DDP TRANSACTIONS

Article By Newsletter on 25-06-2015

DDP TRANSACTIONS

In our February Newsletter we informed you of a change of practice by the Australian Customs and Border Protection Service (ACBPS) where they would now seek to recover any short paid duty or GST from the Australian consignee under a DDP transaction. This change of practice has now been tested in the Administrative Appeals Tribunal (AAT). In this circumstance the Australian consignee, Studio Fashions (SF) were purchasing product from a Chinese supplier on a DDP basis. The Chinese supplier was found to be undervaluing the products when supplying invoices to the customs broker for customs clearance purposes in order to pay less duty and GST. The Chinese supplier was charging the full price of the goods to SF.
SF claimed that they did not own the goods at time of importation and therefore were not responsible for the short payment of duty and GST under DDP terms. The AAT found that SF could be considered an “owner” under the definition provided in the Customs Act and were therefore responsible for the short payment of duty (approx. $75K) and GST (approx. $98K). To make matters worse SF are not considered to be the “importer” under the GST Act and therefore they are not eligible for an input tax credit on the short paid GST.
If you are importing product under DDP terms then please be aware than you can and will be held responsible for any short payment of duty or GST even though you have had no involvement in the customs clearance process.