Customs Valuation: How Businesses Can Appeal Customs Decisions and Recover Overpaid Duties

Nataliia Kyreieva, Attorney at Law

Source: Mind.ua

Customs value adjustment is one of the most common grounds for additional assessment of relevant payments in Ukraine. For businesses, this means increased customs payments and VAT, blocked working capital, delays in supplies, and the risk of penalties under foreign trade contracts. For large importers and international groups, adjustments can significantly affect cash flow, pricing structure, and tax planning.

At the same time, a significant part of such customs decisions is canceled in administrative or judicial proceedings. Nataliia Kyreieva, attorney at Ilyashev & Partners Law Firm, told Mind how a business can recover overpaid payments.

Methods of Determining Customs Value and Reasons for Its Adjustment

The customs value is determined by the declarant who imports the goods. Article 57 of the Customs Code of Ukraine provides for one primary and five secondary methods of determining customs value.

The determination of customs value by the price of the agreement (contract) is the primary method and must be applied first. Deviation from it is possible only in the presence of clearly defined grounds, in particular, discrepancies or deficiencies in documents that do not allow for the confirmation of the declared price.

Secondary methods are used only when the primary method is impossible. These include the determination of value:

• by the price of the agreement regarding identical goods;
• by the price of the agreement regarding similar (analogous) goods;
• based on the deduction of value (deductive method);
• based on the addition of value (computed value);
• the reserve (fall-back) method.

Businesses need to understand that customs authorities do not have the right to choose any method, except for the primary one, only because it is more convenient for them. They are obliged to prove the impossibility of applying each previous method in turn, as the Customs Code expressly provides for the principle of sequence: each subsequent method can be applied only after proving the impossibility of using the previous one.

In practice, the grounds for adjusting the customs value most often are:

• discrepancies in the documents submitted by the declarant, for example, inconsistency between the invoice, contract, transport documents, lack of confirmation of payment, or discrepancies in the terms of delivery;
• presence of information about higher prices for analogous goods in customs databases (in particular, the Central Database of the IAIS of the SCSU);
• suspicion that the relations between the buyer and the seller influenced the price;
• alleged absence in the documents of all information confirming the numerical values of the components of the customs value of goods.

In addition to the decision on the adjustment of the customs value of the goods, the customs also issues a refusal card for the acceptance of the customs declaration, customs clearance of release or passage of goods, and commercial transport vehicles.

When Can a Decision on Customs Value Adjustment Be Unlawful?

For example, when the customs:

• applied a secondary method without proving the impossibility of applying the primary one;
• referred exclusively to internal databases;
• did not justify the calculation of the adjusted value;
• formally stated “discrepancies” without specification;
• requested documents outside the limits of the exhaustive list.

What Should Businesses Do?

After receiving a decision on the adjustment of the customs value, the declarant has the right:

1. To agree with such a decision and pay customs payments in the amount determined by the customs.
2. To pay the undisputed part of the payments and provide security for the payment of the difference in customs payments in the amount determined by the customs.

After that, the goods are released into free circulation. The second option allows for avoiding the delay of goods and simultaneously initiating the appeal procedure.

When assessing the prospects of appealing a decision on the adjustment of the customs value of goods, it is recommended to analyze both the decision itself and the package of documents that were submitted for customs clearance.

The choice of strategy largely depends on the volume of additional assessments, the structure of supplies, and the long-term plans of the business in Ukraine.

Algorithm of business actions after receiving a customs decision:

1. Analyze the motivational part of the decision.
2. Check compliance with the sequence of methods.
3. Ensure the release of goods (if necessary, through the provision of a guarantee).
4. Form an evidentiary base.
5. Choose an appeal strategy – administrative or judicial.

Documents for Confirmation of the Customs Value of Goods

The decision on adjustment must be properly motivated and comply with the requirements of Art. 55 of the Customs Code, i.e., contain:

• a clear justification of the reasons for non-recognition of the value declared by the declarant;
• specific information that guided the customs authority in making the decision, in particular, regarding the components of value, prices of identical or similar goods, and other factors affecting the price;
• an exhaustive list of additional documents, the submission of which will allow for the recognition of the customs value;
• a detailed justification of the adjusted value, indicating the circumstances that caused its change.

Also, it should be checked whether the sequence of methods for determining the customs value of the goods was observed by the customs authority.

In addition to analyzing the decision itself, it is necessary to critically assess the package of documents that the declarant submitted to confirm the customs value of the goods. In particular, whether they meet the requirements of the Customs Code, whether they do not contain discrepancies, and whether they are authentic.

The list of such documents is clearly defined and exhaustive. These include: foreign economic agreement, invoice, payment and accounting documents, transport and insurance documents, and, in case of need, an import license.

