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  • Interpretation
  • No.651
  • Date
  • 2008/11/14
  • Issue
    • Is Article 8, Paragraph 1 of the Regulation Governing Military Type Item Import Duty Exemption, as amended in 2001, unconstitutional?
  • Holding
    •     Article 8, Paragraph 1 of the Regulation Governing Military Type Item Import Duty Exemption, as amended and promulgated on December 30, 2001, provides: “At the time when a military organ handles an invitation for bid under the Government Procurement Act, the bidding document filed for the military item imported by the merchant who wins the bid shall state in writing that, according to the provisions of the Customs Act, the Commodity Tax Act, the Value-Added and Non-Valued-Added Business Tax Act, and this Regulation, the item may apply for the exemption of duty. The posted winning bid price shall not include the exempted duty.” This is a supplementary provision made by the Ministry of Finance with the delegation authorized by Article 44, Paragraph 3 of the Customs Act, as amended and promulgated on October 31, 2001.( As of May 5, 2004, this provision is revised and renumbered as Article 49, Paragraph 3.) It does not exceed the extent of delegation of law and is in conformity with the Principle of Taxing by Law under Article 19 of the Constitution.
  • Reasoning
    •     Article 19 of the Constitution states the people shall have the duty to pay taxes under law. It means that when the state imposes an obligation to pay tax or confers preference for tax deduction or exemption on people, the essential elements such as taxing bodies, taxed subjects, tax bases, tax rates, etc., shall be prescribed by law or regulation clearly authorized by law. In the event a law authorizes an agency in-charge to promulgate regulation as supplementary or specific provisions, its authorization must be in conformity with the principle of clarity and definiteness; furthermore, the concern of whether a regulation is consistent with the meaning and purpose of authorization by law shall not be confined within the text employed in the provisions. It shall be determined based on the legislative purpose of the law itself and the relevant meanings on the totality of the provisions as a whole. This ruling has been repeatedly illustrated in J.Y. Interpretations Nos. 506 and 650 in the official file.
      
    •     Article 44, Paragraph 1, Subparagraph 4 of the Customs Act amended and promulgated on October 31, 2001 (as of May 5, 2004, this provision is revised and renumbered as Article 49, Paragraph 1, Subparagraph 4) provides that military weaponries, equipments, vehicles, vessels, aircrafts, and their accessories imported by military organs or armed forces, and materials exclusively served for military purposes are exempted from duties. Paragraph 3 of the same Article also authorizes the Ministry of Finance to make regulations concerning matters on the scope, catalog, quantity, and quota of the exemption of duty applied to the item prescribed above. According to this authorization, the Ministry of Finance revised and promulgated the Regulation Governing Military Type Item Import Duty Exemption on December 30, 2001. Among other things, Article 8, Paragraph 1 provides: “At the time when the military organ handles an invitation for bid under the Government Procurement Act, the bidding document filed for the military item imported by the merchant who wins the bid shall state in writing that, according to the provisions of the Customs Act, the Commodity Tax Act, the Value-Added and Non-Valued-Added Business Tax Act, and this Regulation, the item may apply for the exemption of duty. The posted winning bid price shall not include the exempted duty.” Accordingly, at the time when the military organ handles an invitation for bid to import military type item under the Government Procurement Act, those who desire to enjoy the preferential treatment for the exemption of duty shall state in writing on the bidding document such matters as the item may apply for the exemption of duty according to the provisions of the Customs Act, etc., the posted winning bid price does not include the exempted duty, and so forth.
      
    •     While importing military type item may undoubtedly enjoy the preference for the exemption of duty under the law, the questions of whether the declared military articles belong to the military type item prescribed in Article 44, Paragraph 1, Subparagraph 4 of the Customs Act and whether the actually imported item and the declared catalog, quantity of the importing articles involve any discrepancy, overstatement, or falsity are still in need of the supplementary and specific regulations made by the agency in-charge, so that the customs at importing port may thus exanimate and verify. Article 44, Paragraph 3 of the Customs Act mentioned above, therefore, authorizes the Ministry of Finance to stipulate the scope of the exemption of duty and make regulations concerning related matters, so as to effectively implement the above-stated provisions governing the import of military type item and the exemption of customs duties, and to encourage the tax collection authority to levy duties by law and prevent any unlawful evasion of taxes and duties. The provision of Article 8, Paragraph 1 of the Regulation Governing Duty Exemption mentioned above facilitates the disclosure of the matter of whether the importing military type item has applied for the exemption of duty in accordance with the law, so that all merchants who anticipate in the bidding may be capable of obtaining necessary information to decide the price for competitive bidding.  This provision is beneficial to the fairness of the bidding invitation process and also as a basis of the examination and verification for future customs imports and the reviewing practice of the exemption of duty, so as to enhance the convenience and swiftness of the customs clearance process. This provision is necessary for the implementation of the Customs Act. Taking into consideration the legislative purposes of Article 44, Paragraph 1, Subparagraph 4, and Paragraph 3 of the Customs Act mentioned above and the relevant meanings of the entire provisions, the provision does not exceed the extent of delegation of law, and has not contradicted the Principle of Taxing by Law under Article 19 of the Constitution.
      
    • Translated by Ching P. Shih
      
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