Probably the most significant changes relate to the new Target case on TCOs, Customs new approach to cargo reporting compliance and Customs new Practice Statement on Transfer Pricing. As a result I thought that I would provide the following summary of those significant developments for your entertainment and education.
Always happy to provide more information on these developments and keep in mind that many of these developments will be addressed in current and forthcoming CBFCA State Conventions and the CBFCA CPD sessions. A number of additional issues have also come out of the recent CBFCA State Conventions in Perth and Noosa which have been very well attended.
Target v Customs .
This was a decision of the AAT where Target was denied a TCO for environmentally friendly shopping bags due to local substitutable goods. The case is particularly interesting for three reasons. First, there is extensive consideration of the admissibility of evidence of local production of substitutable goods which only became available after the decision to reject the TCO had been made. The material was allowed in part due to the absence of earlier objection and in part as it assisted the AAT to make its decision. Second there is a detailed discussion of the law around "substitutable goods". Third, the AAT has helpfully summarised the entire TCO process in one bite – sized summary at the back of the judgment.
Thiess v Customs and others.
This is a decision of the Court of Appeal of the Supreme Court of QLD denying an importer the right to refunds of duty and GST outside of statutory provisions which decision is consistent with other findings in earlier cases. The importer only became aware of the overpayment of duty after the statutory timeframe for refunds had expired and brought an action seeking refunds based on other grounds, including that the Commonwealth keeping the duty was tantamount to compulsory acquisition without fair compensation. The importer failed on all grounds and I would anticipate the next fight to be by the importer against his customs broker who the importer claimed to have erred in the duty being paid in the first instance.
Cooper Brothers (Triple R Waste Management) v ATO.
This is another AAT case on what constitutes production of excisable goods where the AAT held that used fuel oil is not subject to excise. The ATO subsequently issued a Decision Impact Statement in which it stated the implications of the finding are confined to factual scenarios that were materially the same as that of the taxpayer. The ATO also indicated that it would withdraw examples 9 and 10 from Excise Ruling 2012/1 and consider including new oil recycling rulings. There are also consequences for those seeking refunds based on the decision.
La Rosa v Nudrill Pty Ltd .
This is an interesting decision of the Court of Appeal of the WA Supreme Court where goods fell off the back of the truck and the road transport operator sought to limit liability through terms and conditions on the reverse of its tax invoices. The Court held that terms and conditions on the back of tax invoices issued after services are provided are not part of the contract and therefore the road transport operator could not benefit from limitations from liability in those terms and conditions. The decision emphasises the importance of getting a contract in place at the start of dealings to set terms and conditions or, at least, having acknowledgement of terms and conditions before providing services.
Importer of Korean meat.
An importer of Korean meat has been convicted and fined heavily for being in possession of illegally imported food products contrary to section 70C (3) of the Quarantine Act 1908. This was the third prosecution arising from Operation Hayride which uncovered more than 130 tonnes of illegally imported food products from Korea
- The Customs and AusCheck Legislation Amendment (Organised Crime and Other Measures) Bill 2013 was introduced on 20 March – see ACBPN 2013/12 and the HH Update of 22 March. Reference to this Bill has been included in the presentation on Part XI of the Customs Act for CBFCA State Conventions and will also be delivered for CBFCA CPD. Since the Bill been introduced and our earlier commentary, Customs has indicated in National Consultative meetings that it will consult on the introduction of new Regulations to effect the Infringement Notice Scheme as well as developing a general "Statement of Principles" governing the operation of the Scheme.
- The Customs Amendment (Miscellaneous Measures) Act 2012 commenced 31 March 2013. See ACBPN 2013/16 and our earlier HH e – alert. This mainly addresses "production – assist" issues for valuation of goods provided free of charge to an importer by its customer to be further produced overseas and imported back as finished goods as required by the customer of the importer.
