Infringement Notices under the Biosecurity Act

under s.523 of the Biosecurity Act for 55 strict liability offences. Some apply to first points of entry such as airports and seaports, while others relate to cargo and ballast water or other areas of biosecurity concern. To be valid they must however be issued within 12 months after the day on which the contravention is alleged to have taken place.

A list of the 55 infringement notices is at s.523 of the Biosecurity Act 2015 and the following link: https://www.agriculture.gov.au/biosecurity/legislation/compliance/infringement-notice-scheme#how-much-is-my-infringement-notice

When strict liability applies to an offence, DAFF is only required to prove that the offence was committed. They are not required to prove fault elements such as intent in order for a person to be found guilty. Strict liability is used in circumstances where there is public interest in ensuring that regulatory schemes are observed, and it can reasonably be expected that the person was aware of their duties and obligations so can be expected to deal with less serious and less complex contraventions where proving guilt in a court would be disproportionately costly

At this time, we do not know if the ability to issue infringement notices is restricted to any particular training, although the DAFF website provides that any Biosecurity Enforcement Officer can issue an infringement notice.   I understand that this role is different to that of a Biosecurity Officer but am unaware of the level of training or expertise required to be so appointed, as guidance material has not been issued. DAFF’s rationale for this is that this is an update regarding new provisions that are infringeable rather than a new scheme.

DAFF has however advised that a decision to issue a penalty will first consider the following:

·        If this is the first occurrence of a breach

·        Whether warnings have been issued in the past

·        Seriousness of the breach

·        Failed audits

The infringement notice provides the amount payable, the time in which it must be paid, and the methods whereby it can be paid. It also explains the process for seeking a withdrawal of a notice and/or requesting an extension of the payment period. Although payment is required within 28 days after the day the notice was given, an extension may be requested provided it is made before the original payment period has ended.

If an extension has already been granted, but additional time is required, this application must be lodged within the extended period, as late payments received outside of the extended payment period cannot be accepted by the department. More than  one extension request may be made.

Paying the infringement notice within the payment period specified effectively discharges all guilt or liability regarding the alleged contravention without making any admissions. If it is not paid, DAFF may prosecute for that offence or commence court proceedings for a civil penalty order against that person. The court may impose a financial penalty for the contravention, as specified in the Biosecurity Act for that contravention.

The maximum penalty that a court could impose for each contravention is:

·        s 126(2) - 300 penalty units ($93,900)

·        s 128(2) - 300 penalty units ($93,900)

·        s 532(1) - 60 penalty units ($18,780)

·        s 533(1) - 60 penalty units ($18,780)

·        s 186A (1) – 1200 penalty units ($375,600)

Under Commonwealth law, financial penalties are calculated in ‘penalty units’. Section 4AA of the Crimes Act 1914 sets the monetary amount of one penalty unit, which at 1 July 2023 was $313. This penalty is fixed at the lesser of one‑fifth of the maximum penalty that a court could impose for that contravention or 60 penalty units for commercial entities or 12penalty units for individuals. It should be noted that DAFF considers that there is no scope for lower penalties to be issued as the amount of penalty units is  legislated. Although the amount payable may vary between offences, generally the amount is 12 penalty units (currently $3,756) for an individual and 60 penalty units (currently $18,780) for a company.

The penalty can be paid by credit card, cheque, money order or electronic funds transfer. Payment details are on the back of the infringement notice.

 Requests for withdrawal of the infringement notice must be made in writing to the Director of Biosecurity and provide information about the circumstances of the alleged contravention as well as any other relevant information that may assist a decision to be made. A defence of honest and reasonable mistake of fact is available. This means that if a person has considered the relevant facts and is under a mistaken, but reasonable, belief about those facts, he or she is not liable for the offence.

If a broker is seeking withdrawal of an infringement notice on behalf of a client, the application must be accompanied by a signed Authority to Act from the client.  A copy of this Authority is on the DAFF website.

When deciding whether or not to withdraw an infringement notice DAFF must take the following into account:

(i)      whether a court has previously imposed a penalty on the person for a contravention of a provision subject to an infringement notice;

(ii)    the circumstances of the alleged contravention;

(iii)   whether the person has paid an earlier infringement notice, for conduct that is the same, or substantially the same, as the conduct alleged to constitute the contravention in this matter;

(iv)   any other matter considered relevant.

Developing a sanctions compliance programme

It is an offence to contravene Australian sanctions laws. The maximum penalty for breaches of Australian sanctions by corporations is a fine the greater of 10,000 penalty units (AUD 2.75 million as of 1 July 2023 ) or three times the value of the transaction.

For corporations this is a strict liability offence, but as prevention can be difficult, the legislation provides that it is a defence if it can prove it took such precautions and undertook such due diligence to avoid contravention as would be expected of companies in that position. This evidence could include details of the sanctions policy and methodology used in risk assessments and screening as well as any software used, plus details of staff training provided and available sanctions expertise.

 Step 1: Assess the organisations current risks and compliance.

The systems and controls in the corporation's sanctions program should be commensurate with its assessed sanctions risk. This assessment should consider matters such as

·        customers, supply chain, sub-contractors and agents.

·        the services it offers.

·        the geographic locations of the organisation and services, as well as its customers, supply chain, and agents.

·        The risk from a trusted insider breaching the requirements.

Such reviews should be regularly undertaken and used to develop and/or update compliance policies, procedures, internal controls, and training in order to mitigate any risks. 

Organisations should review too the extent of their insurance coverage, especially directors’ and officers’ insurance, because of the substantial costs of investigating or defending allegations of sanctions breaches. Note however that the conviction of an offence may negate claims for such coverage and legal advice should be sought.

Step 2: Documented Compliance Programme with company wide application.

The Policy should include active support and oversight by senior management and use suitably qualified and experienced personnel,  although those persons may also have other roles. Whistleblower policies should be in place so that staff reporting possible violations can do so without fear of reprisal.

The compliance program and its application should be regularly reviewed and updated where material changes occur.  External audits may be appropriate to ensure that the system is working as intended.

Step 3: Are contractual obligations required?

•                  Consider incorporating sanctions obligations in contracts so that the customer agrees they have undertaken due diligence in sanctions obligations and that end users and/or goods are not sanctioned goods.

•                  Consider the inclusion of a force majeure clause to encompass the effects of sanctions. Force majeure is a clause that is included in contracts to remove liability for unforeseeable and unavoidable catastrophes that prevent parties from fulfilling obligations. Some clauses limit force majeure to an Act of God (such as floods, earthquakes, hurricanes.) but exclude matters such as acts of war or terrorism, labour disputes, or interruption or failure of electricity or communications systems, so it is important such clauses are drafted noting that complying with a sanctions law is not a breach;

•                  Ensure contracts contain a contractual right to disclose information, including confidential information, to Government if required in sanctions matters.

