September 2006

Customs duty overpaid on bonded goods in the transition to free trade agreements

The Australian Customs Service and certain importers of goods from the US disagreed as to the transitional effect of the Australia - US Free Trade Agreement ("AUSFTA") where goods were imported and bonded before 1 January 2005 (the date of commencement of AUSFTA) but entered for home consumption only after that date. Importers claimed that lower AUSFTA duty rates should apply.

Bartier Perry partner, Oliver Shtein, represented John Deere Limited in a test case on this issue in the Federal Court. The Court has now upheld our client's submissions that it should be entitled to the lower AUSFTA rate of duty in respect of goods entered for home consumption on or after 1 January 2005.

Similar issues may arise in relation to goods of Thai origin under the Australia-Thailand Free Trade Agreement which also entered into force on 1 January, 2005.

Depending on the steps importers took at the time of importation refunds may be available. For more information or a copy of the judgment please contact Oliver Shtein.

Author: Oliver Shtein