Compliance Update
December 2012
Contents
Message from the National Manager Compliance Assurance,
Customs and Border Protection Importations of Soju – Spirit not wine Compliance program industry information sessions
Engaging with international stakeholders –
working ahead of the border
Submitting documents and notice to produce
messaging for red line refund applications
Use of Air Cargo report self-assessed
clearance declarations (ACR-SACs)
Compliance expansion measure
Increase in the value of a penalty unit
Industry compliance results
Compliance terminology
Find us on the internet
Tell us what you think…
Customs Watch
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December 2012
Compliance Update
Message from the
National Manager Compliance Assurance,
Customs and Border Protection
This will be the last edition of Compliance Update for 2012. As I
look over the past nine months, since commencing in the role of
National Manager Compliance Assurance Branch, I am satisfied with
the progress we have made strengthening our compliance program
including our relationship with Industry. Feedback from our Industry
Engagement Sessions and the Compliance Update publication is
encouraging and we will continue to refine both as well as looking at
other mechanisms to build productive partnerships with those involved
in the trading system.
The December 2012 edition of Compliance Update focuses on our
work internationally through the article ‘working ahead of the border’.
There is also some important information about the requirements
when using cargo report self-assessed clearance declarations and
a reminder about submitting documents and notices to produce
messaging for red line refund applications.
I would like to take this opportunity to wish you all a very happy
and safe Christmas. If you do become aware of incidences of
non-compliance, please forward any information to
[email protected]
Anthony Seebach
National Manager Compliance Assurance
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December 2012
Compliance Update
Importations of Soju – Spirit not wine
Soju is a clear, sweet, distilled spirit originally from Korea. Soju was
traditionally distilled using the same processes as for arak in ancient
Persia, but using fermented rice. Now it can be made from a range of
starches including potatoes, wheat and tapioca. It is not the same as
sake or wine and it is typically about 20 per cent alcohol by volume.
Overseas it retails for as little as US$3-5 for a 300ml bottle.
Compliance Assurance Branch discovered an ongoing pattern
of misreporting of imported Soju. Importers often misclassify it to
reduce their duty liability. They sometimes claim that a supplier has
oversupplied an ordered product, or that the wrong goods were sent
in error. However, the detected level of non-compliance suggests that
there are continuing deliberate efforts to evade controls at the border.
Non-compliance is distorting local supply, as the offending importers
can undercut their law-abiding competitors. To address this extensive
targeting is now underway. Twelve containers have been held to date
and multiple importers are involved.
Where we detect non-compliance we have a variety of treatment
options available to us. These range from education and warnings,
administrative action such as suspension and revocation of licences
and the application of infringement notices, through to prosecution.
We can also refuse to allow re-export of the relevant goods. In such
cases, the importer would have three options only:
1. pay the revenue, clear the goods and then re-export while claiming
a drawback
2. destroy the goods under Customs Control at the expense of the
importer, or
3. abandon the goods.
Importers and their agents must be thorough in dealing with any
importations of Soju.
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Compliance Update
December 2012
Compliance program industry
information sessions
Compliance Assurance Branch delivered the compliance program
industry information sessions in five capital cities – Melbourne, Sydney,
Brisbane, Perth and Adelaide from 22-30 August 2012. This initiative
was built upon the positive feedback provided from Industry participants
who attended the previous sessions held in 2011.
The information sessions provided information about Customs and
Border Protection’s compliance approach, changes to customs depot,
warehouse and broker licence conditions, findings in year 2011-12 and
areas of focus for the Compliance Program for 2012-13. In addition,
it highlighted potential areas for change in the regulatory environment
such as new measures aimed at strengthening the cargo supply chain
against criminal infiltration.
The purpose of the information sessions was to assist the import and
export community to understand Customs and Border Protection’s
compliance approach and our priorities in the year ahead, as well as
strengthening our working relationship with Industry.
We asked participants at the sessions to provide feedback on a
questionnaire; most feedback received was positive and constructive.
Forty-seven per cent (249/532) of attendees returned the completed
feedback forms at the end of the sessions. Please refer to the chart
below for responses regarding question 2-5 on the questionnaire.
