The forfeiture penalty strips the private party of ownership of the seized goods and, for a long time, was applied in a proceeding that was exhausted at a single level. That framework changed with Law No. 14,651 of August 23, 2023, which introduced articles 27-A through 27-F into Decree-Law No. 1,455/1976 and laid down a specific procedure for the matter, with a challenge, a first-instance decision and an appeal to a collegiate body. What follows describes that procedure and the deadlines that govern it.
The grounds that authorize the penalty are set out in article 23 of Decree-Law No. 1,455/1976, which groups under the designation of damage to the public treasury situations that are quite distinct from one another, ranging from importing without a license whose issuance is prohibited or suspended to goods deemed abandoned upon the expiration of the stay period in a customs premises, and including the conduct described in articles 104 and 105 of Decree-Law No. 37/1966. Item V addresses the concealment of the taxpayer, of the actual seller, of the buyer or of the party responsible for the transaction by means of fraud or simulation, the latter including the fraudulent interposition of third parties. Paragraph 1 assigns the forfeiture of the goods as the penalty for such damage, and paragraph 2 establishes a presumption of decisive weight in the evidentiary phase by treating as fraudulent interposition the failure to prove the origin, the availability and the transfer of the funds employed in the transaction.
The assessment is usually preceded by retention. Where there is suspicion of irregularity in an import or export transaction, the customs authorities initiate the special customs control procedure governed by RFB Normative Instruction No. 1,986/2020, during which the goods remain retained and the interested party is summoned to provide clarifications and to submit documentation. This stage is not yet accusatory, which explains why it is often underestimated. Yet it is at this stage that the evidence capable of deciding the case is either produced or lost, since proof of economic capacity and of the origin of the funds can hardly be improvised later, within the short deadline for the challenge.
Once the audit is concluded, the penalty is applied by a Tax Auditor of the Brazilian Federal Revenue Service and formalized in an assessment notice accompanied by a seizure record and, where applicable, by a custody record, supported by the evidence of the illicit act, in accordance with the caput of article 27. For goods valued below five hundred dollars, paragraph 5 of the same article provides for an abbreviated procedure, in which the goods are listed in a notice posted for twenty days and, absent any manifestation by an interested party, declared abandoned.
Service on the assessed party may be personal, postal, electronic or by public notice, and the law establishes no order of preference among these methods; article 27-B sets the moment at which each is deemed effected: personal service, on the date of acknowledgment; postal service, fifteen days after dispatch; electronic service, fifteen days after delivery to the electronic address, or on the date of consultation, if earlier; and service by public notice, fifteen days after publication. The practical consequence is direct, because the defense deadline runs from the service as thus effected and not from actual knowledge of the act, so that inattention to the electronic mailbox or an outdated address registered with the Brazilian Federal Revenue Service may produce a default without the assessed party ever learning of the assessment.
From service as thus characterized runs the twenty-day deadline for the challenge, provided for in article 27-A. Once the defense is filed, the proceeding goes to first-instance adjudication; if it is not filed, the assessed party is deemed in default, under article 27-C.
Article 27-E delegated to the Minister of Finance the regulation of the procedure and of the adjudicating competences, which was done by Normative Ordinance MF No. 1,005 of August 28, 2023, creating the Center for the Adjudication of Customs Penalties within the Brazilian Federal Revenue Service. The first instance lies with the National Adjudication Team, in a single-member decision by a Tax Auditor, and the voluntary appeal is heard by Appellate Chambers, which are collegiate and require a minimum quorum of three adjudicators. It is worth noting, because the confusion is frequent, that the forfeiture proceeding is not heard by the Judgment Delegacies and does not admit an appeal to CARF, the Administrative Council of Tax Appeals: competence lies with the Center for the Adjudication of Customs Penalties, and the decision of the Appellate Chamber closes the administrative discussion.
The appeal to the second instance likewise observes the twenty-day deadline, counted from service of the decision, under article 27-D, whereby first-instance decisions not appealed within that period, and decisions rendered on appeal, become final.
Filing the appeal does not prevent the disposal of the goods, and therein lies the most severe feature of the regime. Paragraph 1 of article 29 authorizes disposal after a default or after a first-instance decision unfavorable to the assessed party, even where judicial proceedings on the matter are pending, and allows livestock, perishables, flammables, explosives, deteriorated or damaged goods or goods past their expiration date, as well as cigarettes and tobacco products, to be disposed of immediately after seizure. Disposal takes place by sale at public tender, donation to a nonprofit entity, incorporation into public assets, destruction or rendering unusable. It follows that the goods may have been sold or destroyed before the outcome of the dispute, in which case a subsequent favorable ruling on the appeal will not restore them.
When the goods are not located, or have already been consumed or resold, paragraph 3 of article 23 converts the penalty into a fine equivalent to the customs value, and the proceeding then follows the procedure of Decree No. 70,235/1972, with adjudication by the Judgment Delegacies and appeals to CARF. Two sets of proceedings thus coexist, with different adjudicating bodies, and determining which of them applies depends on a factual circumstance, namely whether the goods have been seized or not.
The procedure is still consolidating. The brevity of the twenty-day deadline, insufficient for obtaining foreign documentation and for reconstructing the financial flow of the transaction, and the possibility of disposing of the goods before the dispute concludes are the circumstances that most frequently shift the discussion to the judicial route.
