The Department of Home Affairs has released Notice 2019/19 regarding “Implications of Comptroller General of Customs v. Zappia [2018] HCA 54â€
The High Court of Australia handed down its decision in the case after considering the scope of subsection 35A(1) of the Customs Act 1901, regarding the failure to keep dutiable goods safely. The decision affirmed that the statutory purpose of section 35A is to motivate persons who have the ability to keep dutiable goods safely, or to account to the Collector for the goods, to do so.
The High Court unanimously held that section 35A is concerned with persons who have the de facto ability to keep goods safely and to prevent goods passing into home consumption without the payment of duty. The Court in this case found the employee had possession, custody or control of the goods before the goods were stolen from the warehouse and had failed to keep those goods safely.
The takeaway is that any person who possesses the appropriate degree of power or authority in relation to dutiable goods falls within the ambit of section 35A. Several different persons, such as directors (including ‘shadow directors’), shareholders, officers or employees, may each possess power or authority to the requisite degree within a chain of command or hierarchy of responsibility. All those in the import supply chain should take heed.
Subsection 35A(1) provides that where a person has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control and the person fails to keep those goods safely or does not account to the Collector for those goods, the person shall pay an amount equal to the amount of customs duty that would have been payable on those goods.
In practice, this means that entities and persons entrusted with the possession, custody or control of dutiable goods under customs control – even if subject to the direction of another person – should manage risks appropriately, particularly when dealing with high risk goods subject to excise-equivalent duties. Mitigation measures could include risk assessments, providing appropriate physical and personnel security, and implementing suitable integrity measures and insurance arrangements.