In terms of improving the sessions, we received a number of comments,
including for example that we invite the Department of Agriculture,
Fisheries and Forestry to participate, run the sessions twice a year,
provide additional practical examples of compliance issues and some
people would have liked to break the session up, with one part for
brokers and another for others. We are considering all feedback and
will use that information to improve the content and structure of the
sessions that will be delivered in 2013.
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Compliance Update
Engaging with international stakeholders –
working ahead of the border
Border management in Australia is characterised by a desire to
create a seamless border for legitimate trade and travel intervening
only where people or goods present a risk to security, safety or the
economy. There is growing pressure on the border arising from the
increased volume and complexity of the movement of goods and
people crossing the border. Increased cooperation and collaboration
with overseas counterparts and foreign governments is required to
respond to challenges like these.
Customs and Border Protection collaborates with a range of
international customs administrations and law enforcement agencies.
Such cooperation is critical to our ability to work ahead of the physical
border to identify and manage risks early. Strategic trade data analysis
supported by our engagement with our international counterparts
can assist us to identify emerging risks and to detect and deter
individuals and companies who attempt to disguise their activities with
sophisticated international trading operations.
December 2012
International cooperation was a key area of development and
expansion for the compliance program during 2011–12 and it has
continued to be in 2012-13.
On 19 September 2012, National Manager Compliance Assurance,
Anthony Seebach, signed an agreement with United States
Immigration and Customs Enforcement (US ICE), which allows
Customs and Border Protection access to the Data Analysis and
Research for Trade Transparency System (DARTTS). The US ICE
developed DARTTS is an information technology system that enables
the matching of domestic and foreign trade data. The DARTTS
technology is highly regarded internationally as a tool for identifying
trade related offences. US ICE has already established bilateral
data exchanges using DARTTS with countries in its region such as
Argentina, Brazil, Colombia, Paraguay, Mexico, Ecuador, Panama and
Guatemala.
Customs and Border Protection officers are using access to DARTTS
to compare United States export/import data with Australia import/
export data to identify anomalies and discrepancies not previously
visible in the value, quantity and description of goods, which could be
indicative of:
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Compliance Update
• the movement of prohibited or restricted goods
• unfair trade practices such as dumping
• duty evasion
• the abuse of intellectual property rights
• improper benefits from free trade agreements, tariff concession
orders and the like, and
• trade based transfer pricing and money laundering.
We are pursuing trade data exchanges with a range of other countries
including India and China.
December 2012
Submitting documents and notice to produce
messaging for red line refund applications
The non-submission of documents to the National Refunds Centre
(NRC) for red line refunds has continued to be a major factor
contributing to refund rejections. In 2011-12, just over a third of refund
rejections resulted from no documents received or no responses
to requests for further information generated via Notice to Produce
Documents (NPD) messaging in Integrated Cargo System (ICS). This
compared favourably with the previous financial year where just over
half of all rejections were the result of such factors. The reduction is
the result of the NRC’s increased focus and intervention in the nonproduction of documents in the refunds environment.
The NRC considers that the non-production of documents for red
line applications, or failure to respond to an NPD request to be a
serious non-compliance issue, which may result in increased levels of
Customs and Border Protection intervention including:
• direct communication with importers advising that their nominated
Customs broker has not submitted documents for refund
assessment
• application of the full 30 day service standard for assessment of
refunds
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Compliance Update
• requests for Customs brokers with high levels of refund rejections
to develop strategies to achieve ongoing compliance
• increased levels of Customs and Border Protection interventions in
the real time environment for brokers with continual non-compliant
behaviour, as this reduces our level of assurance, and
• referral of the Customs broker to the National Customs Brokers
Licensing Advisory Committee for disciplinary proceedings.
We remind the owners of goods and their agents of their record
keeping obligations.
Requests for documents are generated via ICS messaging and are the
primary communication method for the NRC if further information is
required to verify particulars in refund applications. If messages are not
being received and you interact with Customs and Border Protection
via electronic data interchange (EDI) software and the web, it is most
likely that the electronic NPD message is not being acted upon by the
third party software or the nominated EDI email address is incorrect.
