Bills Digest 62 1996-97 Customs Amendment Bill (No. 2) 1996


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WARNING:
This Digest is prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest was available from 4 December 1996.

CONTENTS

Passage History

Customs Amendment Bill (No. 2) 1996

Date Introduced: 7 November 1996
House: House of Representatives
Portfolio: Industry, Science and Tourism
Commencement: Schedule 1 will commence on a day to be fixed by Proclamation, or on the first day after the end of six months after it receives Royal Assent.

Purpose

The major amendments:

  • impose a liability to pay cargo report processing charge;
  • impose a liability to pay screening charge;
  • reduce from $1 000 to $250 the threshold above which an import entry is required to be lodged for goods imported into Australia through the Post Office;
  • impose a liability to pay entry processing charge;
  • introduce a new licensing regime in relation to depots handling imported goods;
  • impose a liability to pay warehoused goods entry fee;
  • impose a liability to pay depot licence application charge and depot licensing charge.

Background

Origin and Rationale for Proposed Measures

The Government announced in the 1996-97 Budget that it would legislate for the cost recover of elements of the Australian Customs Service commercial activities directly or indirectly required to process import transactions.(1) The Government gave an undertaking that the costs to be recovered would not include export transaction costs, investigation costs or the costs of public benefit functions.(2)

In a Press Release of 20 August 1996, the Minister for Small Business and Consumer Affairs provided a rationale for the proposed cost recovery measures, namely, 'These cost recovery measures are a necessary part of a Government - wide push to reduce the Budget deficit created by Labor.' The rationale given by the Minister in the Second Reading Speech to the Bill for the proposed cost recovery measures is that 'This measure is consistent with the general thrust of government policy which increasingly sees the closer alignment of service delivery costs with sectors of the community which generate the workload.'

Industry and Consumer Reaction

Media reporting of industry reaction for the proposed cost recovery measures has been limited and largely restricted to the pre-budget period. For example, Air express companies were reported in The Canberra Times of 13 August 1996 to have sought to head off a Budget move to have the industry collect a $10 tax on all import and export transactions on behalf of the Australian Customs Service by foreshadowing a constitutional challenge to such arrangements.(3) The Council of Asia Pacific Express Couriers is reported in The Australian Financial Review of 14 August 1996 as saying 'Customs had proposed the new charge for inclusion in the federal Budget on the basis of user-pays for customs import and export entry transactions. ... The proposed $10 charge would increase the cost of both importing goods into Australia and exporting goods from Australia. It would have a greater impact on low-value items such as books and compact discs.'

While, the Second Reading Speech to the Bill clearly indicates that the Government has consulted extensively with industry about the proposed cost recovery measures, the views and impact of the measures on industry and consumers remain unclear. To gauge industry reaction the reader may contact the following bodies: the Council of Asia Pacific Express Couriers; the Australian Air Transport Association; the Australian Chamber of Shipping; the Australian Federation of International Forwarders; the Customs Brokers Council of Australia; the International Air Couriers Association; and the Consumers Federation of Australia.

Estimated Increases in Revenue

As noted in the Second Reading Speech to the Bill, this Bill is the first of three in a package providing for the proposed cost recovery measures. The other two Bills in the package are the Customs Depot Licensing Charges Bill 1996 and Import Processing Charges Bill 1996.

It is estimated in the Explanatory Memorandum to the Bill that the proposed cost recovery measures will increase revenue in 1996-97 by a net amount of $186 000. This amount is estimated to rise to $372 000 by 1998-99. The Customs Depot Licensing Charges Bill 1996 and Import Processing Charges Bill 1996 are estimated to increase revenue in 1996-97 by $23.155 million. This amount is estimated to rise to $45.561 million in 1998-99.

Main Provisions

Cost of Customs Services Performed Outside Prescribed Times

New subsections 28(2) and (3) are inserted in the Customs Act 1901 (the Principal Act) by item 7 of Schedule 1. Under the proposed subsections, where a Collector (eg. the Chief Executive Officer, the Regional Director for a State/Territory, or any Customs officer doing duty in the matter in relation to which the term is used) arranges, at the request of a person, for a Customs officer to be available outside prescribed hours, the person must pay an overtime fee. The overtime fee is $40 per hour or part hour or a prescribed rate, and any prescribed travel expenses. A location fee will be payable where a Customs officer has to perform a function in a place that is not one where such a function is normally carried out and during the hours prescribed for that function. The location fee is $37 per hour or part hour or a prescribed rate, and any prescribed travel expenses.

