Offender Sentenced for Smuggling Tobacco to Avoid Customs Duty

The offender was convicted and sentenced to three years and three months in prison with a non-parole period of 18 months for importing tobacco with the intention of defrauding customs revenue, under section 233BABAD(1) of the Customs Act (Cth) 1901. The court considered the maximum penalty, the offender's plea of guilty and lack of prior criminal history.

OUTCOME: Allowed

District Court New South Wales

Medium Neutral Citation: R v [NAME] [2023] NSWDC 442 Hearing dates: 22/9/23 Date of orders: 22/9/23 Decision date: 22 September 2023 Jurisdiction: Criminal Before: Bourke SC DCJ Decision: Convicted and sentenced to a Commonwealth term of imprisonment of 3 years 3 months with a NPP of 18 months (14/9/22-13/3/24). A 25 percent discount has been taken into account. Catchwords: Crime – Sentence – Commonwealth offence – Import tobacco with intention of defrauding the Commonwealth of revenue Legislation Cited: Customs Act (Cth) 1901 Crimes Act 1914 Cases Cited: R v Zhang [2017] SASCFC 5 R v Saleh [2015] NSWCCA 299 Category: Sentence Parties: [NAME] - [NAME]: Mr [NAME] for Crown Mr [NAME] for [NAME](s): 22/275204

sentence 1. [NAME] Mr [NAME] is for sentence on a single offence under the Customs Act (Cth) 1901 being an offence under s 233BABAD(1) of importing tobacco with intention of defrauding the revenue.

2. The maximum penalty for that offence is ten years imprisonment. The maximum penalty is of course an important guidepost in the sentencing exercise to which I have had regard.

3. I intend on account of [NAME]'s plea of guilty to allow a 25% discount by reason of the utilitarian value of that plea. There is of course no specified percentage in Commonwealth matters but nonetheless that is the discount that I consider appropriate in this case.

FACTS 1. Turning to factual matters, the Agreed Facts note that [NAME] arrived in Australia from Greece in November 2019 and thereafter was involved with others in the preparation for, and importation of, two shipping containers which contained tobacco products. He did so with the intention of avoiding the payment of Customs duty. Each container was intercepted by Australian Border Force and were found to contain a total of 16 million cigarettes. The Customs duty relating to them was $17,904,800. 2. [NAME], a Greek citizen, was recruited to participate in the offences by a [NAME] [NAME] who had arrived in Australia on the same day in November 2019 as [NAME]. There is no evidence, however, as to how they came to know each other.

3. Mr [NAME] is also a Greek citizen. He left Australia in late-2019 and has not returned to Australia. It is not known whether Mr [NAME] gave directions to [NAME] about the imports or whether both [NAME] and [NAME] acted on the directions of another man, [NAME], who was directly involved in the purchase of the tobacco that was in the containers. As I have said the offence involved two containers.

4. The first container was shipped from Singapore to Sydney in late September 2021 via Malaysia. Its documentation recorded that it contained 14,000 pail buckets. However, following X-ray, the container was found to contain 600 cardboard boxes concealed at the rear of the container behind a large number of plastic buckets. Inside the boxes there was found 6 million [NAME] brand cigarettes comprising 5.2 million premium cigarettes, 700,000 standard cigarettes and 100,000 menthol.

5. The container was being shipped to a company called [COMPANY], an entity which had been incorporated in the name of [NAME] about six months after he left Australia. The company was one over which [NAME] exercised control and was created solely for the purposes of importations.

6. In preparing for the arrival of the first container [NAME] caused [NAME] to enter into a rental agreement for two storage units at [NAME] in Chullora. In dealing with [NAME], [NAME] used the name "[NAME]". He also provided [NAME] with two mobile phone numbers on which he could be contacted, one of which was subscribed in the name of Mr [NAME]. 7. [NAME] operated a number of accounts with the Commonwealth Bank which were used to make payments in furtherance of the importation. One of them was in the name of Mr [NAME] and had been opened more than a year after his departure from Australia. The account in the name of [NAME] was used solely for the purposes of meeting expenses associated with the importation enterprise. It received funds either by over‑the‑counter cash deposits or by transfers from a CBA account in the name of [COMPANY] of which [NAME] was the sole director.

8. In addition to using the CBA account in the name of [NAME] to make seven payments to [NAME] [NAME] used the account to pay $5,539 to [NAME] which acted as the freight forwarder for [NAME]. That payment was made by [NAME] on the day that the container arrived at Port Botany.

9. Of that sum, $2,994 related to duty and taxes payable to the Commonwealth based on the declared importation of the buckets said to have been in the container.