EDI software can be tailored accordingly and brokers should discuss
this with software developers for incorporation into software packages.
December 2012
Please be advised that the ICS is currently experiencing issues in
the refunds environment related to outbound messages for import
declaration amendments resulting in a refund hold. The issues include
the omission of the following messaging advice:
SUBJECT TO RED LINE PROCESSING. DOCUMENTS MUST BE
SUBMITTED PURSUANT TO S71DA OF THE CUSTOMS ACT.
Until the issues are rectified, industry is advised that commercial
documents for refunds with a “HELD” status 24 hours after lodgement
should be forwarded to the National Refunds Centre for assessment at
[email protected].
For any queries related to submitting refund documents for the NRC,
please email [email protected].
For technical support: email [email protected] or
phone 1300 558 099.
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December 2012
Compliance Update
Use of Air Cargo report self-assessed
clearance declarations (ACR-SACs)
A large number of consignments enter Australia each year with
freight forwarders and others availing themselves of the combined
cargo report and self-assessed clearance communication method
(Communicators). Section 71 of the Customs Act 1901 sets out the
requirements for communicating via ACR-SACs.
Customs and Border Protection uses ACR-SACs to risk assess goods
entering Australia and relies on accurate and timely ACR-SACs to
perform this function effectively.
Our compliance activities indicate that there is some abuse of ACRSACs including their use for alcohol, tobacco, permit goods and
goods with a value in excess of AUD $1000. The following examples
illustrate this point:
1
Goods Description:
Gross Weight:
Declared value:
After intervention
Goods Description:
Camera
45.4 kg
US $1
2
Declared value:
Action:
Goods Description:
Gross Weight:
Declared value:
After intervention
Declared value:
Action:
Value changed to $520,000
Recovery of $52,238.55 GST shortfall
Garment
20 Kg
1.11 EUR
Value changed to 8640 EUR
Recovery of $1111.96 duty and
$1374.00 GST
Our compliance activities also indicate that Communicators have been
responsible in a substantive way for some of the non-compliance and
poor data quality.
Customs and Border Protection is working with a number of significant
Communicators to improve compliance and border protection
outcomes.
Visionmap A3 Panoramix digital camera
used in aerial mapping
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December 2012
Compliance Update
As a reminder, to declare low value consignments through the cargo
report, the Communicator must be able to agree to statements about
the goods. These statements contained in the following screen.
against the description of any goods contained in a low-value
consignment. The SAC Thesaurus is also available on the Customs
website at http://www.customs.gov.au/webdata/resources/files/
SACThesaurus_050725.pdf
Further information regarding Self Assessed Clearance Declarations
can be found at http://www.cargosupport.gov.au/site/documents/
self_assessed_clearance_declarations.pdf
Compliance expansion measure
If the Communicator cannot agree with certainty to these statements,
they cannot declare the goods on a cargo report SAC declaration and
must lodge a SAC declaration or an import declaration if the value of
the consignment exceeds the AUD$1000 import entry threshold.
The SAC thesaurus has a list of words generated by Customs and
Border Protection. This list is available to industry as a reference file
for cargo report SAC declaration purposes. Customs and Border
Protection has also provided the information to software developers
and the service provider industry. The reference file includes a list of
words, terms, and descriptions that will need to be cross-checked
The Government’s Mid‑Year Economic and Fiscal Outlook (MYEFO)
2012‑13 released on 22 October 2012 committed $13.5 million to
increase compliance activity and undertake a systematic review of tariff
concession orders to ensure they are still valid or appropriate.
The expansion measure will increase the Agency’s capacity to treat
economic risk, particularly revenue leakage. The measure is estimated
to have a gain to revenue of $57.0 million, and an increase in GST
payments to the States and Territories of $22.8 million, over the
forward estimates period.
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December 2012
Compliance Update
Increase in the value of a penalty unit
Higher financial penalties will soon be in place for breaches of most
Commonwealth laws.
