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Toshiba Korea, Samsung, LG get customs fines

SEOUL - Toshiba Korea Electronics, Samsung Electronics and LG Electronics have been slapped with 254.7 billion won (US$219.8 million) in fines for violating customs rules and not paying duty on imported chip packages, according to South Korea customs officials.

The Korea Customs Service said on Wednesday that it was levying the stiff fines on the three companies because they failed to pay duties on multi-chip-package (MCP) sets they imported.

The electronic devices, used for mobile phones and other information technology products, are subject to an 8 per cent tariff.

The state authority, or KCS, said all three electronics companies had not filed proper customs reports on the MCPs they imported for the last two years.

Toshiba Korea was ordered to pay 54.7 billion won, while Samsung and LG were fined 150.0 billion won and 50.0 billion won, respectively.

The three companies said they will ask the KCS to reconsider its actions and added they plan to take up the issue with the National Tax Tribunal.

All three said they did not know MCPs were subject to 8 per cent duties. They moreover pointed out that levying customs duties on this particular product should be scrapped since other countries classified the same part as exempt from import tariffs.

The KCS said, however, it had reviewed the claims made by the electronics companies and countered that the duties are clear and that there can be no confusion.

"South Korea allows for 0 per cent duties if parts are imported for use in cell phones," a KCS spokesperson said. He said that because MCPs can be used for MP3 players, personal digital assistants and digital cameras, waiver rules do not apply across the board and that the importers should have known this.

The official, however, said that if the three companies could come up with supporting documents to prove that the MCPs were used to make cell phones for foreign markets, the fines could be reduced somewhat.

(Asia Pulse/Yonhap)

Jun 24, 2004

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