10. In the days before the arrival of the container a payment in that amount had been made by a Customs broker named [COMPANY] which was acting on the instructions of [NAME] and in reliance on documents provided by [NAME]. [COMPANY] were provided with an authority from [NAME] which was purportedly signed by Mr [NAME] as well as a false invoice relating to 14,000 buckets which was consistent with the information on the waybill. The author of the false documents, however, is not known.

11. The container arrived at Port Botany on 29 September 2021.

12. About three days later, [NAME] called [NAME] at Chullora to seek permission for the container to be delivered there at some stage in the coming week.

13. Between 6 and 8 October 2021 a number of bookings were made with Fast Track Deliveries, a transportation company, by somebody using the name of [NAME] relating to the collection and transfer of the container.

14. The identity of the person with whom Fast Track Deliveries dealt is not apparent, however, [NAME] made at least three telephone calls to [NAME] around this time to provide updates about the container's likely arrival date.

15. Around this same time [NAME] was seen travelling in a vehicle driven by [NAME] in which vehicle ABF officers subsequently found a USB device containing documents relating to the importation as well as a business card for [NAME].

16. During a later search of Mr [NAME] residence, ABF officers seized an iPhone on which were found numerous communications between [NAME] and [NAME], as well as WhatsApp conversations with a Mr [NAME] which related to the purchase and shipping of [NAME] brand cigarettes. One of those messages which was received by [NAME] from [NAME] in March 2021 related to this importation and was in the following terms: "Container cost 4000 USD (you can sell the container after). Singapore Malaysia 2000 USD Transloading including changing paperwork and container 6000 USD Freight to Sydney from Singapore through Malaysia 6200 USD Total equals 18,200 USD for first container You can pay them direct. You can pay in Singapore dollars"

1. I note of course that the reference to USD is evidently a reference to United States dollars.

2. In July 2021, [NAME] used a [NAME] account which he controlled to make two payments to the total of $22,780 to an account held by Mr [NAME] in Vietnam. Another payment in the amount of $20,807 was made to [NAME] by [NAME] who was an associate of [NAME] with whom [NAME] also came to be associated whilst he was in Australia. During a search of Mr [NAME] residence, ABF officers found a key marked "WH" to a warehouse in Ingleburn which was apparently where [NAME] resided for most of the time he was in Australia and which had been leased by [NAME] as a director of [COMPANY] the day before he left Australia. 3. [NAME] used a CBA account in the name of that company, (International Rising), to make payments for rent and utilities on the warehouse from late December 2020. The first container was delivered to [NAME] on 9 October 2021. CCTV captured [NAME] unpacking the container along with other males. That CCTV footage also captured [NAME]'s surprise upon learning that the cigarettes which had been removed by ABF officers were not in the container. Subsequently, [NAME] abandoned inside the [NAME] the "cover load" of red plastic buckets and he had no further contact with [NAME].

4. The customs duties payable on the six million cigarettes inside this container was $6,714,300. It is an agreed fact that at no stage did [NAME], [NAME], [NAME] or [NAME] have the means to pay that sum.

5. Turning then to the second importation. [NAME] had sourced the [NAME] cigarettes directly through Mr [NAME], [NAME] was also able to source other brands of cigarettes through contacts in the United Arab Emirates. Mr [NAME], with the help of others including Mr [NAME] then caused more cigarettes to be shipped to Australia via Singapore. From around mid-March 2021 [NAME] engaged in WhatsApp communications with contacts in the UAE for the purchase of about 1,000 boxes of [NAME] brand cigarettes for an amount of USD 85,000.

6. Between 16 and 19 August 2021, [NAME] used a [NAME] account that he controlled to make three payments to a total of about $113,000 to an account in the UAE in furtherance of the purchase of the cigarettes. In early September 2021 [NAME] approved a bill of lading in relation to the shipment of [NAME] brand cigarettes from UAE to a consignee in Singapore named [NAME] which had been nominated by Mr [NAME]. At the same time, [NAME] used WhatsApp to send a copy of the bill of lading to [NAME] and this bill of lading indicated that the contents of the shipment to Singapore was cigarettes.

7. As part of the agreement between [NAME] and [NAME], it was understood that [NAME] would then on-ship the container to Sydney on the basis that it was a consignment of food packaging. To help substantiate this, [NAME] assisted [NAME] to create false packing lists and invoices relating to the purported purchase from [NAME] of 1,365 "packing boxes (pizza)" weighing 14,288 kilograms. No payment however was ever made to [NAME] for this purported purchase.