Under most Commonwealth laws, financial penalties are expressed
in terms of ‘penalty units’ instead of dollar figures. As an example,
Commonwealth legislation would generally express maximum fine as
‘10 penalty units’ as opposed to ‘$1100’.
penalties, including those specified in Customs and Border Protection
infringement notices, for offences committed before 28 December
2012, will attract the current penalty unit amount of $110.
To illustrate further the change, please see the following table.
Customs Act
offence
On 28 December 2012, the value of a penalty unit will increase from
$110 to $170.
This means that the maximum financial penalties for committing
various Commonwealth offences, including those under the Customs
Act 1901, will rise accordingly.
The penalty unit value has not changed since 1997, meaning the
real value of the penalty unit has reduced. This change is necessary
to ensure that financial penalties remain effective deterrents to the
commission of Commonwealth offences.
The new penalty unit value will only apply to offences committed
on or after 28 December 2012. This means the changes will not
impact on current or future proceedings, or other action that may
be taken, in relation to offences committed before this date. Any
Sections 33(2),
(3) and (6)
interfering with
goods subject to
Customs control
Section 77R(1)
Breach of
conditions of a
depot licence
Offence and corresponding
infringement notice scheme (INS)
penalty for conduct that occurred
before28 December 2012
Offence and INS penalty for
conduct that occurs on or after
28 December 2012
Natural Person
Body
Corporate
Natural Person
Body
Corporate
Up to 60
penalty units
($6,600)
Up to 300
penalty units
($33,000)
Up to 60
penalty units
($10,200)
Up to 300
penalty units
($51,000)
INS – 12
penalty units
($1,320)
INS – 12
penalty units
($1,320)
INS – 12
penalty units
($2,040)
INS – 12
penalty units
($2,040)
Up to 50
penalty units
($5,500)
Up to 250
penalty units
($27,500)
Up to 50
penalty units
($8,500)
Up to 250
penalty units
($42,500)
INS – 10
penalty units
($1,100)
INS – 10
penalty units
($1,100)
INS – 10
penalty units
($1,700)
INS – 10
penalty units
($1,700)
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December 2012
Compliance Update
Industry compliance results
1 April 2012 – 30 September 2012
IP / trade marks
Other regulated goods
1. Risk Program
Prohibited or restricted goods – Absolutely
Pre-clearance intervention (PCI)
Precursors and Other Drugs
From 1 April 2012 to 30 September 2012, there were 93,206
documents profiled through PCI activities.
Description
Understated
$24,673
$586,706
GST
$499,471
$4,945,449
LCT
$4,237
$763,028
WET
$22,311
$2,407
PCI regulated goods detections
Regulated goods type
Consumer safety
Environmental goods
Firearms, weapons, & strategic goods
0
210
All PTV revenue results
Overstated
Actual Duty
188
Post Transaction Verification (PTV) imports
PCI revenue results
Description
40
1 April 2012 – 30 September 2012
Actual duty
GST
Overstated
Understated
$92,590
$17,059,642
$234,139
$12,900,261
Cargo control and accounting
From 1 April 2012 to 30 September 2012, there were 43,594 lines of
cargo checked at licensed warehouses, licensed depots and CTOs.
There have been 27,529 cargo control breaches identified from these
checks (63.1%).
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1,159
45
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December 2012
Compliance Update
Cargo reporting and arrival related offences
The infringement notice scheme
(1 April 2012 to 30 September 2012)
False and misleading statement related offences
Offence
Description
IN
DWL
NDWL
IN – Infringement Notice, DWL – Delegate Warning Letter,
NDWL – Non-Delegate Warning Letter
243T(1)
False or misleading statements resulting in
a loss of duty
3
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Offence
Description
IN
DWL
NDWL
64(13)
Failure to meet reporting
requirements for the impending
arrival of a ship or aircraft
0
0
5
64AA(10)
Failure to meet reporting
requirements for the arrival of a
ship or aircraft
0
0
3
64AB(10)
Failure to meet reporting
requirements for the report of
cargo
0
0
0
64ABAA(9)
Failure to meet reporting
requirements for outturn reports
0
0
26
15
243U(1)
False or misleading statements not
resulting in a loss of duty
4
2
36
243V(1)
False or misleading statements in a cargo
report or outturn report
2
0
4
Movement of goods related offences
Offence
Description
IN
DWL
NDWL
33(2), (3) & (6)
Moving altering or interfering with
goods subject to Customs control
without authority
96
34
36
36(2), (6) & (7)
Failure to keep goods safely or
failure to account for goods
3
2
2
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December 2012
Compliance Update
2. Compliance monitoring program (CMP)
Compliance Assurance Branch has a dedicated analyst reviewing the
CMP data with a view of informing our risk program.
