1493005181049 - Federation Clothing’s fine appeal dismissed

Federation Clothing’s fine appeal dismissed

Federation Clothing’s appeal against a fine of $450,000 for understating the value of goods imported and evading hundreds of thousands in GST, has been dismissed.

The appeal was made by Federation, Public Gallery and Only You, all companies in liquidation and with the same directors, Jenny Joblin and Nicholas Clegg. Public Gallery was fined $45,000 and Only Found You, $20,000.

The charges were laid last year after New Zealand Custom Service found the three companies had undervalued imported goods from China between 2010 and 2014 by about $2.8 million. As a result they avoided paying about $680,000 in custom duties and GST.

The appeal was made on two grounds: that the imposed fines were excessive and that the judge erred in principle by failing to order restoration of the funds held by Customs to Federation and Public Gallery to obtain the release of the container.

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Joblin was also sole director of Minti Design, another company that imported clothes from China.

When it became aware of the offending, Customs seized a container of goods worth $430,000 that had been imported by all four companies.

The appellants said the Court should consider their financial capacity as they are insolvent.

But the court dismissed the claim on the basis that the offending was serious as it occurred over four years and involved 112 erroneous import entries and the companies evaded more than $600,000 in customs duties and GST.

The second ground of appeal, was argued on the basis that third party creditors such as ASB Bank were innocent and would suffer loss if funds borrowed from the bank to pay for the release of the container seized by Customs were not returned.

This appeal was also dismissed because the Court said ASB’s potential losses did not amount to a compelling argument that outweighed the legislative policy of forfeiting goods involved in theoffence.

According to the judgement released on March 28, the sum of about $190,000 remains outstanding to Customs in respect of unpaid duties. 

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