DUTG - Customs value reality check

Trade and Legal Bulletin 04/13

CUSTOMS VALUE REALITY CHECK

Did you hear the one about ...

In accordance with their apparently increasing focus on Compliance Assurance, the Australian Customs and Border Protection Service (CBP) recently released their Notices 2013/16 and 2013/19. Both these Notices are in relation to amendments to CBP's policies for determining the customs value of goods, as that term is used in section 159 of the Customs Act.

Notice 2013/16 reflects the CBP policy that where an importer provides a production assist to a manufacturer, the value of that assist must be included in the customs value of goods. This should occur even if the actual cost to the manufacturer is nil. It should be remembered that while the cost of something is a fact which is  very easily discernible, the value of anything is quite often a matter of opinion. This policy is in accordance with the WTO Valuation Agreement and serves to vary an error in Australian complaince with WTO principles in the past.

Notice 2013/19 is in relation to Transfer Pricing (which is sometimes referred to as Reverse Dumping) and gives notice of  a web link to the Valuation Transfer - Pricing Policy Practice Statement, which replaces the existing Practice Statement PS 2009/21.

While both of these Notices should be considered very carefully in isolation, there are situations where both of these Notices must be considered simultaneously, providing a double whammy for some importers and their professional advisers.

This may occur where for example, a clothing importer provides production assists to their offshore manufacturer, where the clothing importer has an interest in the manufacturer. In this situation, both production assists and transfer pricing may become a part of the process of determining the customs value of goods.

Another example would be where gearboxes and/or engines or other components are supplied to an associated vehicle manufacturer, who in turn includes these components in vehicles which are exported to Australia.

Our suggestions:

1. Always act in good faith when determining the customs value of goods; 

2. Those responsible for making import declarations should advise their clients (in writing) to make a Request for Valuation Advice, to protect clients from Infringement Notices or Prosecution, if errors are made in determining the customs value of their goods.

Providing advice to clients in this way should also protect Customs Brokers from:

(i) Allegations of negligence and associated litigation; and

(ii) Responsibility for the large professional indemnity insurance claims which are likely to eventuate in these situations, if a Broker relies on their judgement alone in determining the customs value of goods, rather than taking clear and documented instructions from their client.

We hope that this heads up is of assistance.

Please do not hesitate to contact me with any questions?

 With best regards,

John Law

Solicitor and Director; Licensed Customs Broker

The Down Under Trade Group, for Justice, Trade & Customs

"Our Industry Experience, makes the difference"

Bennelong Legal

Central Coast Lawyers

Down Under Legal

Down Under Trade Group

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