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To our Valued Customers,
Over the past few years, Customs has had some major, and at times, surprising losses in Australian Court and Tribunals (in one case wheelie bins were classified as vehicles). The most high profile loss concerned the classification of vita-gummies where the High Court held that they should be classified as a medicament rather than food.
Legislation has been introduced to parliament to prevent a replication of outcomes in respect of future imports. The outcome will mean that future imports will be taxed as Customs intended. However, the legislation does not undo the judicial reasoning that resulted in Customs losing those cases. Most significantly, we are still stuck with the position that the French text of the HS Code needs to be considered when interpreting the Customs Tariff Act (which, incidentally, is in English).
Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Bill 2020
A copy of the proposed legislation can be found here. The proposed legislation seeks to change the tariff outcome in a number of important cases as set out below:
The proposed amendment based on "further modification" to plates, rods, angles, shapes, sections, tubes and pipes seems to go much further than was necessary to address the issues arising from the Solu case. For instance, if cabinetry rails were cut to the precise size at the time of import, but did not have screw holes, the item would require drilling and would now be excluded from heading 9403.
The term "further modification" is too wide and goes beyond established identification principles. Some modification will be so minor that the good should rightly be classified to heading 7308, 7610, 8302 or 9403 as applicable. The proposed amendments could prevent this outcome.
The answer may be for importers to argue that a particular good has such features that it is correctly identified as a furniture or building part, rather than a mere "plate, rod, angles, shape, section, tube or pipe". If this is the case, the new notes would not exclude the good, despite the need for further modification, as the new notes only apply to goods identified as mere " plates, rods, angles, shapes, sections, tubes or pipes". These arguments will be strongest where the required modification is very minor.
Commencement of new classifications
The new classification rules will only apply to goods imported after the date that the legislation commences. This is the 28th day after the Act receives royal assent. At this stage the bill has not passed the Senate. The changes will take effect some time in 2021.
Importers need to consider the following:
· tariff concessions orders that rely on a classification that will change after the bill is passed
· duty free vitamin and health supplements that will in the future be classified as a food that attracts duty
· dumping duty payable on steel pipes and aluminium extrusions that are currently classed as parts of a building or furniture
· steel and aluminium products that require some minor further modification before use that may in the future (perhaps inadvertently) be classified to a different heading
· the HS code on certificates of origin for affected goods
· tariff advices applying to affected products – legislative amendment is a ground on which Customs can revoke a TA
Please feel free to contact our Customs Team, should you have any queries or questions.
Keeping you updated,
BRi Customs TeamBack to News Page