THE BATTLE FOR SURVEILLANCE VALUE IS OVER

In our previous article, we explained that, regarding the surveillance value practice, the public authorities were using the limited arguments at their disposal to protect domestic producers to the fullest extent, even if they were contrary to international law, while importers were insisting on not paying the tax they considered unfairly levied on them under international law and the Customs Code, and that this battle had been going on for years. The war ended with the decision of the Council of State Tax Litigation Chambers, Case No. 2025/15, Decision No. 2025/16, published in the Official Gazette dated November 13, 2025, and the public authorities have won the war.

We believe it is of great value to review the developments that have taken place during this process.

JUDICIAL PROCESS

First, let us note that the matter was decided upon the request for the elimination of inconsistency submitted by the Board of Presidents of the Istanbul Regional Administrative Court. The request is based on the decisions rendered by the Erzurum and Istanbul 2nd Tax Courts. Let us recap the course of these decisions:

By the decision of the Erzurum 2nd Tax Court dated March 29, 2024, numbered E:2023/705, K:2024/185;

It is ruled that, due to the importer's goods were subject to subject to surveillance and the invoice value being below the surveillance value, the importer sought to import the goods without incurring any foreign expenses. However, by making an additional declaration to the foreign expense column, the importer ensured that the value of the goods reached the value specified in the surveillance notification. therefore, the administration's possibility of conducting investigations and research to determine the actual price of the goods and applying trade policy measures within the scope of the powers granted to it by law has been eliminated, In accordance with the amendment made to paragraph (1) of Article 211 of Law No. 4458, it has been decided that there is no legal violation in rejecting the request for the refund of taxes levied as a result of the increase in the customs value of goods subject to trade policy measures based on the claimant's own declaration. The importer did not incur any foreign expenses in order to ensure that the goods subject to surveillance and whose invoice value was below the surveillance value could be imported by the claimant and placed into free circulation without any problems. However, the claimant made an additional declaration to the foreign expense column, thereby ensuring that the value of the goods reached the value specified in the surveillance notification. Therefore, the administration has the right to conduct investigations and research to determine the actual price of the goods, as provided by law.

The Erzurum Regional Administrative Court of Appeal, which reviewed the appeal request, Tax Litigation Chamber's decision dated 30.12.2024 and numbered E:2024/638, K:2024/1286; since it was understood that the value of the goods was increased by declaring additional value to foreign expenses and that this additional value was declared with a reservation, it was determined that the plaintiff's declaration could not be considered binding, that the value specified in the Communiqué on Surveillance Practices in Imports was not the actual sale price determined in accordance with the provisions of the Customs Law, and that the dismissal of the case was not in accordance with the law. The court ruled definitively that the excess taxes collected should be refunded with legal interest.

2- By the decision of the Istanbul 2nd Tax Court dated March 12, 2024, numbered E:2023/2540, K:2024/492; Under the new legislation that has entered into force, the excess taxes paid due to the increase in the customs value of goods subject to trade policy measures based on the declarant's own declaration cannot be refunded, it is understood that the administration can't investigate or audit the expenses declared in the foreign expense section, and that the customs surveillance control applied by the customs administration based on the import regime decision related to this foreign expense declaration has been rendered ineffective, and that foreign expenses were declared for this purpose. Therefore, it is concluded that there is no illegality in the subject transaction established in accordance with the provisions of the legislation in force on the date of registration of the declaration. It was decided that there was no legal violation in the subject matter of the case.

The Istanbul Regional Administrative Court's 7th Tax Litigation Division, reviewing the plaintiff's appeal request, ruled in the decision dated 29.01/2025, E:2024/1414, K:2025/259, that The Tax Court Division denied the appeal request outright, reasoning that the claims made in the appeal petition did not warrant the reversal of the tax court decision in question.

REASONING BEHIND THE COUNCIL OF STATE DECISION

The Council of State Tax Litigation Chambers' decision includes the following grounds:

- The monitoring system in imports is a foreign trade policy tool based on determining a minimum unit price for goods and monitoring imports below this price. 

- The requirement to present a surveillance certificate is limited to cases where the goods are to be imported at a value below a certain threshold. 

- The unit value specified in the notifications serves as a criterion for monitoring the import flow of the goods. 

- This unit value does not constitute the actual sale price of the goods as determined under the provisions of the Customs Law.

- There are administrative appeal channels provided for the purpose of correcting errors related to the under- or over-assessment and payment of tax liabilities arising by law. Within this scope, Law No. 4458 regulates the institution of tax refunds or waivers. The institution above does not serve as an administrative solution for resolving disputes at the administrative stage regarding collected customs duties and fines.

The appeal procedure regulated in Article 242 of Law No. 4458 is an administrative solution that must be exhausted before filing an administrative lawsuit against customs duties, fines, and administrative decisions.

- Article 211 of Law No. 4458, as amended by Law No. 7333, stipulates that requests for the refund or cancellation of taxes paid or accrued when the customs value of goods subject to trade policy measures is increased based on the declarant's own declaration shall not be accepted. Furthermore, for declarations filed with a reservation and subsequently registered, there is no legal obstacle to applying the objection procedure outlined in Article 242 of Law No. 4458. There is no legal obstacle to applying for the appeal procedure set out in Article 242 of Law No. 4458. 

The provision stipulating that requests for the refund or waiver of taxes paid or accrued in cases where the customs value of goods subject to trade policy measures is increased based on the declarant's own declaration shall not be accepted shall not apply to appeals filed under Article 242 of the Law.

- Declarations made by the customs obligor of their own free will, without any pressure, threat, or concern, shall be considered a written admission in law and shall be binding on the obligor.

- With the amendment, the legislator aims to prevent the refund or removal of taxes in cases where the obligor increases the value of the goods through their own declaration, which would render trade policy ineffective.

- In cases where the customs value of goods subject to trade policy measures is increased by the obligor's own declaration, the inclusion of a reservation in the customs declaration during importation does not provide the obligor with the opportunity to pursue legal remedies under Article 211 of Law No. 4458.

- Therefore, importers who claim to have paid additional taxes due to the surveillance application should not file a lawsuit by exhausting the remedies under Article 242 of Law No. 4458, rather than Article 211, in cases where declarations are registered with a reservation.

- Following the amendment made by Law No. 7333, about declarations filed after the amendment, the value of the goods is increased by the amount of the foreign expense item declared with a reservation, which is equal to the value stated in the surveillance notification. Therefore, the taxes allegedly paid in excess cannot be refunded under Article 211 of the Customs Law. Article 211 of the Customs Law.

RESULT

The discrepancy with the stated legal reasons and grounds, in terms of declarations registered after the amendment made by Law No. 7333, it was unanimously and definitively decided that the taxes allegedly overpaid due to the increase in the value of the goods, which was declared with a reservation in the foreign expense item to an amount equal to the value in the surveillance notification, cannot be refunded under Article 211 of the Customs Law.

I would like to note that the decisions issued by the Council of State Tax Litigation Chambers regarding the resolution of inconsistencies and disputes between the final decisions of the Regional Administrative Courts are binding in nature, similar to final and binding decisions.

In light of all these explanations, the possibility of recovering the difference in taxes paid through litigation after the customs value of the goods was increased with a reservation without presenting a surveillance certificate has been closed. In other words, the public authorities have won the battle.

[1] https://moral.av.tr/tr/hukuki-haberler/danistay-vergi-dava-daireleri-kurulu-vuk-uyarinca-yapilan-etebligata-iliskin-ayrica-bildirim-yapilmasina-gerek-olmadigina-hukmetti-638

Remzi AKÇİN 
Chairman of the Board