5 Common Issues In Customs Processing & How to Avoid Them
We all want our shipments to have a smooth run through customs processing. We all want our goods to arrive to us as soon as possible without any holdups.
Have you ever wondered what you can do on your behalf as a consignee to avoid certain catastrophic mistakes?
Customs Clearance involves the preparation and submission of information, in order to facilitate importing or exporting of the shipment. The service also entails of representing clients for customs assessment, examination, payment of duty and more.
Incomplete or inaccurate declarations can turn out catastrophic for a business.
Invoice to Bill Check
If you have ever walked into a custom’s broker’s office, the piles of papers would not have gone unnoticed! In order to clear and lodge a declaration for a shipment, your broker needs to answer a range of detailed questions about your goods and their components, among other things. First of all, it is fundamental that your commercial invoice and bills tie up together during customs processing. In other words, your documents need to make sense as to the contents of the shipment. If the documents don’t reconcile with the contents, your broker can not move forward with your clearance.
Some ways to tie up the documents include matching;
- Container number figures
- Amount/Number of packages
- Weight of shipment
- Order numbers
- Bill of Lading number
- Other reference numbers
The customs broker will require a statement from the supplier confirming the details of the invoices and other information regarding the shipment, if the documents do not tie back to the shipment.
If the declaration form does not include the gooods due to inadequate documentation and a short payment of duty occurs, there are three probable ourcomes;
- Pay back the duty short paid
- Pay back the short-paid duty and a penalty of 25% of the short duty is applied
- A penalty of over $9,000 in addition to paying back the duty owed
I am sure none of the above were included in your businesses annual budget for 2019, so be prepared and have your documents in order!
No Asbestos Means ZERO Asbestos!
Although some countries still have a small tolerance in asbestos, there has been an Australia-wide ban on all types of asbestos, since 2003. Accordingly, customs processing services handle asbestos cases with very high scrunity.
Asbestos is a natural mineral, very toxic to humans. Inhaling airborne asbestos fibres can cause significant health risks to humans. Such health risks include asbestosis, lung cancer, plural disease and mesothelioma. Some of which, can take up to forty-five years to develop after the individual inhaled the asbestos! Although some countries still have a small tolerance in asbestos, there has been an Australia-wide ban on all types of asbestos, since 2003.
If a shipment gets identified as possibly containing asbestos, the Australian Border Force (ABF) puts a hold on the goods. Following, the hygenists take samples of the goods with special equipment, in order to test them for asbestos. Should they detect asbestos, they will seize the goods as prohibited imports. As per the ABF statement, “A person found unlawfully importing or exporting asbestos, or goods containing asbestos, may be subject to fines or prosecution”. Penalties for such activities can be up to $210,000 or three times the value of the goods, whichever is greater. Whereas, in more severe cases punishment includes imprisonment up to 5 years.
How to avoid?
First of all, never assume that because a goods’ label says “asbestos-free”, it actually is. It is a common trap importers fall into, as different countries, have different standards as to what qualifies as “asbestos-free”. For instance, in China, products with up to 3% asbestos classify as “asbestos-free”. Whereas, the same products would be totally prohibited in Australia. Additionally, importers must directly enquire to the foreign manufacturer of the product to clarify if there has been any use of asbestos during manufacturing. This needs to be confirmed before the importing process starts.
As mentioned earlier, some countries still allow the use of asbestos. Hence, ensuring that your goods were not manufactured in the same facilities where asbestos containing goods were manufactured, is imperative. That is due to the high risk of cross contamination. In fact, consignees should question their overseas supplier about the use of asbestos at ANY stage of the supply chain.
The ABF recommends the below precautions for importers;
- Testing and Sampling goods while they are still overseas
- Contractual obligations with their suppliers that specify nil asbestos content
- Regular risk assessment and quality assurance processes, that take into account;
- What raw materials are used in the manufacture of the goods
- Where manufacturers outside Australia source their raw materials
- Identifying and subsequently minimising asbestos-risk activities at the point of manufacture
Brown Marmorated Stink Bug (BMSB)
Moving onto one of the most common issues customs processing services are facing lately, the BMSB.
