The recent High Court decision of Thiess
v Collector of Customs emphasises the importance for
importers and their customs agents to take care when paying customs
duty and associated GST.
The Customs Act 1901 contains restrictions on when
refunds will be paid. In this case, the High Court concluded that
refunds could not be paid other than in the circumstances described
in the legislation.
The expensive mistake of fact
Mr Thiess owned a yacht. He imported the yacht into Australia in
2004. His customs agent mistakenly believed that the gross weight
of the yacht was 108 tonnes. The agent consequently ascribed to the
yacht the wrong tariff classification (yachts less than 150
tonnes), which attracted customs duty of $494,472, with an
additional $49,447 in GST, totalling $543,919.
In fact, the gross weight of the yacht was 160 tonnes. For
yachts of 150 tonnes or more, there was no duty, meaning that Mr
Thiess' duty liability should have been nil.
The agent paid the full amount of the duty on behalf of Mr
Thiess and the goods were released. Mr Thiess did not become aware
of the duty error until October 2006. On 15 December 2010, Mr
Thiess commenced proceedings for recovery of the money from
The mechanism under section 167 excludes common law recovery
Before the High Court, Mr Thiess appealed on the basis that the
section in the legislation denying an importer his usual common law
rights (section 167(4)) did not apply because there was no dispute
as to the proper duty payable.
The High Court held that the legislation is clear. There is no
right at common law for the recovery of any sum paid to Customs,
the payment is made under protest in accordance with section
167 and the action is commenced within the mandatory six month
the importer has a right to a refund under section 163.
The High Court noted that section 167 creates an incentive for
the importer to be vigilant when identifying the amount of duty
payable and, in the event of a disagreement with Customs, to pay
'under protest' and commence a statutory action within six
The High Court considered the historical circumstances and
concluded the purpose of section 167(4) was to 'create fiscal
certainty'. This was to ensure that there could be no action
for the recovery of any duty paid to Customs, other than the
statutory action for recovery under section 167(2) or an action for
a refund under section 163. The High Court commented that the
'payment under protest' mechanism in section 167 would be
undermined if an importer had six years to commence proceedings
under the common law. This could not be Parliament's
Relief under the refund provisions in section 163
Section 163 provides for refunds, rebates or remissions of duty
in certain circumstances. The Customs Regulations
prescribe numerous circumstances for this purpose, including where
'duty has been paid through manifest error of fact or patent
misconception of the law'. Applications for refunds must be
made within the specified time limit.
The time limit applicable where duty has been paid through
'manifest error of fact' was, at the relevant time, 12
months from the date on which the duty was paid. Again, Mr Thiess
failed to apply for a refund within that limitation period.
Unfortunately for Mr Thiess, the Regulations have since been
amended to extend the limitation period to four years for
'manifest errors of fact'.
Time to check your customs import history?
In a self-assessment environment, it is important to conduct
reviews and audits. This is to protect against both the risk
underpaying customs duty and import GST and attracting the
interest of the Australian Customs and Border Protection Service
and the Australian Taxation Office; and
overpaying customs duty and import GST – and like Mr
Thiess, being out of time to claim a refund.
Importers should obviously be mindful of the different tariff
classifications and confirm the nature and details of the goods
they are importing with their customs agent before paying any
Winner – EOWA Employer of Choice for Women Citation 2009,
2010, 2011 and 2012
Winner – ALB Gold Employer of Choice 2011 and 2012
Finalist – ALB Australasian Law Awards 2008, 2010, 2011 and
2012 (Best Brisbane Firm)
Winner – BRW Client Choice Awards 2009 and 2010 - Best
Australian Law Firm (revenue less than $50m)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).