (or requesting changes), in order to perform the customs clearance of the goods.
Through an automated system, imports are subjected to channels – such as in the distribution of a lawsuit to the judge – in which there will be more or less detailing of information and requests from the authorities.
This procedure may be automatic, when the goods are directed to the green channel, or it will be conditioned to the document verification (yellow channel), added to the physical verification of the goods (red channel) or the initiation of special customs control procedure (gray channel), to verify evidences of fraud in the import operation.
Especially in situations where the goods are directed to the red channel, it is common that technical reports to support discussions related to the tax classification of goods are requested.
This is because, once the import has been submitted to that channel, the tax authority is required to carefully analyze all the information and elements to confirm that the imported good is consistent with that reported in the import documents. After this procedure, the goods can be released - customs cleared.
Even after all this procedure and regardless of the chosen channel and the analysis carried out for the release of a particular good, Article 638 of the Customs Regulation provides for customs revision procedure.
In nutshell, it allows the authorities to, within five years from the import (statute of limitation period), recheck the regularity of the payment of taxes, the proper use of tax benefits and the accuracy of the information provided by the importer in the import declaration.
The legal controversy lies in this possibility of customs review itself.
Taxpayers argue that there is no need for customs review over cases that have already passed through the yellow, red and gray verification channels, because on these occasions the goods were thoroughly analyzed by the tax auditors themselves in relation to payment, information declared, nature of the goods – including analysis by experts specialized in the imported goods.
The customs review, therefore, would imply the express approval of the taxpayer's correctness, with the final customs clearance.
The taxpayers' argument is even stronger in relation to the red and grey channels, in which the analysis for the purposes of clearing the goods requires the physical analysis by the the customs inspector, who confirmed, after reviewing the process and the imported goods, that the customs clearance could occur as it was declared by the importer..
In cases where such an analysis has already taken place with tax authorities implementing the customs review, taxpayers believe that, the legal criterion originally adopted has changed, the effect of which, to the limit, could only be applied for future operations.
Taxpayers base their understanding on articles of the National Tax Code, which impose limits on the performance of the inspection. Moreover, said articles, due to their scope, could be perfectly applicable to cases of customs review.
More specifically, taxpayers make use of the following:
- article 100, that restricts the applicability of retroactive effects when there is a change of legal criterion;
- Article 149, which identifies the situations in which a tax assessment can be reviewed by the auditor (highlighting the situation in which the fact was not known or was not proven at the time of the previous accordance – error of fact); and
- article 24 of the Law on Introduction to the Rules of Brazilian Law (LINDB), which foresees the invalidation of legal situations fully constituted with base in subsequent change of general orientation – common in the scenarios of customs review, which occurs after the taxpayer has carried out numerous import processes, including discussions with the inspection about its correction.
This understanding of the taxpayers, for a long time, was accepted by the STJ[1] and the Administrative Council of Tax Appeals (Carf),[2] whose jurisprudence established the impossibility of changing the legal criterion and the following application of retroactive effects of said “new position” to the customs clearance completed.
In other words, both the administrative courts and the STJ agreed that the previous analysis carried out by the inspection (e.g. red channel) confirmed the correction of imports, which is why it would no longer be possible to demand from the importer a new change in imports and the payment of differences in taxes.
Nevertheless, this jurisprudence has been altered in recent years, culminating in the of the Special Appeal 1,826,124/SC.
The appeal was based on an lawsuit filed by a taxpayer that was importing the goods before the Regional Court of the 4th Region.
The judgment of the Regional Court was in the sense that the possibility of customs review was restricted to the hypothesis of customs clearance performed through the green channel – when the goods are automatically cleared, without any verification.
As the decision was favorable to the taxpayer, the National Treasury appealed and the matter proceeded for consideration by the STJ.
The First Chamber of the STJ, responsible for re-analyzing the case, considered that the legislation governing the matter does not bind the tax authorities' right to review the regularity of the payment of taxes to a certain type of customs verification channel to which the goods have been submitted.
This understanding is aligned with the one already signed in the Second Panel of the Court, in the judgment of Special Appeal 1.201.845/RJ, in which it was decided that the first opportunity (customs verification) does not hinders the second (customs review) - which arises after customs clearance - in which the tax auditorwill revisit all acts practiced in the first procedure.
