The Notice addresses the vexed issue of 'authorisations' and replaces ACN 2007/56 which has now been withdrawn by Customs (and removed from its website). Ironically, a number of those in industry objected the terms of ACN 2007/56 which was then the subject of a series of workshops between Customs and industry in 2008 and extensive further discussions including the development of a further proposed notice which was ultimately not issued. After that time, there has been ongoing debate between Customs and various members of industry as to the position of authorised agents, the need to secure a written authority to act on behalf of an owner and the position of parties who may or may not have an authority to act on behalf an owner. However, the Notice has now appeared, apparently without the benefit of any significant industry consultation or arising from a particular decision.
CUSTOMS SUMMARY OF THE KEY POINTS IN THE NOTICE
Customs has summarised the key points to arise from the Notice as follows:
- only the owner of goods or a licensed customs broker may enter the goods for home consumption;
- it is not an offence for a licensed customs broker to enter the goods for home consumption without written authority from the owner of the good; and
- freight forwarders and other businesses that are not themselves licensed customs brokers should not describe their businesses as customs brokerage.
- Notwithstanding the provision of key points by Customs, those affected by the Notice should read it in detail and consider the application to their businesses both from the position of compliance with the Customs Act 1901 ('Act') and from a commercial perspective.
PRELIMINARY RESPONSE TO CUSTOMS' POSITION IN THE NOTICE
Customs approach to the relevant provisions in the Notice rise some questions which are set out below:
- It needs to be remembered that any notice (or other document) issued by Customs is, in most cases, only an expression of the opinion of Customs. Such notices do not have force of law and may not prove to be correct.
- The Notice is not expressed in Customs' normal assertive terms. For example, the Notice includes a comment as to what section 181 of the Act 'appears to contemplate'. It does not unambiguously reflect Customs position. Some parties may question the level of certainty of the Notice.
- As a matter of principle, Customs is the government agency authorised to protect the borders and to ensure that import and export transactions are transacted properly and that no unathorised activity take place. However, having a provision in the Act where 'it is not an offence for a license customs brokers to enter the goods for home consumption without written authority from the owner of the goods' is of concern as that then raises the issue about what other implicit form of authority will suffice and how it is evidenced. This creates a significant level of uncertainty. If the aim of Customs (and the Federal Government) is for the supply chain to be secure and for reporting through Customs' systems to be comprehensive and accurate and only undertaken by trusted parties, then a more appropriate outcome could be for Customs (and other Federal Government agencies) to amend the Act to require that a party reporting on behalf of an owner hold a written authority before acting and for that authority to registered within Customs systems. Not only does that create certainty but it would also preclude any other parties claiming authority to register transactions on behalf of the owner.
- Customs conclusion on the absence of an offence for reporting without written authority seems to flow from consideration of the interaction of section 181 of the Act with section 183 of the Act which makes an unauthorised agent of an owner liable for duty and penalties associated with a report to Customs as if they were the principal. Customs appears to suggest that such potential may seems to override the need for there to be an offence.
- The offence referred to subsection 181(4) of the Act remains in place for a party other than an owner or a licensed customs broker reporting an import declaration.
- The Notice does make some comments regarding the ability of a freight forwarder or other business to hold themselves out of being a licensed customs broker when they are themselves, not a licensed customs broker. There has been some confusion within the industry where freight forwarders claim to be able to undertake customs clearances without being licensed customs brokers themselves. Presumably, Customs also remains of the position that a licensed customs broker should secure an authority from the owner of the goods directly and should not rely on any authority granted in favour of a freight forwarder or other business which is not a licensed customs broker.
- The Notice only represents the position of Customs in the context of authorization under the Act. It does not address other contractual or common law issues associated with a party acting as an agent with (or without) written authority from an owner. An owner (or other principal) could still be bound by the actions of a party even acting without appropriate authority. Indeed, should a party purport to act on behalf of principal without appropriate authority that may be construed as misrepresentation or, in some circumstances, be a fraudulent act. Resolution of the issue from a commercial perspective needs to take into account considerations above and beyond those relating to the provisions of the Act.
- It should not be forgotten that liabilities to all parties In the supply chain have significantly increased in recent times, especially after the commencement of the AusCheck Act. It also is noteworthy that licensed customs brokers can now be liable under section 243T of the Act as 'causing' an incorrect statement to be made. As exposures to liability increase, steps need to be taken to minimise risk, which includes proper terms and conditions and written authorities to act.
- There has been extensive correspondence between Customs and those in industry as to what constitutes an authority with absence of a specific written authority signed by the owner. Parties rely on a variety of alternatives such as terms and conditions of trade, links to websites and consignment notes. What satisfies the requirements will vary from case to case and will depend on terms of trade (DDP or DDU for example). The advisable option for all concerned would be for a licensed customs broker to secure a written authority to act from an owner before lodging an import declaration. Even though not required by the Act, such a written authority could extend to any report including a SAC or Export Declaration or report to any other Government agency. The wider commercial benefit is that such authority could also set out the terms and conditions of appointment drafted with indemnities and exclusions liability. Reliance on implicit authority should only be of last resort.
As always we will continue to keep you updated with developments and would remind parties that this wider issue deserves careful attention over and above the comments in the Notice.