customs post chafta...2015/12/20 · broker liability – t&cs 7. aluminium extrusions 8....
TRANSCRIPT
Customs post ChAFTA
February 2016
Topics
1. ChAFTA – Where are we at
2. Fundamentals of claiming origin
3. Certificates of origin
4. Transhipment
5. TCOs – Capital order goods
6. Broker liability – T&Cs
7. Aluminium extrusions
8. Penalties for false statements
2
ChAFTA
1
Where are we at
• Commenced - 20 December 2015
• Year 2 - 1 January 2016
• Origin rulings issued since 1 December 2015
• Transition:
• Australia permitted duty free for goods entered for home
consumption from 20 December
• China – Goods warehoused at 20 December were not eligible
Fundamentals
3 Key Elements
• Origin
• Certification
• Transhipment
A COO or DOO does not prove origin – Always ask whether
the origin claim seems reasonable
5
Certificates of origin
2
Legislation
• The importer has a certificate of origin “for the goods”
• COO is defined a COO that complies with article 3.14
• Article 3.14 requirements:
1. Issued by an authorised body
2. Based on template in FTA
3. English
4. Signed and stamped
5. Applicable to one or more goods under one consignment
6. Valid for 12 months
FTA Requirements
Art 3.22 (1)(e)(iii) – Can deny preference where data on COO
does not match commercial documents
However – this requirement did not find its way into our
legislation
Our legislation has two tests:
1. Origin rule met; and
2. COO held “for the goods”
Certificates of origin
• Tariff classification
• Inconsistent classifications
• Grouping
• Legislative requirements
• Practical response
9
Certificates of origin
• Origin rule
• Third party invoicing
• Amending
• Practically
• FTA rules
Certificate of origin
• Items per certificate – max 20
• If more than 20 – multiple certificates
• Can group items where:
• Tariff class is the same
• Origin rule is the same
• Goods can still be identified
• Same rules apply to declarations of origin
Certificate of origin
Retrospective certificates of origin
• General rule – COO must be obtained at the time of, or prior
to, export
• Goods in the process of export on implementation –
intended that COO will be retrospectively issued
• Practically, seems to be a 30 day restriction
• All other exports – need a good reason
• Important with setting client expectations
Transhipment
• China to Australia
• Australia to China
• Non-manipulation certificate
• Depends on whether a “through BOL” can be provided
• Required for non-containerised cargo and unsealed containerised
cargo
• Must hold a HK business registration certificate to apply
Advanced rulings
• One issue per ruling
• One good per ruling
• No retrospective application
• Customs has provided guidance on what information it
requires
ChAFTA – After phase 1
3
What to expect next
• This is Customs being lenient
• As concession use moves from TCOs to FTAs, expect more
focus on FTAs
• It is expected that you hold a COO but is it valid and can
you show the goods meet the origin requirement
• Document retention
• Look at FTA
• Look at Australian requirements for exporters
Australian importer is on the line
16
Recent cases
4
Recent cases
• So & Others v CEO of Customs (District Court of
Queensland)
• Solu Pty Ltd and CEO of Customs (AAT)
• CGC v Vestas Australian Wind Technology Pty Ltd (Full
Federal Court)
• Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd
(NSW Court of Appeal)
So & Others
• Deliberate evasion of duty
• False statements regarding jewellery and duty free watches
• Goods seized
• Original penalty – forfeiture of goods, plus:
• Fine equal to 2 x underpaid duty x 3 people
• Fines of $2,500 for So, $1,500 for Yip and $1,500 for Johal
• Appealed seeking return of the goods
So & Others
Held:
• Forfeiture can be taken into account when determining the
penalty
• Also, penalties can be taken into account when considering
whether forfeiture is appropriate
• Jewellery forfeited, but watches returned
• Relevant that no duty was payable on watches and they
were not imported for resale
• Considered that a penalty equal to 6 times the duty on the
jewellery had been paid
So & Others
“Customs offences are notoriously difficult to police and
traditionally attract heavy penalties. Penalties for
Customs offences are to be of a very high order. A
punishment for deliberate offences against the Customs
Act should be severe”
Solu Pty Ltd and CEO of Customs
• Classification case with a lot at stake – dumping duties
• Goods were aluminium products used for kitchen and other
types of cabinetry
• Essentially, bulk product that could be cut to size. Notably,
the goods are cut to smaller lengths as required after
importation
• Tribunal held goods properly classified as aluminium
profiles
• materials used in the construction of an unidentified number of items
to be incorporated into not only furniture but an indeterminate
number and type of other goods
• critical is the state of the goods at time of import
Solu Pty Ltd and CEO of Customs
• Classification can be critical when considering application of
dumping duties.
• While there are various methods to seek to have the
dumping duty reassessed, the starting point for contesting
the imposition of dumping duty is whether the goods are
actually covered by the dumping duty notice. This involves a
critical threshold question - what is the tariff classification of
the goods?
Vestas
• Long running battle (original application made on 14/8/12)
with Australian Customs regarding whether a TCO should
be granted covering certain gearboxes for wind turbines
• Critical issue – “produced in Australia in the ordinary course
of business”
• How does the “ordinary course of business” test apply to
made to order goods?
Vestas
• Full Federal Court held that for production line goods there
must be a history of actual production, but for made to order
capital equipment, a capacity to produce is sufficient.
Capacity can encompass goods to be produced in the
future.
• This decision returns the law to the position previous
understood and applied by Customs.
• Vestas has applied for leave to appeal the decision to the
High Court
Mega-top Cargo
• A freight forwarder/customs broker who had paid $234K in
customs duty, GST and other charges was held to have no
right to recover the amount from the importer
• Usually, broker would have had a right of indemnity
• T&C’s were varied by the client expressly stating it accepted
“no liability for any freight costs… duties or taxes payable
relating to the delivery and acceptance of the freight”.
These costs were to be recovered from the third party
• Critical – must have unqualified acceptance of your terms
and conditions to be able to enforce rights
Key take away
• Risks are higher than ever
• Perfect storm of:
– Courts encouraging harsh penalties for breach of the Customs Act;
– The difficulty with enforcing T&Cs; and
– More concessions meaning errors have higher consequences
• Managing the risk
– Unequivocal written acceptance of your terms and conditions
– Obtain as much information as possible about the goods
– Explain risks to the clients
– Rulings
27
Questions
CONTACT Russell Wiese
T: 03 8602 9231
Lynne Grant
T: 03 8602 9246