•                  Consider jurisdiction –some EU countries have no claims provisions that prevent claims arising from other parties’ attempts to comply with sanctions laws. 

Step 4: Screening and transaction monitoring for sanctions risk.

Service professionals such as customs brokers, freight forwarders, airlines and shipping companies should undertake due diligence on proposed freight movements, the routing, and the parties,. As requirements change, the due diligence needs to be ongoing. Consider:

·        Subscribing to DFAT’s Consolidated List, remembering that this List only covers travel bans and asset freezes. Also consider the sanctions put in place by foreign jurisdictions such as USA, UK, and European Union should there also be involvement in those regions (e.g., a director of US nationality);

·        Screen new clients that are newly established companies in areas subject or adjacent to sanctioned countries.

·        If in doubt, obtain an indicative assessment via PAX, the DFAT sanctions portal.

If breaches do occur, additional procedures / training is undertaken and documented to prevent a recurrence. 

Step 5: Alert generation, review and documented action. 

Any alerts identified should be documented and the policy provide methods to review, record and  escalate for further review if required, noting especially that sanctions screening can provide  false positives requiring review.

Step 6: Regular and documented staff training in compliance.  

If there are circumstances in which there is a high possibility of a sanctions breach occurring  that  activity should immediately be ceased or the engagement declined.

 

Tariff Concession Orders - copy of a submission to ABF on 11 July 2023

1.    TCO applications

The power to make Tariff Concession Orders (TCOs) is contained in Part XVA of the Customs Act 1901. The “core criteria” that must be met for a TCO application to succeed are the subject of s 269C:

“For the purposes of this Part, a TCO application is taken to meet the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.”

The meaning of the expressions “substitutable goods” and of “produced in Australia” and of “in the ordinary course of business” are defined in subsequent sections.

Correspondence received by the applicant enables them to chart the progress of their application. Such correspondence includes an email acknowledgement where TCOs are lodged by email and a second email containing the application reference; a follow up letter about 28 days later confirming that the TCO is accepted and its gazettal date; and notice that the TCO has been made or rejected or that an appeal has been received.

In relation to the latter, industry would request advice regarding objections to a TCO application at the time of receipt of the objection, rather than waiting for the end of the gazettal period, which may be seven weeks later.

Late Communication

Once a TCO application is lodged, the Australian Border Force (ABF) have 28 days to either accept or reject it. If it is not accepted within that period, the legislation provides that it is deemed to be accepted.

Part of this initial process is that the proposed tariff classification of the TCO is reviewed by the National Trade Advice Centre (NTAC). This takes place before the TCO section process the application. Given that TCO acceptance is often very close to the 28 days and customs brokers and presumably officers are put under pressure in relation to proposed changes to wording as a result, is it possible for the two areas to complete their tasks at the same time so as to allow time to either discuss amended wording or seek data from overseas?  According to the 2015 ANAO reports, there are only about 900 TCO applications lodged in a year and about 80% of them are successful. In addition to that 300+ TCOs are revoked

A TCO application should not be rejected because discussion is required if there is insufficient time because the customs broker is contacted so late. Note, that there is no referral to AAT if the application is rejected. Another TCO application must be lodged, which will not be possible if goods have arrived.  

The application process for TCOs and the time frame is prescribed in the Act. It is understood that responses must be provided within a given time frame. In general, however questions are referred back to the applicant within the last few days of the 28 day screening period, which severely impacts upon the applicants existing workload, ability to respond and/or seek further information as required from the importer/overseas manufacturer.            

Recommendation:

1.      The ABF have internal KPIs to ensure that applicants are not disadvantaged by late requests for information by the ABF, with such late requests being suggested as any past 21 days after lodgement.

2.      We further recommend that where amendments to wording are suggested that the change is clearly notified to the broker as a comparison to proposed wording.

3.      Further, where wording is changed by the ABF and later deemed to not cover the subject goods, that the ABF revoke and reissue the TCO to correctly reflect the proposed coverage in the application.             

Tariff Classification of TCO applications

A TCO must be accepted or rejected within the 28 day internal screening process. It is common to receive requests for information or clarification late in this time frame, with only a few days in which to respond. Given that manufacturers and suppliers of overseas good are in different time zones this is frequently very difficult and places an unfair burden on parties because of shortfalls in ABF staffing / processing.

The FTA also receives many complaints that requests received for further information, including pictures, drawings and flow charts, are received from NTAC when that information has already been submitted with the TCO application. Both the ABF and the customs broker have priorities to consider in the current environment. Both have a role to fulfil, however with  the customs broker having sought and provided the information, it should then be the responsibility of the ABF to  review it before issuing queries, especially where relevant information is highlighted or referred to in correspondence. Industry is happy to discuss and clarify information provided, but that should be the limit, especially where many questions appear to indicate that the information already provided has not been reviewed.

Recommendation

The TCO branch be provided with additional resources allowing for its own “internal” tariff officer/s to ensure adequate and timely reviews of the tariff classification applicable to TCO applications.

This would also enable the applicant sufficient time to submit further literature or product data within legislated timeframes, with a view to reducing rejections because the Tariff Officer cannot determine the classification within the prescribed time.

2.    Concurrent TA & TCO applications

Applicants are required to propose generic TCO wording that describe the goods in terms of their physical characteristics. TCO section support that view.

Where an existing TCO is in place the costs for a client are less, however, if a TA is required, perhaps because of the value of the consignment or client instructions, then given the time taken to process a Tariff Advice by the ABF, it is not always feasible to await the outcome of the TA and a new concession application may therefore be required. This is because TCOs must be operative as at the date the goods are entered for Customs. Most importers are not proactive and consider applying for a TCO only in the time leading up to goods arrival. Given the speed of airfreight and the 5-10 days transit time from Asia by seafreight, not much more time is available in many cases. The ABF do not acknowledge this.

The identification and then use of an existing TCO is reliant upon IDM being received from the client sufficient to lodge a TA to confirm tariff classification and then compliance with the TCO. This timing is not generally within the control of the customs broker / applicant.

Recommendation

The ABF accept that as a result of processing delays and fast shipment times it is sometimes necessary to lodge TAs and TCO applications for goods at the same time and that such actions be permitted.

