Australia: Tougher penalties under the new Customs Infringement Notice Scheme commencing on 1 February 2014

The Infringement Notice Scheme (INS) allows the Australian Customs and Border Protection Service (ACBPS) to issue infringement notices for strict liability offences.

These are offences in the Customs Act 1901 for which there are few defences, such as false and misleading statements resulting in a loss of duty, false and misleading statements not resulting in a loss of duty, failure to meet reporting requirements and breaching licence conditions.

From 1 February 2014, changes to the INS mean that tougher penalties will apply to a wider category of strict liability offences.

What are the changes effective from 1 February 2014?

The Customs and AusCheck Legislation Amendment (Organised Crime and Other Measures) Act 2013 (AusCheck Act) received Royal Assent on 28 May 2013 and made significant changes to the INS.

The changes greatly increased the penalties payable for offences to which the INS applies. The intention of the changes was to increase compliance and to make it easier for the ACBPS to issue infringement notices.

Many aspects of the INS are now contained in the Customs Amendment (Infringement Notices) Regulation 2013 (Cth) (Regulations). These Regulations were approved on 12 December 2013 and are due to commence on 1 February 2014.

In addition to the Regulations, the ACBPS also issued, in October 2013, a draft Infringement Notice Scheme Guide (INS Guide) for industry comment. The ACBPS has indicated that an updated guide on the INS, incorporating 'aspects' of industry feedback, will be published on the ACBPS website before the Regulations commence. The updated guide is not yet on the ACBPS website.

What should you do if you receive an infringement notice?

First step

The first step is to check whether the infringement notice complies with the Regulations. The infringement notice must contain:

  • the date of issue of the notice;
  • brief details about the alleged contravention; and
  • a statement that payment is not an admission of guilt or liability.

Second step

A decision maker must have reasonable grounds to believe that the person has committed a prescribed offence before issuing an infringement notice. The INS Guide does not elaborate on the meaning of 'reasonable grounds' but sets out an inclusive list of circumstances that may influence whether the ACBPS is more likely to issue an infringement notice or take enforcement action, including whether:

  • the alleged offence is an isolated incident;
  • the facts of the alleged offence are straightforward or in dispute; and
  • the alleged offence poses a significant risk to the border or the collection of revenue.

Third step

A decision maker must issue an infringement notice either within four years of the day the alleged contravention took place, or within 12 months of the day the alleged contravention is detected, whichever comes first.

It is important to check timing requirements, as our experience is that this is often overlooked by the decision maker.

Your options

Assuming the infringement notice has been validly issued, your options are generally:

  1. Pay the penalty within the period required for payment. In most cases, payment will be due within 28 days after the day the CBFCA gives you the infringement notice. If you do this, you will not be liable to be prosecuted in a court for the alleged contravention. The Regulations also provide that any liability will be discharged, you are not regarded as having admitted guilt or liability for the alleged contravention and you are not regarded as having been convicted of the alleged offence.
  2. Request an extension of time in which to pay the penalty. The INS Guide sets out several factors the request should contain, including the circumstances as to why you are unable to pay by the due date, and whether you are requesting a withdrawal of the infringement notice.
  3. Request the ACBPS to withdraw the infringement notice. In most cases, this request must be made before payment is due. The ACBPS may also withdraw the infringement notice of its own volition. The INS Guide states that in some cases, the Infringement Officer who issued the infringement notice is the person who is best placed to consider the withdrawal request. As the issuing officer, they will be aware of the factual issues involved to make an informed and timely decision. In practice, this may create an unusual situation where the same person is both judge and jury. In those circumstances, it seems unlikely that the issuing officer will withdraw a notice unless significant additional factors have subsequently come to light.
  4. Refuse to pay the penalty, in which case the ACBPS may prosecute you for the alleged offence, or refer the matter to the Commonwealth Director of Public Prosecutions for further action.

Offences to which the new INS applies

The Regulations contain an extensive table setting out the offences to which the INS applies. These include:

  • false or misleading statements;
  • moving, altering or interfering with goods subject to Customs' control without authority;
  • failure to meet various reporting requirements;
  • entering goods that have already been entered for home consumption;
  • breach of conditions of a depot licence;
  • breach of conditions of a broker's licence; and
  • offences in relation to prohibited imports and exports.

Transitional arrangements

If the offence occurred before 1 February 2014, the existing penalty rates will apply.

If the offence occurs on or after 1 February 2014, the new INS will apply, as will the new penalty regime. The penalty specified in an infringement notice can be up to $2,550 for an individual or $7,650 for a body corporate.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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