Customs & Trade in Israel

24 August, 2022

Internal Records of the Customs Authority will be Disclosed as part of Document Disclosure

Our firm recently succeeded in achieving a landmark decision in a case in which we are representing a car importer.

The main dispute in the case is whether the value of a spare tire should be included in the valuation of imported vehicles when the spare tire is acquired and installed in Israel after the completion of the import process. The implication is an increase in the tax rate of the spare tire, to the same tax rate as an imported vehicle.

During the deliberations, the Customs Authority refused to disclose documents relevant to the case, arguing that they are internal records and are therefore confidential.

The importer turned to the court, requesting that it order the Customs Authority to disclose the documents. The Customs Authority submitted the documents to the court’s review, so that the court may determine whether it accepts the Customs Authority’s argument.

The District Court rejected the Customs Authority’s attempt to label any document that may harm its defense as an “internal record” and ordered a broad disclosure of documents labeled as internal records, including internal emails and notes between Customs Authority officials relating to the vehicles; results of examinations conducted by the Customs Authority on assembly tools; and more.

It is important to note that the court also ruled that a vague concern by the Customs Authority regarding exposure of work and investigation methods does not constitute sufficient cause for imposing a blanket confidentiality upon all content of an investigation.

This means that not every document labeled as an internal record by the Customs Authority will be automatically protected by the court, in all probability due to the new Civil Procedure Regulations, which mandate a broad document disclosure between the parties, even if they may be ‘harmful’ documents.

On a side note, the Customs Authority requested that the court order the plaintiff to obtain documents and information from a third party that is not part of the dispute, and transfer that information to the Customs Authority. The court rejected the request, ruling that the plaintiff cannot be forced to turn to a third party, and the Customs Authority must employ the common practice in such cases and issue a third-party notice.

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. The firm does not undertake to update the information in this communication or its recipients about any normative, legal or other changes that may impact the subject matter of this communication.

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