DUMPING DUTIES ON ALUMINIUM EXTRUSION KITS AND SETS
For over 10 years Customs has collected millions in dumping duty on aluminium extrusions exported from China. One of the major focus areas of the ABF compliance team has been the importation of aluminium racking used in relation to solar panels. A recent Administrative Appeals Tribunal suggests that Customs has been incorrect in its approach to assessing when dumping duty applies.
Solar Juice Pty Ltd and Comptroller-General of Customs
Solar Juice imported various components for used in the mounting of solar panels on roof tops. The components were aluminium rails and clamps and other components used in attaching the rails to the roof. Solar Juice did not import solar panels.
The ABF position was that the aluminium rails were subject to dumping duty. The Solar Juice position was that the importation was correctly identified as not mere rails, but a number of complete solar panel mounting kits.
In support of the Solar Juice position was the following:
the invoices set out supplies of kits (although each components was individually listed and priced)
the components (other than the rails) required for each mounting kit were collectively packaged for each type of kit
the number of rails imported was the correct amount for the number of kits imported
the Solar Juice brochures showed that the goods were all designed to work together as a kit.
The legal issues
Dumping duties are imposed by way of a dumping notice. The key issue was whether the imported goods fit within the terms of the dumping notice. It was accepted that if the rails were imported on their own, they would be subject to dumping duty.
The dumping duty notice had an exception to the effect that the notice did not cover aluminum extrusions that were “intermediate or finish products that are processed or fabricated to such an extent that they no longer possess the nature and physical characteristics of an aluminium extrusion, but have become a different product”.
Relevant to this questions was the issue of how the goods were to be identified and the status of the report completed by the Anti-Dumping Commission when conducting the initial investigation.
Ultimately the Tribunal found that the imported goods should be identified as a system or kit and not merely rails and other parts.
Importantly, the Tribunal found that:
“the relevant processing or fabricating is the preparation of the system or kit”; and
while not assemble or packaged together, the rails and components were capable at the time of importation as being view as a different finished good.
These findings enabled the Tribunal to reach the conclusion that the goods were excluded from the dumping notice as “finish products that are processed or fabricated to such an extent that they no longer possess the nature and physical characteristics of an aluminium extrusion, but have become a different product”.
This is an interesting approach, as it might initially have been thought that “processing or fabricating” of the aluminium rails would involve physically altering the rails in some way, as opposed to packaging them with other products (with which they were designed to work).
If the Tribunal had considered that the goods as imported were correctly identified as solar panel mounting kits, and not mere aluminium extrusions, than rather than bringing the kit within the “processed or fabricated goods” exclusion, it simply could have said:
the dumping notice only applies to aluminium extrusions (non-controversial);
the goods as imported are not identified as aluminium extrusions but rather, solar panel mounting kits;
dumping duties do not apply to solar panel mounting kits.
The path the Tribunal elected to take leaves open the questions:
when will a kit or assembled item cease to have the identity of an aluminium extrusion and not fall within the terms of the dumping notice regardless of an exclusions; and
what is the scope of the “processing or fabricated goods” exclusions if it include “processing or fabrication” that does not involve the physical altering of the aluminium extrusion.
For instance, is an aluminium extrusions that is given a very unique coating for a specific end purpose process or fabricated to such an extent that it has become a different product.
Issues for future cases
This was one of the first cases to deeply examine the process of determining what goods fall within the scope of a dumping notice. This is an interesting area as the terms of a dumping notice largely follow the description of the “goods under consideration” in a dumping investigation. This wording is provided by the local industry and often lacks the precision of legislation. It is not uncommon for there to be disputes regarding the scope of the wording.
This becomes a particularly difficult problem as neither the ABF or the ADC will not provide binding rulings on whether or not an import fits within the terms of a dumping notice. This means more of these cases are likely to appear before the Tribunal. Some interesting findings that will be relevant in these future cases are:
The Tribunal held that the issues raised and approach used when identifying the goods for tariff classification can be used when identifying the goods for the purpose of a dumping duty notice.
The tariff classification of a good is not relevant for determining whether the goods fit within the terms of a dumping notice. However, in practice the ABF has applied dumping duties only to goods that fit within the tariff classifications nominated by the ADC. This provides certainty to importers and it will be interesting to see if this approach changes.
The report produced by the ADC as part of the initial investigation should be treated possibly as part of the dumping notice, or at least be read in the same way as an explanatory memorandum. This is particularly interesting as it suggests that the approach of the ADC to interpreting the wording of the “goods under consideration” should be treated as correct. My experience is that the ADC interpretation is often in dispute. This last point may create a lot of work for customs brokers who may have to read the ADC report (usually over 100 pages) to be able to correctly interpret a dumping notice.
Next steps for customs and importers
Customs has the option of lodging an appeal with the Federal Court. In deciding whether it do so, it may consider:
whether this case can be confined to its facts and not have ramifications for future cases;
the extent to which the past high level of ABF compliance activity in respect of aluminium extrusions is now open to challenge;
the constant pressure the ABF is under from Australian manufacturers to enforce the dumping duties they have worked hard to have imposed.
Importers should be considering past ABF compliance activity and whether it is now open to challenge. This will be particularly the case with goods imported in any form of kit or specifically altered to work with other components.
Please feel free to contact us regarding the application of dumping duties to your imports.