Customs accused of jumping the gun

Press, 13 December 1985, Page 23

Customs accused of jumping the gun

PA Wellington The Apple and Pear Board has accused the Customs Department of jumping the gun by issuing a backdated sales tax bill of $3.8 million for Just Juice marketed as pure when it contained an additive.

The board’s genera] manager of processed foods, Mr Jerry Wellington, has criticised the department for not awaiting the outcome of the board’s appeal to the Minister of Customs, Mrs Shields, before claiming the tax. “Issuing an assessment for unpaid sales tax before it has been decided that the goods are actually subject to tax is premature and unnecessary,” said Mr Wellington.

The row centres on Just Juice’s containing dimalic acid but sold as pure fruit juice between its launch in late 1981 and early 1984. Fruit juice, as defined in

the Food and Drug Regulations, is exempt from the wholesale sales tax of 20 per cent imposed on all fruit drinks and soft drinks.

Customs argues that the board should have been paying tax on Just Juice for at least the year to February, 1984, because the product did not meet the legal definition of fruit juice.

The board claims to have done its best to ensure that Just Juice complied with the regulations at all times. It says it has been caught up in a misunderstanding between, the Customs and Health departments over interpretation of identical rules.

The board’s process of removing the taste and colour from apple juice before adding other juices took away natural malic acid which is the indicator the Health Department uses to measure purity. The board, therefore, had

to add dimalic (synthetic malic) acid to give Just Juice the minimum amount the department requires. The department recognised the difficulty and secretly allowed the board to market the product as fruit juice for about two years.

The deal became public in March after the department ordered its Wellington office to drop legal action against the board for using dimalic acid in what was claimed to be fruit juice. Mr Wellington said the board was awaiting the advice of its lawyers before taking further action. If its appeal to Mrs Shields fails, it could seek a review of the claim in the High Court. Mrs Shields has referred the board’s submissions to the Solicitor-General, Mr Paul Neazor, Q.C., d for a legal opinion.