Unsettled Custom Duties under Article 7 of Iran Customs Code

One of the most important articles of Iran’s customs law is Article 7.  Lack of attention to Article 7 could pose significant problems to merchants.
Article 7 of Iran’s customs law states: ” Goods in the customs shall be as a bond for payments of all fees pertaining to such goods and other outright liabilities of the owner of goods with regard to the fees the collection of which are the responsibility of the customs in accordance with the law. The customs may not allow delivery or release of the goods before collecting or securing such fees”.
According to this article, even one Iranian Rial of unsettled customs duties to the customs can prevent the release of merchants’ goods. This means that the mentioned goods can be released only after the full settlement of the previous debts.
Every document that is declared at the customs office at the beginning of the customs procedures and also at the exit door (the final stage of release), is examined in terms of whether the owner of goods owes any unsettled custom duties to the customs office, and the stamp of article 7 is placed on the declaration or customs license.
In addition to the unsettled custom duties, the customs also examines the obligations of the owner of goods to the customs. For example, if the owner of goods commits to providing the necessary documents by a certain deadline and fails to fulfill their commitment, the customs will not allow the shipment to be released.
It is worth mentioning that if the value of your shipment is higher than the unsettled customs duties owed to the customs, the owner of goods can request the release of a part of the shipment from the customs, so that the remaining part of the shipment would be kept as a bond in the customs for the amount of the same debt.

How merchants file a lawsuit against the application of Article 7
But what should merchants do if they have a complaint regarding the application of Article 7? Basically, in such cases, the authority to deal with disputes and complaints is the “Customs Dispute Commission”.
According to Article 111 of the Customs Law, disputes that can be raised in the Customs Disputes Commission include:
– Disputes over tariff identification
– Disputes over the value of goods
– Disputes over determining fines except for customs smuggling
– Disputes over identifying force majeure
– Disputes over identifying customs regulations
Since Iran Customs Administration website has been launched, merchants can file an objection to the customs services electronically by referring to the customs web page.
According to Article 111(5) of the Customs Law, disputes between persons and the customs shall, initially at the request of the payer, be investigated in administrative bodies of Iran Customs Administration, and if the payer insists on their objection, the case shall be referred to the Customs Disputes Settlement Commission by the President of Iran Customs Administration and/or the person determined by their written order. In order to file a dispute in the mentioned commission, the owner of the goods must deposit an amount equal to half percent (0/5%) of the disputed amount as the investigation fee.
In the next step, in accordance with Article 111(1) and Article 116(9), in case of appeals where the amount of the margin between the opinion of the customs and the amount accepted by the payer and/or customs value of the goods whose import and export conditions are the subject matter of the dispute is more than fifty million (50.000.000) Iranian Rials., the payer may, within twenty days from the date of the serving the ruling, request reference of the case to the Appeal Commission. (Up to 50 million Iranian Rials, the verdict issued by the primary chambers is considered as a final decision, and more than the mentioned amount can be appealed in the reviewing commission). In order to file a dispute in the Appeal Commission, the owner of the goods must deposit a legal fee equal to one percent (1%) of the disputed amount as the investigation fee.

What if the award of the Customs Dispute Settlement Commission is not favorable?
According to Article 13(9) of the Law on Procedures of the (ACJ), approved in 2013, dealing with objections and complaints from the opinions and final decisions of Customs Dispute Resolution Boards (CDRB) and Commissions, including the Customs Disputes Commission, exclusively in terms of violating laws and regulations or opposing them, can be sued in the ACJ. In this regard, all final decisions issued by the primary and appeal commissions for dealing with customs disputes can be appealed in the ACJ.
Also, according to Article 16(9) of the Law on and Procedures of the ACJ, final decisions issued by the Customs Disputes Commission can be appealed in the ACJ within three months from the date of the notification of the decision by persons inside the country and within six months from the date of notification of the decision by persons living abroad.

Can the goods included in Article 7 be considered as a bond?
One of the questions related to this article (7) is whether the customs can consider the goods included in Article 7 as a bond and allow merchants to continue importing? The instruction provided by Iran’s customs with respect to the release of goods of production units on credit, which was determined in 2017, has recognized keeping a part of the goods as a guarantee of the import rights of the released goods. However, the mentioned instruction has excluded debtors regarding Article 7 of the Customs Law from this rule.
This instruction has also emphasized: in case of non-fulfillment of obligations within the deadline set by the local customs, while implementing articles 7 and 8 of the Customs Law regarding the follow-up in order to resolve the unmet obligations, measures will be taken to inform Iran’s customs in order to stop providing customs facilities to the owner of goods. Obviously, the implementation of the provisions of Articles 7 and 8 will stop after the relevant entry rights are received.

How to settle customs duties
Customs duties, which are defined based on Article 7 of the Customs Law, were previously controlled in a semi-mechanized manner and with human intervention, a process which was prone to the risk of forgery or dissimulation. With the establishment of the comprehensive system of customs affairs, the review of the mentioned customs duties is automated and the debtors are not allowed to declare and release the goods automatically.
Therefore, the owner of goods must pay their debt so that they would to be able to receive services from customs. Through the electronic customs system, persons are informed about the application of this article as well as other legal procedures of goods release.
In addition, as long as a case belonging to merchants and companies is in process in the appeals commission, Article 7 is not applied to them. Article 7 is applied if the decision of the commission is against the person, after which a lawsuit can be filed with the ACJ within three months from the decision of the CDRB and at the same time, the request for the issuance of a provisional order can also be submitted. This request is related to putting a halt to the executive operation of Articles 7 and 8. In the event ACJ issues a Provisional Order, the owner of the goods can, after notification of the such order, resume custom clearance procedure until a final award is concluded by the ACJ with respect to the substances of the claim.

MSLI takes pride in providing valuable legal consultancy services in the field of customs-related matters to various clients, including renowned FMCGs for many years. Through our team of experienced legal professionals who possess extensive experience and expertise in this field, we strive to safeguard our clients’ best interest.