The Customs Appeal Authority recently decided duty is payable on goods confiscated by Customs as “prohibited imports”

An importer tried to bring some cartons of beer and whisky into New Zealand. Unfortunately the labels didn’t comply with NZ regulations and the origin of some of the cartons was wrongly stated on the customs entry. This lead to NZ Customs seizing the liquor and assessing duty.

Now duty is normally payable when you import something, i.e. actually bring it into the country for domestic consumption.

In this case the beer and whisky was confiscated before it got through Customs and, what’s more, it wasn’t even destined for NZ in the first place. The importer intended to re-export it immediately.

Nevertheless, because of the labeling breaches and misleading information on the customs entry the liquor was a “prohibited import” and NZ Customs was quite within its rights to confiscate it and assess duty.

It seems to me this case could apply to GST as well as other customs duties. GST is a “duty” under Customs law and the GST legislation imposes GST on the importation of goods that, before their entry for domestic consumption, are “dealt with in breach of the Customs” legislation, similar wording to that which the Court was ruling on.

The sting in the tail though is whether a GST registered importer would be entitled to claim back the GST imposed by Customs from the IRD in its GST returns. If the goods are ‘prohibited imports’ and are confiscated by NZ Customs there’s a risk no GST can be claimed because the importer has not “used” the goods in their business.


The case is: XXX v CEO NZ Customs Service (CAA 03/12 and 04/12, 22 August 2013)






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