October 11, 2023

  • Alfredo Lazcano, Chair, Lazcano Sámano, Mexico
  • Andrea Avedillo, Head of Legal, Lazcano Sámano, Mexico

To appeal or not to appeal: the Tamaulipas file, a study case from Mexico

Alfredo Lazcano AND Andrea Avedillo use a practical example to inform a key legal decision


Most legal systems today have a robust set of procedural rules governing the process of appealing a public decision. Nevertheless, does it make sense to appeal every time? The answer should come only after the party inclined to launch an appeal performs a cost-benefit analysis and establishes well grounded reasons to pursue an additional procedure.

Although the original concept of the rule of law can be traced back to the classical age of civilization, over time it has been developed in such a way that it is now an indispensable principle of governance in modern societies.

The rule of law essentially states that every person is equal before the law. Moreover, “all persons, institutions and entities, public and private, including the State itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human rights norms and standards” .

The principle of rule of law recognized by most of the current legal systems around the world, embraces the notion that no one can be harmed without a cause. No one can be affected by other people’s acts or decisions without repercussions. No one can act against somebody else’s interest when such action is not permitted by law.

It is precisely the rule of law that motivates the legal rights to contest or appeal political or governmental decisions that can be harmful for the citizens, because “the Rule of Law is supposed to lift law above politics. The idea is that the law should stand above every powerful person and agency in the land” .

Whenever the rights granted to a person or an entity are affected by a public act – which can be a new law, a legal amendment, a closure, a public policy or a fine – that person or entity is entitled to appeal such an act. Whether the appeal is the best course of action or not shall be determined over a cost-benefit analysis.

In this article we will present a case that took place in the State of Tamaulipas, Mexico, in 2017. Derived from an inspection of several casinos in different cities of Tamaulipas, the customs authority resolved that the gaming machines  that were inspected, which were imported to Mexico, did not comply with the legal requirements for importation, thus the authority proceeded to seize them and impose fines against the manufacturer who brought the machines into the country .

At first glance, this case was probably not worthy of appeal, but as we will go on to explain, not only did the actions of the authority show some irregularities, but the evidence of the legal importation of the gaming machines was absolute, therefore It was decided to appeal the fines imposed and request the return of the gaming machines.

The facts

In April 2017, the Deputy Secretary of Revenue of the Ministry of Finance of Tamaulipas (the “MFT”) ordered an inspection visit to a casino located in a city of said state to review the compliance of the gaming machines, that were installed in the casino at that time, with Customs and Imports Regulations. Then in May 2017, the MFT ordered an inspection visit to a casino located in another city of Tamaulipas with the same purpose as the visit held back in April.

As a result of its inspections, the MFT determined in both cases that the gaming machines did not comply with the legal importation requirements. They proceeded to seize the gaming machines that were installed in the casinos at the time, which initiated the Administrative Procedure in Customs Matters (in Spanish Procedimiento Administrativo en Materia Aduanera; Spanish acronym “PAMA”).

An important clarification is that the seizure of the gaming machines was not construed as a sanction per se, but as a precautionary measure. Since the authority had initially determined that the gaming machines were not legally imported, it assumed that the corresponding import taxes had not been paid and it proceeded to seize the gaming machines as a guarantee to the payment of tax credits.

Once the PAMA was initiated, and pursuant to Article 153 of the Customs Law, a period of ten days is allowed, counted from the day following that on which the notification made by the authority is received, for the defendant to offer, by writing, the evidence and allegations that he or she deems appropriate. In this case, the manufacturer who imported the gaming machines responded in a timely manner and presented the documents that evidenced the legal importation of the gaming machines.

Among the stipulations established in the Customs Law, importers are required to affix a label to the goods they introduce into the country that displays specific commercial information. This obligation comes from the Mexican Official Standard NOM-024-SCFI-2013 (the “Label NOM”). The Label NOM applies to new, refurbished, and second-hand products, and it is beyond dispute that it applies to gaming machines.

The MFT alleged several breaches of the Customs Law from the manufacturer, however, the main argument was that the gaming machines did not show the labels that were supposed to be affixed to them at the time of the inspections. The non-compliance with the Label NOM were sufficient grounds to determine that the gaming machines were not correctly imported and as a consequence the MFT imposed the respective fines on the manufacturer.

The appeal

Even though the manufacturer contested all and every argument presented by the MFT and submitted substantial evidence, such as photographs of the labels adhered to the gaming machines, the MFT concluded that the importation of the gaming machines did not comply with the legal requirements and levied several fines on the manufacturer.

The manufacturer had the choice of paying the fines and recovering the gaming machines or appealing the MFT’s resolution through an administrative trial before the Federal Court for Administrative Justice (the “Administrative Court”).

Despite the fact that the litigation would represent more in costs than the fines, and that the trial could have taken much longer that the original PAMA, the manufacturer believed it had fully complied with Mexico’s import laws. It had evidence of its compliance and decided to appeal to safeguard its reputation. Therefore, in April 2018, a year after the first inspection, the manufacturer filed a complaint before the Administrative Court to initiate an annulment trial.

The final verdict

After almost six months of trial, the Administrative Court ruled that the PAMA was filled with inconsistencies and that the gaming machines were legally introduced into the country. The Administrative Court annulled the fines imposed by the MFT to the manufacturer and ordered that the gaming machines were immediately released.

Why did the manufacturer choose to appeal? The answer seems simple, but it carries a deep meaning: any gaming manufacturer – especially those with a global presence – is subject to great scrutiny over its conduct in any jurisdiction; therefore, it would have been absolutely detrimental to set a negative precedent by the acceptance of guilt when, in fact, the gaming machines were legally imported.

Appellate attorney, Donna Bader, has written that “there are three major standards of review for appeals: legal error, abuse of discretion, and substantial evidence. An appeal could involve a combination of these standards” .

A clear legal error occurred when the MFT seized the gaming machines without giving the manufacturer the option to pay a guarantee for the taxes alleged to have been evaded. As is clear from the facts above, the seizure of the goods, at least in this case, was a precautionary measure, yet it was treated by the authority as a sanction.

Now, was there an abuse of discretion? Unfortunately, everything seems to indicate that this was the case. The evidence provided in the case showed that some MFT officials could have acted maliciously during the inspections by removing the labels that were stuck to the gaming machines; the above, to “justify” the seizures and sanctions.

Finally, the evidence presented was substantial as the manufacturer was able to demonstrate that the gaming machines had been legally imported. All the paperwork was complete, including the importation documents, the commercial invoice and the certificates of compliance with all the applicable Mexican Official Standards.


Even though today most countries in the world are governed under the rule of law, acts of authority – in whatever form they occur – are not extent from error nor misjudgment, and in worst cases, abuse.

In the specific case of Mexico, as our legal system acknowledges the rule of law, it is possible for every person or entity to appeal or contest acts of authority. However, just because every person has the right to appeal, not every decision is appealed because sometimes it may be easier and less expensive not to.

At other times it takes more than solid argumentation, strong evidence or even courage to appeal. In the gaming industry, reputational aspects and good practices are a determining factor in whether to appeal or not to appeal.

The Tamaulipas file is a perfect example of when it does make sense to appeal. Not only in order to avoid the economic damage resulting from the payment of fines and the loss of the gaming machines, without a cause, but also in order to set limits on the discretionary acts of the authority and safeguard the rule of law.

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