3.    Tariff Classification of TCOs to operate as a Tariff Ruling

The ABF suggest that prior to lodging a TCO application, applicants should obtain a Tariff Advice (“TA”) to determine the tariff classification of the subject goods. A TA is, in brief, an administrative system of the regulator that provides certainty in tariff classification and protection from penalties. It can be relied upon until withdrawn, provided full and correct information is provided with the application.

The current turnaround time for TAs is about 30 days from lodgement, but this timing may be significantly extended on occasion by NTAC’s workload / staffing limitations. If an appeal is necessary, the review may take 6 months or more. The time frame between making application for a TCO and its finalisation is then a further 3-6 months. Suggesting TAs be submitted prior to lodgement of application for TCO is not therefore either commercially viable or realistic.

Recommendation

1.      The Freight & Trade Alliance (FTA) suggests that the confirmation of a given tariff classification on a TCO application should have the same regulatory standing as a decision on a Tariff Advice, particularly as the same Tariff officers undertake both tasks.  It is difficult for industry to accept, as claimed, that Tariff Officers give less time and effort to one type of tariff classification over another given the importance of correct classification.

2.      Further, we suggest that as the Delegate has accepted the TCO wording the TCO when made should then be deemed to apply to the subject goods and operate as a Tariff Ruling.  This is especially important in the refund application process when further duplication of effort is often unnecessarily required in satisfying Refunds section that the TCO applies.

This also prevents later redline or monitoring audits determining that the tariff classification and/or TCO nominated does not apply to the subject goods. In this circumstance the goods can have the shortpaid duty called up and the importer can therefore be subject to significant penalties.

Incorrect tariff classification decisions also have the following effects:

(a)    Duplication of efforts and/or creation of additional TCOs                

(b)    Rekeying of TCOs to correct tariff classification.                

(c)     Additional work for TCO section and industry                    

(d)    Additional costs to industry                   

(e)    Incorrect tariff information reported to the Bureau of Statistics                   

(f)     No protection to the importer as the tariff classification given or confirmed by the ABF does not operate as a TA. This is especially the problem when a change made by NTAC to the tariff classification on a TCO application is later determined to be incorrect by a monitoring team or red line lodgement.  

4.    TCO wording

The role and expertise of the TCO section is in the use of the TCO system, which includes the wording of the legislated instrument.

It is therefore of ongoing and serious concern to industry that the staff of the NTAC still suggest amendments to the wording of a proposed TCO and that amendment is then accepted by TCO section. NTAC’s role we are told is tariff classification, which is a separate skill to the next step of drafting or interpreting a proposed TCO wording. If NTAC are as busy as we are advised, then this additional task should cease.

Industry remains concerned at the level of training in tariff classification, experience in and understanding of commercial matters, and the use, interpretation and application of TCOs of some NTAC officers. 

Recommendation

1.      That NTAC be again advised that the application of proposed TCO wording is the responsibility of TARCON, not NTAC.

5.    Amendment of TCO wording by TARCON

It is accepted by Industry that having lodged a TCO application the ABF Tariff Concession section (TARCON) will then attempt to change or amend that wording in some way. These amendments often appear irrelevant and/or unnecessary and are generally regarded by industry as for error recording for justification.

Recommendation

If it’s not broken, and is legal, don’t fix it. It takes industry time to review suggested amendments and refer them to importers/ overseas manufacturers for acceptance and with commentary as required.

Further, careful review of any suggested amendment to the wording is also generally required as it is not uncommon for such suggested amendments to change the meaning of the TCO and thereby exclude goods for which the coverage was sought.

6.    Strict compliance

TCOs must STRICTLY describe the goods as imported but what is a “strict” description has become fogged since the decision in Toro.  As in this case, the ABF interpretation of TCOs and the wording or expressions used changes over time, which means industry can be uncertain of coverage or clarity, especially given AAT decisions over the last few years. ABF staff changes and rotation also mean that the history of some matters is lost within the Department.

For example, in the past many TCOs written used the term “comprising”  followed by a non-exhaustive list of components. When made, these TCOs were phrased this way at the direction of an officer of Customs and/or the then TCO guidelines, as well as Manual 13 (TCO wording).  Industry remains concerned that existing TCOs expose users to post or penalty action resulting from any changes in practice by the regulator.

For example, in Becker Vale Pty Ltd v Chief Executive Officer of Customs [2015] FCA 525, Yates J cited Toro and proposed that this reasoning supported a construction of “comprising” that exhaustively states the essential components”. 

In reading the decision in Becker Vale TCOs must include a full description, and this full description must include the “”essential components”. 

Recommendation

1.      The FTA seeks further guidance from ABF as to what are considered to be “essential components” by the regulator, given the ongoing confusion caused in industry by AAT decisions, and the regulators actions in monitoring audits and in TCO wording. We note here that the Administrative Appeals Tribunal (AAT) exists to provide a merits review of an administrative decision. Its role is to consider afresh the facts, law and policy relating to that decision.  It affirms, sets aside or varies the decision under review. Its decisions are however NOT PRECEDENT and relate only to the merits of that case. Such a decision does not bind later AAT decisions. Indeed, one wonders why the regulator chooses therefore to follow only one case (Toro)) when the majority of decisions in these matters support the “more than” principle.

2.      ABF monitoring officers appear to target companies using TCOs if they consider that the TCO does not fully describe the goods according to current requirements. A full description of the goods is of course a requirement of the application under s.269H but the interpretation of what is a “full description” has changed, Examples include a glass candlestick with a small decorative brass band around it not being eligible for a TCO for glass candlesticks because the candlestick was both glass and brass. Another example is brake motors. These are motors with brakes. They are still a motor, but existing TCOs do not in general also specify the “brake” and so we understand imports have been refused TCO coverage.  Does it then follow that a motor with a gearbox is also not eligible for TCOs for motors? The Legal Notes to the Customs Tariff Act 1995 specify that the motor and gearbox are to be classified as a motor. The ABF have in the past advised that in this instance as the electric motor had a gearbox attached it was in fact more than the full description of the goods in the TCO and the TCO would then not apply.

Until the decision in Toro, TCOs that properly described goods that were “more than” as described were accepted as being covered provided that the essential nature of the subject goods was as described and of course did not change the tariff classification of those goods.  This is no longer the case, and our opinion is that it exposes many companies, including the original applicants for concessions.

3.      As long as industry has clear, concise and consistent Guidelines it can meet regulatory needs. What is of concern to industry is where Guidelines change, and no formal advice of change(s) is issued or in relation to those which are given these lack clarity and understanding.

