Cargo Management Re-Engineering for Australian Imports

b) Purchase a digital certificate for direct communication with the ACS through the ICS. Digital certificates are available through VeriSign Australia, currently the only approved issuer in Australia. The application for the digital certificate is undertaken concurrently with a user agreement between the client (user/importer) and the ACS. The client must be registered in the ICS before communication takes place. Once the digital certificate is issued and the user registered on the ACS system, direct communication is possible. Counsel should be aware of the browser limitations that the ACS has imposed on users. The systems were designed to be compatible only with Internet Explorer, although VeriSign Australia provides the additional option of using Netscape browser. The limitation on browser usage is apparently part of the “gatekeeper” strategy adopted by the Federal Government, and is being applied as a uniform standard for all electronic communication with government agencies. It is important to be aware of the specific browser requirement, otherwise significant difficulties may be experienced by clients, in downloading and installing digital certificates on

their system with resultant frustration and possible expensive solutions to rectify any technical problems.

The ACS service standards for electronically lodged import declarations are superior to manually lodged documents.

Import declarations lodged electronically are accorded priority than those lodged by document. Customs ail to transmit an authority to deal advice to owners within 30 minutes of receiving payment of any duties, taxes and charges, provided all other Customs and Australian Quarantine and Inspection Service (AQIS) requirement have been met ¹⁰ .

Counsel should also be aware, and advise client accordingly, that different types of digital certificates are available. The client should investigate and select the one that more appropriately caters for the business operational requirements. Digital certificates are not expensive to purchase and usually have a two-year validity period.
c) Utilise the services of a Customs Broker who will undertake all necessary communication with the ACS and obtain customs clearance from the ACS, as appropriate. Customs Brokers are professionals who are licensed by the ACS to conduct business on behalf of owners. They apply commercial fees, but also provide expertise and a value added service, as it is common for a broker to be charged with the responsibility to have the cargo collected and delivered locally to clients.

Just because the services of a broker are being used, this does not necessarily mean that the client will not be asked for proper identification. The ACS will identify the broker when receiving/sending communication, but it will be the broker’s responsibility to identify the client.
It should be noted that the use of a service provider does not diminish in any way the obligation of a party to full and honest disclosure of any matters relevant to the customs process. Brokers and other service providers also have documentation and records compliance obligations in accordance with Section 240AB, that require the retention of records that verifies the content of the communication for a period of one year from the date of communication.

Counsel should ensure that the client understands the obligations in relation to the documentary retention period for any transaction with the ACS, regardless of the communication method chosen. Owners are required to keep all relevant commercial documentation related to an import declaration for 5 years, in accordance with Section 240. Where documents are surrendered because of legal or commercial requirements, the onus is on the client to ensure that such surrender is conducted as per section 240(3), that prescribes in detail the process to be followed. Counsel should ensure that the client understands the compliance requirements of this subsection to avoid problems with the authorities.

4. Self Assessed Clearance Declarations (SAC)

This is probably the most drastic change introduced by the CMR project. SAC apply to consignments with a value of AUD 1000 or less, as outlined earlier. The introduction of the AUD 1000 threshold was achieved through the Customs Amendment Regulations 2005 (No. 6) (SLI No 30 of 2005) – Schedule 1
31AC Value of prescribed goods

For subparagraphs 68 (1) (f) (iii) of the [Customs] Act, $1,000 is prescribed.
That amendment finally aligned the values applicable to SAC for all modes of transport.
The introduction of SAC came with one proviso, that is, a restriction on the method of lodgement of such declarations. Unlike formal declarations, SAC can only be lodged with the ACS electronically, pursuant to Section 71AAAF(2)
A self-assessed clearance declaration must be communicated electronically to Customs.

The ramifications of this requirement are, by and large, likely to affect small time and infrequent importers. This is because of the nature of the consignments. It is unlikely that regular importers would routinely deal with consignments bearing a customs value of less than AUD 1000.

Individuals or firms wanting to avail themselves of the SAC option will need to either be in possession of a digital certificate, and be registered to use the ICS, or engage the services of a service provider, either a bureau or broker, at commercial rates.

There are three types of SAC¹¹ , that are available, depending on the nature of the goods being imported:

a) Cargo report SAC.

This type of SAC can only be communicated by a cargo reporter, as part of the cargo report (on behalf of the importer) to the ACS. In using this type of SAC, goods of quarantine concern will be automatically directed to AQIS (based on goods description and client details). This means that clients need not make a declaration about the quarantine status of goods that appear on this type of SAC.

b) SAC (short form).

The importer, or another party acting on their behalf, may lodge SAC (short form) with the ACS. The other party (the communicator) need not be a licensed broker, therefore freight forwarders, cargo reporters or others performing similar functions may lodge SAC (short form) with the ACS. This type of SAC provides an opportunity to declare any items of quarantine concern to AQIS. Because SAC (short form) must be reported electronically, the communicator must possess a digital certificate and be registered in the ICS. Where the importer uses the services of a communicator, the importer need not be registered in the ICS (because it is not the importer who lodges the declaration). Where the importer lodges the SAC (short form) directly, then the digital certificate and ICS registration become compulsory – this is consistent with the requirement the ACS has to verify communicators.
Counsel should advise the client that where SAC (short form) declarations may be appropriate, using the services of a communicator may overcome the problem of obtaining a digital certificate and registering in the ICS – this is particularly so where the volume of transactions is very low.

c) SAC (full declaration format)

This type of SAC may only be communicated to the ACS by the importer or a licensed broker. Using this type of declaration requires the importer to be registered in the ICS. Some brokers have special Compliance Agreements with AQIS and if they wish to operate under these arrangements to address any packaging concerns or nominate inspection/treatment, they need to use this type of SAC.

The use of a SAC (full declaration format) is optional in all other circumstances.
It should be noted that customs screening and release of low value postal imports will continue and there is no requirement to lodge a SAC for postal imports.
The type of SAC to be used is influenced by the requirements of the consignment and the property of the items. The advantages of the SAC short form are:

fewer input fields, as minimal data is supplied,
no requirement for ISC registration.

The disadvantages of the SAC (short form) are:

no claims possible for any concessional rates of duty,
no automatic processing (sea cargo only) for AQIS purposes.

Counsel advising client should establish whether the items to be imported are subject to concessional duty applications and/or should be automatically processed, and if either of these circumstances apply, the client should be advised not to use the SAC (short form).
The changes outlined above have resulted from new legislation and a shift towards a higher level of compliance. Compliance requirements for the new system were introduced well ahead of time, with the Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001. This legislation introduced increased powers for the ACS, extending their reach to cover not only customs law, but also “customs-related” law. A new compliance regime was additionally introduced, together with an infringement scheme based on financial penalties for non-compliance. Whilst much of this was practically introduced to coincide with the switch over for exports, the types of penalties equally apply to imports. In this situation, the ACS were successful in “phasing in” the new requirement over a relatively long period of time, enabling the import trading community to adjust to the new compliance environment before migrating to a new system.

The shift to a new operating system for imports was always recognised as being more problematic than the relatively simpler export switch over. At the time of writing this paper, the old customs system (COMPILE) was still running in the background and this is due to be decommissioned on 3 February 2006.
In these early days, has the CMR imports system delivered everything it promised?

10 . supra at 5, p. 6.

11. Australian Customs Service,

* This article has been reproduced with the kind permission of the Vindobona Journal of International Commercial Law and Arbitration, a publication of the MAA (Austria). Orignal citation: (2005) 9 VJ 341

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