If a customs value adjustment is made after imported goods have been released: when is it made, how much additional duty and VAT result, from which day does late-payment interest run and what changes in the accounts?

"Zarafshon Termo" LLC brought 200 industrial fans in from abroad and cleared the goods under the release for free circulation procedure (code 40). In the cargo customs declaration (CCD) the customs value was declared as 360 000 000 soum, the customs duty was taken hypothetically as 18 000 000 soum (this is a hypothetical amount, not a rate), and VAT came to (360 000 000 + 18 000 000) × 12% = 45 360 000 soum. The goods were released and the fans began to be sold from the warehouse.

Eight months later the customs authority, checking the documents, found that the freight forwarder's invoice for carriage to the border, issued for 24 000 000 soum, had not been included in the customs value. Chief accountant Zebo faces three questions: is this adjustment lawful, how much more has to be paid, and from which day does late-payment interest run? The article answers them from the text of the Customs Code. The duty amounts in the example are hypothetical, not actual rates; the interest rate is shown by the letter (r). Take current rates from an official source.

When and why is an adjustment made?

Article 320 names two moments: during customs clearance and after the release of the goods.

During clearance an adjustment is made if: - the method of determining the value and the amount declared by the declarant or broker do not match the documents submitted; - a technical error that affected the amount of the value or of the payments is found in the customs value declaration.

After the release of the goods an adjustment is made if: - the final value of conditionally released goods is determined on the basis of additional information from the declarant, or the declarant accepts the value set by customs under Article 321; - it is found that a technical error in declaring affected the value or the payments; - during a later check of the documents, incorrect declaring that affected the value or the payments is found; - it is found that on the date the CCD was accepted the declared value did not match the actual value because the quantity or quality of the goods departed from the contract terms; - other grounds arise that lead to a refund or an additional payment of payments, or that affected the amount of the value.

The case of "Zarafshon Termo" falls under the third item: incorrect declaring was found during the check. The essence is in Article 304: the costs of delivering the goods to the place of entry into the customs territory (carriage, loading and unloading, insurance cost) are added to the transaction price if they are not included in the price, and these costs are confirmed by documents.

Later control is not arbitrary. Under Article 201 customs authorities carry out such control when there are sufficient and confirmed grounds to suspect that the law has been violated; the basis is the decision of the head of the customs authority (it states the purpose, the term, the composition of the inspectors and the period under review). The control is carried out at most once per contract, and an additional assessment of customs payments is possible within three years from the moment the goods ceased to be under customs control. Under Article 266, an amendment to the CCD is likewise made within three years of the date it was accepted.

If you disagree with an adjustment made by the customs authority, Article 320 gives you the right to ask for a written explanation of the reasons and to appeal the adjustment.

Which documents are prepared?

An adjustment is not one piece of paper. The main documents:

The appearance of the adjustment form and the procedure for completing it are set by the State Customs Committee (Article 266). We do not have the text of this form, so before completing it obtain the current form from an official source or from a customs broker. The general set of documents for the procedures is covered in separate articles.

How much additional duty and VAT result?

The adjusted value: 360 000 000 + 24 000 000 = 384 000 000 soum. The VAT base, under Article 322, consists of the sum of the customs value and the duty payable (the goods are taken not to be among those subject to excise). The calculation (compiled by the author, in soum; duty amounts are hypothetical, not a rate; VAT 12%). Suppose that in the customs authority's calculation the additional duty came to 1 200 000 soum:

Check: (24 000 000 + 1 200 000) × 12% = 3 024 000; 1 200 000 + 3 024 000 = 4 224 000 soum. Most of the additional payment is VAT: 3 024 000 soum is more than two thirds of 4 224 000 soum (3 024 000 × 3 = 9 072 000 > 2 × 4 224 000 = 8 448 000), because both the additional value and the additional duty enter the VAT base.

In the example the freight invoice is in soum. If the invoice is in foreign currency, then under Article 326 during clearance the currency is converted into soum at the Central Bank rate on the date the CCD was accepted. Which day's rate applies when an adjustment is made does not follow precisely from the texts we have; ask the customs authority for this in writing.

When does the debt arise and from which day does late-payment interest run?

This is the most important question, because late-payment interest runs from the day the debt arises (Article 349). Article 347 distinguishes three routes:

An important warning: a very small amount is not formed as a debt, that is, a debt that does not exceed 20 percent of the base calculation unit is not recorded (Article 347). The current amount of the base calculation unit is not stated here; calculate for yourself whether your amount exceeds this threshold using the current figure.

Late-payment interest under Article 349 is calculated as follows: for each calendar day on which the obligation is not performed, an amount equal to one three-hundredth of the Central Bank refinancing rate at that time, applied to the amount of the debt. The total late-payment interest does not exceed the amount of the debt; the obligation arises on the day the debt arises and ends on the day the debt is actually paid. The article contains no rule that the 10-working-day deadline in the demand suspends late-payment interest.