7.    Objections to TCO applications

While we are assured that the ABF visit potential Australian manufacturers it is reasonable to suppose that the officers lack both accounting training and the technical expertise to differentiate one machine’s capabilities or functions from another. No details are provided as to how often this occurs. No details are provided of the appellant until the revocation decision is gazetted, and we understand that this may not always occur.

Recommendation

We therefore request that the previous practice of notifying industry of the objector be included in the gazette notification as per earlier practices. 

“Simple Assembly Operations” are excluded from grounds for objecting to/revoking a TCO vide s.269D (3) (d). We suggest that guidance be provided on the meaning of this term. It is some members’ experience that some companies who appear to only assemble imported components leverage this piece of the legislation for competitive and commercial advantage over other industry sections and competitors.              

8.    Information requirements in making a TCO objection.

It is onerous and costly for companies lodging numerous objections or revocation requests to provide costing information and examples of sales invoices for each request.

Recommendation

Once the information is provided the ABF systems should allow them to use information on pricing and manufacturing costs from earlier submissions and within a prescribed time frame, rather than requiring new data each time.

9.    Revocation of TCOs

Over the last few years, the ABF has initiated the revocation of many TCOs. Many of these older revocations were because a more generic TCO was available that was deemed to cover the goods. This appears to be in conflict with the guidelines in Toro that a “full description” must be provided.

Recommendation

We seek clarification on the divergence between NTAC interpretations of TCOs as against the TCO section.

We understand that the NTAC are very narrowly applying TCO’s with a heavy reliance on the Toro case that advises “To fit the TCO description precisely means that the goods must have no more or no less of the characteristics set out in the description”.

Clarification is required, as interpretation of TCO wording is proving challenging for industry given these anomalies.

10.       Impact of TCO revocation and reissue on refunds

ABF current policy is that if a TCO is revoked under s.269SD (1AA) no replacement TCO need be made and if it is, it need not be from the operative date of the revoked TCO.

The objective of the Tariff Concession System was stated in Vestas - Australian Wind Technology Pty Limited and Chief Executive Officer of Customs [2015] AATA 348 (21 May 2015) as “It is now more accurate to say ….. the object of the systems is to ensure that industry is not taxed by a tariff where it is serving no protective function. It is clear from s 269C and its place in the scheme of Part XVA, that Parliament has decided that a tariff serves no protective function where there are no goods serving similar functions, and so no substitutable goods, made by Australian industry in the normal course of business.”

Industry therefore queries why the practice of revoking and reissuing TCOs under s.269 SD (2) changed, thereby denying refunds to legitimate importers of goods in conflict with the stated intent of the TCO scheme?  

s.269SD (2)

(2) If the CEO is satisfied that:

(a) because of an amendment of a Customs tariff; or

(b) having regard to a decision of a court or of the Administrative Appeals Tribunal; or

(c) having regard to written advice on the matter given by an officer of Customs;

the tariff classification that is stated in a TCO to apply to the goods the subject of the TCO has not, with effect from a particular day, applied to those goods, the CEO must:

(d) make an order revoking the TCO with effect from that day; and

(e) make a new TCO in respect of the goods with effect from the revocation.

(4) The particular day referred to in subsection (2) may be the day on which the TCO that is revoked came into force or a later day.

Recommendation

That replacement TCOs be operative from the operative date of the revoked TCO where legislative (not policy) provisions permit, such as where typographical errors have been made.

11.  Tariff decisions by Refunds and Monitoring Officers

A customs broker’s involvement in monitoring audits generally occurs once their client is notified of such action or, if they do not tell the customs broker, being sent a copy of the audit report or draft report by the client. (A customs broker can however also be audited)

Monitoring audits have a purpose, but the officers often have relatively little training in tariff and in general no technical expertise in the industry reviewed. They are however under current guidelines empowered to issue what amounts to a formal classification decision on the tariff classification of goods and/or the application of a particular TCO. The only response to this is to reply with an appeal to Tariff. This is unsatisfactory and industry remains concerned about the conduct and independence of such reviews and the validity of some decisions made.

Recommendation

1.      That NTAC be the only ABF section empowered to make formal tariff classification rulings.

2.      That a TCO having been made for nominated goods and a refund application lodged for the same goods be sufficient evidence that the TCO applies to the goods, provided TCO IDM is provided.

EU IMplementation of ICS2

A new advance cargo information system called the Import Control System 2 (ICS2), has been implemented by the EU to provide risk analyses on goods before they enter or transit the customs territory of the European Union (including Norway and Switzerland). Note that it does not apply to intra-European transport.

Entry of the goods into the EU is a 4-step process, consisting of:

1)     Lodging of an Entry Summary Declaration (ENS) in ICS2. This document is for advance cargo screening and is to HAWB level. It is not the customs declaration system used to clear the consignment for release into free circulation. 

The ENS has a prescribed format and must be lodged within specified time frames. Its “filing”(lodgement) can contain either partial or full information, as discussed below.

2)     Cargo arrival and examination by Customs in case of a potential risk;

3)     Temporary storage of goods before their release or bonded storage and;

4)     Lodgement of the customs declaration

The system is being implemented in three releases. Release 1 covering the pre-loading process for postal and express consignments by air was implemented on 15 March 2021,

Release 2 on 1 March 2023

From this date, all freight forwarders, air carriers, express couriers, and postal operators transporting goods to or through the European Union (including Norway and Switzerland) will be required to submit an ENS. This entails submitting pre-loading advance cargo information data to EU Customs through ICS2, where it will be risk assessed. Before departure, the air carrier or freight forwarder must also lodge in ICS2 a mandated pre-arrival information data set, which includes the journey details. The pre-loading and pre-arrival messages are collectively referred to as the Entry Summary Declaration (ENS).

The information required to be submitted at pre-loading includes:

·        Shipper name

·        Shipper address

·        Consignee name and the consignee’s EORI number if the goods are staying in the EU.

·        Consignee address

·        An accurate cargo description which includes the 6-digit HS code for each item in that shipment

·        Total quantity

·        Total weight     

This information must be input before shipments are loaded onto an aircraft and within the following required timeframes:

(a)   The ENS, or when it is not possible, the minimum data set for air pre-loading, must be lodged as early as possible but at the latest before the goods are loaded onto the aircraft which will bring them into the customs territory of the Union;

(b)   When only minimum data set was lodged under (a), the complete ENS must be lodged at the time of actual departure of the aircraft when the duration of the flight is less than four hours;

(c)   For other flights than those mentioned under (b), the complete ENS must be lodged four hours before the arrival of the aircraft at the first airport in the customs territory of the Union.

