Carnet Expiry, Sale of the Crane and Late Re-export
Delta Build Ltd imports a 60-metre tower crane and 12 modular formwork sets under an ATA carnet for a six-month bridge project. The carnet is valid from 1 January to 30 June 2026. The crane is imported on 5 January and the formwork on 12 January. Customs grants no extension. The bridge is delayed: on 15 August Delta sells the crane to a local subcontractor for $420,000. The crane's new value at import was $1,200,000; the duty rate is 8% and VAT is 15%. The formwork is valued at $300,000 and is exported on 20 September. National rules provide that temporary admission ends on the carnet expiry date; goods sold or disposed of while under temporary admission must be regularised by a home-use declaration; duty is charged on the import value depreciated straight-line at 20% per year, counting each commenced month; late regularisation attracts a penalty of 10% of duty; late re-export attracts a penalty of 5% of value, and the guarantee may be called until export is proved.
1. Compute the duty, VAT and penalty payable when the crane is regularised on 15 August, and state its status between 1 July and 15 August.
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Temporary admission ended on 30 June. From 1 July to 15 August the crane was no longer validly under temporary admission, so it was in an irregular status and the carnet guarantee was exposed. The national rule values the crane at import value depreciated straight-line at 20% per year, counting each commenced month. From 5 January to 15 August is eight commenced months: 20% × 8/12 = 13.333% depreciation. Depreciated value = $1,200,000 × 86.667% = $1,040,000. Duty = 8% × $1,040,000 = $83,200. VAT base = $1,040,000 + $83,200 = $1,123,200; VAT = 15% × $1,123,200 = $168,480. Penalty = 10% × $83,200 = $8,320. Total payable = $83,200 + $168,480 + $8,320 = $260,000. The sale price of $420,000 does not set the customs value because the stated rule uses depreciated import value.
2. What is the position of the formwork exported on 20 September? Is duty payable?
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The formwork was also irregular after 30 June, but it was ultimately re-exported. That does not automatically make the late export a home-use disposal; the primary obligation is to extinguish temporary admission and prove export. Customs should accept the export evidence and close the temporary admission, but the breach is separate: a late-re-export penalty of 5% of value applies, i.e. 5% × $300,000 = $15,000, and the guarantee may be called pending proof. Duty is not payable merely because the re-export was late if customs accepts that the goods left the country; duty would arise only if the goods were disposed of domestically or cannot be accounted for. Delta should obtain a certified exit record and ask customs to regularise the carnet without a home-use declaration.
3. What should Delta have done differently, and what options remain after 20 September?
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Before 30 June Delta should have applied for an extension of temporary admission or re-exported the goods. For the crane, once the sale was contemplated, it should have filed a home-use declaration before transfer, using the depreciated-value rule, and paid duty and VAT. A carnet cannot simply be transferred to the buyer. Remaining options are to regularise voluntarily, pay the duty, VAT and penalty, and ask customs to treat prompt correction as mitigation; to provide export evidence for the formwork; and to seek a payment plan if cash flow is an issue. Delta should also check whether the subcontractor is registered and whether VAT can be recovered. Prospectively, it should diarise carnet expiry, appoint an owner for temporary admissions and build a 60-day pre-expiry review.