- The Customs Amendment (Miscellaneous Measures) Act 2013 commenced on 30 March 2013. (See ACBPN 2013/17) This includes a significant change on "aligning the treatment of the timeliness of the report of cargo reporters with the cargo report". This should be read together with the more recent and very important ACBPN 2013/20 which addresses Customs approach to cargo reporting compliance and revokes the earlier ACN 2007/03. That earlier ACN had indicated that Customs would not act against a cargo reporter where there had been sustained improvement. Its revocation foreshadows a Customs crackdown on cargo reporting issues. It would also be reasonable to assume that there would be a similar crack down by Customs on those who provide information or otherwise cause offending Cargo Reports to be made pursuant to section 243V of the Customs Act 1901. Attention should also be paid to ACCA 2013/02 which refers to an "Alternate Part – Shipment Model" being introduced in the ICS to automate air cargo shipments when a Master Air Waybill is re – reported.
- The Implementation of the Customs Tariff Amendment (Schedule 4) Act 2012 commenced on 1 March 2013. See ACBPN 2013/07 on the effect on pre – existing By – Laws and TCOs etc. This is important as existing instruments may have been revoked and new ones must be used. Customs has issued a Concordance on old and new instruments.
- An exposure draft of the proposed Customs Amendment (Enhancing Customs Control) Bill 2013 has been released for comment– see ACBPN 2013/10
- After passing associated legislation, the Anti – Dumping Commission is to start on 1 July 2013 most likely at the same time as the several tranches of new legislation which have been passed but have yet to commence. Hopefully there will be new AD and CV Manuals and Practice Statements. Importers and their service providers need to take special care with the new "anti –circumvention" provisions which have been adopted in a similar fashion to the US to stop and penalise measures to avoid current AD and CV measures. There is extensive discussion on this in the CBFCA CPD session on AD and CV as well as in the session I delivered at the WA State Convention
- The Aviation Transport Security Amendment (Inbound Cargo Security Enhancement) Bill 2013 wasintroduced at same time as Department released Discussion Paper on "Building a More Secure End – to End Supply Chain for Australian Air Cargo Exports"
- The new IP "Raising the Bar" provisions started on 15 April 2013 including changes to IP protection at the border. These will assist rights holders here and may make it harder for importers to recover goods subject to seizure by Customs arising out of alleged breaches of IP of the rights holder.
- The introduction of the new "Australian Jobs Bill 2013" being "A Bill for an Act about Australian industry participation plans for major projects, and for other purposes". There are concerns that the provisions could be construed as being protectionist and could make it difficult for those running projects to secure adequate numbers of local resources. Certainly the major gas industry participants have been critical of the Bill in their submission to the Senate Committee Inquiry in relation to the Bill. When added to the apparent likely restrictions on the use of 457 Visas for skilled overseas workers it does give the appearance that Australia is moving towards a more protectionist environment
Broker Licensing and other Integrity Measures
- Customs release of 22 March 2013 on new Integrity standards in Customs and re organisation of responsibilities
- Customs has issued ACBPN 2013/09 with a further important CPD Update. Reference to the Notice has been included in the new Part XI presentation for CBFCA State Conventions and for CBFCA CPD
- Customs has also issued ACBPN 2013/21 regarding the requirements for Integrity, Approved Course of Study and Acquired Experience for those applying for customs brokers licences. This supersedes earlier Notices on the same topic and, interestingly, removes reference to the CBFCA National Exam as a specific example of Acquired Experience. However it would seem that this removal was only intended to avoid the impression of giving the CBFCA preference as the Acquired Experience provisions in the Notice still refers to the benefits from passing various exams offered by those in the market (which includes the CBFCA)
- Issue by Customs of the new Duty – Free Shop Operators Guide for 2013
Other Australian developments
- Current DP World problems having impact on members with penalties for late return on containers being imposed. We have addressed 2 meetings of VTA members on legal remedies. It seems harsh that shipping lines should impose penalties where containers are returned late due to systems errors of a stevedore who is the agent of the shipping lines.