1 April 2011 to 30 September 2011 and 1 April 2012 to 30 September
2012 CMP Statistics Comparison
Import Activity
No of Lines Checked (a)
No of Lines Detected to Have
Error/s (b)
Error Rate = (b) / (a)
No of Detections
1 April 2011 –
30 September
2011
1 April 2012 –
30 September
2012
Difference
3,352
2,821
531
516
587
71
15.4%
20.8%
4.6%
688
777
89
1 April 2011 –
30 September
2011
1 April 2012 –
30 September
2012
Difference
3,302
2,821
481
104
40
64
No of Cargo Reports
Checked (b)
3 271
n/a
n/a
Error Rate = a / b
3.2%
n/a
n/a
118
76
42
1 April 2011 –
30 September
2011
1 April 2012 –
30 September
2012
Difference
No. of lines checked (a)
640
157
483
No. of lines with detection/s
(b)
121
46
75
18.9%
29.3%
10.4%
150
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Cargo Report
No of Lines Selected
No of Cargo Reports
Detected to Have Error/s (a)
Total No of Detections
Export Error Rates
Error rate = b/a
No. of detections
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December 2012
Compliance Update
2011-12 and 2012-13 CMP import declarations data
accuracy monitoring activities outcome
CMP imports – error rate and number of detections made
Import Activity
No of Lines Checked (a)
1 April 2012 – 30 September 2012
2,821
GST Exemption Code
7
Import Goods not Declared when Required
0
Incorrect GST Deferral Outcome
0
Incorrect Owner Identified
7
Incorrect Supplier Identified
28
No of Lines Detected to Have Error/s (b)
587
Interest
No of Detections
777
Invoice Terms
64
Loading Port
27
Error Rate = (b) / (a)
20.8%
CMP imports – detection types
Detection Types
1 April 2012 – 30 September 2012
Air Way Bill / Bill of Lading
0
Assists
0
Currency
19
Discounts
0
Foreign Inland Freight
7
FTA Concessions
0
Goods Description
8
Gross Weight
74
0
Non-declaration of Imported Goods
2
Number of Packages
4
Origin
23
Other Addition
2
Other Deductions
0
Outside Packaging
0
Overseas Freight
17
Overseas Insurance
9
Packing Costs
1
Port of Discharge
0
Preference
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December 2012
Compliance Update
Price
36
Quantity
22
Related Transaction
86
Relevant Transaction
1
Royalties
0
Stat Code
0
Tariff Classification
Tariff Concession or Other Concession
Other
Transport and/or Insurance
Valuation Date
VOTI – GST
Other
Total Detections
115
47
1
129
1
29
777
2011-12 and 2012-13 CMP – cargo reporting data
accuracy monitoring activities
CMP cargo reporting – error rate by lines and number of
detections made
Cargo Report Errors
No of Lines Selected
1 April 2012 – 30 September 2012
2,821
No of Cargo Reports Detected to Have
Error/s (a)
40
No of Cargo Reports Checked (b)
n/a
Error Rate = a / b
n/a
Total No of Detections
76
2011-12 and 2012-13 CMP cargo reporting – detection types
Cargo Reporting Detection Types 1 April 2012 – 30 September 2012
Bill Number
1
Cargo Report Data Inaccuracy
3
Consignee Incorrect
18
Consignor Incorrect
14
Country of Origin
0
Declared Value
4
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December 2012
Compliance Update
Goods Description
6
Gross Weight
21
CMP export – detection type
Export Activity – Detection Types
1 April 2012 – 30 September 2012
Origin Port of Loading
7
FOB Terms Error
Port of Destination
0
FOB Currency Error
5
Other FOB Error
9
AHECC Classification Error
9
AHECC Multi-Lines error
0
Other AHECC Error
0
Other Permit Error
0
Net Qty Error
9
Destination Error
0
Origin Error
5
Owner Name Error
1
Consignee Name Error
1
Total Number of Detections
74
2011-12 and 2012-13 CMP export data accuracy
monitoring
CMP export – error rate and the number of detections made
Export Error Rates
No of lines checked (a)
No of lines with detection/s (b)
Error rate = b/a
No of detections
1 April 2012 – 30 September 2012
157
46
29.3%
74
Gross Weight
Other Export Data Inaccuracy
