CEO of Customs v Astawa [2001] VSC 303

Supreme Court of Victoria|2001-08-24|Before: Bongiorno, J.

On or about 19 November 1999 Adi Astawa (also known as I Gede Made Adi Astawa) smuggled 2,000,000 cigarettes into Australia in a refrigerated shipping container which supposedly contained various packages of foodstuffs. He did so using the services of a customs agent through whom he made a false customs declaration in that it omitted to declare that the shipping container contained cigarettes.

The customs duty evaded by the smuggling attempt was almost $400,000 and the "street value" of the smuggled cigarettes could also be measured in hundreds of thousands of dollars. Although no evidence or submissions were addressed on the issue it seems an inescapable inference from the admitted facts that Mr. Astawa must have paid a considerable sum to the consignor of the smuggled cigarettes.

By a writ issued out of this Court on 24 August 2000 the Chief Executive Officer of Customs commenced a customs prosecution against Mr. Astawa claiming, in the first instance, various declarations, orders and penalties in respect of his smuggling activities, including the payment of customs duty evaded of $377,440.

Although Mr. Astawa initially delivered a defence to the plaintiff's claim it seems clear that at all material times he accepted that he had engaged in the illegal activity alleged and would admit his guilt when the matter came before the Court.

On the trial of the proceeding counsel for the plaintiff sought an amendment to the prayer for relief in the statement of claim so as to confine the plaintiff's claim to a declaration that the defendant committed the offence of smuggling, a conviction against the defendant in respect of that offence, an order imposing a monetary penalty pursuant to the provisions of the Customs Act 1901 (C'th), an order that the cigarettes be condemned as forfeited to the Crown or a declaration that they have been so forfeited and an order for costs. The defendant does not now contest the making of orders and declarations in these terms. He seeks only to mitigate the monetary penalty which the plaintiff seeks.

The defendant is a Balinese migrant aged 46. His counsel described his employment activities since he arrived from Bali in 1978 in some detail. Although between about 1995 and 1997 he displayed an entrepreneurial flair, largely in business ventures in Bali, for the most part he has worked as a manual worker in various aspects of the food industry. He presently works as a process worker on shift work with a company processing nuts. He works long hours and earns about $670 net per week. He has no dependent children and lives with his wife who has, herself, an income of about $400 net per week. The defendant and his wife live in rented accommodation for which they pay $150 per week.

The defendant's counsel described debts which the defendant owed to the Commonwealth Bank and to a finance company with a current total of something over $20,000. He pays a total of about $550 per month in reduction of these debts.

Prior to his marriage to his current wife in 1998 the defendant had been married for many years and had a child who is now aged 19. His counsel informed the Court that he had educated this child at Wesley College. This must have strained his resources as a manual worker to the limit.

Counsel for the plaintiff informed the Court that he was unable to contest any of the assertions of fact made on the defendant's behalf, thus leaving the Court in the position of having to accept those facts notwithstanding the lack of explanation as to how the not inconsiderable enterprise of smuggling the cigarettes was in fact financed by the defendant. Scepticism is no substitute for proof, however, and I propose to sentence the defendant on the basis that the facts asserted by his counsel are true.

The plaintiff is clearly entitled to the relief sought in the amended statement of claim. As the cigarettes themselves have been forfeited to the Crown by virtue of their having been smuggled (s.229(1)(a) Customs Act 1901 (C.) the only matter which requires further consideration is the quantum of the monetary penalty to be imposed.

At the time the defendant committed this offence the monetary penalty provided by s.233AB(1)(a)(ii) Customs Act 1901 (C'th) in respect of the offence of smuggling was an amount of not more than five times the customs duty evaded and not less than twice the amount of that duty. By an amendment which took effect on 26 May 2000 the penalty for smuggling was changed to a maximum of five times the amount of the duty evaded with no minimum. The defendant is entitled to the benefit of this amendment notwithstanding that the offence he committed would have attracted a higher penalty had it been prosecuted prior to that date (see s.4F(2) Crimes Act 1914 (C'th)).