Let us denote the refinancing rate by r (as a decimal fraction, not an actual value). If the debt is 4 224 000 soum, the daily interest is 4 224 000 × r / 300 = 14 080 × r soum. By days of delay:

The calculation is simple: the number of days is multiplied by the daily interest. The limit is visible too: the total late-payment interest must not exceed the amount of the debt (Article 349), that is, growth stops once the expression 14 080 × r × (number of days) reaches 4 224 000; this corresponds to 300 / r days. In practice it is cheaper not to run this calculation but to avoid the delay itself.

The right to instalments (Article 350) allows payment in equal shares over six months. If the shares are paid once a month, it is 4 224 000 / 6 = 704 000 soum each. How late-payment interest is calculated during the period of equal shares is not stated in Article 350; clarify this in writing when agreeing the payment schedule with the customs authority.

What if the adjustment leads to a refund?

An adjustment does not always mean an additional payment. In another consignment the invoice was issued for 200 fans (360 000 000 soum, that is, 1 800 000 soum each), but 190 came out in the crate. The customs inspection report and the expert opinion confirmed that the goods did not match the contract terms (Article 320). The calculation (compiled by the author, in soum; duty amounts are hypothetical, not a rate, the duty for 190 units is hypothetically taken as 17 100 000):

Check: 190 × 1 800 000 = 342 000 000; (342 000 000 + 17 100 000) × 12% = 43 092 000; 63 360 000 − 60 192 000 = 3 168 000 soum overpaid.

Refund rules (Articles 353–357): - The overpaid amount is refunded within three years from the date of payment or is credited against the initial funds paid. Recalculation in connection with the making of an adjustment is one of the grounds for refund (Article 354). - The application is submitted to the customs authority to which the amount was paid, with documents confirming the entitlement (Article 355). - The customs authority takes a decision within 10 working days from the day after the application and documents arrive; if additional checking is needed, the review is extended by a period not exceeding 10 working days. When a decision is taken, a written notice is sent to the applicant, then a reconciliation report of mutual settlements is drawn up (Article 356). - The refund is made by making an adjustment to the customs value and (or) customs payments; no interest is paid on the refunded amount and it is not indexed. If the payer has a debt in customs payments, late-payment interest or interest, the refund is made with their consent after deducting that debt (Article 357). - The amount is not refunded if it does not exceed twenty percent of the base calculation unit or if the application is submitted after the set deadlines (Article 353).

What changes in the accounts?

To write a journal entry for the additionally paid duty and VAT, NAS No. 21 has no standard line for the additional assessment of customs payments. There is none for customs late-payment interest either. So set the accounts for the entry in the company's accounting policy. Here the standard says only what goes into cost (NAS No. 4): - customs duties and fees are included in cost (paragraph 15); - taxes connected with the purchase of goods, if not recoverable (not accepted for offset), are included in cost (paragraph 15); - tax that is accepted for offset is excluded from cost (paragraph 23).

The effect of the additional 4 224 000 soum on cost (compiled by the author):

The right to offset import VAT is decided not by the Customs Code but by the Tax Code; determine which column applies to you under that code. Late-payment interest is not part of the value of the goods but a consequence of delay; it is not listed in paragraph 15 of NAS No. 4. Set in the accounting policy through which account it is kept.

An important point: if part of the goods has already been sold, the additional cost may have to be allocated between the part sold and the part remaining in the warehouse. The allocation logic in paragraph 22 of NAS No. 4 is written for transport and procurement costs; there is no such paragraph for duty. Set the method in the accounting policy and apply it consistently.

Practical tips

• Keep a "value card" for every import consignment. Keep the contract, invoice, the freight forwarder's and insurer's invoices and the payment orders in one folder: the costs added under Article 304 are determined precisely by these documents (practical tip).
• If you find the error yourself, do not wait. If you make the adjustment yourself, the debt arises on the day of the adjustment and there is a right to instalments under Article 350. Late-payment interest runs for each calendar day (Articles 347, 349 and 350).
• Record the day you received the demand. The deadline for compliance is 10 working days from the day after receipt, and the right to instalments is also counted from the day the demand is received (Articles 348 and 350).
• If you disagree, ask for a written explanation. Article 320 gives the right to require the customs authority to set out the reasons for the adjustment in writing.
• Do not forget VAT when calculating the additional payment. In the example 3 024 000 soum of the 4 224 000 soum is VAT (Article 322).
• Watch the overpaid amount too. If quantity or quality departs from the contract, apply within three years (Article 353).
• Do not take duty and interest rates from here. The duty amounts in the article are hypothetical and the interest rate is given by a letter; check current rates against an official source.