This article reviews a judgment of the Tel Aviv Magistrate’s Court (T.A. 57174-10-20 Mor v. State of Israel, judgment dated January 26, 2027, Hon. Deputy President Ronit Ofir) concerning the verification of a certificate of origin in the case of a small-scale importer.
The case concerned a claim filed by the importer against the State of Israel – Customs and VAT Authority, seeking a declaration that two customs assessment notices had been issued unlawfully, together with a refund of import duties paid under protest in the amount of NIS 43,315. The importer, a commercial importer described as a “small-scale importer,” imported two BMW vehicles from Europe during the period 2019-2021, filed two import declarations in respect of those vehicles, and attached preferential documents in order to obtain preferential tariff treatment under the trade agreement between Israel and the European Union. On the basis of those documents, the vehicles were released without payment of customs duties. The documents were subsequently sent for ex post verification to the customs authorities in Belgium and Italy, which responded that the vehicles did not qualify for preferential treatment. Following those responses, the assessment notices were issued and the importer paid the amounts demanded.
The importer’s principal argument was that, in the case of a used vehicle manufactured in Europe, there was no legal basis for conditioning preferential tariff treatment on the presentation of preferential documents. According to his position, Section 25 of Protocol 4 to the trade agreement applies the procedures of the importing country, and, at the relevant time, the procedures of the Israel Customs Authority (Section 1.17 of the Europe FTA procedure) permitted recognition of preferential tariff treatment for used vehicles originating in Europe even without the presentation of an EUR.1 movement certificate, by relying instead on information regarding the country of manufacture that could be derived from the chassis number. He therefore argued that the Customs Authority’s requirement to submit preferential documents was inconsistent with its own procedures, and that the documents were attached in practice only because he had been required to do so. In parallel, he argued that the decision to send the preferential documents for ex post verification was overbroad and was not confined to circumstances justifying such verification under Protocol 4.
The Customs Authority argued in response that Israeli law requires the submission of “preferential documents” as a condition for obtaining customs relief or exemption and that, in the case of imports from the European Union, the requisite preferential document is an EUR.1 movement certificate. The Authority further contended that preferential documents are a mandatory precondition for preferential treatment and cannot be substituted by alternative evidence. It also argued that once the European customs authorities determined that the preferential documents did not satisfy the applicable rules of origin, Israel was required to deny the preferential benefit unless and until the European authorities reinstated the validity of those documents.
The court rejected the importer’s argument and held that Section 1.17 of the procedure was originally intended to facilitate personal importation, such as by returning residents, and was not designed to regulate commercial importation. The court further held that, in any event, an internal administrative procedure cannot be interpreted or applied in a manner that contradicts binding law: the Customs Tariff Order conditions relief from import duties on the presentation of a preferential document, and, with respect to the European Union, that document is an EUR.1 movement certificate. Accordingly, the court emphasized the principle of legislative harmony, as well as the rule that rights cannot be founded on administrative guidelines that conflict with primary law and case law. It therefore held that the Customs Authority had not acted ultra vires, nor contrary to binding procedure, when it required the attachment of preferential documents.
The court also attached significance to the importer’s contemporaneous conduct. In practice, the importer submitted preferential documents, testified that he had not argued before the Customs Authority that he was not required to do so, and failed to exhaust the appeal route provided under the relevant procedure. In those circumstances, the court held that it was inappropriate to permit him, ex post facto, to challenge within the proceeding the very requirement to submit those documents, particularly where this amounted to a collateral attack on an administrative decision. The court further emphasized that a party who elects to obtain an exemption on the basis of preferential documents cannot, after those documents have been invalidated, contend that he should have been exempt from the requirement to present them in the first place.
As to ex post verification, the court held that Protocol 4 permits either random verification or verification where reasonable doubt arises. With respect to the two import declarations at issue, the court held that the importer had failed to establish arbitrariness. As regards the first declaration, the importer did not demonstrate any defect in the decision to initiate verification. As regards the second declaration, the court held that the referral for verification was made after concerns had arisen in light of findings relating to a previous certificate and therefore constituted a reasonable exercise of administrative discretion.
In conclusion, the court held that once the European customs authorities had invalidated the preferential documents, the importer was no longer entitled to preferential tariff treatment. The court emphasized that the proper course for addressing such invalidation is to approach the customs authorities in the country of export in order to have the validity of the documents restored. As the importer had not done so, the additional evidence he presented regarding origin did not alter the result.
Accordingly, the court dismissed the claim.
For the importer: Advs. Abramowitz and Ganon. For the State: Advs. Tahrani, Pereda, and Kehat-Blum
The content in this update 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.
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