8. In late September 2021, with the assistance of [NAME], a booking was made for the shipping of a 40 foot shipping container to Sydney from Singapore. In the days before this booking, two payments to a total of $49,143 were paid to a freight forwarder. The first payment of $25,000 was made by [NAME] associate Mr [NAME]. The second payment for the balance of the amount was made by Mr [COUNSEL] himself.

9. On 27 September 2021, a representative of the Orient Overseas Customer Line sent an email to [COMPANY] seeking to confirm that the bill of lading was correct. It was [NAME] who replied to that email in which he nominated [NAME] as the customs broker. Throughout his involvement with Bluetongue, [NAME] used the name (described in the statement of facts as an alias) of "[NAME]".

10. In the first week of October 2021, Bluetongue exchanged a number of emails with [NAME] so as to gather documents and information needed to submit an import declaration to the ABF. During those exchanges, [NAME] provided Bluetongue with invoices and other documents that he knew to be false. These documents were also found in the possession of [NAME] when his car was later searched.

11. On 8 October 2021, Bluetongue used the information and documents provided by [NAME] to lodge an import declaration from which a liability of $3,198 in duties and taxes arose, based of course upon the falsely declared contents of that container. Later that day, Bluetongue sent an invoice to [COMPANY] for that sum plus its fees which [NAME] caused to be paid.

12. The second container arrived on 17 October 2021. Unknown to [NAME], in the days before the arrival of the container, ABF staff had conducted searches of [NAME]'s premises and of the Ingleburn warehouse where [NAME] mostly resided. [NAME]'s personal effects were at the warehouse, he was not present at that location on 14 October 2021, which presumably is the day that the Australian Border Force carried out their searches. It is noted that while [NAME] was in the presence of ABF members, [NAME] tried to call him multiple times. In the days after the container arrived, [NAME] continued to exchange emails with Bluetongue about the progress of the container and its delivery to the Ingleburn warehouse.

13. The second container had, however, been intercepted and was found to contain ten million [NAME] branded cigarettes packed into 1,000 different boxes comprising three million [NAME] black red cigarettes and seven million [NAME] black gold brand cigarettes. The customs duty payable to the Commonwealth in relation to the importation of those ten million cigarettes was $11,190,500 in circumstances where the applicable rate of duty was $1.11905 per cigarette stick. At no stage over the offending period did [NAME], [NAME], [NAME] or [COMPANY] have the means to meet that liability. 14. [NAME] was arrested on 14 September 2022, in other words, nearly a year later, whilst working at a business operated by Mr [NAME] associate, [NAME]. Those then are, in summary, the agreed facts.

OBJECTIVE SERIOUSNESS 1. As this is a Commonwealth offence, I direct myself to the provisions of s 16A(2) of the Crimes Act 1914 and the various paragraphs of that sub‑section insofar as they are relevant to the circumstances of this case. Paragraph (a) refers to the nature and circumstances of the offence.

2. In R v Zhang [2017] SASCFC 5, the [ADDRESS] of Criminal Appeal, after referring to relevant factors identified in the New South Wales decision in R v Saleh [2015] NSWCCA 299, collated a number of factors to be considered in sentencing for an offence of the kind now before the Court.

3. Firstly, [NAME]'s role. In this regard it is conceded by the Crown that [NAME] was not an architect or instigator or significant beneficiary of the plan, and I accept those concessions. However, I am satisfied that [NAME] played an important and trusted facilitating role. There was some suggestion that [NAME] may have had limited knowledge of the nature of the enterprise or at least of its scale. However, I do not entirely accept this. As I have said, [NAME] was, in my view, in a trusted position. He arrived in Australia from Greece on the same day as Mr [NAME], who had a more senior role, I accept, than [NAME]. [NAME] rented and paid for the units at [NAME]. He operated bank accounts, including one in the name of Mr [NAME]. He told [NAME] when to expect the first container and the import of that first container was done in the name of [NAME], over which, as noted in para 8 of the Statement of Facts, [NAME] exercised control. Also, he exchanged messages with [NAME] about the purchase and shipment of the [NAME] brand cigarettes and showed surprise when he found that the cigarettes were not in the first container which he helped to unpack. Furthermore, he abandoned the buckets from that first container at the [NAME] storage unit. Those buckets clearly were simply a ruse to cover the importation or at least an attempt to do so. In relation to the second container, [NAME] received from [NAME] a bill of lading which referred to cigarettes being imported, and [NAME] helped [NAME] create false documents as a cover for the real contents of that second container, after which he replied to emails confirming the correctness of the bill of lading. Also, it was [NAME] who nominated [NAME] as the customs broker and it was he who gave them invoices and other documents he knew were false. It was also he who paid Bluetongue.