In this case, ministers adopted the premise that the Customs verification requires expedited analysis, because the goods are deposited on behalf of the taxpayer (with the burden of paying for surcharges) and, in addition, its permanence hinders the activities of the tax auditor, who needs to attend other customs clearances in the queue. Thus, it is legitimate that the inspection can review these acts practiced quickly (subject to the green channel).
In the case under discussion, the existence of Technical or Expert’s reports was not mentioned. The First Chamber of STF supported the decision on prior cases and the legislation only.
However, in that particular case, the situation differs from that discussed in the process analyzed by the First Chamber more recently. This is because, in the Special Appeal 1.201.845/RJ, the discussion concerns the beginning of the statute of limitation period, when the inspection does not make any requirement five days after the end of the customs verification. In such case, authorities only performed the analysis afterwards, based on the fact that through "examination in its Laboratory of Analysis, disputed the classification attributed at the time by the Appellant, considering as correct another classification".
The specific case examined at that time, therefore, differs greatly from what happens with many taxpayers, who, after carrying out extensive work with the customs supervision – red channel – to confirm the regularity of the tax classification of their products, are targeted with future audit procedure.
Although the Judgment of the Supreme Court was not subject to the Repetitive Cases systematic, the decision has the potential to negatively impact the processes that are already under discussion, especially in the judicial sphere.
In the administrative sphere, although currently the case law is not favorable to the taxpayer, the Special Appeal case mentioned above was judged before the extinction of the quality vote (therefore, it could have a different conclusion nowadays). Under CARF (second instance of the administrative court), the prevailing understanding so far is unfavorable to taxpayers.
For a better understanding of the situation: in the Administrative Proceeding 10314.732822/2013-04, judged by the Superior Chamber of Tax Appeals (CSRF), the decision was that customs clearance does not represent the hard confirmation of the taxes due or approval of the inspection, since this only occurs with the customs review (express approval) or with the course of the satute of limitation period (tacit approval). For this reason, customs clearance would not be cvered with sufficient legal value to be defined as a "legal criterion". However, in the case, the appeal was dismissed by a vote of quality (reason why nowadays it could have a different approach).
On the other hand, recently, the discussion has gained a chapter under CARF. In the trial of the Administrative Proceeding 10909.003996/2007-10, the 1st Panel of the 4th Chamber of the 3rd Section canceled a tax assessment aimed at the collection of taxes as a result of tax reclassification, on the grounds that the customs review is improper in the case of goods cleared through the red channel, where, by legal obligation, the responsible tax auditor shall confirm the composition and tax classification of the goods.
The result was a pro-taxpayer tiebreaker due to the extinction of the quality vote.
As the precedent of the STJ is not binding, for the processes that are still in discussion in CARF there is still a chance of the jurisprudence being reversed in favor of taxpayers.
However, the decision shows, once again, that the courts do not always adopt the same reasoning, leaving taxpayers at the mercy of discrepant decisions, without being sure how the outcome of their case will be, even if confirmed by the authorities themselves at a previous time.
[1] REsp 1112702/SP, Rel. Minister LUIZ FUX, FIRST CLASS, judged on 10/20/2009, DJe 06/11/2009 – g.n.
REsp 1079383/SP, Rel. Minister Eliana Calmon, Second Class, judged on 18/06/2009, DJe 01/07/2009
Ag 918.833/DF, Rel. Min. José Delgado, First Class, DJ. 11.03.2008
[2] Process No. 12719.000127/2005-34, Appeal 344.510, Judgment 3102-00.684, 3rd Section, 1st Chamber, 2nd Ordinary Class, Session: 26.05.2010.
Process No. 10814.005331/2003-76, Appeal 139,812, Judgment 3202-00.023, 3rd Section, 2nd Chamber, 2nd Ordinary Class, Session: 14.08.2009.
Process No. 12466.004542/2002-33, Appeal 127,930, Judgment 301-30,892, 3rd Council of Taxpayers, 1st Chamber, Session: 01.12.2003
