Inclusion of transportation costs in the customs value of goods. Overview of relevant case law

A Russian importer (“the Company”) imported goods into the EAEU under the delivery terms FOB and EXW. The customs value of the goods was determined in accordance with Method 1 and included transportation costs up to the EAEU customs border in accordance with a freight forwarding agreement with multiple forwarders (“Forwarders”). The relevant additional charges were stated in Box 17 of the CVD-1 form based on invoices from Forwarders containing breakdowns of transportation costs.

However, the Forwarders used carriers (“Carriers”) to carry out the transportation. It is an important factor for this case that invoices issued by the Carriers to the Forwarders did not include breakdowns of costs into those incurred before and after the EAEU customs border.

After carrying out a desk customs audit, the customs authority concluded that all transportation costs (i.e., including those for transportation within EAEU territory) must be included in the customs value of imported goods.

Information on the division of costs into those incurred before and after the crossing of the EAEU border can be based only on information supplied by the Carrier as the entity that actually carries out the transportation services and incurs expenses associated with the carriage of goods (for example, depreciation, labor costs, etc.).

In commercial documents from the Carriers, costs for transportation from the place of shipment of goods to the place of arrival in the customs territory of the EAEU are not broken down into transportation before and after the EAEU customs border.

The only such breakdown is contained in documents drawn up by the Forwarders (freight forwarding agreements and invoices). Since that breakdown was made by the Forwarders independently, the Forwarders’ documents cannot be admitted as evidence of transportation costs incurred owing to the fact that they contain arbitrary or unsubstantiated data.

The concept of “carriage/transportation costs” covers costs which meet the criterion of being related to the conveyance of goods. In this regard, the type of civil contract under which the costs were incurred (carriage or freight forwarding agreements, agency or commission agency agreements, et al.), the number of entities involved in the conveyance of goods and other similar circumstances have no legal significance for customs valuation purposes.

Compliance with the conditions for the deduction of transportation costs may be confirmed by various types of evidence depending on the types of civil contracts concluded, the terms of those contracts and the means by which goods are transported.

Documents submitted by the declarant must make it possible to determine the composition and amounts of costs incurred for forwarding services and the extent to which those costs are attributable to the carriage of declared goods (for example, if the nature and cost of specific costs are shown separately in the forwarder’s invoice). However, the price of a forwarder’s services may be expressed as a fixed amount without segregating cargo transportation costs if the forwarder’s obligation consists in ensuring the safe delivery of cargo.

If it is impossible to determine accurately the amount of expenses attributable specifically to the Carrier, that does not mean that the full cost of transportation must be included in the customs value. In this situation it is possible to use documented information submitted by the declarant or possessed by the customs authority on tariffs ordinarily charged by carriers (forwarders). 

The fact that the cost of carriage is not divided into transportation up to and from the EAEU border in the Carriers’ invoices is not a basis for asserting that the Forwarders’ invoices are inadmissible as supporting documents for declared transportation costs on the grounds that they contain arbitrary and fictitious information. 

The absence in a Carrier’s documents of separate figures for transportation before and after the EAEU customs border does not in itself indicate that information contained in documents received by the Company from Forwarders is inaccurate.

A similar legal approach was supported in Supreme Court rulings (1) No. 307-ES20-13121 dated 22.12.2020 on Case No. 66-5900/2019 and (2) No. 310-ES22-7951 dated 06.06.2022 on Case No. A08-579/2021.