Customs Duty Row Detains Trucks at Border

Hundreds of trucks filled with goods for the Russian market are stuck at the border due to new customs instructions aimed at cracking down on tax avoidance, importers and transport company officials say. Instructions issued last month by the State Customs Committee requiring prepaid deposits on imports of excisable goods, which include tobacco, alcohol, candy, soft drinks and cars, are raising an outcry from importers, who say that the instructions violate international law."This is killing us," said Cary Languirand, a distributer of Corona beer who has a truck stuck at the border. "This is costing me $250 a day just for the truck."This is the same bullshit tactic that they pulled last December, " he added.In December, the State Customs Committee issued a regulation requiring that all customs and excise duties be paid in cash at the point of entry. After widespread outcry from transport companies and importers, however, the committee softened the regulation, requiring only a letter of guarantee promising payment at the point of destination.But on May 19, the committee sent instructions to officials at the Finnish, Estonian, Latvian and Belarus borders requiring that importers of excisable goods pay a deposit at the point of destination before goods would be allowed into the country, according to Jack Helton, general manager of CIS operations for the transport company, SeaLand Service, Inc. He said that various border points began acting on the instructions last week.The instructions are aimed specifically at trucks, which often get by the border with minimal tax payments, then fail to show up at their final destination, according to Mikhail Bortniaev, a tax specialist at Arthur Andersen. He said that customs officials are able to keep better track of imports by rail, air and sea.Helton said the customs committee office at the point of destination within Russia is supposed to inform customs officials at the border that a deposit has been paid. Since many border points are understaffed and lack modern equipment such as fax machines, however, the new requirement has been difficult to fulfill, he said.According to existing customs regulations, the deposit should exceed the value of the goods being shipped and all the duties levied on them, according to Alexander Mironenko, general director of Sovtransservice, a Russia-Liechtenstein transport company."This is a violation of all international regulations," he said.Dimitri Yanshin, an official at the Lonrho transportation company, said the new regulation violates an international transport agreement which Russia has signed. He said that the Transport Over International Roadways agreement stipulates that customs duties should be paid upon arrival at the point of destination, not before.Yanshin said that his company has 40 trucks stuck on the Russian border, mostly transporting cigarettes.Helton said that the instructions had not been published, but were designed to implement a previous State Customs Committee order. Officials of the State Customs Committee refused to comment on the instructions or the order.Languirand said that he had been told to pay a $80,000 deposit on his beer by the customs committee."If I am going to walk across town with $80,000 I might as well draw a target on my chest," he said, adding that he is losing thousands of dollars as he tries to figure out a way to get the beer across the border.He also said that the customs committee had been unable to clarify how it would pay his deposit back to him after the goods cleared the border.Transport companies said that they were considering shipping the goods held up at the border by rail, as trains have not yet been affected by the new regulation.