The 24.01.2024 dated and 2024/1 numbered Decision of the Council of State Board of Tax Appeals, published in the Official Gazette dated March 26, 2024, brought back to the agenda a dispute that frequently arises between customs administrations and customs obligees regarding surveillance measures. 

According to the "Agreement on Safeguard Measures" annexed to the GATT 1994, GATT member countries may take safeguard measures in cases where "a product causes serious injury" or "threatens serious injury" to "the domestic industry producing similar or directly competing products in its territory." Of course, member states must first notify the counterparties, obtain their defenses, and make a fair assessment and decision. Article 6 of the Agreement states, "The safeguard measure must be in the form of a tariff increase." In other words, GATT 1994 (World Trade Organization) member countries can take safeguard measures, such as additional customs duties or additional financial obligations, only in cases of "serious injury or threat of serious injury" to products produced in other countries that are competitors of a product made in their country.

However, after the signing of GATT 1994, the Turkish bureaucracy, unable to cope with Far Eastern goods through safeguard measures, created a new type of measure. "Since protection measures are insufficient, let's take surveillance measures. Let's arrange so that those who want to import the goods we want to take measures against can come and import them by obtaining a 'surveillance certificate' from us or, if they do not obtain this certificate, by raising the unit price to the threshold price we set in the communiqué. Let's not give surveillance permission to the applicant." Surveillance communiqués were put into effect. For example, Article 8, titled "Surveillance Measures" of Decision No. 95/6815, states that surveillance measures may be applied if it is determined that the absolute or relative increases in the import quantities of the products subject to examination pose a threat of damage to the domestic production of directly competing products, it was stated that "The purpose of surveillance is to monitor the developments in the imports of textile products for which surveillance measures are applied." In other words, "Surveillance is not a protection measure, but aims to monitor the course of imports." In the communiqués on surveillance measures that entered into force during this period, provisions such as "the provisions regarding customs value in the Customs Law No. 4458 are reserved" were also included to say that "we do not ignore the existing customs value provisions."

Some business people responded, "Since the Ministry does not issue surveillance certificates, we declare at the threshold price and pay the taxes. However, we put a reservation on the customs declaration regarding this threshold price. Then we can apply for a refund."

Realizing the situation, the state tried to cut this path with an amendment to the law. Article 211, paragraph 1 of the Customs Law No. 4458 reads: "Customs duties that are determined to have been paid when they should not have been paid by law shall be refunded. Customs duties accrued when they should not have been accrued by law shall be removed. However, suppose the customs duties that should not have been paid or accrued by law have been paid or accrued due to a deliberate falsification by the person concerned. In that case, requests to return or remove these taxes are not accepted."

In 2021, in the article added to the "Omnibus Law" numbered 7333, the phrase "or increasing the customs value of the goods subject to trade policy measures with the declaration of the obliged party" was added to paragraph 211 of the Customs Law No. 4458, after the phrase "a deliberate falsification."

In other words, according to the current provision, "this tax cannot be refunded to the person who declares at the threshold price determined by the surveillance measure." After the entry into force of this provision, some entrepreneurs who imported the goods covered by the surveillance measure without a surveillance certificate by declaring the threshold price difference in the "foreign expense" box of the customs declaration with a reservation applied for reimbursement to the customs authorities after the actual importation. Customs administrations rejected the refund applications because they did not act in accordance with the provisions of the current Article 211 of Law No. 4458.

In Decision No. 2024/1 of the Council of State Board of Tax Appeals, which we mentioned at the beginning of the article, it is stated that "In the case filed with the request for the cancellation of the objection to the accrual in accordance with Article 242 of the Customs Law No. 4458 due to the increase of the value of the goods by making a declaration with reservation to the foreign expense item in the amount to be equal to the value in the surveillance communiqué, and the return of the taxes, with the explained legal reasons and justification. In the lawsuit filed with the request for the cancellation of the transaction regarding the rejection of the objection to the accrual by Article 242 of the Customs Law No. 4458 and the refund of the taxes, in determining the customs value of the imported goods, first of all, the sales price should be taken as the basis, if it is determined that the necessary conditions for taking the sales price as the basis do not exist, other methods should be applied respectively; In case it is concluded that the reasons for abandoning the sales price method are not concretely revealed, it was decided that there is no conformity to the law in the transaction, it was decided definitively on 24/1/2024 with a majority of votes."

Thus, the Council of State stated, "While the provisions regarding the value in the Customs Law are in force, it is not fair to resort to ways such as threshold price and surveillance value. Moreover, the customs administration, based on the provision in Article 25, 'As long as the customs value of the goods can be determined according to the provisions of the upper subparagraph, the provisions of the lower subparagraph cannot be applied.' it is ruled that there is no determination that requires the administration to abandon the sales price method. Therefore, rejecting the return request due to the amendment made in Article 211 is not by the law.

This decision of the Council of State is an excellent example of the fact that the search for justice in Türkiye has yet to be exhausted. However, shouldn't someone evaluate the attitude of the merchant who pays the tax with a stiff upper lip and bows down to the public regulation, saying, "According to the new provision of Article 211, the threshold price brought by the surveillance measure is above our heads", and the merchant who withdraws his goods from customs with a "reservation record" and applies for the return of the goods and gets back the overpaid taxes? In other words, can the state treat the naughty child and the good child the same and issue a regulation that says, "In line with this decision, refund applications can be made for the old surveillance measure threshold price increases for six months starting from March 24, 2024"? Unknown.