These requirements apply to all goods (except documents), regardless of value. Failure to provide it may lead to non-acceptance of the goods at origin.

The carrier bringing the goods into the EU is the party responsible for lodging the ENS, however, ICS2 allows the filing of information by all parties involved in the transport of a consignment where the carrier does not have complete information. This is referred to as a multiple filing. Freight forwarders, express couriers, and postal operators are legally responsible for providing data, either direct to ICS2 or through the air carrier. If through the air carrier, the carrier will then complete the ENS. (Direct filing by the forwarder could provide competitive protection as they are not then sharing their customer details with the carriers.)

Note that parties filing ENS data in ICS2 must have an Economic Operators Registration and Identification (EORI) number, which are obtainable on application from the EU customs authority in all member states.

Postal operators and express couriers, who have previously been declaring partial information regarding inbound shipments (under ICS2 Phase 1), are now also required to coordinate with their air carrier to submit all required data. 

Failure to comply or providing inaccurate data may lead to in financial penalties, cargo being stopped at the border, no customs clearance, rejection of poor quality ENS declarations, and cargo delays.

Release 3 on 1 March 2024

From this date carriers for goods transported by sea and inland waterways and roads and railways will also have to complete ENS dataset for all goods, including postal and express consignments carried by these means of transport.

The required information must be input before shipments are loaded and within the following required timeframes:

Sea freight

(a)   No later than two hours before the arrival of the vessel at the first port of entry into the EU for arrivals from Greenland, Faeroe Islands, Iceland, ports on the Baltic Sea, Black Sea, Mediterranean Sea or Morocco;

(b)   No later than two hours before the arrival of the vessel where the voyage is less than 24 hours and the goods are arriving from other third country territories and entering the EU, the French overseas departments, the Azores, Madeira or Canary Islands

(c)   No later than four hours before the arrival of the vessel for bulk cargo in cases other than (a) or (b) above;

(d)   For containerised cargo in other cases than (a) and (b) 24 hours before the goods are loaded onto the vessel which will bring them into the customs territory of the Union.

Rail Transport

(a)   When the train voyage takes less than two hours from the last train formation station outside the customs territory of the Union to the first point of entry into the customs territory, the ENS is to be lodged at the latest one hour before the train arrives at the border entry point of the Union;

(b)   In other cases than those mentioned under (a), the ENS is to be lodged at the latest two hours before the train arrives at the entry point of the Union.

Road Transport

The ENS must be lodged no later than one hour before the goods arrive at the entry point of the EU.

Transport by inland waterways

The ENS must be lodged no later than two hours before the goods arrive at the entry point of the EU.

Customs Audits

The Customs Act provides the ABF with the authority to conduct audits of activities relating to import declarations including tariff classification, use of tariff concession orders, valuation, usage of permits and taxes payable on imports.

Every importer, exporter and customs broker dealing with the ABF has a chance of being audited to make an assessment as to risks and levels of compliance, either through a targeted audit directed at, for example, usage of a specific tariff classification or tariff concession order or as part of a random sampling of targeted  goods or companies.

Various types of audits of import and export consignments are undertaken by the Australian Border Force and authorised under the Customs Act 1901. The ones brokers would readily identify are redline entries and monitoring audits.

·        Desktop audits (“redline entries”)

Desktop audits are conducted on nominated transactions as a random sampling or where a specific risk can be addressed by examining a transaction. They are authorised by Customs Act s.71DA and undertaken at ABF offices on import declarations routed red line on lodgement and undertaken before delivery of the goods. Queries relating to import declarations after they have been “dealt with” in accordance with the Authority to Deal are undertaken as monitoring audits.

·        Targeted (“monitoring”) audits

The ABF Compliance Audit team undertakes post-delivery audits for periods up to five years after the transaction to verify into compliance of entities with the payment of duties and taxes and with other regulatory requirements. Any noncompliance detected may lead to increased intervention, demands for shortpaid duties, and significant administrative penalties.

Monitoring Officers visiting client premises must exercise their powers under the provisions of s214AA-214BB of the Act, which provides specific requirements as to notification, consent and the powers of the officer.

Monitoring powers can only be exercised with the written consent of the occupier or under a monitoring warrant. The "occupier" of premises includes a person who is apparently in charge of the premises, so if everyone else is away it could even be a receptionist, s.214AA refers. It would be wise therefore to ensure that businesses have procedures in place in case of this circumstance.  Consent to enter premises can be refused or once given, withdrawn in writing at any time.

Monitoring powers can only be exercised for the purpose of verifying compliance, they cannot be used to search for evidence of an offence – what we call a “fishing expedition”. For this reason, a written list of FIDs to be reviewed is required to be provided by ABF prior to the audit. Those documents should be made available at a suitable desk or location such as the Board Room for the officers’ use. It would be unwise to suggest that the Customs officers should pull the files from the records themselves. Brokers  should encourage their clients to advise them if they receive any notice of intent to exercise monitoring powers so that they can attend and advise as necessary. They should also review the audit report before it is finalised.

It should be noted that all officers exercising monitoring powers must be authorised by the Chief Executive Officer (CEO) of Customs and must produce a photo identification card identifying them as a monitoring officer before exercising monitoring powers. They are also, according to guidelines, supposed to have a certain level of training, although the nature of that training has not been disclosed.

Given that the legislation appears to provide ABF with audit powers before and after delivery of the goods, it would be reasonable to assume that those legislated conditions were sufficient to ensure compliance, right? Wrong. Sections 240AA and 240AC of the Act provide that an authorised officer may require persons to produce commercial documents to verify the information provided to the ABF on import declarations (and other documents). I have seen documents requested from the broker under this section and an audit then launched with no further advice. Although I've received an opinion that ABF is within its powers to audit via 240AA, there is not the level of formality as in monitoring powers and the process does concern me.  If a s40AA request is received, you are therefore strongly encouraged to audit the documents yourself. Remember however that voluntary admissions cannot be made, amongst other reasons, where an officer exercises a power under a Customs -related law to verify information in the statement.

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New 2021 Tariff Notes will change the way we classify some goods.

This article was originally publishef 3 March 2021

The Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Act 2021 amends the Customs Tariff Act 1995 to, among other things:

(1)   separately identify specifically formulated caffeinated beverages, formulated supplementary sports foods and formulated supplementary foods;

(2)   specifically identify vitamins and food supplements;

(3)   provide that wheelie bins do not fall within the classification of vehicles;

(4)   provide that plates, rods, angles, shapes, sections, tubes, pipes and the like requiring further modification prior to being used cannot be classified as parts;.

