This article was originally publishef 3 March 2021
The Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Act 2021 amends the Customs Tariff Act 1995 to, among other things:
(1) separately identify specifically formulated caffeinated beverages, formulated supplementary sports foods and formulated supplementary foods;
(2) specifically identify vitamins and food supplements;
(3) provide that wheelie bins do not fall within the classification of vehicles;
(4) provide that plates, rods, angles, shapes, sections, tubes, pipes and the like requiring further modification prior to being used cannot be classified as parts;.
These amendments create new tariff subheadings to separately identify formulated supplementary food, formulated supplementary sports food and formulated caffeinated beverages within the meaning of ANZFSC under the broader, more generic water-based beverages classification heading.
Similarly, the amendments include new subheadings to separately identify formulated supplementary food and formulated supplementary sports food under the more generic food preparations classification heading . This will also be used to improve monitoring under the Imported Food Inspection Scheme.
The Act also inserts additional notes to provide for the classification of vitamins and dietary supplements, wheelie bins and metal profiles and pipes. These Notes have been inserted to overcome the decisions in recent cases:
Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd (Pharm-A-Care)
This case considered the tariff classification of gummi bears. The ABF argued that they should be classified as food preparations of heading 2106 or confectionary of heading 1704. The decision, which was upheld in the High Court and therefore a legal precedent, was that the goods were classified to Chapter 30 as medicaments and were therefore duty free.
The ABF opinion is that in order to be classified in Chapter 30, goods should treat or prevent particular diseases or conditions, and that this interpretation is consistent with other WCO countries.
The new Note provides that vitamin and food supplement products cannot be classified as medicaments of Chapter 30 unless they are included in Schedule 2, 3, 4 or 8 to the Poisons Standard, and provides that they are classified to heading 2106 unless they are elsewhere classified.
Sulo MGB Australia Pty Ltd and Comptroller-General of Customs
The Sulo case concerned the tariff classification of wheels for wheelie bins. The outcome of the Sulo case is that it sets a legal precedent for wheelie bins and their parts to be classified vehicles, not mechanically propelled, in Chapter 87 in the Tariff.
The new Note suggests that such goods should be classified according to their material in Chapter 39 or Section XV.
Since this decision, the WCO has changed the explanatory notes so that wheelie bins are excluded from Chapter 87.
Smoothflow Australia Pty Ltd and Comptroller-General of Customs
In the Smoothflow case, Smoothflow Australia Pty Ltd imported steel pipes that could be used for fire sprinkler systems in buildings. The AAT decided that the goods were classified to heading 7308 and not heading 7306. Although both headings are dutiable, 7308 is not subject to anti-dumping and countervailing duties. (The Federal Court has since dismissed the ABF appeal of this decision).
The Act adds new Notes, which provide that heading 7308 and 7610 (titled structures and parts of structures and aluminium structures respectively) do not include ‘plates, roads, angles, shapes, sections, tubes, pipes and the like, requiring further modification before use in structures, including, but not limited to, cutting, drilling and bending’. In addition, heading 7308 does not include ‘tubes, pipes and the like prepared for the conveyance of fluids (including water, oil and gas)’.
It will be interesting to see if these Notes are interpreted by ABF to overcome the decision in Solu Pty Ltd and Comptroller-General of Customs, which concerned the importation of various extruded aluminium components for kitchen builds that had to be cut to length on site. The importer claimed the goods were classified under either 8302 (base metal mountings, fittings and similar articles) or 9402 (other furniture and parts). The ABF claimed that the goods were classified under 7604 as aluminium profiles to which dumping duties applied. The judgement was not in support of the ABF claims.
The Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Act 2021 has received Royal Assent and should commence on 29 March 2021. It should be noted that these amendments only apply in relation to goods imported into Australia on or after the commencement of this Act and goods imported into Australia before the commencement of the Act, but not yet entered for home consumption.
Should you have clients that may be impacted, we strongly suggest that the Notes be reviewed as these changes have implications not only for tariff classification, but also for existing and new tariff concession orders and the imposition of dumping duties. Please note too that it is probable that any Tariff Advices received based on the above decisions will be revoked by ABF.