Administrative responsibility as a factor of innovative development in Customs

Shkiperov Anton Aleksandrovich ORCID: 0000-0003-0411-6513 Assistant to the President of the Fishery Shipowners Association (FCA) 12 Trubnaya str., Moscow, 107045, Russia Shkiperov@fsarf.ru Other publications by this author

Kleimenova Anastasiya Nikolaevna PhD in Law Associate Professor of Department of Customs Law, GKOU HE "Russian Customs Academy" 140015, Russia, Moscow region, Lyubertsy, Komsomolsky Prospekt, 4 a.shashkina@customs-academy.ru

The transformation of customs into an intellectual, invisible to law–abiding business and effective for the state is one of the goals of the Customs Service Development Strategy until 2030 (hereinafter referred to as the 2030 Strategy)^[1]. Among the guidelines for achieving this goal is the increase in the effectiveness of combating crimes and administrative offenses attributed by the legislation of the Russian Federation to the competence of customs authorities, including using the latest digital platforms and technologies. 

We agree with Yu.A. Tikhomirov, who believes that digitalization in the monitoring mechanism in management can affect such results as reducing the time of operations, reducing losses (financial, property, etc.), expanding the information used to choose the optimal solutions and actions, changing the consciousness and behavior of civil servants and their partners^[2].

Customs authorities, being subjects of state administration, carry out actions aimed at improving the quality of public services provided by them through the use of digital tools. Thus, innovations in customs are inextricably linked with the automation of mainly two groups of actions:

1.                 Committed by persons and customs authorities in accordance with international treaties and acts in the field of customs regulation and (or) the legislation of the EAEU member states on customs regulation (customs operations).

In 2022, the electronic declaration form was used by 91,116 participants in foreign economic activity (hereinafter referred to as foreign economic activity), which is 99.89% of the total number of participants in foreign economic activity^[3]. Also, 84.7% of the total number of declarations for goods were automatically registered, 31.7% of them were automatically issued^[4].

Of course, these indicators exclude the guarantee of absolute compliance of goods released into free circulation on the EAEU market with the norms of customs legislation. After all, as R.V. Amelin notes in his research, according to statistics, on average, the program contains one error per 1000 lines of code^[5]. Customs authorities eliminate such risks within the framework of customs control after the release of goods.

2.                  Performed by customs authorities and aimed at checking and (or) ensuring compliance with international treaties and acts in the field of customs regulation and the legislation of the member states on customs regulation (customs control). For example, artificial intelligence is able, without the participation of a customs official, to attribute a foreign trade participant to one of the risk categories, to determine the level of risk for DT, for the goods being transported, the country of origin and/or destination, the counterparty, the transport company and other risk factors for a foreign trade transaction, is able to propose forms and measures of customs control for foreign trade participants, those who do not fall into the "green" risk category, allow the release of goods for those who have been identified as a risk-free participant in foreign economic activity, and perform many other functions ^[6].

In the light of the above, E.V. Talapina's point of view is particularly relevant that a qualitative change in public administration should be accompanied by such measures as regulating the use of algorithms, ensuring their transparency and clarity, institutional support (data protection authorities), preparing the judicial system to resolve possible disputes, etc.^[7].  The subject of research by administrative scientists is also the issues of determining the range of rights and obligations of an individual brought to administrative responsibility in the context of the development of digital communication^[8]; establishing criteria for the admissibility of the use of scientific and technical means and resolving the issue of the evidentiary value of the results of their application^[9]. But today, we are witnessing the digital transformation of only certain institutions of customs law (operations, control).

At the same time, when performing customs operations by automated systems, the problem arises of determining responsibility for errors committed by such systems, resulting in administrative offenses.

It is important to take into account that errors and failures in public information systems, primarily state ones, can, on the one hand, reduce the effectiveness of public administration, and on the other hand, entail infringement of the rights and freedoms of citizens^[10].

In this context, the legal status of subjects of customs legal relations, both persons controlling the movement of goods and persons initiating the movement of goods and subjects of activity in the field of customs affairs should be considered in two aspects:

1) it is necessary to exclude negative consequences from illegal decisions of customs authorities made using automated systems that arise from participants of foreign economic activity.  At the same time, customs officials cannot be brought to disciplinary responsibility for illegal automatic solutions of software tools if they could not foresee and prevent them;

2) proving the fact of illegality of bringing to administrative responsibility related to the error of automated systems leads to court proceedings, which generates time and financial costs for both customs authorities and foreign trade participants.

