Comptroller General of Customs v Zappia

The case of *Comptroller General of Customs v Zappia* involved an appeal to the High Court of Australia concerning the interpretation of section 35A(1) of the *Customs Act 1901* (Cth). The dispute arose after dutiable goods were stolen from a warehouse operated by a company, Zaps, which held a warehouse licence. The Collector of Customs issued a demand for payment of customs duty to Mr Zappia, the general manager and warehouse manager of Zaps, on the basis that he had failed to keep the goods safely. Mr Zappia sought review of this demand before the Administrative Appeals Tribunal.

The central legal issue before the High Court was whether Mr Zappia, as an employee and manager of the company operating the licensed warehouse, was a person who "has, or has been entrusted with, the possession, custody or control" of the dutiable goods subject to customs control, within the meaning of s 35A(1) of the *Customs Act*. This required the Court to determine the scope of "possession, custody or control" in the context of an employee managing a warehouse licensed under the Act, particularly when the goods were stolen from the company's premises.

The High Court allowed the appeal, setting aside the orders of the Full Court of the Federal Court of Australia. The Court reasoned that while Mr Zappia exercised significant day-to-day operational control over the goods and directed their handling, this control was exercised in his capacity as an employee and agent of the company, Zaps. The company, as the holder of the warehouse licence, was the entity entrusted with the possession, custody, and control of the dutiable goods by their owner. Mr Zappia's role, though involving operational management, did not amount to having or being entrusted with possession, custody, or control in a manner that would render him personally liable under s 35A(1) for the failure to keep the goods safely. The Court distinguished between the company's statutory responsibility and the delegated operational authority of an employee.