These amendments  create new tariff subheadings to separately identify formulated supplementary food, formulated supplementary sports food and formulated caffeinated beverages within the meaning of ANZFSC under the broader, more generic water-based beverages classification heading.

Similarly, the amendments include new subheadings to separately identify formulated supplementary food and formulated supplementary sports food under the more generic food preparations classification heading . This will also be used to improve monitoring under the Imported Food Inspection Scheme.

The Act also inserts additional notes to provide for the classification of vitamins and dietary supplements, wheelie bins and metal profiles and pipes. These Notes have been inserted to overcome the decisions in recent cases:

Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd (Pharm-A-Care)

This case considered the tariff classification of gummi bears. The ABF argued that they should be classified as food preparations of heading 2106 or confectionary of heading 1704. The decision, which was upheld in the High Court and therefore a legal precedent, was that the goods were classified to Chapter 30 as medicaments and were therefore duty free.

The ABF opinion is that in order to be classified in Chapter 30, goods should treat or prevent particular diseases or conditions, and that this interpretation is consistent with other WCO countries.

The new Note provides that vitamin and food supplement products cannot be classified as medicaments of Chapter 30  unless they are included in Schedule 2, 3, 4 or 8 to the Poisons Standard, and provides that they are classified to heading 2106 unless they are elsewhere classified.

Sulo MGB Australia Pty Ltd and Comptroller-General of Customs

The Sulo case concerned the tariff classification of wheels for wheelie bins. The outcome of the Sulo case is that it sets a legal precedent for wheelie bins and their parts to be classified vehicles, not mechanically propelled, in Chapter 87 in the Tariff.

The new Note suggests that such goods should be classified according to their material in Chapter 39 or Section XV.

Since this decision, the WCO has changed the explanatory notes so that wheelie bins are excluded from Chapter 87.

Smoothflow Australia Pty Ltd and Comptroller-General of Customs

In the Smoothflow case, Smoothflow Australia Pty Ltd imported steel pipes that could be used for fire sprinkler systems in buildings. The AAT decided that the goods were classified to heading 7308 and not heading 7306. Although both headings are dutiable, 7308 is not subject to anti-dumping and countervailing duties. (The Federal Court has since dismissed the ABF appeal of this decision).

The Act adds new Notes, which provide that heading 7308 and 7610 (titled structures and parts of structures and aluminium structures respectively) do not include ‘plates, roads, angles, shapes, sections, tubes, pipes and the like, requiring further modification before use in structures, including, but not limited to, cutting, drilling and bending’. In addition, heading 7308 does not include ‘tubes, pipes and the like prepared for the conveyance of fluids (including water, oil and gas)’.

It will be interesting to see if these Notes are interpreted by ABF to overcome the decision in Solu Pty Ltd and Comptroller-General of Customs, which concerned the importation of various extruded aluminium components for kitchen builds that had to be cut to length on site. The importer claimed the goods were classified under either 8302 (base metal mountings, fittings and similar articles) or 9402 (other furniture and parts).  The ABF claimed that the goods were classified under 7604 as aluminium profiles to which dumping duties applied. The judgement was not in support of the ABF claims.

The Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Act 2021 has received Royal Assent and should commence on 29 March 2021. It should be noted that these amendments only apply in relation to goods imported into Australia on or after the commencement of this Act and goods imported into Australia before the commencement of the Act, but not yet entered for home consumption.

Should you have clients that may be impacted, we strongly suggest that the Notes be reviewed as these changes have implications not only for tariff classification, but also for existing and new tariff concession orders and the imposition of dumping duties. Please note too that it is probable that any Tariff Advices received based on the above decisions will be revoked by ABF.

Cutting red tape for excisable goods and EEGs

This article was written and originally published on 3 Jan 2021

On 22 Dec 2020 ,  Assistant Minister to the Prime Minister and Cabinet, Ben Morton announced new priority tasks for the Deregulation Taskforce, one of which was a review of Australia’s excise and excise-equivalent goods (EEGs) customs duty regime to identify unnecessarily cumbersome and duplicative processes.

This review will not examine the base or rates of taxation and is focused only on enhancing the administrative efficiency of Australia’s excise and excise-equivalent customs duty regimes as well as cutting regulatory overheads for business. Feedback from industry participants has indicated these regimes often impose unnecessary red tape and costs on businesses, and time imposts on officers of the Australian Taxation Office (ATO) and Australian Border Force (ABF).

Freight and Trade Alliance (FTA)  congratulates government on this initiative and suggests a review of the process and requirements for importing alcohol to be further manufactured in bond be included. The complexity of this process was highlighted early in the Covid-19 pandemic by the often painful and very costly experiences of importers of undenatured ethyl alcohol with an alcohol by volume (ABV) content of 80% or greater, that was for use in manufacturing hand sanitiser in Australia.  

Undenatured ethyl alcohol with an ABV of at least 80% is subject to customs duty, when imported , of 5% plus $86.90 per litre of alcohol. As neither TCOs nor FTAs were available, FTA approached the ABF to request consideration that a new bylaw be made providing that this and other specified goods could be imported duty free for use during the Covid-19 pandemic. A 4th Schedule bylaw was subsequently approved, but while it covered goods such as personal protective equipment and ventilators, it did not cover undenatured ethyl alcohol because of the significant quantities being manufactured in Australia in response to the need for it.

The suggestion that FTA then provided to the many members that reached out to us for assistance and advice was for the importer to consider warehousing the goods in a dual licensed facility administered by the ATO on behalf of the ABF.  If the warehouse had an excise manufacturer licence to produce or distil spirits the warehouse could, without additional approvals, produce hand sanitiser and then report it by using the duty free-rate tariff item on their Excise return. The imported spirit would then be treated as locally manufactured, and subject to a free rate of excise rate. 

The summarised procedure is as follows:

•                 As imported and until such time as they are used in the manufacture of an excisable product, the goods are subject to customs duty of 5% plus $86.90 per litre of alcohol.

You cannot go from an imported undenatured ethyl alcohol straight into making sanitiser or significant customs duty is payable. There needs to be excise manufacture in-between, hence the excise manufacturer licence requirement.  Blending and/or reduction is first required and then the resultant excisable alcohol can be used as a concessional spirit to make hand sanitiser.

•                 A Nature 20 is lodged to enter the goods into a bond licensed by both the ABF and ATO.

•                 A Nature 30 is then lodged quoting treatment code 444. This takes it out of the customs system and puts it in the excise system.

•                 In the bond the undenatured alcohol is further manufactured and then manufactured into hand sanitiser, provided the bond holds such approval from the ATO.

