It is our pleasure to present the latest issue of Customs & Trade in Israel, which features a diverse selection of articles on the fields of customs and trade. Even in these uncertain times, we remain committed to providing high-quality legal services and maintaining our connection with you.
Repeal of the Encryption Order: Reform of Israel’s Encryption Export Control Regime
On March 20, 2025, Israel repealed the “Encryption Order” and replaced it with an export control regime aligned with the Wassenaar Arrangement. Activities involving encryption that do not constitute export are exempt from licensing requirements. The export of encryption items is subject to licensing by the Ministry of Economy and Industry in the case of civilian exports, or by DECA in the case of defense-related exports. Exporters are advised to ensure compliance with the new regime, particularly in light of the potentially lengthy registration and licensing procedures.
Shipping Exchange Rates – Implications of the District Court Settlement
A settlement reached before the District Court established that currency conversion mechanisms affecting the price charged to customers must be clearly and expressly disclosed. Under the settlement, the shipping company undertook to publish its exchange rate methodology on its website and to incorporate a reference to that methodology in its customer agreements. The underlying principle is clear: exchange rate mechanisms constitute negotiable pricing components that require transparency and proper disclosure, and should not be presented as concealed contractual terms.
Professional Liability of Customs Agents Under Israeli Law
Israeli courts apply a reasonable professional standard in assessing the liability of customs agents. Customs agents are required to act with honesty, loyalty, and professional diligence; however, they are not expected to anticipate fraudulent conduct by third parties or to warn against every conceivable risk. Their duty is to provide advice and services that meet the standard of care applicable to members of the profession, rather than to foresee criminal or improper conduct on the part of others.
Magistrate Court: Failed Certificate of Origin Verification Cannot Be Circumvented
The Tel Aviv Magistrate’s Court held that entitlement to preferential tariff treatment for goods of EU origin is contingent upon the presentation of valid preferential origin documentation. Where an EUR.1 certificate has been rejected following an ex-post verification procedure, the importer may not rely on alternative evidence of origin in order to claim the preferential treatment. The appropriate course of action is to apply to the customs authorities in the exporting country to seek reinstatement of the certificate’s validity.
District Court Upholds Customs Authority’s Alternative Valuation in a Personal Import Case
In a dispute concerning the valuation of a personally imported motorcycle, the District Court clarified the applicable burden of proof. The importer bears the burden of substantiating the declared customs value, and where the Customs Authority rejects that declaration, it must establish that its alternative valuation was lawful, reasonable, and properly grounded. In this case, the Court upheld the Customs Authority’s rejection of the declared value and accepted the alternative valuation, which was based on an Israeli price guide. The importer failed to rebut the presumption of administrative regularity.
Duration of Customs Investigations and Judicial Protection of Property Rights
Courts are increasingly exercising judicial oversight over the duration of customs investigations in circumstances where the continued detention of property gives rise to significant economic harm. While affording due weight to administrative discretion, courts may impose procedural checkpoints requiring the authorities to justify the ongoing retention of the property. In a recent ruling issued in Ashdod, the court declined to order the immediate release of the property, but established a mechanism for continued judicial oversight: if no decision were issued by the specified date, the applicants would be entitled to renew their petition.
Power Station as a Single System: The Transformer Test
The Herzliya Magistrate’s Court applied the “whole” rule in classifying a turbine, generator, and GSU transformer as a single generating set under heading 85.02. The Court placed particular emphasis on the functional reality of the system, holding that the transformer is essential to the production of electricity capable of transmission through the grid. Although transformers are ordinarily classified under heading 85.04, the Court found that, in this case, the transformer constituted an integral component of the overall generating system. This classification resulted in substantial customs duty refunds.
Customs Authority Undertakes to Cease Excess Import Fee Collection
In the context of class action proceedings, the Customs Authority undertook to update its “Global Gateway” system in order to cease the collection of excess import fees and to calculate such fees in accordance with the applicable regulations. The Central District Court dismissed the motion for certification, while approving the agreed compensation and attorneys’ fees in a total amount of NIS 600,000, in view of the substantial public benefit resulting from the correction of the fee calculation mechanism.
The content in this communication is provided for informational purposes only and is not intended to be comprehensive. It does not serve to replace professional legal advice required on a case by case basis.
Key Contact
