Compliance Update - Planned Increase in Australian Customs Penalties
Australian Customs is developing proposed increases in the penalties payable under its infringement notice scheme, as well as creating new infringement notice offences. The changes form part of Customs' increasing crackdown on organised crime, where Customs considers that tighter border controls will reduce organised crime.
The changes will increase the liability exposure of vessel operators, warehouse/depot operators, stevedores and freight forwarders/customs brokers.
That means both Owner and Charterer Members of Skuld should pay careful attention to these new regulations as they will potentially affect both Owner and Operators.
Infringement Notice Scheme
Offences for breach of Customs laws are generally punishable by prosecution in court, requiring a judgment of guilty before penalties are applied.
The Infringement Notice Scheme is an alternative to prosecution in court and is described by Customs as "an administrative enforcement remedy". A person does not have to be found guilty of breaching a Customs law before an infringement notice can be issued. All that is required is that a Customs officer has reasonable grounds for suspecting that the person has breached a relevant Customs law.
That means Members may be served with notices before any formal investigation is finalised or a final finding of fault is made.
An infringement notice sets out details of the suspected breach and gives the recipient two options:
- Pay the penalty stipulated; or
- Attend court and challenge the infringement notice
The advices are that such notices may levy fines at ΒΌ of the maximum penalty which could follow a court conviction.
Further, payment of an infringement notice is not taken as an admission of liability and is not recorded as a criminal conviction.
This is considered to be an incentive to settle such infringement notices quickly, but Members should seek advice before doing so as they need to ensure that they are not prejudicing contractual or insurance indemnities and remedies by agreeing to pay the fine absent a formal finding of fault.
Infringement Notice Offences
Infringement notices can be issued for a range of suspected breaches of the Customs laws, including the following below. It would appear that even minor errors and oversights could result in an infringement notice being issued.
Vessel operators
Failure to meet reporting requirements for impending and actual arrival/departure of ship and cargo/persons/crew.
Warehouse/depot operators and stevedores
Failure to keep goods safely, failure to account for goods, breach of conditions of depot/warehouse licence, failure to notify release of cargo from wharf, failure to keep commercial documents for five years.
Freight forwarders/customs brokers
Breach of conditions of customs broker's licence, failure to lodge customs cargo manifests, failure to keep commercial documents for five years.
Increased Penalties
Presently, the maximum infringement notice penalty for any standard offence is $2,040.00 for either an individual or a corporation.
However, Customs proposes to increase the maximum penalty per offence to $2,500.00 (in the case of an individual) and $7,650.00 (in the case of a corporation). Customs further warns that, if compliance is not improved, it may consider further increasing the maximum penalty per offence for corporations up to $12,750.00 (i.e.: in case of repeat offences).
The above maximum penalties apply to each offence. Typically, where one offence occurs, multiple other associated offenses will also have occurred. For example, the offence of failing to report passengers/crew applies to each individual passenger/crewmember that is not reported. Companies can therefore expect to receive multiple infringement notices arising out of the same set of circumstances.
That means cumulative penalties, quickly amounting to a large sum, could be imposed.
The Third Way?
In addition to the options to pay an infringement notice or dispute it in court, there is an additional option of requesting that it be withdrawn. Generally, Customs will not consider withdrawing an infringement notice unless the recipient can very conclusively demonstrate that it did not commit the alleged offence or there is additional information which has not been considered by Customs in relation to the circumstances.
However, there is no right of internal or administrative appeal of a decision not to withdraw an infringement notice. The only option would then be to go to court and dispute the notice.
Recommendations
All transport industry organisations should:
- Be aware of their obligations under the Customs laws - ignorance of the law is no excuse;
- Implement workplace policies to align operational practice with Customs responsibilities - which should help avoid breaches and/or may be used to support a withdrawal request or dispute of an infringement notice;
- Respond to any potential infringement enquiries by Customs early - generally, Customs will first contact an organisation in relation to suspected breaches. Organisations should ensure that they provide all countervailing information to Customs in an effort to avoid an infringement notice being issued; and
- Seek withdrawal early - any withdrawal request should be submitted in accordance with the formal requirements that apply and supported by all supporting information/considerations.
The new laws are expected to come into force early next year. Given Customs' increased attention on organised crime by tightening up the regulation of the import/export of goods, we can expect that the new Infringement Notices Scheme will be exercised liberally and enforced strictly.
In case of queries or concerns, Members should seek to contact the Association without delay. If a vessel is confronted with an Infringement Notice, immediate contact should be made.
The Association is grateful to Messrs. Norton White for permitting the republication of material from their Compliance update of 19 November 2013.