Total No. of Detections
12
14
9
74
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December 2012
Compliance Update
Compliance terminology
Licensed warehouse
A warehouse licensed under s79 of the Customs Act 1901
AWB
Air Waybill
CLEAR status (depots)
A cargo status in the ICS that allows cargo to be delivered
into home consumption from a depot
MWA
CP
Continuing Permission – allows a permission owner
to move goods between nominated warehouses on a
continuing basis
Movement Without Authority – when underbond goods are
moved to another licensed place or CTO – the goods are
still under Customs control – without the movement being
authorised by the Customs Act (s33 Customs Act 1901)
OBOL
Ocean Bill of Lading
CTO
Cargo Terminal Operator (can be Air or Sea)
STP
DCL
Deconsolidation or “unpack” at a depot
Single Transaction Permission – application must be made
to Customs and Border Protection to move goods between
nominated warehouses on a one-off basis (one movement
per application)
DWA
Delivery Without Authority – when underbond goods are
delivered into home consumption without being authorised
by the Customs Act (s33 Customs Act 1901)
UBM
Underbond movement
UBMR
Underbond movement request
EDI
Electronic Data Interchange
FAK
Freight of all kinds
Underbond movement
A movement of cargo subject to the control of Customs
that moves on a permission granted under s71E of the
Customs Act 1901
FCL
Full container load
FCX
Full container multiple suppliers
FOB
Free On Board
HAWB
House Air Waybill
HBOL
House Bill of Lading
LCL
Less than container load
Licensed depot
A depot licensed under s77G of the Customs Act 1901
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Compliance Update
Find us on the internet
If you are looking for more information on compliance-related issues,
or want to access previous editions of the Compliance Update, you
can now find all the information you need in one convenient location.
From the Customs and Border Protection website menu, click on
‘import export’ and then select ’complying with customs and border
protection’.
You can also follow this link or type this URL into the address bar on
your internet browser: http://www.customs.gov.au/site/page4271.asp
Tell us what you think…
Your valuable feedback helps us to provide you with useful and
relevant information.
You can contact us with compliance-related feedback and queries by
phoning 1300 363 263 or emailing: [email protected]
Customs Watch
Customs Watch is Customs and Border Protection’s national
information collection program that draws on the knowledge of
December 2012
industry and the community to protect Australia’s borders by reporting
suspicious border activities.
Customs Watch members know their local environments. Members
range from multi-national corporations to individuals, are based in
capital cities, regional centres and remote areas, and operate in
environments as different as cargo logistics and caravan parks.
By reporting suspicious activities, Customs Watch members actively
help Customs and Border Protection protect Australia’s border.
Customs and Border Protection encourages you to report suspicious
behaviour to Customs Watch toll-free on 1800 06 1800, or by using
the online form.
The 1800 06 1800 number is answered by experienced Customs
and Border Protection officers 24 hours a day, seven days a week.
Your information could be the key piece of the puzzle that leads to the
seizure of narcotics or other prohibited imports or the identification and
treatment of unfair trade practices. You may provide information to
Customs and Border Protection anonymously.
If you are calling from overseas or using a satellite phone, please call
+61 2 6246 1325 (normal call costs will apply).
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