Unconstitutional Declaration of Legal Audits Practiced by Customs Authorities.

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"UNCONSTITUTIONAL DECLARATION OF LEGAL AUDITS PRACTICED BY CUSTOMS AUTHORITIES"
(Declaration of Unconstitutionality of Mexico's Fiscal Code)

By: Raúl Mérigo

Recently, on October 11th, 2000, Mexico's Supreme Court upon our firm's counselling declared the unconstitutionality of Mexico's Fiscal Code on certain audit procedures practiced by customs authorities due to its initial seizure of foreign goods by customs personnel, when they proceed to call the company's legal representative and upon his (her) absence, they cite him (her) for the next business day to legally begin the audit, and execute at the same moment a seizure of the foreign goods detected.

Such procedure on the authority's behalf has been commonly practiced against companies, when they irrupt into the company's domicile and begin the audit procedures to verify the legal status of foreign goods in Mexico, and even though no person who legally represents the company, an inventory is made and seizure is declared on all of such goods, despite that the inspection order has not yet been notified.

Of course, action is taken pursuant to article 44, fraction II, and third paragraph of Mexico's Federal Fiscal Code, which states that…

"When the visiting personnel, upon arriving at the place where the audit should be practiced, finds merchandise or goods whose import, possession, production, capture or transport should be reported to or authorized by fiscal authorities, without being such obligation fulfilled, personnel will proceed to seize such goods or merchandise."

Apparently authorities legally practice a preventive seizure pursuant to such rules, if we consider a simple application of the regulation we are studying, and forgetting about fundamental rights and principles that Mexican constitution gives to all.

In constitutional injunction case number 2068/98, the Supreme Court of Justice of the Nation, upon appeal filed by Mexico's Internal Revenue Authority against resolution taken by the Fourth Federal District Court of Tijuana, declared article 44, fraction II, third paragraph, of the Federal Fiscal Code, unconstitutional, with the argument that no person should be molested without being notified first of the existence of an audit, inspection or verification order.

Consequences obtained from such constitutional case were widely encouraging, because the company in favor of which the protection was obtained by the Supreme Court succeeded in getting the customs procedure nullified and therefore, if any irregularity had been present, no sanctions were imposed.

Another subject of great relevance is that, according to the Supreme Court's criteria, the Fiscal Code article declared unconstitutional in favour of the company, cannot be applied in the future, unless it is reformed by the legislature.

It is important to notice that should a person or a company become affected by actions of such nature, legal defense is available either immediately filing a constitutional injunction, or against the procedure's resolution taken by the fiscal authority, preparing the constitutional trial once the ordinary legal defences are filed before Administrative Courts, and therefore, even though procedures had begun against they still have legal means available and most likely they could end up with very positive results.

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