The Australian Government expects that industry and the international trading community will comply with Customs-related law in all transactions involving the importation or exportation of goods and services and the movement of ships and aircraft to and from Australia.

As articulated in its Regulatory Philosophy, Customs acts on its own behalf, and on behalf of other government stakeholders to regulate the movement of goods and people across our border and to collect customs and other revenue. In line with the Regulatory Philosophy, Customs undertakes checks to verify compliance in an environment that is largely self-regulated, by intervening in transactions proportionately to the perceived levels of risk in a given situation.

The following information provides a general overview of the methodology and procedures used by Customs to determine clients compliance with various requirements. For more information on the requirements applicable to a particular activity, refer to the appropriate section of this Guide or contact the Customs Information and Support Centre on 1300 363 263 or email to information@customs.gov.au

Customs utilises a strategy known as compliance improvement in delivering government assistance measures and revenue collection. The principal objective is to maximise voluntary compliance and eliminate future errors. Customs is not required to scrutinise every transaction. It is the role of the client to self assess the correctness of the transaction before it is communicated to Customs.

As an importer or exporter, you are legally responsible for the accuracy of information supplied to Customs, even if you use a Broker, Freight Forwarder or Service Provider to prepare your documents. For your own protection, ensure you examine and retain all documents supplied to Customs, check them for accuracy, and advise your Broker, Freight Forwarder of any errors.

Choose a topic from the list below for more information about a particular area:

• customs audits
• monitoring powers
• sanctions
• common errors
• movement of goods under Customs control

Customs audits

A Customs audit is an evaluation of company practices and records. The audit assists in judging the integrity of information supplied under self-assessment and the level of compliance with legislative requirements.

A likely audit follows these steps:

• clients are initially contacted by Customs to advise of their selection for audit
• clients and Customs will arrange an entrance interview to discuss the proposed audit
• clients are encouraged to examine their transactions prior to audit, as errors reported to Customs voluntarily will be viewed favourably and
• clients and Customs will conduct an exit interview to discuss the assessment made about the client's level of compliance.

Monitoring powers

Monitoring powers allow officers to enter premises to the extent that is necessary to assess:

• compliance with Customs-related law
• whether a person's record keeping, accounting, computing or other operating systems accurately record and generate information to enable compliance or
• the correctness of information communicated to Customs

Cargo reporters, importers, exporters, customs brokers, freight forwarders, depot and warehouse proprietors, financial institutions, information storage facilities, bureau services, owners, stevedores, etc may be subject to compliance checks conducted using monitoring powers

Monitoring powers can only be exercised by an officer authorised by the Chief Executive Officer (CEO) of Customs. The CEO must be satisfied that the officer has the necessary ability and experience to exercise monitoring powers. Consent must also be obtained from the occupier of the premises. This may include a person who is apparently in charge of the premises that the officer is seeking entry to. A warrant may be sought if consent is withdrawn, where consent was sought but was not given, or where there may have been an appropriate reason for not seeking consent in the first place.

For more information on monitoring powers

Sanctions

On 1 July 2002 a range of new penalties were introduced for non-compliance with Customs legislation. Many of these penalties are strict liability. Strict liability offences do not require intent to be proven. Most of the strict liability offences provide Customs with two options if Customs decides to pursue penalty action. One option is to prosecute and the other option is to issue a notice under the Infringement Notice Scheme.

There are 18 offences subject to the Infringement Notice Scheme. These relate to:

• false or misleading statements
• unauthorised movement of goods
• alteration or interference with goods
• loading goods for export without authority to deal and
• export offences relating to moving, entering and handling of goods for export.

Customs will consider whether a sanction is the best means of achieving future compliance. Some of the types of sanctions available to Customs are:

• warning letters
• imposition of penalties (20% of the maximum a court could impose)
• removal from, or modification to, the self assessment benefit by examining and verifying each transaction which may result in delays in clearing goods
• refusal of permission for underbond movements or imposition of conditions on the permission holder
• cancellation, suspension or imposition of a conditional licence for warehouse licence holders
• or prosecution action.

For information on the infringement notice scheme

Imports Moratorium

The administrative moratorium in relation to the Infringement Notice Scheme (INS) has been republished. The key change involves giving industry the original intended benefit of a full 6 months moratorium on infringement notices and prosecutions for the new import offences. More information.

Common errors

The information and legislation requirements associated with import and export transactions are extensive. Before undertaking a particular activity, clients are advised to familiarize themselves with the information contained elsewhere in this Guide and to contact the Customs Information and Support Centre if they are unsure about any of the requirements that may apply to them.

Select one of the following topic areas for information on some of the more common reasons for reduced compliance.

Importers

Failure to retain adequate records

• All relevant commercial documents must be retained for five years from the date of entry.

Imports incorrectly entered

• All imported goods must be entered in accordance with the approved form, classified correctly and any surplus goods reported. Items not ordered, samples and promotional merchandise must also be entered.
• If merchandise is received but not included in the Customs entry, an amending entry should be made immediately. Voluntary payments of additional duty will not be penalised. In a self?assessment environment, importers could be subject to penalties if errors are detected during an audit.
• If duty has been paid on merchandise which is not received, you may be eligible to apply for a refund of duty.
• Customs provides a tariff advice service for importers who are in doubt as to the correct classification or concession. Applications accompanied by supporting evidence should be lodged with Customs. You may apply for a tariff concession on imported goods that do not compete in the market place with goods of Australian manufacture.