An example of a court decision in the case of May 23, 2022 No. A76-25576/2021 is indicative. As a result of violation of the customs transit period, a protocol on an administrative offense under Article 16.10 of the Administrative Code of the Russian Federation was drawn up in relation to JSC "Russian Railways", and when considering the case, an administrative penalty was imposed by the resolution of 08.07.2021 of JSC "Russian Railways". However, according to the results of the arbitration court's consideration of the case, it was found out that the customs transit period did not take into account the actual distance between the departure and destination stations and was set automatically by the automated system of the FCS of Russia (automatic release of goods) without the participation of a customs official in violation of part 2 of Article 144 of the EAEU TC.

 At the same time, the establishment of a deliberately insufficient period of customs transit by the FCS program was carried out systematically and JSC "Russian Railways" applied to the customs authority with a letter about the need to check on the facts of the legality of the appointment of deliberately insufficient terms of customs transit and to take measures to establish the terms of customs transit in accordance with Article 144 of the Customs Code of the EAEU, sufficient for the customs carrier to perform duties.

As a result, the court concluded that the fault of JSC "Russian Railways" in the commission of the above-mentioned offense by the customs authority has not been proven, which, in turn, excludes proceedings in an administrative case (sub-item 2, paragraph 1, Article 24.5 of the Administrative Code of the Russian Federation). The earlier ruling in the case of an administrative offense was canceled by the decision of the arbitration court.^[11]

Thus, errors committed as a result of the work of automated systems of customs authorities are eliminated by two mechanisms:

1) carrying out customs control after the release of goods;

2) the release of participants in foreign economic activity based on the results of court proceedings from administrative responsibility for administrative offenses that arose as a result of such errors, due to the absence of the composition of an administrative offense.

As part of the organization of activities for the introduction of innovations using automated systems in the customs authorities, a mechanism has developed for resolving negative consequences and eliminating potential risks arising from the operation of such systems. Meanwhile, within the framework of innovation processes in a non–governmental environment – the environment of foreign trade participants - these problems remain unresolved, which is a significant obstacle to their innovation implementation.

The risk of being brought to administrative responsibility for errors committed by commercial automated systems plays a decisive role when foreign trade participants make decisions on the introduction of innovations. This is due to the importance of administrative responsibility in their activities, especially when making a decision by administrative bodies to include in the register or exclude from it persons engaged in customs activities.

As a result, the fact of bringing legal entities to administrative responsibility is one of the determining conditions for inclusion in the register of persons engaged in activities in the field of customs affairs or exclusion from such a register, which is why, due to the risk of grounds for exclusion from the register or making a negative decision on inclusion in it in connection with bringing to administrative responsibility from-due to the errors of commercial automated systems, legal entities do not seek to introduce innovations into their activities.

For example, on the basis of LLC SVH "TLC "Bely Rast" (hereinafter – SVH) in 2022, together with LLC Alta-Soft, project work was carried out on the integration of internal warehouse accounting systems and information interaction systems of SVH and the customs authority, the purpose of which was to develop a mechanism for automatically issuing goods to the declarant without the participation of SVH employees. Meanwhile, this initiative did not lead to the intended results due to the unresolved issue of the distribution of responsibility between organizations for errors committed by such an automatic system. The issuance of goods in a temporary storage warehouse without the permission of the customs authority is considered as a violation of the procedure for performing operations with goods under customs control, for which, in accordance with Article 16.9, in addition, this violation will also be a violation of the obligations of the owner of the warehouse provided for in Article 414 of the Customs Code of the EAEU, and be the basis for its exclusion from the register of owners of temporary storage warehouses.

Thus, the ratio of simplifications associated with the use of an automated system and the level of potential risks of exclusion from the register predetermined difficulties in implementing such innovations.

Bringing to administrative responsibility is also one of the key criteria for the categorization of foreign trade participants acting as declarants of goods (including the customs carrier and AEO).

For example, one of the criteria for assigning a low-risk category to a person is the absence on the day of categorization of an obligation not fulfilled by a person to pay customs duties, taxes, special, anti-dumping, countervailing duties within a period exceeding 10 (ten) calendar days from the expiration date specified in the notification (clarification to the notification) on payment customs duties, taxes, special, anti-dumping, countervailing duties. Confirmation of this criterion is the absence of the fact of bringing the specified person to administrative responsibility.

