Refund of security for customs payments

One of our most significant recent cases involved a dispute with the state revenue authorities over the return of money deposited in a temporary account as security for customs payments.

Our client applied to a state authority for a refund of money previously paid as security for customs payments. The state authority refused, citing the expiry of the statute of limitations as a reason.

Before proceeding, it is necessary to briefly explain how the legislation has regulated this issue. The client is a subsoil user whose oil exports are exempt from customs duties. However, the customs authorities require the client to prove that he is exporting his own oil and not the oil of a third party. For this purpose, a customs expert appraisal is appointed. To avoid waiting for the appraisal results, the client places money in a special account as collateral and exports the oil without paying customs duties. If the appraisal does not confirm the oil’s origin from the client's field, the money in the account will be transferred to the budget. If the appraisal confirms that the oil belongs to the client, the money paid can either be returned or used for further customs operations within the statute of limitations, at the client's option.

Customs payments were secured by a registration card and the time limit was calculated from the date the card was issued.

Thus, the dispute boiled down to whether or not the statute of limitations had expired. The state authority's position was based on two conflicting arguments: (1) that the statute of limitations starts from the date of the first-ever registration card and (2) that the statute of limitations starts from the date the money was deposited as collateral.

During the proceedings, the courts of first instance, appeal and cassation upheld our arguments, concurring that the statute of limitations starts from the date of each collateral card and not from the date of the first card in time. It does not matter when the money was deposited, since the funds cannot be considered as collateral until the registration card is issued.

Of course, such disputes are relatively uncommon in practice, which is why it was surprising for me, as a legal practitioner, to discover that money deposited as security may not be returned to the payer once the statute of limitations has expired. In my opinion, this is an unfair approach, because we are dealing with security in the form of money placed in a special account, not taxes or other budgetary payments. Why should the taxpayer forfeit his money, if they have fulfilled all the obligations that were secured by it?

One possible solution could be to send taxpayers a notification through their accounts, informing them about specific amounts they deposited as collateral and the approaching expiration of the statute of limitations, which is X days away. This way, taxpayers can take prompt action, such as requesting a refund or using the funds to settle other obligations, etc. Taking this course of action will prevent the legal proceedings described above.