- A number of AD and CV Investigations are being delayed here (for example, the release of the SEF on countervailing on galvanised steel and the Pineapple investigations). The SEF on galvanised steel dumping has been released and the hot steel plate investigation is proceeding. More measures are being introduced. I am seeing many brokers missing to assess/collect AD/CV duties largely due to errors in TC by the broker. Check out imports before Customs audits! The Minister has now announced yet another Reinvestigation – this time in relation to Customs investigation into alleged dumping of HRCS, following a TMRO review.
- Customs has issued a draft new Tariff Precedent on Aluminium Extrusions which is especially relevant given that there are AD/CV measures on such aluminium and failure to classify aluminium products properly could mean a failure to pay those AD/CV measures leading to possible recovery action and penalties.
- Customs has issued ACBPN 2013 identifying additional restrictions on trade with Syria and Iran.
- Customs has issued ACBPN 2013/19 on its new amended Transfer Pricing Policy Practice Statement together with the new Practice Statement itself. This is very important as many importers are part of multinational groups who undertake Transfer Pricing arrangements to suit the desired taxation outcomes for the international group. However that has consequences for customs duty and GST in Australia when prices are retrospectively adjusted, which consequences could involve payment of additional duty and GST and amending earlier Import Declarations.
- There have been some significant developments in the Australian Free Trade agenda. Firstly, Australia has approved Japan to enter negotiations with other countries associated with the establishment of the Trans Pacific Partnership. As a consequence, many have speculated that Australia and Japan have either completed or are extremely close to completing negotiations on their bilateral FTA. However some of that speculation has also included suggestions that Australia has conceded ground on proposed agricultural gains in favour of gains for the automotive sector. Secondly, after many years of trying (and failing) to secure a comprehensive Free Trade Agreement with China, recent press reports suggest that Australia has recanted on its standard Trade Policy with a view to seeking a Free Trade Agreement with China which focusses mainly on agriculture. In exchange it would appear that China is seeking approval for its State Owned Enterprises to invest up to $1B in Australia without requiring FIRB approval which is a significant increase on the current threshold.
- Press reports on 30 April 2013 suggest that SPC has approached the Federal Government requesting that Safeguard Measures be put into place to protect against significant imports of cheaper canned and preserved fruit from elsewhere. This is a different approach to seeking quotas (as in the Thai FTA) or bringing anti – dumping action. I was interviewed by ABC radio on the topic and a link to the SPC story and my interview can be found at http://www.abc.net.au/pm/content/2013/s3748596.htm
- The WTO has expressed concern on an increase in protectionist measures
- The EU is seeking to modernise and strengthen AD/CV protections
- The US CBP has reported a decline in compliance and supply chain security measures
- A US electronics manufacturer has been ordered to pay US 4.5M for Anti – Bribery violations under the US FCPA. At the same time, US Fashion House Ralph Lauren has been ordered to pay a fine of US $1.6M following an FCPA investigation for similar violations.
- New EC Regulation (EC 1223/2009) is to commence on 11 July 2013 governing one harmonised requirement for cosmetics to be imported to any EU member. The new Regulation will impact issues such as safety assessment, product notification and labelling. These will need to be observed by Australian cosmetic exporters to the EU.
- The UN Office on Drugs and Crime released a report on 16 April finding that trafficking in counterfeit products is now as lucrative as drug trafficking for organised crime organisations in East Asia and Pacific region.
- The East Africa Community has announced a pilot AEO scheme and at the same time a provisional deal was struck between Members of the EP and the Irish EU Presidency allowing the EU Customs Code to be updated to keep pace with IT development. That deal should allow for the introduction of paper – free Customs transactions, including "fast track" processing for trusted companies in an AEO scheme. Hopefully, Customs here follows suit with an AEO scheme before much longer.
- IATA has implemented a Resolution allowing for the use of a Multilateral E–Air Waybill Agreement. This will save from the many "one on one" agreements currently needed to be used on a regular basis.
As always I would be happy to discuss these in more detail and look forward to seeing you at forthcoming functions.