UK fresh produce importers will be on high alert after a major court case highlighted an ongoing issue over deceptively packaged produce.
A large-scale importer has confirmed it will not appeal further against a huge duty bill after it was found to be importing falsely marketed garlic.
FMX Food Merchants Co Ltd, based in Tottenham, London, was slapped with a £370,872 bill after it declared garlic as being of Cambodian origin that was in fact from China and therefore subject to Anti-Dumping Duty (ADD), an import duty charged in addition to normal customs duty.
The volumes imported by FMX in 2004 - more than 1,100 tonnes - would have represented around a third of Cambodia’s entire exports that year but the company said it was unaware that the garlic was not Cambodian.
The case exposed difficulties in the system that European authorities have looked to address. In 2005, the EU was moved to issue a notice to importers warning them of Chinese garlic exceeding the annual quota of 13,200t and in 2007, regulations around country of origin certification on garlic were stepped up for Malaysia, Vietnam, the United Arab Emirates, Lebanon and Iran.
FMX appealed the original bill which covered the period from February to October 2004 at two first-tier tribunal hearings by HM Courts & Tribunals Service in April and September last year, with a ruling made on 22 December 2010 claiming that FMX’s complaint was submitted too late and recommending in favour of HM Revenue & Customs (HMRC).
FMX confirmed to FPJ it does not intend to take the case any further and has paid the full amount. In theory, it could have appealed to an upper tribunal, then to the High Court, and the Supreme Court.
An FMX spokesperson told FPJ: “It has been paid and we have moved on. We imported it in good faith. There were no tricks on our side. The business is doing well.”
Cambodia has an exception - under the “Everything but Arms” amendment of the EU’s Generalised Scheme of Preference (GSP) - eliminating duty on all goods other than arms exported by a number of the least developed countries.
The document dismissing the appeal, obtained by FPJ, reveals Chinese garlic was packaged in boxes decorated with Cambodian temples, and follows an in-depth investigation by the European Anti-Fraud Office (OLAF).
FMX defended its position saying it was unaware of the problems in the case or the general trend. It said Cambodian authorities “at least ought to have known of the alleged large-scale irregularities concerning large-scale export of garlic”.
Philippe Binard, general delegate of Freshfel Europe, said: “Following the OLAF investigation, the regulations were reinforced. Importers must make sure they are compliant with the term of existing regulations for tariff quotas, licence systems and certification of origin.”
Freshfel is in talks with the EC to look at amending garlic quota tariffs further after they were enlarged to address “the modern European market,” according to Binard.
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