4. In my view, the overwhelming inference is that [NAME] had clear knowledge, well before the first shipment and throughout the process of the second shipment, that the true intention was to import tobacco products with the intention of defrauding the revenue. This is also consistent with part of the contents of para 1 of the agreed statement of facts, which states that from his arrival in Australia in November 2019 [NAME] was involved with others in the preparation for an importation of two shipping containers into Australia, each of which was found to contain tobacco products and, further, that [NAME] did so with the intention of avoiding the payment of customs duties that would have otherwise been payable. 5. [NAME] may not have known the exact quantity of cigarettes or the exact amount of duty avoided, I am satisfied beyond reasonable doubt that he knew that there was a very large quantity and that the duty sought to be avoided would also be very large. He also knew that someone intended to make a lot of money out of the sale of the cigarettes. However, I am unable to be satisfied beyond reasonable doubt that [NAME]'s reason for travel to Australia was solely to be involved in this enterprise. Nor am I satisfied that in using the name "[NAME]" this was intended to operate as an alias.

6. In my view, [NAME] performed an important role which was in the nature of a facilitator or foreman responsible for things like appointing Customs agents, making payments, arranging storage and carrying out various other logistical matters.

7. In terms of any identifiable hierarchy, however, I accept that he was towards the lower end. I am not able to be satisfied that he was to be involved in the sale of the cigarettes or was to share directly in the proceeds of sale, although I have no doubt that he expected to be rewarded financially to some degree. How much I cannot say. I accept, however, that he was subject to the direction of others who had a more senior role than him and who, apparently, have not been charged.

8. The second matter referred to in the [NAME] decision that I quoted earlier is the sophistication and scale of the offending. In this regard, the scale of the offending, that is, the quantity of tobacco and the amount of revenue avoided, was very large. There was a degree of sophistication by reason of the use of companies, multiple bank accounts and false documents. While there was no evidence that [NAME] was a principal, the fact is that he was part of an organised group of persons whose actions were aimed at defrauding the revenue of very substantial sums. It therefore cannot be said that the offending was only part of a small-scale or short term operation.

9. Thirdly, by reference to the Zhang principles, there is the period over which the offending occurred. As already noted, the period was considerable, it being a period of at least several weeks in the case of [NAME].

10. Fourthly, by reference to the Zhang principles, the quantity of tobacco imported and the amount of duty avoided. As I have already noted, there was a total of 16 million cigarettes and a total of nearly $18 million in revenue avoided. On the other hand, none of the tobacco ended up in the community, although it was clearly the intention of [NAME] and others that it should have.

11. Fifthly, by reference to the Zhang factors, I have considered the question of whether the loss to the revenue has been repaid. Of course, there has been no payment of the import duties in this matter.

12. The sixth matter referred to in Zhang is whether the offending involved other illegality such as the use of false identities. [NAME] used the name "[NAME]", which is described in the statement of facts as an alias, I understood the Crown to accept, in submissions this morning, that as this is an equivalent of the Greek name [NAME], this submission was no longer pressed, and so I proceed on the basis that that name was not being used as an alias.

13. Seventhly, by reference to the [NAME] factors, the question of whether [NAME] was involved or proposed to be involved in the distribution and sale of the tobacco. While I have suspicions that he may well have been intending to be involved in that aspect, there is insufficient evidence for me to be satisfied about that beyond reasonable doubt.

14. Eighthly, by reference to [NAME] factors, the extent to which [NAME] gained financially. While I have no doubt that [NAME] received some financial benefit and expected to receive more if the importations had been successful, I am not able to make any finding as to what that benefit was.

15. In regard to the various matters that I have noted and, in particular, the very large scale of the operation and [NAME]'s role in it, I assess the offence as being comfortably within the mid-range of objective seriousness.

16. Paragraph (e) of s 16A(2) of the Crimes Act refers to any injury, loss or damage arising from the offence. In this regard, the obvious loss, injury or damage in this matter arises from the general government revenue which is collected for the community of Australia as a whole, being deprived funds that should have been available to support services and programs essential to the general working of the Australian community. On the other hand, the tobacco, with its potential harm to the community, was intercepted and, therefore, that aspect of harm has been avoided, although not by reason of any actions by [NAME].

17. Paragraph (f) of s 16A(2) refers to the degree to which the person has shown contrition. [NAME] has pleaded guilty to the offence, there appears to have been a fairly strong case against him, and so I do not see his plea of guilty as being much more than an acceptance of the inevitable. The Sentencing Assessment Report notes that [NAME] expressed some insight into the harm that unvetted tobacco might have involved, if it had gone into the community. However, [NAME] also tried to minimise his role and knowledge when speaking to the author of the Sentencing Assessment Report, claiming ignorance of what was in the container, and so I have some concern about the genuineness of anything that he is reported to have said.