At the same time, the list of criteria characterizing the activities of persons performing customs operations, when categorizing them, includes such criteria as^[12]:

– the ratio of the number of cases of administrative offenses initiated by the customs authorities, for which the decisions on the imposition of penalties have entered into legal force, to the total number of issued declarations for goods;

– the ratio of the amount of penalties imposed and fines imposed in cases of an administrative offense initiated on the grounds provided for in Chapter 16, Articles 7.12 and 14.10 of the Administrative Code of Russia to the total cost of goods for which a decision was made to issue.

The attribution of a person to a particular risk category, in turn, is of decisive importance in terms of the application by customs authorities of measures to minimize risks in relation to goods, the declarant of which is the specified person. Thus, with respect to goods whose declarant are persons classified as high-risk, the risk minimization measures contained in the risk profiles are applied in all cases when the need for their application is determined in accordance with the instructions of the identified risk profile. In relation to goods whose declarant are persons classified as low-risk, on the contrary, risk minimization measures are applied in accordance with a limited range of risk profiles or with a random number generator with a specific value. In other words, the attribution of a person to a particular risk category directly affects the "rigidity" of customs control carried out in relation to the goods they declare, which, in turn, affects the financial costs of foreign trade participants, as well as the time of customs operations.

Thus, administrative responsibility, on the one hand, hinders innovative development, since errors of automated systems give rise to unlawful bringing of persons to responsibility. On the other hand, the conscientious behavior of participants in customs legal relations, the absence of facts of bringing to administrative responsibility simplifies the process of moving goods across the customs border of the EAEU for them. For example, the categorization of foreign trade participants, including by the criterion of bringing to administrative responsibility, largely contributes to the maximum use of innovative technologies by customs authorities.

Thus, the problems of legal overcoming the consequences of imperfections caused by the objective incompleteness of specific algorithms, any, especially new automated systems, is an actual vector of development of modern legal regulation.

Errors of automated systems of foreign trade participants, as well as customs authorities, leading to violations of customs legislation should be a circumstance excluding proceedings on administrative offenses, due to the absence of the subjective side of the composition of the administrative offense. In this regard, we consider it appropriate to amend the legislation on administrative offenses. At the same time, the question inevitably arises about the evidence of such errors and the exclusion of the possibility of manipulation by foreign trade participants by this circumstance: when really illegal behavior will be "covered up" by software errors.

In addition, mechanisms should be developed at the legislative level to stimulate the innovative development of the commercial side of the customs sphere, by, in particular, facilitating the independent and independent conduct of relevant experiments by foreign trade participants without negative legal consequences.

As an objective guarantee of ensuring a favorable climate for innovative development, mechanisms should be developed to exclude the influence of errors made by automated systems on the categorization of foreign trade participants, their inclusion in the register and exclusion from it.

These measures will create prerequisites for the accelerated development of an innovative environment in the field of customs, both on the part of customs and other administrative authorities, and on the part of foreign trade participants.   

Innovative development is the main tool for ensuring competitiveness in the foreign economic activity of the state as a whole, and economic entities in particular. Digitalization of public administration requires the subjects of customs legal relations to take actions aimed at transforming their activities (automation of customs operations, risk management system, categorization of foreign trade participants, etc.). Customs authorities, as federal executive authorities with authority in the field of customs affairs, are obliged to ensure the effectiveness of automated systems, minimize potential risks, develop a mechanism legal regulation, which excludes bringing to administrative responsibility participants of foreign economic activity for illegal acts that are not guilty, but arose as a result of errors or technical malfunctions of automated systems.

In turn, the possibility of bringing to administrative responsibility stimulates the conscientious behavior of foreign trade participants, as it is one of the grounds for exclusion from the relevant registers. In addition, the transparency of the activities of persons initiating the movement of goods and subjects of activity in the field of customs, the absence of facts of bringing to administrative responsibility entail the following favorable consequences:

1)create competitive advantages for law-abiding foreign trade participants;

2) contribute to the innovative development of customs affairs due to the possibility of assigning a foreign trade participant to the "green sector" and simplifying administrative barriers when moving goods across the customs border of the EAEU;

3) promote the attraction of foreign investments and technologies;

4) contribute to the socio-economic development of the Russian Federation.