In a recent case the Administrative Appeals Tribunal (AAT) had to consider the classification of certain aluminium rails, and other extruded aluminium products. In doing so, the AAT made important findings about dumping duty and when goods can be identified as parts.
The case
Solu Pty Ltd and Comptroller-General of Customs [2019] AATA 2584 concerned the importation of various extruded aluminium products in profile form imported by Solu. The products were imported in lengths up to 4.4 metres and then cut to length in Australia for use as components in kitchen furniture such as cupboards.
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. If classified as aluminium profiles, the ABF claimed that dumping duties applied.
The case concerned 9 different profiles. Other than one profile, the goods were designed to be cut after importation and installed into kitchen cabinets and shelving units. The size to which the profile would be cut would depend on the particular shelve or cabinet.
All equipment was designed for this specific purpose and, other than being cut to size, did not require further working in Australia.
Part vs materials to make parts
This was not Solu's first trip to the AAT. On a previous hearing concerning similar goods, the AAT held that at the time of import, the goods were not identified as parts, but rather were material that could be cut to size post importation to make parts. It was considered relevant that there was no set relationship between the imported good and the number of parts that could be produced from those goods.
Normally these factors are sufficient to prevent the materials being identified as parts. Rather, the goods are identified at the time of import as materials that will be used to make parts. However, the AAT took a different approach in this case. The AAT said that there was nothing in the tariff heading that required the goods to be of a certain size and that cutting to size did not alter the design or use of the goods. The AAT also noted that the goods were not reusable and there was not an infinite number of parts that could be made from the materials.
In respect of the rails, the AAT found that at the time of import the incomplete or unfinished rail had the essential character of a complete or finished article. The goods were not substantially transformed before being used and as such, were "parts" and not merely "materials".
Identification of the goods
Dumping duties apply to the goods in the dumping duty notice. In relation to aluminium extrusions, unsurprisingly the dumping duties apply to goods identified as "aluminium extrusions". There will be some products that are clearly more than a mere extrusion and not subject to dumping duties. Then there will be other products where the dividing line is less clear. The AAT referred to the innovative design of some of the products and said "They are more than simply aluminium profiles." The ATT seemed very influenced by the fact that the goods had a very specific, and limited, design purpose.
There are many importers of solar aluminium rails who will be very interested in the AAT's comments that the rails in this case "…are more than mere aluminium profiles." It is hard to see a big difference between rails designed for the specific purpose of kitchen cabinetry and rails designed for the specific purpose of holding solar panels. Both sets of rails have one design use. Presumably, both sets of rails, should be identified as more than mere aluminium profiles. If this is correct, should dumping duties that apply to mere "aluminium extrusions" apply to highly designed rails with one specific design purpose?
Classification decision
Ultimately, the AAT found that the different goods were classified to either 8302 or 9402 and not as aluminium profiles under 7604. This decision is relevant for the classification of any goods that after cutting to size will be used as parts in Australia. It also allows a more flexible approach to the general rule that goods must be assessed as they appear at the time of import and not by reference to what will happen to the goods post importation.
It is additionally important guidance for heavily engineered goods that are a base metal which have only one design purpose.
Dumping duty
Solu commenced the AAT proceeding seeking review of two decisions. A payment of general customs duty under protest and a decision to refuse a dumping duty refund. This case confirms that while dumping duty cannot be reviewed under the PUP process, the alternative route is to pay the dumping duty on an entry, make a refund application and if that refund is denied, seek a review of that decision.
This case is very important for importers of aluminium extrusions. It must be remembered that in the first line of the judgement the AAT member stated that the case concerned aluminium extrusions imported in profile form. However, it was found that no dumping duty was payable.
The reason for this was that both parties had agreed that if the goods were not classified to 7604 no dumping duty would be payable. While the dumping notice made by the Assistant Minister does limit the imposition of dumping duties to any particular classification, the decision in this case seems to indicate that the Comptroller of Customs will limit the application of dumping duties to the tariff classifications nominated by the Anti-Dumping Commission when conducting the relevant investigation.
What next?
This decision represents a shift in the approach to the identification and classification of goods. It would be surprising if the decision is not appealed by the Comptroller General of Customs given that it impacts goods subject to dumping duty rates exceeding 100%.
We will discuss this decision in detail in the upcoming FTA legal forums:
Sydney – 28 October 2019 – refer HERE
Brisbane – 11 November 2019 – refer HERE
Melbourne – 14 November 2019 – refer HERE
Fremantle – 27 November 2019 – refer HERE
Please contact Russell Wiese (03 8602 9231, rwiese@huntvic.com.au) if you would like to discuss how this decision applies to your imports.