Overview of the updated definition of the "Owner" for Customs Clearance

 

Overview of the updated definition of the "Owner"  

 The Department of Immigration and Border Protection has released the updated notice on the definition of "owner"  click the  attached  link to read the full notice – DIBPN No. 2017/16

The notice  confirms the liability of those involved in the supply chain.However  this notice is unlikely to impact significantly in a practical, day to day sense.

What does the notice say ?

Various sections of the Customs Act 1901 impose obligations on the "owner".  For instance, section 165 of the Act provides that underpaid duty is payable by the "owner".  Section 240 provides that the "owner" of goods imported into Australia must retain commercial documents for 5 years.

"Owner" is defined in section 4 of the Act as "any person (other than an officer of Customs) being or holding himself or herself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods".

This is an extraordinarily wide definition and as pointed out in the notice – "This means that most parties participating in an import or export supply chain, including licensed customs brokers, may be considered the "owner" for the purposes of the Customs Act". 

In essence, the broad definition in the Act means that almost any person in the supply chain can be liable for underpaid duty.  In those circumstances, the notice sets out how the Department will decide who to pursue, given they can seek payment from nearly any party in the supply chain for underpaid duty.  The following points are made:

  • the Department is legislatively obliged to pursue underpaid duty – it is not a choice;

  • this can include pursuing the party that is not commercially liable to pay the duty – a distinction not always appreciated by commercial participants;

  • generally (read "almost always"), a demand will first be made against the importer named on the import declaration.  If the duty is paid there is no further action required;

  • another party may be pursued if it is uneconomical to pursue the importer named on the import declaration, such as where the importer is based overseas or is insolvent;

  • if another party is pursued, it will be after the Department has considered the involvement and actions of parties in relation to the goods.  The impact of a party's conduct on the non-payment of duty will be relevant;

  • additionally, if duty is underpaid, it may be relevant to consider who is in possession or control of those goods.  Reference is made to Notice 2014/50 which makes clear that a purchaser under a DDP (delivered duty paid) transaction may be the target of a demand for short paid duty.

In summary, the following parties should be most concerned if there is an underpayment of duty: 

  • the importer named in the import declaration;

  • any party that contributed to the underpayment of duty – especially if that party showed a disregard to their obligations under the Act; and

  • an innocent purchaser of goods under a DDP transaction.

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