Pegasus Supply Solutions Pty Ltd and Collector of Customs

This matter concerned an application by Pegasus Supply Solutions Pty Ltd (the Applicant) to review a demand issued by the Collector of Customs (the Collector) under section 35A(1) of the *Customs Act 1901* (Cth). The dispute arose from a stock count conducted by the Collector at the Applicant's licensed warehouse, which identified a shortfall in excise equivalent goods. The Applicant was subsequently served with a demand for payment of customs duty on these goods.

The primary legal issue before the Tribunal was whether the Applicant had satisfactorily accounted for the missing excise equivalent goods in accordance with section 37 of the *Customs Act 1901* (Cth). This involved determining whether the goods were genuinely missed during the stocktake and subsequently accounted for through the Applicant's reconciliation process, or if they represented an unaddressed shortfall for which duty was payable.

The Tribunal found that the goods in question were more likely missed during the June 2016 stocktake and had been satisfactorily accounted for in the Applicant's Exhibit 4A reconciliation. The Tribunal reasoned that the goods remained subject to customs control until they were used in manufacture, entered for home consumption, or exported. However, in this instance, the evidence supported the conclusion that the shortfall was a result of an error in the stocktake rather than an unaccounted-for removal of goods.

Accordingly, the Tribunal set aside the Collector's August 2017 Demand and remitted the matter to the Collector for redetermination. The Tribunal directed that the Applicant should only be considered to have failed to account for goods in relation to items specifically indicated in Schedule 4 as having a shortfall quantity.