Originally published by Lloyds List DCN, September 30, 2016
News of the revocation of the licence (Licence) issued to QSL Freight Forwarding Pty Ltd by section 77G of the Customs Act 1901 (Act) represents a sobering reminder of the powers of the Australian Border Force (ABF) and the way in which it can intervene to deal with perceived breaches of the licensing regime applying to such premises.
The speed of the action possibly points to an increase in such actions which may include actions against owners of other premises licensed under the same section of the Act s as well as premises licensed under section 79 of the Act or against licensed customs brokers (LCB). It may also suggest an increased level of intervention in premises or persons subject to "approved arrangements" under the (new) Biosecurity Act 2015.
I have previously been involved in a number of instances where the ABF (and its predecessors) had been engaged in lengthy discussions with the owners of licensed premises regarding perceived compliance leading to threats of impending suspension or revocation of the licence and removal of goods under customs control. At that late stage, I had been consulted to assist against such outcomes. That usually entailed frantic negotiations with the regulator to try and establish conditions on which the licensed premises could either continue to trade or do so pending proceedings against the proposed suspension or revocation. Those conditions could entail directions as to what goods could (and could not) be handled, manner and hours of operations and changes to physical premises, for example by way of additional physical security at the premises. Those examples have been required intense work and negotiation with the ABF and is "no fun whatsoever" and usually leaves the owner blaming its lawyer for all the trouble.
There have been few litigated cases on the issue – there was one in more recent times regarding an attempt to revoke the licence of an LCB in which the LCB was successful in having the revocation overturned. However based on my experience, there are many matters which are resolved between the ABF and the holders of the licences and result in an outcome which allows the holder of the licence to continue its operations and gives the ABF additional comfort as to way in which the licence – holder conducts its operations. However, in this case, the action appears to have been different – a relatively new licensee subject to sudden and severe action – the revocation of the licence.
I tend to the view that with the continued delay to the review of the "customs licensing review" the future of the licensing regime will be one of tighter controls and more immediate intervention by ABF and all the other border agencies which, somehow, have to fit with the need for trade facilitation.
A few thoughts on this case and the possible consequences:
The ABF had at first exercised search warrants to secure evidence and then issued a Notice of Intended Cancellation and Suspension of the Licence – with no proceedings being issued to stop the effect of the Notice, the licence was cancelled with full effect, 10 days after the search warrants had been exercised
The holder of the licence had not been in operation for very long which did not give it a much history of excellent compliance on which to draw to draw to defend the Licence
The reported incident relates to alleged handling of cigarettes in a way to defraud the revenue. As readers would be aware, there is a massive compliance and enforcement focus on dealing with tobacco in a way to avoid taxes which now attract extremely high rate of duty. After all, the most recent Budget raised taxes to a new high and announced new powers and offences in relation to attempts to avoid the revenue otherwise payable. The recent CBFCA State Conventions included presentations on seizures and offences and the types of practices adopted by criminal parties to smuggle the goods as a means to avoid being inadvertently engaged in such activities. However in this case, the media release suggests that the actions were undertaken deliberately.
As readers would be aware from the June edition of the ABF Compliance Updates and as set out in the recent CBFCA NNF 2016/151, the highest numbers of infringement notices have been issued in relation to alleged breaches of sub - sections in section 33 relating to handling goods under customs control without authority as would be the prosecutions here.
There have been a number of recent announcement of seizures of tobacco and cigarettes on which duty had not been paid and it will call into question those in the supply chain who handled the clearance of containers which (secretly) contained the offending items.
There must be a decreasing number of premises willing to handle tobacco – even legitimately, given the increased incidence of smuggling of seized products and the unwillingness of insurers to insure the trade.
An increased compliance and enforcement action against all holders of licences, including LCBs, is to be expected, especially as we wait anxiously for the results of the review of the "customs licensing" provisions, the result of which has been promised on several occasions.
The media release from the ABF identifies the party whose licence has been cancelled and suggests that party was allegedly involved in attempts to defraud the revenue – before findings of any such type by a Court.
The media release also fails to provide details of the alleged offending behaviour although without details. This can be frustrating as the more detail which is provided the more that other licensed parties can learn.
If proceedings are imminent or have started against a licence then please consider recourse to legal options to seek review including the ability to have the proposed action withheld pending a full resolution and testing of the matter in the AAT or Federal Court. Of itself this may give cause for compromise or negotiation on the position.
The focus on the customs licensing regime is due to issue any day now – and given the lack of action such as this in the past, we may well expect more such positive action by the ABF in the future against all licence holders.
Ultimately the best I can do is to continue to caution those holding licences to pay careful attention to the terms of the Act governing their licences and the conditions of those licences and to pay even more careful attention to the actions of their clients and the attention of the ABF. Proper training of staff, proper engagement (and contracts) with clients and the ABF are of massive value and can only assist in the successful conduct of their business. Ideally, those holding licences should have access to their "compliance record" with the ABF so as to ensure that the important record is correct and to rectify offending conduct. And insurance – lots of insurance.
As always – if pain persists, see your lawyer and pay attention to the review of the licensing regime! Recourse to the legal options is often left way too late until the problems have already been created and the adverse position entrenched.