Following is an article I wrote that appeared in Lloyds List in July 2016
DIBP relies on self-assessment. In order to encourage compliance the Infringement Notice Scheme (INS) was introduced, which imposed financial penalties for errors, whether or not duty was shortpaid.
A penalty issued under the INS is a strict liability offence, which means that fault does not have to be proven. This means that, regardless of whether the person making the error acted intentionally or negligently or otherwise, the fact that it occurred is sufficient to establish the offence and incur the penalty. DIBP also retained the right to prosecute in a Court rather than issue an administrative penalty.
The Customs Act specifies that the maximum penalty under the scheme must not exceed either:
25% of the maximum penalty a court could impose on a person for that offence, or
either 15 penalty units for an individual or 75 penalty units for a body corporate.
Each penalty unit is currently worth $180. The number of units for the particular offence is multiplied by that dollar amount. For example, if an offence is punishable on conviction in a court by a fine of 60 penalty units, this would equate to $10,800. An infringement notice issued to an individual for this offence would therefore be 15 penalty units or $2,700.
Schedule 8 of the Customs Regulations 2015 prescribes all the offences to which the INS applies. The number of penalty units for an offence under that section is shown in that section.
The Corporate Multiplier
The Crimes Act 1914 at s.4B(3) allows a court to impose a fine on a company that is up to five times the maximum that could be imposed on an individual convicted of the same offence. This is called the “corporate multiplier” and carries across to infringement notice penalties vide Customs Act s.243X (2) (a).
DIBP can however impose a lesser penalty provided it does not exceed this maximum penalty and generally the amount payable by a company would be three times the amount payable by an individual. If there is further noncompliance, then DIBP may increase later penalties to four or five times the amount payable by an individual.
Subsection 243X (3) provides an exception to maximum penalties in paragraph 243X (2) (b). In some cases under the Customs Act, the maximum penalty a court can impose for a strict liability offence is determined by reference to the amount of duty or value of the goods. Section 243T of the Customs Act is an example. The amount payable under an infringement notice is limited to 25% of the maximum penalty a court could impose.
The decision to serve an infringement notice is made by the CEO or his delegate after having regard to CR 136 and the Guidelines, which unfortunately are quite vague in comparison to earlier versions of this document. Unfortunately too the current Guidelines are not specific as to the training and level of officer who may decide to issue an infringement notice.
Note that the time for serving an infringement notice is within one year of the offence being detected OR four years of the offence being committed, whichever ends first. CR 136(2) refers. Therefore always check that a penalty is valid. Customs Regulation 137 lists the matters that MUST be included in an infringement notice, other than those issued under s.243T, to which CR139 refers. There is no specified format so care should be taken to properly review correspondence received to ensure it is not an IN.
These conditions do not in any way limit the application of section 15B of the Crimes Act 1914. This means for example that where section 15B imposes a 12-month limitation on commencing prosecution for an offence, then an IN should not be issued for that offence more than 12 months after it occurred
Applications for Remission
While the Guidelines specify that “Payment of an infringement notice is not an admission of guilt or does not count in any way as a criminal record” and does not allow prosecution, DIBP will maintain the file on record (indefinitely) and may use the imposition of an IN, whether or not it was contested, in later deliberations about that party. DIBP can (and has in the past) used paid infringement notices against brokers for other purposes. For example, DIBP used paid infringement notices issued under s.33 in an attempt to revoke a broker’s licence.
For this reason it is suggested that all infringement notices should be contested and applications for remission lodged.