The bearing as a reflector of the Russian customs

04.02.2011 — Analysis

The Arbitration Court of the Ural Federal District has made an unprecedented gift to customs inspectors: it has allowed imposing antidumping duties on the goods that are not manufactured in Russia. Unless the verdict is overturned by a higher court, scandal is unavoidable. As the "RusBusinessNews" columnist has found it out, the litigation of Amir Khaknazarov, a Russian businessman, with customs inspectors has come to the attention of the Administration of the President of the Russian Federation.

Everything started in May, 2009, when Evrosnabkomplekt LLC delivered 3,000 bearing assembly units from China to the Ordzhonikidzevsky customs station. Amir Khaknazarov, the General Director of the importing company, had no doubt that he would not have any problems with import clearance, as it was not the first year he had imported these goods to Russia. However, problems came out of the blue. The imported units are not manufactured in Russia; therefore, they do not fall within the scope of the government decree "On protection for Russian manufacturers of roller bearings", which imposed a 41.5% anti-dumping duty on single-row bearings from China. For bearing units delivered to Russia, Evrosnabkomplekt paid a 5% duty, and for a long time customs inspectors were quite satisfied with the company's operations. Problems blew up after the businessman did not respond to the invitation of one of the officers: "We should fix it up".

According to A. Khaknazarov, the Ordzhonikidzevsky customs inspectors did not like that the declaration was filled in without participation of a customs broker, and the entrepreneur was given a hint that he could fail to get customs clearing. Then, there was a silent internal expert examination, which found that Evrosnabkomplekt had imported single-row bearings rather than bearing units. The Ordzhonikidzevsky customs inspectors demanded payment of an antidumping duty, together with the penalty for the inaccurate declaration.

The curious thing is even not that A. Khaknazarov learnt about the customs' manipulations after the fact (the law requires that the customs applicant must be notified about an expert examination with written acknowledgment of receipt), but that in their report the experts referred to a certain ordinance issued on September 21, 2009, which no one had ever seen. Viktor Kovin, the entrepreneur's attorney, states that the arbitrary ordinance was soon annulled by the customs executives. Then the second expert examination took place. However, it actually repeated the previous report word-for-word.

As UGTU-UPI professor Alexander Krasilnikov told "RusBusinessNews", the problem with the terminology was caused by the wrong translation of the technical documentation from English into Russian: foreign manufacturers do not use such term as a bearing. As for the USSR, until the 1960s the bearing could have been equally named as an assembly or a unit. Half a century later, when issuing its decree, the Russian government refused from equaling the unit and the bearing - thus, causing differences of opinion. The item imported by Evrosnabkomplekt looked like a roller bearing, but according to experts, only dissection can reveal the actual number of rows. According to A. Krasilnikov, the dissection was performed by the Uralpodshipnik Research and Production Company that confirmed one row in the subject bearing.

Mikhail Mansurov, a sales manager of Uralpodshipnik, explained to "RusBusinessNews" that the company has no expert bureau and, therefore, cannot perform expert examination. The company's professionals checked against the catalog what should be defined as a bearing unit and a bearing. They found out that the unit means that the item must have some housing, which was absent in case of the Chinese item. So, they reported it as a "bearing".

On the other hand, Anatoly Komissarov, head of the Graphics and Machine Component Department at the Ural Agricultural Academy, argues that it does not matter whether the bearing is installed in a housing or not. The important thing is that it is an assembly: any item is recognized as an assembly unit if it consists of three or more elements. The subject item has an additional sleeve and threaded pins; therefore, in opinion of professor Komissarov, it is an assembly unit.

Amir Khaknazarov lodged an objection to the decision of the Ekaterinburg customs about imposition of penalty, filing it to the Arbitration Court, but he lost the case to the government. Viktor Kovin suspects that the judges followed somebody's order. They continually violated the law and did not even try to disguise their actions. For example, the court of appeal made a decision on performance of an expert examination, but at the following session, the judges announced that no expert examination would be carried out, and almost immediately, without going to the conference room, delivered a judgment. V. Kovin explains the reasons for lawlessness by corporative solidarity of the guards of law: relatives of a number of judges operate businesses where goods cross the border; therefore, they are very interested in keeping "normal business relationships" with the customs.

The unlawful decision of the Arbitration Court, which, however, took legal effect, put the Ural Customs into an awkward position. When in court, its representatives asserted that the bearings went through the customs under the code that requires the antidumping duty. It was a blatant lie. "RusBusinessNews" has A. Khaknazarov's previous customs cargo declarations, which clearly show that the same code did not provide for any antidumping duties. Having submitted false information to the court, the customs officials realized that they must collect the outstanding tax payment from Evrosnabkomplekt for the previous years.

Here, the customs got entrapped: if the duties were no collected by mistake, then the customs executives must be dismissed for the tax deficiency. On the other hand, if the duty was charged wrongfully, the customs officials must be taken to the court and punished for extortion.

Ambitions of the second-rate customs officials will be costly for the government: they have smeared the already vulnerable reputation of the Russian court and cornered the government, which will have to collect duties from other importers of bearing assembly units, trying to save its face. By law, the duties will have to be collected for the last three years - business community is certain to resent and start filing letters of protest to the government.

Amir Khaknazarov has already informed the Administration of the President of the Russian Federation about his vicissitude. His letter was forwarded to the Federal Customs Service and the Sverdlovsk Region's prosecutor's office for detailed examination. Experts think that the customs officials and the judges will have to account for their questionable mistakes by law.

Vladimir Terletsky