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Australian Customs have published a Customs notice – number 2010/13 which seeks to clarify the definition of “import sales transaction” within the valuation provisions in Division 2 of Part IX of the Customs Act. This is in the context of ensuring that the correct Customs value is expressed where an importation may have multiple contracts of sale.

Customs in their notice, have identified the problem as follows -

“Retailer A, in Australia, places an order for goods with distributor B, in Australia. B then places an order for the importation of the goods into Australia with manufacturer C, in country X. C confirms the order and raises an invoice for $5,000 being for the sale of goods to B.

B requests that the goods be delivered directly to the premises of A and arranges with A to be the importer of the goods. B raises an invoice for $10,000 being for the sale of the goods to A.

In this example, country X is a participant in the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) and the goods ordered by B are eligible for duty free importation into Australia if a valid certificate of origin for the goods is held by A.

The certificate of origin obtained by C indicates the FOB price to be the FOB price on the contract of sale for the goods between B and C, this being $5,000.

Upon receipt of the certificate of origin from C, B forwards the certificate of origin to A to assist in the Customs clearance of the goods.

The broker employed by A then completes the Customs import declaration using the invoice from B to A and the certificate of origin supplied by C. Brokers have identified a problem because the FOB price on the certificate of origin is $5,000 and the FOB price on the invoice is $10,000 and have asked if it is possible to delete the FOB price in the certificate of origin.

The issue in the above scenario relates to which transaction should be regarded as the import sales transaction. “

The broker in the above example has made an error because the contract between A and B is irrelevant for Customs purposes.

The contract of sale between A and B is a domestic contract; it is not a contract for the importation of the goods. If B had the goods in stock, there would not be a requirement to import the goods. The order place by B upon C is the import sales transaction because it was the contract of sale for the importation of the goods into Australia.

Even if it could be argued that the contract between A and B was for the importation of the goods, the contract between B and C would still be used because under paragraph (c) of the definition of import sales transaction, the contract that was entered into last is regarded as the import sales transaction.

The issue therefore is to ensure that the correct import sales contract is identified and utilised when determining the Customs value of the imported goods.

Ross Becroft

Please note that should you have any questions or issues regarding either potential or actual anti-dumping matters or review of government decisions generally, contact Louis Gross or Ross Becroft.

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