Clothing firm charged with evasion of duty

Press, 3 November 1983, Page 4

Clothing firm charged with evasion of duty

A Christchurch clothing company, MacAlisters Apparel, Ltd, was alleged in the District Court yesterday to have evaded $8789 in customs duty by importing 200 fur jackets made in an Eastern country and replacing the labels with “Made in Australia” labels to take advantage of duty concession.

The Court heard in evidence yesterday of concern expressed by the fur trade of its vulnerability to imports “through Australia’s back door,” under the Closer Economic Relations Agreement. Complaints had been made to the Customs Department, or members of Parliament, by representatives in the fur trade and by the Canterbury and the Otago Manufacturers’ Associations.

The company has denied a breach of the Trade and Industry Act on January 31 by importing 200 fur jackets, valued at $19,300. The charge alleges that their importation was prohibited by the Import Control Regulations in that the company did not comply with a special condition in the licence that the jackets were to be the produce or manufacture of Australia.

The case, which is being heard before Judge Paterson, will continue today. Mr D. J. L. Saunders appears for the Customs Department and Mr N. A. Till for the company. Mr Saunders, outlining the department’s case, said the garments were imported under a licence issued to the company which had a special condition that it was available

for goods manufactured in Australia, and supplied by an Australian manufacturer, Briggs and Neeter, Ltd. A customs officer released the garments to the company after seeing that they bore “Made in Australia” labels.

A tariff concession provided that no duty was payable on their importation.

Mr Saunders said that, soon after the coats were released, the department received information which gave rise to doubts as to whether the country of origin had been correctly declared.

Two local fur manufacturers, Messrs John Collingwood aiid Barry Sligh, showed to an officer of the department a jacket. purchased from the defendant

company. They pointed to a number of features which they claimed indicated that the jackets were manufactured in a Far Eastern

country. The manager of Mac Alis-, ters Apparel, David Mac Alister, was spoken to and stated that the garments were manufactured by Briggs and Neeter and that they qualified, under the terms of the licence.

By verbal agreement the garments were withdrawn from sale pending further inquiries, but after they were found on February 18 to be again on sale a total of 91 garments were seized. The balance of 109 apparently had been sold. The department at that time received a report from Mr Evan Tosh, principal of a Dunedin firm of fur dressers and dyers, to whom it had sent a sample jacket. Mr Tosh concluded that they were produced in Korea or Hong Kong. Some of the jackets were then submitted to the D.S.I.R, for analysis and a scientist, Peter Rudolf Hentschel, found in one jacket the remains of a label bearing the letters* “NG.”

Many of the jackets inspected had some damage to the seam, particularly in the area at the label

.The department contended that the jackets were manufactured in an Eastern country and, upon importation to Australia by Briggs and Neeter, were relabelled and sold to New Zealand. Inquiries in Australia

showed that Briggs and Neeter had imported madeup jackets from Korea and Hong Kong last year. Mr Saunders said that if, as the department alleged, the jackets did not qualify under the terms of the regulation on the licence, it had important consequences in regard to tariff classification and calculation of duty.

At the normal tariff rate of 45 per cent, a sum of $8789.85 would have been payable. In evidence for the department, Kevin Francis Knowles, a supervising customs officer, said that Messrs Sligh and Collingwood saw him on February 9 and complained about the department’s lack of progress in investigating the importation of fur jackets from Asia. , ■ They showed him a jacket

which had a stick-on label, “Made in Australia.” The lining was removed and a stamp could be seen with Chinese lettering. The licence under which the defendant company imported the 200 coats provided a specific concession, under terms of the trade agreements between Australia and New Zealand, that they could be imported free of duty from the firm

specified on the licence. Briggs and Neeter Pty, Ltd, Melbourne. When he interviewed Mr Mac Alister about the importation, Mr Mac Alister told him that, as far as he. was concerned, the jackets were of French rabbit, made up in the Melbourne factory. He had required them to have “made in Australia” labels, because of requirements for importation under the terms of the licence.

Cross-examined, Mr Knowles said Messrs Sligh and Collingwood made their complaint to him on February 9. The department had also received complaints from various organisations, including the Canterbury Manufacturers’ Association,

the Otago Manufacturers’ Association, and representations made to members of Parliament from persons in

the trade. Mr Sligh had previously complained on behalf of his company and Mr Collingwood had also written to the department. The first complaint had been made on December 23.

Mr Knowles agreed that Messrs Sligh and Collingwood would have a personal interest in not having the jackets imported into New Zealand.

Mr Hentschel said the “made in Australia” labels appeared to be an iron-on type. He found the letters “NG”

on a portion of label, and on various jackets he examined there was damage to the seams and linings near the labels. Cross-examined, he was asked whether the damage seen in the label areas could be consistent with the labels

having been affixed irregularly, and having to be removed and replaced. He said ' his findings could be consistent with this. Barry Sligh, a company director, said he became aware of imports of fur jackets last year. He said that with C.E.R. provisions the trade would be “very vulnerable to imports through Australia’s back door.” He became concerned about the jackets stocked by the defendant company, and purchased one and arranged to open the lining in the presence of Mr Knowles to see if there were markings inside which indicated that they were not made in Australia. He detailed various factors which indicated to him

that they were made in an Eastern country. Mr Sligh said the garments were identical with

those he had seen manufac- > tured in. Korea. i He had been offered these in Korea at the same prices ; as Briggs and Neeter in 1 Melbourne were supplied them—sUS32 to SUS4O for one style of jacket and

SUS 34 to SUS 43 for another style. In New Zealand they would cost close to SNZ3OO to the wholesaler. Cross-examined, Mr Sligh said he formerly employed Mr Mac Alister and two others who left to start up a competing business. When it was suggested that Briggs and Neeter had

had some jackets made up in other countries, including Korea; and manufactured others in its own factory, Mr Sligh said that “no way could they make jackets in Australia for $3O to $40.”

He said it would cost at least four to five times that amount to make them in Australia. It would not make economic sense for the Australian company to make them, he said. . (Proceeding ? •