18. On the other hand, he is supported by a letter from the Chaplain at [COMPANY], which says he wishes to amend his life and not return to prison. On balance, I accept that there is some, although limited, contrition.

19. Paragraph (g) of s 16A(2) refers to the guilty plea, the timing of that plea and the degree to which these things resulted in any benefit to the community, any victim or witness. It is accepted in this matter that [NAME] entered an early plea of guilty and, as I have said, I intend to allow a discount of 25% on account of the utilitarian value of that plea. Given the strength, however, of the Crown case, I do not consider that the plea of guilty is a demonstration of remorse or of a willingness to facilitate the course of justice but, rather, as I have said, an acknowledgment of the inevitable.

20. Paragraph (h) of s 16A(2) refers to any co-operation, and in this matter [NAME] refused to speak to police on his arrest and there has been no co‑operation.

21. Paragraphs (j) and (ja) of s 16A(2) refer respectively to the deterrent effect on the person and the deterrent effect on others. There is no doubt, as has been said in numerous cases, for example, R v [NAME] which I earlier cited, that general deterrence is a fundamentally important element in sentencing for this type of offence, and it has not been argued to the contrary. As to personal deterrence, [NAME] is likely to be deported and is unlikely to ever be able to re-enter Australia. However, this is not a matter to which I am entitled to attach any real significance, and so I remain of the view that personal deterrence is of some importance in this case.

22. Paragraph (k) of s 16A(2) refers to the need for adequate punishment and, as with any sentencing exercise, I am of course required to address the need for adequate punishment for an offence. In this case, the offence carries a maximum of ten years' imprisonment, making it an offence that Parliament has declared ordinarily to be a serious one.

SUBJECTIVE MATTERS 1. Paragraph (m) of s 16A(2) refers to the character, antecedents, age, means and physical or mental condition of [NAME]. [NAME] is now aged 59. As far as I am aware, he has no prior criminal history. He is a citizen of Greece, although he apparently spent some time during his childhood in Australia. He came to Australia in 2019 most recently on a tourist visa and, since then, apart from his involvement in this offence, has engaged in some work here. As noted in the Sentencing Assessment Report, he has essentially no social contacts in Australia.

2. A letter from the Chaplain at [COMPANY] notes that [NAME] is always polite and courteous and has expressed a desire to amend his life and not return to prison. Beyond these matters, I know little about [NAME], his background or his current mental and physical health. On the evidence there is, in my view, nothing that can be said to mitigate [NAME]'s moral culpability, which I assess as being fairly high. It is likely that [NAME] will be deported upon serving the minimum period of his sentence, but this is not a matter to which I am entitled to give any weight in sentencing.

3. Paragraph (n) of s 16A(2) refers to the prospects of rehabilitation. The Sentencing Assessment Report notes an assessment that [NAME] is of low risk and, as I have already said, as far as is known he has no criminal history. In the circumstances, I think he has reasonable prospects of rehabilitation.

DETERMINATION 1. Turning then to my final determination in this matter, I am satisfied, for the purposes of s 17A of the Crimes Act 1914 that no penalty other than imprisonment is appropriate. I take into account, however, that in serving his sentence in Australia, [NAME] is rather isolated as his family and other contacts are in Greece. This has, and will continue to make his time in custody more difficult. I have taken this aspect into account, in particular when determining the minimum period which [NAME] should spend in actual custody.

2. In determining the term of his sentence, I have had regard to statistics provided by the Judicial Information Resource System as well as a number of appellate and other decisions, including those on a table provided to me by the Crown. Mr [NAME], if you could stand up and I will announce the sentence.

3. I impose a head sentence of three years three months. I impose a non‑parole period of 18 months. Those will date from 14 September 2022. The head sentence, therefore, will expire on 13 December 2025 and the non‑parole period will expire on 13 March 2024.

4. So, Mr [NAME], as I have said, the minimum period that you must serve in custody will be until 13 March next year, and you should expect, provided you are of good behaviour, to be removed from prison at that stage. However, it is likely that you will be taken into the custody of Immigration officials.

5. Is there anything else I need to do? 6. SCARD: Nothing arising in terms of further orders, your Honour. I just wondered, without wishing to be pernickety, whether or not you formally convict [NAME].

7. HIS HONOUR: It follows from the sentence that I've imposed, but for abundant caution, yes, I convict [NAME] of the offence.

8. SCARD: May it please.

9. HIS HONOUR: I thank the lawyers for their assistance, the Court will adjourn.

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