Although the BMSB is not present in Australia, BMSB is highly mobile, especially during winter. They tend to find shelter in cargo, vehicles or machinery, which is how they can migrate to Australia. Here, they can cause severe damage to our fruit and vegetable crops. Unfortunately, the BMSB detection rate in Australia has increased in the recent years. For instance, in January 2019 BMSB was detected in Dandenong South.
Therefore, all Freight All Kind (FAK) shipments departing from BMSB target risk countries and including target high risk goods, will need to undergo fumigation beforehand, offshore or endure re-exportation, as per the next BMSB season starting 1st September 2019. However, FAK shipments departing from target risk countries and containing target risk goods, will be treated slightly different. In those cases, the Department of Agriculture and Water Resources (DAWR) will issue a direction of strict surveillance. Essentially, the DAWR can issue fumigation based on i) Country of Origin ii) Vessel Pathway.
Albania, Andorra, Armenia, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, Czechia, France, Georgia, Germany, Greece, Hungary, Italy, Japan (Heightened vessel surveillance only), Kosovo, Liechtenstein, Luxembourg, Montenegro, Netherlands, North Macedonia, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Switzerland, Turkey and United States of America. If your shipment departs or pathways through a target risk country, your customs broker will notify you about fumigation.
The consequences of failure to comply with the upcoming measurements of mandatory fumigation, could severely harm a business. Shipment delays due to re-exportation can cause stock shortage, declines in overall productivity, sales, growth and brand trust. Not to mention the additional costs a business would experience for rebooking slot at the port, additional stevedore expenses, rebooking inspections and more.
The DAWR, requires a quarantine Packing declaration for non-commodity purpuses. The declaration is directed to DAWR for release without intervention. It specifies the type of material used in the packing of the goods of containers, together with the cleanliness of the container. It is only required for sea freight containerised cargo, break-bulk doesn’t apply. The entity or person responsible for packing the container, is responsible to fill in the packing declaration. If a valid packing declaration is not passed onto your customs broker in time, your cargo will be sent to an approved quarantine premises for inspection or require a tailgate inspection. This would result in added costs for the tailgate, unpacking, officer booking for inspection fees, as well as all the operational consequences of stock delays.
Do note that if during customs processing, a packing declaration, which, declares that the goods comply with Quarantine regulations and upon inspection, the quarantine control team detect that they do not comply, then quarantine will direct the full unpack of the containers. The full unpack of a container will result in further postponement of the shipment…
One thing you can do to avoid this trouble, is to specify that a packing declaration is essential, under your contract of sale with your supplier. Another thing is ensuring the use of an annual packing declaration, where possible in customs processing. An annual declaration is more suitable for ongoing shipments from the same supplier for the same goods.
Free Trade Agreement (FTA)
If you are trading with a country, with which Australia has entered a FTA, it is paramount that you provide your customs broker or the purchaser for exports, with evidence of preference as required by the particular FTA (Chafta COO, AUSFTA statement of origin).
As per the Department of Foreign Affairs and Trade, Australia has entered an FTA with the below countries;
- Australia-New Zealand (ANZCERTA Or CER)
- Singapore-Australia (SAFTA)
- Australia-United States (AUSFTA)
- Thailand-Australia (TAFTA)
- Australia-Chile (ACI-FTA)
- ASEAN-Australia-New Zealand (AANZFTA)
- Malaysia-Australia (MAFTA)
- Korea-Australia (KAFTA)
- Japan-Australia (JAEPA)
- China-Australia (ChAFTA)
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
If you bypass this step, customs will charge you the full duty. Similarly, to trading with a country that Australia has not entered an FTA with.
In order to enjoy the benefit of duty reduction or duty free as per the FTA, you need to request and receive the FTA certification from an approved authority body overseas, in the manufacturing country of your goods. The overseas approved authority body needs to be in the manufacturing country of your goods.