Most goods that enter Australia require an identifying eight [8] digit number known as a classification to be declared on the customs entry. This classification is linked to Community Protection questions that all Government departments who regulate imported goods into Australia ask the customs broker to answer. Over 98% of the merchandise which is traded internationally is classified in terms of the Harmonized System. The first six [6] digits are the same throughout the world. There are 212 countries, territories or customs or economic unions applying the Harmonized System
As a TAFE NSW teacher for twelve years who teaches the subject classification, I always advise my students that a classification is like learning another language, everything that you touch, smell, eat or use has had an eight-digit number applied to its identification. Those that have been classifiers or customs brokers for some time will agree that we do think with this second language on a daily basis whenever we see things at home or at the workplace.
The ABF can and does rely upon the Customs Act 1901 Section 243T and Section 243U whenever an incorrect classification has been communicated on an import and or export declaration. The ABF reported that between July 2018 and June 2019 the third highest common error on an import declaration was the tariff classification; in the same period interestingly the third highest common error on an export declaration was also the tariff classification. This shows that the people who are classifying the goods for import or export are not fully conversant with the classification process; one way of assisting these import and export staff would be to make tariff advices available in an open-window for industry.
You may be asking, what do I mean by an open-window? In the United States whenever anyone asks the Customs and Border Protection service for a tariff ruling, the answer to the ruling from the CBP is open to everyone to see; the system is called the Customs Rulings Online Search System [CROSS]; it also shows rulings that have been revoked or disputed and the associated history.
The European Commission also has an open-window for their classification rulings, it is known as Binding Tariff Information [BTI]; one of the advantages with the BTI system is that quite often there is a digital image of the goods being ruled upon; as they say “a picture says a thousand words”
Whenever member countries have similar questions about classifications, the World Customs Organization [WCO] Harmonization Committee regularly publishes a classification decision which assists with uniformity to the various customs bodies and to industry.
The Australian importing community should be able to rely upon the ABF classification rulings that are made on a daily basis; a tariff advice is currently not made public for other professionals within the industry to read or debate.
If a customs broker at XYZ Pty Ltd is unsure of how to classify goods, they need to apply for a tariff advice and wait for the ABF’s decision, only XYZ Pty Ltd and their importer would know the result of that tariff advice. If another customs broker at ABC Pty Ltd has similar goods and is unsure of where those goods should be classified, they also need to place a tariff advice with the ABF. It is double handing and not very productive to either the ABF tariff advice section or to importers and their brokers. If the ABF had an open-window like CROSS and BTI where the tariff advice decision could be viewed — the ABF and industry would all be on the same page in regards to classifications. Another benefit of an open-window is that the third highest common error on an import declaration would not be a tariff classification.
Peter McRae, CEO Platinum® Freight Management Pty Ltd, Adjunct Lecturer with the Centre for Customs and Excise Studies, Charles Sturt University, Master of International Customs Law and Administration, Master of International Revenue Administration