Customs value does not include all associated costs

• All costs associated with the goods are legally required to be considered when determining the Customs value. These may include costs relating to advertising, assists, commissions, credits, escalation charges, indirect payments, rebates, research and development or royalties.
• Customs provides a valuation advice service for importers. Applications accompanied by supporting evidence should be lodged with Customs.

Origin incorrectly identified

• Confirmation of country of origin is required in order to claim preferential rates of duty.

Failure to disclose related transactions

• The value of goods can be influenced by related party transactions. An adjustment for the value may be needed.

Incomplete information passed to broker or consultant

• Errors may occur if all relevant information is not passed on to the person selected to assist in clearing your goods.

Incorrect GST exemption

• Ensure that the correct GST exemption has been claimed or that the correct amount of GST has been paid.

Incorrectly quoting Wine Equalisation Tax (WET) or Luxury Car Tax (LCT)

• Importers may quote for WET and LCT if they have an ABN and they have valid quoting grounds.

Misuse of an ABN

• If an importer has an ABN it should be linked to a current Customs owner code and used on all import entries for that entity.

Trade mark infringements

• Trade mark laws provide for the registration of trade marks and the proprietors and users of those trade marks.

Exporters

A number of changes to the way export cargo is managed by Customs were implemented on 1 July 2002.

New reporting requirements for exports

• The new threshold for the reporting of an export is $2000 per consignment.
• All goods that require a permit, regardless of the value of the goods, must be reported to Customs using an export declaration.
• All export goods are subject to Customs control when they are received at the place of export - for example wharf, airport or depot.
• For cargo that is exempt from the requirement to be entered, it is a mandatory requirement to report three fields.

Alignment of export declaration thresholds

• The threshold for when an export declaration is required is $2000 per consignment.
• The threshold applies to a consignment as a whole rather than to each line or type of goods within the consignment.

Goods that require a permit

• All goods requiring a permit must be reported to Customs using an export declaration, irrespective of the value of the goods.
• It is no longer legal to use an exempt cargo line to report goods that require a permit.
• If you require a Restricted Goods Permit (RGP) for the exportation of personal firearms, you are also required to make an export declaration for those goods.

Exempt cargo line reporting

• Customs requires the mandatory reporting of the exporter name, the country of destination and a goods description for each line of cargo that is exempt from the requirement to be entered.

Export examination powers

• Authorised officers may enter premises and examine goods intended for export and related documents, prior to the goods becoming subject to Customs control.
• This power may only be used with the written consent of the occupier of the premises.

Failure to retain adequate records

• All relevant commercial documents must be retained for five years from the date of export.

Exports incorrectly entered

• Most goods intended for export must be notified on an export declaration. The exceptions are listed earlier in this booklet. They must be correctly classified in accordance with the Australian Harmonised Export Commodity Classification (AHECC) and be accurately described.

Inaccurate data declared

• It is important that all data contained in an export declaration is correct, including the Free On Board (FOB) value, quantities exported, origin of the goods and export destination.

Ensuring ongoing eligibility for concessions

• If new products are to be exported you need to ensure that they are also eligible for the claimed concession.

ABN

• If an exporter has an ABN it should be used on an export declaration. This will assist in the verification process when determining the eligibility of the supply as being exempt from GST.

Summary of changes from 6 October 2004

• All goods other than some bulk goods and exempt goods will require a Customs Authority Number (CAN) before being delivered to a place of export.
• Cargo Terminal Operators (CTOs) will have to report the goods arrival at the terminal to Customs.
• Manifests and sub-manifests will only be accepted electronically.
• Manifest reporting periods will be extended to three days after departure for slot and main manifest providers.
• Increased reporting requirements will exist for the movement of certain prescribed goods for export.
• The loading of goods for export will only be possible after the CTO and carrier receive a clear status from Customs; and
• Fourteen export-related offences have commenced.

Movement of goods under Customs control

Owners of imported goods can defer their duty liability by storing their goods in a Customs licensed warehouse. Goods so stored are referred to as Under Bond Goods and remain under Customs control until such time as the owner is ready to enter them for home consumption and pay the duty, or export them. They can be dealt with only in the manner authorized by Customs.

Customs can give permission for the movement of such goods between approved premises. The permission holder is then responsible for the safe custody of the goods until they are received at the approved destination. An amount equal to the duty would be payable by the permission holder if any of the goods are later missing.

The receiving warehouse should verify that the goods received are those on the movement documentation. Customs must be notified within seven days if there is any discrepancy between the goods received and the movement documentation.

The receiving warehouse should ensure that they have received sufficient information from the sending warehouse including such details as the import transaction, value of the goods on a Nature 20 entry for warehousing and the Transport and Insurance Unit Value, to allow entry of the goods ex-warehouse.