Customs Appeals: Compliance with time limits – a hard lesson

An Airline v Chief Executive of the New Zealand Customs Service [2014] NZCAA 9

An unnamed airline imported a number of used leased A320 aircraft into New Zealand. Duty was payable on importation. The case related to the correct method of valuing the aircraft on importation for duty calculation purposes. At issue was duty of around $14 million.

For the purposes of assessing duty Customs used the "agreed value” insurance figure as set out in relevant subleases of the aircraft. The appellant sought to file an appeal with the Customs Appeal Authority arguing that Customs had used the wrong valuation for the purposes of assessing duty.

Appeals to the Authority must be made within 20 working days after notice of the decision to be appealed is given. This involves filing the appeal papers and paying the required fee. The Authority can and does extend time for filing appeals provided that application for extension is made before any applicable time limit has expired.

In this case the appellant sought and was granted two extensions. On the last day for filing the appellant’s advisers submitted appeal papers via an email in which they also confirmed that hard copies and the accompanying cheque for the filing fee had been put in the courier to the Authority in Wellington. The fee was thus not received by the Authority until the next day.

After considering the wording of the applicable legislation and case law, the Authority determined that because the fee had been received late the appeal was not filed within time and accordingly that the Authority had no jurisdiction to determine the appeal.

The Authority nevertheless went on to consider what would have been the position had it had jurisdiction to determine the appeal.

In that context the appellant argued that use of the agreed value insurance figures was incorrect and that a more accurate valuation of the aircraft for these purposes was one contained in an independent valuer’s report which the appellant had obtained. In particular the appellant argued (amongst other points) that the "agreed value” insurance figure allowed for replacement of older aircraft with new in the event of a write off and so overstated the actual value of the (used) aircraft at the time of import. It argued that duty should be assessed on the basis of the independent valuation report.

The Authority canvassed the various alternative potential valuation methods that might be utilised by Customs in assessing the aircraft values. It said that, had it had the jurisdiction to do so, it would have preferred the appellant’s valuation approach in the circumstances of the case, meaning that the independent valuation on which the appellant sought to rely was the appropriate valuation and accordingly that duty had been over assessed.

Unfortunately for the appellant however, late payment of the filing fee meant that this was to no avail and the appeal was dismissed.

For further information contact Karl Stolberger Partner

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