Smuggling has always been an offence in respect of which heavy penalties have been imposed. Counsel for the plaintiff referred me to press releases in which Ministers of the Crown pointed out the anti-social nature of smuggling and the effects it has upon ordinary Australians both directly and indirectly. By defrauding the revenue a smuggler depletes the funds available for the carrying out of essential governmental activities. By creating a market with a lower cost base he engages in unfair competition with legitimate manufacturers and distributors thus leading to social and economic ills of various and diverse kinds including unemployment. It is no wonder the penalties usually imposed are harsh.

In L. Vogel & Son Pty. Ltd. v. Anderson[1] Kitto, J., at first instance, emphasised that it is sometimes only the potentially drastic consequences of a detected breach of the Customs Act that prevents some traders from defrauding their fellow citizens in this way. At p.164 he said:

"No doubt ordinary conceptions of honesty and of civic responsibility suffice to ensure a great deal of fair dealing with the Customs, but for some people little seems to matter but fear of the consequences of discovery. The Customs Act makes those consequences potentially drastic. It is for the courts to make them, in suitable cases, drastic in fact, for otherwise traders who are not saved by qualms of conscience from willingness to defraud their fellow citizens may weigh the profits they hope for against the penalties they have cause to fear and find the gamble worthwhile."

On appeal the Full Court (Taylor, Menzies and Owen, JJ.) expressly endorsed these comments (120 C.L.R. at 168). See also Hayes v. Weller[2].

In fixing the amount of the monetary penalty I am required to take into account the matters set out in s.16A Crimes Act 1914 (C'th). Taking all of those matters into account the appropriate fine in this case is a fine of $600,000.

Whilst it is undoubtedly true that monetary penalties imposed for customs and excise offences are extremely harsh, particularly perhaps when compared to monetary penalties imposed (usually under State legislation) for breaches of environmental or occupational health and safety legislation or even (under Federal law) for evasion of income or other taxes, it is not for this Court to attempt to correct any real or perceived imbalance. By the amendment to which I have referred the legislature has removed the mandatory minimum penalty for smuggling which once applied. Thus, technical or minor breaches of the law can be accommodated by appropriate adjustment of the monetary penalty imposed. However, in this case, the Court is not dealing with a minor breach of the Customs Act. Although in the submissions made on his behalf no reference was made to the profit the defendant expected to make in the event that this scheme had been successful, it would be reasonable to assume that his potential profit was great; perhaps being measured in hundreds of thousands of dollars. His fine must be similarly measured.

In computing the fine to be imposed under s.233AB(1)(a)(i) Customs Act 1901 (C'th) the Court must take into account the sentencing principles contained in s.16A Crimes Act 1914 (C'th) Matters relevant to this case include the nature and circumstances of the offence, the fact that in the event no actual loss has resulted from the offence, the defendant's not having contested the plaintiff's allegations (equivalent to a plea of guilty), the deterrent effect the sentence must have on the defendant himself, the need to ensure that the defendant is adequately punished for the offence and the probable effect that the order being considered would have on the defendant's family (in this case his wife). In the end the Court must impose a penalty that is of a severity appropriate in all the circumstances of the offence.

Taking all of those matters into account it is appropriate that a monetary penalty of $600,000 be imposed in this case.

As the Court was informed that the defendant had already approached the Australian Government Solicitor with a view to arranging terms upon which he might meet any indebtedness to the plaintiff arising out of this matter it is appropriate that the defendant continue to be given every opportunity to seek amicable accommodation in this regard. Accordingly the order imposing the monetary penalty I have fixed will be stayed for 60 days from this date.

There will be declarations and orders as follows:

(1) A declaration that on or about 19 November 1999 the defendant committed the offence of smuggling by evading customs duty payable on a quantity of cigarettes in the sum of $377,440.

(2) An order that the defendant be convicted of the offence of smuggling in respect of the said cigarettes.

(3) An order that the defendant pay a monetary penalty of $600,000 to the plaintiff to be dealt with by him pursuant to s.264 Customs Act 1901 (C'th)

(4) A declaration that the said cigarettes have been forfeited to the Crown.

(5) An order that the defendant pay the plaintiff's costs including reserved costs

of this action to be taxed.

(6) An order that the order in respect of the monetary penalty imposed in paragraph (3) be stayed for 60 days from this date.

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