Blanched and boiled are different... Gosa-ri must pay back 270 million won due to incorrect import declaration

Blanched Vegetables Exempt from VAT under Value-Added Tax Act
Seoul Customs Issues VAT Notice Including Penalty Tax of 270 Million Won

The court has ruled that a trader who reported 'boiled gosari' as 'blanched gosari' and received VAT exemption benefits must pay value-added tax.

On the 5th, the Administrative Division 5 of the Seoul Administrative Court (Presiding Judge Kim Sun-yeol) recently ruled against Mr. A, a trader who imports and sells agricultural products from China, in a lawsuit he filed against Seoul Customs Office seeking to nullify the imposition of value-added tax and other charges.

From February 2014 to January 2015, Mr. A imported about 1,200 tons of gosari from China, declaring the product name as 'blanched gosari' to receive VAT exemption benefits. However, Seoul Customs Office imposed VAT of 242.19 million KRW and additional tax of 21.66 million KRW, stating that the imported goods were 'boiled gosari,' not 'blanched gosari,' and since they were packaged in 1 to 2 kg units for retail sale, they did not meet the VAT exemption requirements.

Bracken. [Image source=Yonhap News]

Article 27 of the Value-Added Tax Act stipulates that imports of unprocessed food items designated by Presidential Decree are exempt from VAT. This includes food products that have undergone primary processing such as drying, freezing, or salting, which do not alter the original nature of the raw product. For simply processed foods like blanched vegetables, VAT exemption is excluded if sold in the packaged units as is. However, if packaging is done temporarily solely for transportation convenience, it is included in the exemption.

Mr. A filed an administrative lawsuit arguing that there is no special standard distinguishing blanched gosari from boiled gosari, and that customs arbitrarily judged the imported goods as boiled gosari without basis. He also claimed that the packaging was done merely for transportation convenience and not for retail sale purposes.

However, the court ruled that the gosari imported by Mr. A "is a product that has undergone preservation and sterilization treatment after being heated several times in water at 60 to 80°C for a considerable period," and "cannot be regarded as simply blanched vegetables that have undergone only primary processing." Furthermore, the court stated, "Since the product was sold to consumers in the packaged form as imported, it is difficult to consider the packaging as temporary for transportation convenience," rejecting Mr. A's claims.

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