Constitutional Court Upholds Constitutionality of Customs Act and Special Act Provisions Punishing 'Unreported Returned Shipments'

Constitutional Appeal by Gang Smuggling 40,000 Gold Bars Worth 2 Trillion Won

The Constitutional Court has ruled that the definition clause establishing the concept of 'return shipment' under the Customs Act, and the provision that punishes 'unreported return shipment' in the same manner as unreported import/export while mandating a fine equivalent to the cost of the goods, do not violate the Constitution.

Additionally, the Constitutional Court upheld the constitutionality of the penalty provision under the Act on the Aggravated Punishment of Specific Crimes, which imposes enhanced penalties when goods worth 500 million KRW or more are returned.

Constitutional Court Grand Bench.

According to the legal community on the 4th, the Constitutional Court unanimously ruled constitutional in a constitutional complaint case filed by Yoon and two others, who claimed that Articles 2(3), 241(1), and 269(3)(1) of the Customs Act, and Article 6(3) of the Act on the Aggravated Punishment of Specific Crimes violated the principle of clarity under the principle of legality, infringed on their general freedom of action, and violated the principle of equality.

Yoon and others were indicted on charges of smuggling over 40,000 one-kilogram gold bars hundreds of times over a year and a half starting July 1, 2015 (violations of the Act on the Aggravated Punishment of Specific Crimes and the Customs Act). They brought gold bars purchased in Hong Kong into the domestic airport transit area and then exported them to Japan without declaration.

After proceedings up to the Supreme Court, in January 2020, Yoon was sentenced to four years in prison and fined 666.9 billion KRW, Yang to one year and four months in prison and fined 662.3 billion KRW, and Kim to one year and six months in prison and fined 591.4 billion KRW. The court also ordered them jointly to pay approximately 2 trillion KRW in confiscation.

The multi-billion KRW fines were imposed pursuant to Article 269(3)(1) of the Customs Act, which mandates a fine not less than the cost of the goods when goods are returned without declaration to the customs officer, and the enhanced sentences were due to Article 6(3) of the Act on the Aggravated Punishment of Specific Crimes, which stipulates aggravated punishment of imprisonment for more than one year when the cost of the returned goods is 500 million KRW or more.

While appealing to the Supreme Court, they argued that the relevant provisions were unconstitutional as they violated the constitutional principle of proportionality between responsibility and punishment and requested a constitutional review, which was dismissed. Subsequently, in March 2020, they directly filed a constitutional complaint with the Constitutional Court.

Yoon and others first argued that the definition clause in the Customs Act defining 'return shipment' as 'foreign goods arriving domestically that are re-exported without undergoing import customs clearance procedures' violated the principle of clarity.

However, the Constitutional Court rejected this, stating, "Considering the dictionary meaning of the definition clause and related provisions, the term 'foreign goods arriving domestically' in the definition clause refers to goods brought into Korea from abroad and stored in bonded areas or storage locations under Articles 155 and 156 of the Customs Act before import declaration is accepted, which is sufficiently predictable."

Article 155 of the Customs Act provides exceptions allowing goods with export declarations accepted, quarantine goods, seized goods, etc., to be stored outside bonded areas, and Article 156 allows storage outside bonded areas with customs officer approval.

They also argued that the Customs Act's declaration obligation provision, which imposes return shipment declaration duties on all transit passengers carrying foreign goods through Korean airports, imposes an excessively broad scope of return shipment declaration obligations on transit passengers, violating the principle of proportionality and infringing on their general freedom of action, but this was not accepted.

The Constitutional Court stated, "This aims to verify whether the conditions stipulated in the Customs Act and other export-import related laws are met to ensure smooth customs administration, which is a legitimate legislative purpose. Since return shipment declarations must be made faithfully for proper return shipment customs administration, the appropriateness of the means is also recognized."

It further noted, "The Customs Act allows for omission or simplified declaration of return shipments for personal effects and checked baggage, permits electronic declaration methods, and thus minimizes restrictions on fundamental rights related to return shipment declaration obligations."

Regarding the balance of interests, the Court said, "Maintaining customs order is a public interest of great importance in terms of protecting and developing the national economy, even when not aimed at securing customs revenue, while the return shipment declarant only suffers the disadvantage of undergoing basic declaration and inspection procedures for the returned goods."

Yoon and others claimed, "The penalty provisions in this case excessively punish smuggling return shipments, which are unrelated to securing customs revenue and have little harm to the national economy, violating the principle of proportionality between responsibility and punishment."

However, the Court stated, "When the cost of the returned goods is less than 500 million KRW, various sentences can be imposed within the range of imprisonment up to three years or fines not exceeding the cost of the goods, and since there is no lower limit on the statutory penalty, probation or suspended sentences can be granted without mitigation."

Regarding the enhanced penalty provision, the Court noted, "Although the statutory penalty for goods returned with a cost of 500 million KRW or more is imprisonment for not less than one year, judges may consider other sentencing factors and grant probation or suspended sentences without mitigation."

On the mandatory fine provision, the Court said, "This provision mandates fines equivalent to the cost of the goods only for crimes involving returned goods worth 500 million KRW or more" and "Considering that large-scale smuggling return shipments likely involve organized crime to generate enormous criminal proceeds, and that once goods are exported, investigation and punishment become difficult, imposing economic disadvantages separate from confiscation and forfeiture is necessary to prevent and strictly punish large-scale smuggling return crimes motivated by economic gain."

It further concluded, "Even if fines are mandatorily imposed, fines are set proportionally to the cost of the returned goods, and considering that suspended sentences are possible regardless of the fine amount, mandating fines equivalent to the cost of goods for returned goods worth 500 million KRW or more does not exceed the limits of legislative discretion."

Finally, they argued that punishing smuggling return shipments, which are relatively less serious than smuggling exports, with the same statutory penalties as smuggling exports violates the principle of equality.

However, the Court pointed out, "Both export and return shipment offenses punish unreported acts to enforce customs procedures and achieve customs administration objectives. Since both smuggling return and smuggling export offenders make evidence collection difficult once goods are exported overseas, the need to secure declarations through legal enforcement is essentially the same."

It added, "Smuggling return shipments have characteristics leading to tax evasion crimes such as customs, consumption tax, and income tax evasion, and when smuggling return shipments and related organized and sophisticated crimes recur, Korea's international credibility may be damaged economically and diplomatically. Therefore, smuggling return shipments are not necessarily less serious or less in need of punishment than smuggling exports."

The gold bars smuggled by Yoon and others are known to have a total market value of about 2 trillion KRW. If Yoon and others fail to pay the fines, they may be detained in a labor camp for up to three years.

This content was produced with the assistance of AI translation services.