International indirect verification of the place of origin in FTA is a procedure, which the customs authorities of an importing country request confirmation of the place of origin in relation to imported goods receiving FTA preferential tariff benefits to the customs authorities of an exporting country and acknowledgment of the place of origin and tariff collection status are decided based on the reply from the customs authorities of an exporting country (result of inquiry into the place of origin). 

For securing effectiveness of such international indirect verification, the Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements (FTA Customs Act) prescribes exclusion of conventional tariff and collection of tariff regardless of acknowledgment of the place of origin, in the case an exporting country’s customs authorities, which are asked to identify the place of origin by an importing country’s customs authorities, fail to make a reply about the result of inquiry into the place of origin, or delay a reply.

Unjust cases where an importer who imports goods from the place of origin according to the above regulation has been collected tariffs just because an exporting country’s customs authorities’ reply is delayed have occurred frequently from the initial phase of FTA implementation. Moreover, even in administrative proceedings filed by importers in protest against such unjust cases, the Supreme Court confirmed the original verdict which decided in favor of the customs authorities. In the result, importers could not but suffer the disadvantage of tariff collection.   

In such circumstances, DR & AJU accepted the case brought by 10 crane importers who have been collected tariff due to an exporting country’s customs authorities’ delaying reply in international indirect verification of the place of origin in the same way as above. The lawyers of the DR & AJU confirmed through close fact investigation and review of legal principles that the result of an inquiry of the place of origin, which was implemented by the tax authorities before international indirect verification of the place of origin, wasn’t notified to the importers, nor was given the chance for an objection. In addition, the same lawyers successfully persuaded the court by aggressively arguing that such procedural defects were grave ones, which should be controlled using the way to deny the effect of disposition by developing various legal reasoning.  

This case is almost the only one, through which the importers who have been collected tariffs due to an exporting country’s delayed reply in international indirect verification of the place of origin were rescued. This case is also the first ruling that identified the principle of legitimate procedures where the chances to prove the place of origin for importers should be faithfully guaranteed through objection procedures before implementing international indirect verification of the place of origin.

The investigation procedures of the place of origin in FTA consist of several phases such as self-inspection of the place of origin – submission of evidential documents for the place of origin – inquiry into the place of origin for an importer – objection procedures for the result of inquiries into the place of origin – international indirect verification of the place of origin, etc. The verification method is also varied according to each FTA. As seen in this example, an importer aggressively argues the procedural defect with the assistance from the lawyers starting from the initial phase might be the way to reduce the risk of unjust collection of tariffs in international indirect verification of the place of origin.