Background
A mid-sized fashion distributor based in Sydney, sources apparel from manufacturers in China. The company’s business model is highly seasonal, with shipments aligned to fashion cycles and retail promotions. During past two years they have faced several issues with hold up by Australian Border Force (ABF), therefore client has reached out to LHP for assistance.The Issue
Upon arrival, the shipment was flagged by the ABF for non-compliance due to:1. Incorrect HS Code Classification
- HS Code used on documentation provided by supplier in China does not match with the actual product.
2. Missing Labelling Compliance
- Some garments lacked the mandatory care labels in English as per the Australian Competition and Consumer Commission (ACCC) textile regulations.
- Absence of country-of-origin labels on several product lines.
3. Valuation Concerns
- ABF questioned whether the declared unit cost matched fair market value, suspecting under-valuation to reduce duty liability.
Resolutions
The key issue is the previous Custom Broker did not explain the ABF requirements to the importer and supplier.- Provide Guidance to Importer and Supplier: Explain the requirement to supplier on how to draft documents such as commercial invoice and packing list. Provide document template for importer to refer to. Conduct a full audit of HS code classification.
- Labelling Rectification: A bonded warehouse was used to relabel garments with proper care instructions and country-of-origin tags before release.
- Valuation Review: Provided supporting documents (supplier invoices, contracts, and market price analysis) to satisfy ABF’s valuation concerns.