•                 The manufacturing bond writes off the quantity used at the end of its settlement period on its excise return.  If the excise licenced manufacturing bond uses alcohol, which has been blended or reduced to make it excisable, to then make hand sanitiser they would report the alcohol under excise tariff item 3.7, which has a free rate of duty.

Please note that procedures other than as above may be subject to permits granted by the ATO for an operator to receive and use duty free rate products.

Not only were the costs in this process significant, but the ABF also considered the names and addresses of licensed bonds of all types to be subject to privacy legislation and refused to provide them to industry. Our experience was that as a consequence some importers and customs brokers were  unable to locate a dual licensed facility in a timely manner. FTA would suggest therefore that the process review include the necessity for this confidentiality, and whether publishing the names of such facilities would be detrimental where those facilities have provided written agreement to that publication.

TCO Revocations

According to the decision in in Vestas - Australian Wind Technology Pty Limited and Chief Executive Officer of Customs [2015] AATA 348 (21 May 2015), the objective of the Tariff Concession System “...is to ensure that industry is not taxed by a tariff where it is serving no protective function. …. a tariff serves no protective function where there are no goods serving similar functions, and so no substitutable goods, made by Australian industry in the normal course of business.”

If a TCO exists, then substitutable goods are not manufactured in Australia and there is therefore no industry to protect. Why then has the revoking and reissuing of TCOs under s.269SD changed over about the last five years to deny refunds and/or ongoing duty savings to legitimate importers of goods in conflict with the stated intent of the TCO scheme?  This result is occurring because the TCO is either not reissued when revoked with a narrower wording or is not revoked on and from the original operative date, with a new TCO made from that date. This has not always been the regulator’s practice. In the past the TCO in the second case was revoked on and from the original operative date, with the replacement narrower TCO then operative from that date. Refunds to legitimate importers were then available.

ABF current practice has been that if a TCO is revoked under s.269SD (1AA), no replacement narrower TCO is made. This practice is maintained even when only one of a number of components is found to have a substitutable good manufactured in Australia. Note that the ABF does has the authority to revoke the TCO and make a narrower TCO for those goods for which substitutable goods are not manufactured in Australia, but it does not do so. If the decision in Vestas is followed, why then does it not maintain the duty saving for these goods? Why did the policy change? The legislation does not appear to have changed.

The impact for revocations under s.269SD (2) is as severe. Customs Act s.269SD (2) requires that

“(2) If the CEO is satisfied that:

(c) having regard to written advice on the matter given by an officer of Customs;

the tariff classification that is stated in a TCO to apply to the goods the subject of the TCO has not, with effect from a particular day, applied to those goods, the CEO must:

(d) make an order revoking the TCO with effect from that day; and

(e) make a new TCO in respect of the goods with effect from the revocation.”

If a TCO when made was keyed when made to an incorrect tariff classification, then the legislation seems clear that the revocation should apply back to the operative date given that the tariff classification will always have been wrong, which under s.269SD(2) means that the new TCO should then be made with effect from that original operative date.

The rationale I was advised in one matter was that importers will then claim refunds – as they are legally entitled to do had the TCO been keyed correctly – but companies that have used the TCO incorrectly in the past will not then be covered. I maintain my query as to how it is acceptable to support incorrect classification and TCO usage in any circumstance.

The Act at s.269SD (4) provides: “(4) The particular day referred to in subsection (2) may be the day on which the TCO that is revoked came into force or a later day.”, but as a matter of equity how is this fair? Acknowledging of course that the law has little to do with fairness or justice.

This practice effectively supports classification and TCO use by word search. It penalises companies whose brokers have correctly classified the goods to support companies that have not. Should this be supported at the expense of companies that have undertaken proper diligence in tariff classification?

Temporary Imports

Importers may bring goods into Australia for a period generally not exceeding twelve months without the payment of duties and taxes, either by lodging a security or undertaking with ABF at the time of import under s162, or by using a carnet under s.162A. This article refers only to temporary imports under s.162.

Section 162 of the Customs Act provides for delivery of goods

·        ‘the property of a person in a prescribed class of persons’; or

·        goods in ‘a prescribed class of goods’; or

·        goods for ‘a prescribed purpose’.

without payment of duty or tax provided a security or undertaking is established. Duty and/or taxes are however payable if the goods are not exported within twelve months, or such extension of time as the DIBP may allow.  

To properly understand the current challenge, it is worth quoting Customs Regulation 99 (CR99) as these Regs changed in 2015. CR99 defines what is “prescribed” for the purposes of s.162:

Classes of persons

(2) The classes of persons are tourists and temporary residents.

Classes of goods

(3) The classes of goods are the following:

(a)    specialised equipment or tools that:

(i)               are to be used in exploration, production, manufacture, repair or modification; and

(ii)              are included in a class of goods to which an intergovernmental agreement applies;

(b)   goods imported for use at a public exhibition or for entertainment, other than:

(i)               cinematograph films of a kind usually used for profit; or

(ii)              theatrical costumes, scenery or property;

(c)    testing or evaluation equipment.

Prescribed purposes

(4) The purposes for goods are testing and evaluation of goods.

Customs Regulations 2015

It is probable most of us did not realise the full impact of the change to this Regulation in 2015 and the consequences of the insertion of ss.3(a)(ii) above in CR99, given previous guidance such as a March 2015 Fact Sheet and a still current ACN 2001/17 on the requirements for temporary imports.

It should be noted too that the explanatory material issued at the time of this change states: “These restructuring and updating changes are not intended to change the current operation of the equivalent provisions in the Customs Regulations 1926 …. However, where the Regulation makes other changes that require further explanation, these are identified and explained in this Attachment.” Unfortunately, the only comment in relation to the change to the (then) Regulation 124 is that “This section specifies what goods may be brought to Australia on a temporary basis without payment of duty for the purposes of subsection 162A (1) of the Act.”

Please note that the requirement for compliance with an International Convention to which Australia is a signatory at ss.3(a)(ii) above, relates ONLY to prescribed goods and not temporary imports by prescribed persons or for a prescribed purpose.  The applicable “intergovernmental agreement” is the Convention on Temporary Admission, otherwise known as the Istanbul Convention, however, note that an International Agreement, although ratified by Australia, does not override Australian legislation.  

So, the purpose of this article and the above background?

Industry should take careful note that ABF may audit temporary imports under s.162. Think about this – the goods have arrived, been used and left Australia. The parties and the goods are not in Australia. Duties and taxes were not paid as it was a temporary importation. Drawback is not available except for exhibition goods, as anything else is deemed to be used. So, given past history, who do you think the Department is targeting if the provisions of s.162 and CR99 are not met?

