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Newsletter | August 2015, Issue 2
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International Trade & Customs
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Supreme Court revokes Korean Customs’ assessment involving importers’ advertising & promotional expenses
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Recently, the Supreme Court revoked Korean Customs’ assessment involving Korean importers’ advertising and promotional ("A&P") expenses.
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Specifically, Korean Customs challenged importers’ exclusion of their A&P expenses from their royalty calculations on the ground that the A&P expenses should be deemed as “indirect” payments. The Supreme Court, on the other hand, held that Korean Customs’ assessment should be revoked in its entirety, since the A&P expenses were undertaken by a buyer (i.e., importer) on the buyer’s own account, and thus, they need not be included as part of the customs base amount of the imported merchandise.
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Kim & Chang successfully represented the importers throughout the appeals process (including the one before the Supreme Court) by raising the following arguments:
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the A&P activities at issue were performed in connection with the importers’ marketing and promotional activities, and concerned the imported merchandise after importation; and
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the importers have independently implemented and performed the A&P activities in accordance with the principle prescribed under the WTO Valuation Agreement, notwithstanding the fact that some benefits may have been accorded to foreign sellers of the imported merchandise.
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