Customs & Trade in Israel

24 August, 2022

The Court Ruled that the Customs Authority's Decision to Revoke the Recognition of the Certificates of Origin was Lawful

The importer, Kesher Yami Ltd., imported All-Terrain Vehicles (ATVs) manufactured by the American manufacturer Arctic Cat. The company presented certificates of origin that attest to the fact that the goods meet the origin rules set in the US-Israel trade agreement and were thus exempt from Israeli customs duties.

Between 2012-2015, the Customs Authority examined a number of certificates of origin submitted by the company and reached the conclusion that three out of four certificates of origin examined do not meet the origin rules.

Therefore, the Customs Authority issued two deficit notices to the importer, totaling 140,454 ILS, notifying the importer of its decision to cancel the customs duties exemption awarded to the importer due to the fact that the certificates of origin do not meet the origin rules of the trade agreement.

The Importer’s Arguments

The importer argued that the burden of proof is upon the Customs Authority, which must prove that the certificate of origin does not meet the trade agreement’s rules of origin, and that the Customs Authority failed to present admissible evidence before the court.

As for the reasonability of the Customs Authority’s decision to revoke the certificates of origin, the importer argued that the decision was made arbitrarily and after a mere cursory examination.

In relation to the Customs Authority’s post factum examination of the certificates of origin, the importer argued that the Customs Authority was supposed to receive its answers as a notary verified deposition.

The importer explained it had limited ability to provide evidence, as it is currently in the midst of a commercial dispute with Arctic Cat, adding that there is a connection between this dispute and Arctic Cat’s disavowal of the certificates of origin.

The Court’s Ruling

With regard to the burden of proof, the court ruled that even though it is a post factum revoke of a certificate of origin, after the importer already received the customs duties exemption at the release of the goods, the burden of proof is not transferred to the Customs Authority.

In this regard, the court noted that the exemption process is conducted through the presentation of a certificate of origin without an examination by the Customs Authority (beyond the technical review of the documents), maintaining the Customs Authority’s option to conduct a post factum examination. Therefore, the court ruled that this does not constitute a case in which the Customs Authority reached a decision following a substantial decision-making process and then changed it (in which case it would be justified to argue that the burden of proof should shift to it).

As for the admissibility of the evidence, the court ruled that the decision to revoke the certificates of origin is an administrative decision, based on administrative evidence, and therefore the Customs Authority may base its decision on administrative evidence, even if such evidence is not admissible in civil or criminal proceedings.

The court added that the Customs Authority’s decision to revoke the certificates of origin was not arbitrary, and that it performed reasonable and appropriate investigative actions. In addition, it noted that as a general rule, there is no justification to have the Customs Authority invest resources in examination beyond written contact with the exporter listed on the certificate of origin, as per the standard form included in the trade agreement.

With regard to the obligation to present a notary verified deposition from the exporter, the court ruled that no such obligation exists, and such a demand would unnecessarily impede the possibility of examination by the customs Authority.

The court noted that the importer did not meet the burden of proof, and did not present any evidence that may contradict the findings of the Customs Authority.

The court added that the importer’s argument regarding its inability to present evidence due to its dispute with Arctic Cat is irrelevant, as there is no chronological correlation between the dates of approval and revocation of the certificates of origin by Arctic Cat to the period of the dispute between the companies.


The court rejected the importer’s claim, charging it with legal costs amounting to 15,000 ILS.


[TA 9540-02-17, Kesher Yami Ltd. V. The State of Israel; before judge Amir Lokshinsky-Gal, ruling given on 16.7.20. Kesher Yami represented by Adv. Moshe Bar, State of Israel represented by Adv. Nitzan Zagrinsky]

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Written by: Adv. Gill Nadel, Adv. Dave Zeitoun, Chen Ben Hayon

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