It appears that Australia has only acceded to Annex A of the temporary import convention, which relates to ATA and CPD Carnets, and Annex B1, which is related to Event, Fairs and Exhibitions.  The Department has never advised industry that this Convention was not ratified, indeed, quite the contrary. Despite this lack of transparency at least one broker has been audited and duties and taxes called up on machinery and equipment to which no other convention applies. Penalties were threatened.

Compliance is compliance however it is achieved, and for the Regulator to issue no guidance to industry when this matter was discovered, and to then not provide a grace period within which past imports could be reviewed and adjusted as necessary, is unconscionable and in conflict with their stated objectives of working with industry and trade facilitation.

Action Required

May I suggest a review of past temporary import transactions may be timely? May I suggest that if your company may be caught by this matter a Voluntary Disclosure in accordance with s.243T – noting the ABF form is not a requirement of s.243T - should be lodged as step 1? And if a demand is received be very careful of the party to whom it is addressed, as it is probable that only a registered importer or their GST agent in Australia can claim this was a creditable importation and therefore claim an input tax credit if one is available. 

Please note other conventions to which Australia has acceded that may assist in your review: -

• Temporary Importation of Private Road Vehicles and also Customs Convention Commercial road vehicles

• International convention – Samples and Advertising Material  

• Customs Convention - Scientific Equipment  

• Convention – Events, Fairs and Meetings

• Customs Convention on the Temporary Importation of Professional Equipment

Generally, this last convention may be used under S162 (specialised equipment) with some exceptions including those contained in Annex C – 1, which provides “It does not include equipment which is to be used for internal transport or for the industrial manufacture or packaging of goods or (except in the case of hand tools) for the exploitation of natural resources, for the construction, repair or maintenance of buildings or for earth moving and like projects.”

Further information on International Conventions is available on the DFAT website under “The Australian Treaties Database”.

A guide to importing Undenatured Ethyl Alcohol of an ABV of 80% or greater for use in manufacturing hand sanitiser in Australia during COVID

Imported undenatured ethyl alcohol that is imported with an alcohol by volume (ABV) content of 80% or greater, and that is for use in manufacturing hand sanitiser in Australia, is subject to customs duty, when imported , of 5% plus $86.90 per litre of alcohol. While a Free Trade Agreement may remove the 5% substantive rate, it does not remove the $86.90/LAL EEG (excise equivalent good) rate. There is no applicable TCO for the goods as imported and little chance of obtaining one as the good is manufactured in Australia. As you may be aware, a Tariff Concession Order (TCO) cannot specify end-use, but bylaws are able to do so. Freight and Trade Alliance (FTA) therefore approached the Australian Border Force (ABF) to request consideration that a new bylaw be made providing that goods could be imported duty free for use during the Covid-19 pandemic (or such other emergencies as might be decreed) and an Item 57 4th Schedule bylaw was subsequently made.  However, while it covers goods such as personal protective equipment (PPE) and ventilators for use in the pandemic, it does not cover undenatured ethyl alcohol because of the significant quantities now being manufactured in Australia in response to the need for it.

The suggestion that FTA has been providing to the many members that have reached out to us for assistance and advice is for the importer to consider warehousing the goods in a dual licensed facility administered by the Australian Taxation Office (ATO) on behalf of the ABF.  If the warehouse has an excise manufacturer licence to produce or distil spirits the warehouse can, without additional approvals, produce hand sanitiser and then report it by using the duty free-rate tariff item on their Excise return. The imported spirit will then be treated as locally manufactured, and subject to the concessional excise rate administered by the ATO.  

The procedure which has been confirmed by the ATO, is as follows:

• As imported the goods are classified under the Customs Tariff, and subject to customs duty.  The comparable excise duty rate would be 3.2% and a duty of $86.90 per litres of alcohol. Until such time as they are used in the manufacture of an excisable product, they are subject to customs duty.  To make them subject to excise you need to manufacture them (i.e. reduce or blend with an Australian manufactured spirit).  This excisable alcohol can then be used as a concessional spirit to make hand sanitiser.

• A Nature 20 is lodged to enter the goods into a bond licensed by both the ABF and ATO.

• A Nature 30 is then lodged quoting treatment code 444. This takes it out of the customs system and puts it in the excise system.

• In the bond the undenatured alcohol is further manufactured and then manufactured into hand sanitiser, provided the bond holds manufacturing in bond approval for alcohol from the ATO. This process must involve further manufacture of the undenatured ethyl alcohol and may involve a reduction in strength giving the LAL of the undenatured product coming in is much higher (>80%) than the minimum approx. 60% recommended for hand sanitiser. (The ATO advise (as we know) that making hand sanitiser by itself is not considered to be excise manufacture as the sanitiser is not an excisable product.  You cannot therefore go from an imported undenatured ethyl alcohol straight into making sanitiser. There needs to be excise manufacture in-between hence the excise manufacturer licence requirement.  Blending and/or reduction is therefore first required and then the resultant product can be used to make hand sanitiser.)

• The manufacturing bond writes off the quantity used at the end of its settlement period on its excise return.  If the excise licenced manufacturing bond uses alcohol, which has been blended or reduced to make it excisable, to then make hand sanitiser they would report the alcohol under excise tariff item 3.7, which has a free rate of duty. .

Please note that procedures other than as above may be subject to permits granted by the ATO for an operator to receive and use duty free rate products.

• If the spirit is imported and then intended for use in making hand sanitiser, and this will be undertaken by licensed third parties (for example, imported into a licensed warehouse and subsequently manufactured into hand sanitiser/cleaner at that dual licensed premise as above), then the importer does not need licences or permissions from the ATO.

• If the importer intends to undertake this activity at their own facility, and they are not already a licensed operator, they must apply to the ATO for these licences. Applications are available on the ATO website, but note that fees apply both for warehouse licences and applications:

• Warehouse licence: https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Excise-equivalent-goods-(imports)/Customs-warehouse-licences/

• Excise licence: https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Alcohol-excise/Applying-for-an-excise-licence--alcohol/

Other licensed entities (for example, breweries) can also apply for permission to manufacture or obtain spirit for the purposes of producing hand sanitiser. ATO has advised that they will fast-track these applications and aim to process them within 1–2 days. Once approved, the goods are reported using the free-rate tariff item on the Excise return.

Other non-licensed entities, such as hospitals, pharmacists, health care practitioners, education institutions, and government institutions can all receive an unrestricted amount of concessional spirits to meet their manufacturing, scientific or medical needs. This does not require a permit.