In case of discrepancies or insufficiency of information, the customs authority may additionally request agreements with third parties related to the supply, invoices for payments to third parties in favor of the seller, invoices for the payment of commission and intermediary services, an extract from accounting documentation, a license or copyright agreement of the buyer, catalogs, specifications, manufacturer’s price lists, a copy of the customs declaration of the country of departure, expert opinions on qualitative and price characteristics and/or stock exchange information on the value of the goods or raw materials.

If there are reasonable grounds to believe that the relationship between the seller and the buyer influenced the price, extracts from the accounting and bank documents of the buyer regarding the alienation of appraised, identical or similar goods in Ukraine, reference information on the cost of such goods in the exporting country, as well as a price calculation (calculation) may be additionally requested.

Requesting any other documents is prohibited, but the declarant has the right to submit additional materials on their own initiative.

Administrative or Judicial Appeal: What Should Businesses Choose?

Importers can choose one of two ways to appeal the decision on the adjustment of the customs value and the refusal card:

Administrative appeal – filing a complaint with a higher-level customs authority. Advantages – absence of court fee, speed of consideration of the complaint – 30 days from the moment of its receipt, with the possibility of extending the period by no more than 20 days. However, this instrument is not always effective, as the higher-level body cancels decisions of regional customs only in case of the detection of obvious violations and errors.

Judicial appeal – appealing decisions on the adjustment of customs value in court is the most effective. Despite the relative duration, approximately from 4 to 12 months depending on the complexity of the case, the chances of success here are much higher, provided that the customs value declared by the declarant is indeed confirmed by proper documents. In case of satisfaction of the claim, the court fee in full and the costs of legal aid of an attorney are, as a rule, partially reimbursed at the expense of the budget.

Evidentiary Base and Position of the Supreme Court

To prove the illegality of the customs decision on the adjustment of the customs value, the main documents confirming the price of the agreement, as well as other materials that allow for checking the correctness of its determination, are submitted to the court.

Documents confirming the payment for the goods (if it has already been made), export declarations, manufacturer’s price lists, and conclusions of specialized experts are of great importance for strengthening the legal position of the importer in court. It is critically important that the provided documents do not contain discrepancies regarding the name of the imported goods, their quantity, and value.

The practice of the Supreme Court testifies to the stable position of the courts in favor of business, in particular:

• the presence in the customs databases of information about the higher value of identical or similar goods is not an automatic ground for adjustment and refusal to accept the customs value declared by the declarant at the contract price (SC resolution of 11.02.2026 in case No. 560/2740/25);
• the very fact of the relatedness of the parties does not prove price underestimation: the fact that the seller and the buyer are related persons cannot be a ground for the conclusion about the incorrect determination of the customs value (SC resolution of 13.03.2018 in case No. 804/5688/16);
• the duty of proving the lawfulness of the decision is assigned to the customs authority: the customs must prove the presence of discrepancies in the documents, signs of forgery, or the absence of all information confirming the numerical values of the components of the customs value of the goods, or information regarding the actually paid price (SC resolution of 19.06.2024 in case No. 814/589/18).

The formed practice of the Supreme Court clearly outlines the limits of the discretion of customs authorities and establishes standards for justifying adjustment decisions. At the same time, it is important to remember: the duty of proving the lawfulness of the decision is assigned to the customs authority.

Sometimes disputes can be caused by differences in customs formalities between two states.

For example, the Chernivtsi Customs of the SCSU applied to the court regarding bringing to administrative liability for alleged violation of customs rules the director of a foreign company, accusing him of submitting false documents regarding the weight and value of the goods imported into the territory of Ukraine.

Attorneys proved in courts that the difference in price and weight of the goods, which was reflected in the customs declarations, was caused by differences in customs formalities between the two states, Ukraine and Turkey. At the same time, the customs did not provide any evidence in court that the goods were supplied for another amount, lower than the amount of the agreement, which would lead to a reduction in the payment of customs payments.

Similar disputes often arise in cross-border supplies when different jurisdictions apply different approaches to reflecting weight, value, or the basis of supply. In such cases, the key is a comprehensive analysis of the contract and customs documents in the two states.

Thus, decisions on the adjustment of customs value are not final – they can be effectively appealed provided that a correctly built defense strategy is in place.

Practice shows that a systematic approach to the formation of a legal position – from the terms of the contract and primary documents to the strategic planning of procedural steps, taking into account the approaches of the Supreme Court – significantly increases the chances of a business achieving a successful result and the return of overpaid customs payments.

Proper documentary confirmation of the price of the agreement, compliance with the sequence of applying methods of determining the customs value, and the validity of the position of the customs authority are of key importance in such disputes.