Surveillance Circular No. 2019/1 Annulled: Uncertainty and Operational Issues in Imports

Surveillance Circular No. 2019/1 Annulled: Uncertainty and Operational Issues in Imports

Circular No. 2019/1 dated January 22, 2019, issued by the Directorate General of Customs on the subject of value-based surveillance practices, was annulled by the 7th Chamber of the Council of State on November 26, 2024. This annulment rendered the procedural methods that had been used for years in surveillance practices legally contested, creating significant uncertainty for both importers and customs administrations. The key questions on this matter were answered by Mr. Savaş Özdoğan, Deputy General Manager and Licensed Customs Broker at SYK Customs Brokerage Inc., and published in the August 2025 issue of Lebib Yalkın Legislation Journal.

What is a surveillance document and when is it required?

A surveillance document is a permit issued by the Ministry of Trade (Directorate General of Imports) that must be presented at the time of customs declaration registration for imports of products under certain HS Codes. The relevant surveillance communiques clearly specify which products are subject to surveillance and at what unit customs value threshold the document becomes mandatory. While the stated purpose is to monitor imports and collect data, obtaining a surveillance document in practice can create a significant bottleneck in import processes due to the time, cost, and administrative burden involved.

What did Circular No. 2019/1 change?

Circular No. 2019/1 introduced an alternative procedure to the mandatory surveillance document requirement. If an importer was importing goods below the unit value specified in the communique, a surveillance document would normally have been required. However, under the Circular, if an additional declaration was made in the customs declaration under the line item Overseas Other Expenses to bring the declared value up to the level specified in the communique, no surveillance document was requested. This allowed companies to complete their import procedures without obtaining the document by paying the resulting tax difference.

Why did the Council of State annul the circular?

The central reasoning in the Council of State's annulment decision was that the Circular had effectively established a mechanism creating a financial obligation not provided for by law. The case centered on the argument that this was contrary to the principle that taxes and similar financial obligations must be established by statute. Additionally, claims that the circular had been applied retroactively to certain transactions raised the issue of the principle of non-retroactivity of administrative acts. With the annulment of Circular No. 2019/1, the legal basis for the value adjustment method used to clear imports without a surveillance document ceased to exist.

What happened at customs after the ruling?

Following the annulment, a significant standstill was observed in the field. The Directorate General of Customs forwarded the Council of State ruling to Regional Directorates by letter dated June 20, 2025. Subsequently, a letter from the Directorate General of Imports dated June 26, 2025 reiterated the general principle: if the declared unit value is below the threshold in the communique, a surveillance document is required; if it is above, it is not. However, since this letter did not explicitly state that the value could be increased by adding overseas other expenses, uniform application could not be achieved in practice.

At this point, companies faced the following problems:

Declarations without a surveillance document were put on hold at some administrations. Some administrations refused to accept overseas expense declarations. Some transactions were referred for customs value investigation. In some cases, penalty risks and disputes arose.

Call for urgent regulation from customs brokerage associations

In response to the uncertainty and the near-complete halt in processing, five customs brokerage associations jointly applied to the Directorate General of Customs on July 2, 2025. The letter noted that surveillance-related declarations were not progressing at many customs administrations, while a small number of administrations were processing transactions using different methods, and requested a clarifying regulation to ensure uniform application. The industry warned that the bottleneck in imports could also negatively impact exports.

Different approaches at Regional Directorates: the search for a temporary solution

As the impact of the uncertainty grew in the field, temporary solutions were introduced in some regions. For example, a letter from the Aegean Customs and Foreign Trade Regional Directorate dated July 3, 2025 indicated the following approach in summary: if the unit value of the product is below the threshold, a surveillance document is mandatory; however, if the value is brought up to the communique level by adding overseas other expenses, it was indicated that a temporary assessment allowing transactions to proceed without a document could be applied. While this approach was intended to prevent grievances for good-faith operators, it also brought with it a debate over whether it effectively rendered the Council of State ruling null in practice.

What are the risks for importers?

Following the Council of State annulment ruling, three key risks stand out for importers.

The first is delay and increased costs due to the surveillance document requirement. Surveillance document processes take time, which can lead to costs such as storage fees, warehousing charges, delivery delays, and disruptions to production schedules.

The second is the risk of penalties and disputes. A surveillance document may, under certain interpretations, be considered a document subject to import authorization requirements. This brings administrative sanction debates to the fore. However, as emphasized in the study, the Council of State's assessment provides a framework that weakens the enforceability of such penalties.

The third is the possibility of scrutiny of past transactions. Companies that previously imported goods using the value adjustment method based on the Circular may face retrospective reviews and disputes. For this reason, careful management of past declarations and their legal bases is of critical importance.

What should be done? Practical recommendations

The most sound approach for companies during this period is as follows.

Unit values and HS Codes in surveillance communiques should be checked in advance. For products requiring a document, the surveillance document process should be initiated before shipment. The declaration strategy covering invoicing, customs value, and expense line items should be determined through risk analysis. Differences in application across customs administrations should be closely monitored. Where necessary, uncertainty should be reduced through mechanisms such as binding tariff information or advance rulings.

Conclusion

The annulment of Circular No. 2019/1 has rendered the method of importing goods by adjusting customs value without a surveillance document legally contested and has disrupted uniform application across customs administrations. Until the administration issues a clear, detailed, and nationally consistent new regulation, the risks of delay, increased costs, and disputes will persist for companies. Given the high operational impact of this matter, it has become critical for importers to manage their surveillance processes in a more planned manner and to structure their operations with these uncertainties in mind.