Remark

Under current subsection 28(1) of the Principal Act the regulations may prescribe the days on which, and the hours between which, Customs officers are available to perform specified functions. Under subsections 28(2) and (3), where a person requests a Customs Officer to perform a outside prescribed times, or in a place that is not one where the function is normally carried out, a fee is payable. The amount of the fee is determined by the Chief Executive Officer having regard to the cost of making the Customs Officer available. </ ul>

Liability to Pay Cargo Report Processing Charge and Screening Charge

New sections 64ABB and 64ABC, dealing with liability to pay cargo report processing charge and screening charge, are inserted in the Principal Act by item 10 of Schedule 1. A person will be liable to pay the cargo report processing charge (which is formally imposed by the Import Processing Charges Bill 1996) where they communicate to the Australian Customs Service (ACS) a documentary report that is, or is part of, a cargo report which provides particulars of a consignment and identifies a person having a beneficial interest in the goods in the consignment.

Similarly, a person will be liable to pay the screening charge (which is formally imposed by the Import Processing Charges Bill 1996), in addition to any cargo report processing charge, where they communicate the ACS a report that:

  • is, or is part of, a cargo report of goods intended to be, or that have been, unloaded from an aircraft at a particular airport;
  • relates, in whole or part, to a consignment of goods that does not require entry;
  • provides particulars of the consignment; and
    • identifies a person who has a beneficial interest in the goods in the consignment.

Requirement to Lodge an Import Entry

Item 12 of Schedule 1 omits $1 000 from paragraph (e) of subsection 68(1) of the Principal Act and substitutes $250. The effect of the amendment is to require an import entry for goods imported into Australia through the Post Office costing more than $250. Such goods will also be liable to pay the proposed entry processing charge. An import entry is a communication to the ACS of certain information concerning the goods.

Remarks

Paragraph 68(1)(e) of the Principal Act currently requires an import entry for goods imported into Australia through the Post Office costing more than
$1 000.

No rationale is provided in the Explanatory Memorandum to the Bill for the amendment proposed by item 12. The rationale could be either revenue raising or statistics gathering, or both.

Whatever the rationale for the amendment it will add to the cost of goods imported into Australia through the Post Office. For example, a person places an order on the Internet for an educational text, compact disks or some computer software with a company in London. The good costs more than $250. The order is duly imported through the Post Office. That person will be required to lodge an import entry with the ACS and pay the proposed entry processing charge. </ ul>

ACS not to Authorise Delivery Unless Screening Charge Paid

A new subsection 71(3) is inserted in the Principal Act by item 14 of Schedule 1 which provides that the ACS must not allow the delivery of goods of a kind referred to in paragraph 68(1)(f) (ie. requirement for an import entry for goods imported into Australia through the Post Office costing more than $1 000 [$250 proposed]) unless:

  • the person liable to pay screening charge (which is formally imposed by the Import Processing Charges Bill 1996) pays that charge; or
  • the person liable to pay the charge is entitled to pay that charge in accordance with subsection 64ABD(1) - (3) (these subsection provides for the making of arrangements for payment of cargo report processing charge or screening charge).

Liability for Entry Processing Charge

A new section 71AA, dealing with liability to pay entry processing charge, is inserted in the Principal Act by item 18 of Schedule 1. A person will be liable to pay the entry processing charge, which is formally imposed by the Import Processing Charges Bill 1996), where an import entry is, or is taken to have been, communicated to the ACS under section 71A of the Principal Act.

Where one person who is the owner of goods has paid entry processing charge in respect of an import entry, any other person who is also an owner will cease to be liable to pay entry processing charge. There will also be no liability for entry processing charge whee an import entry is withdrawn.

Liability To Pay Warehoused Goods Entry Fee

A new section 71AB is inserted in the Principal Act by item 19 of Schedule 1 which makes the owner of warehoused goods who enters the goods for home consumption liable to pay the warehoused goods entry fee. Warehoused goods are defined in subsection 4(1) of the Principal Act to be goods received into a warehouse in pursuance of an import entry, or goods blended or packaged in a warehouse. The proposed section contains a formula for working out the amount of warehoused goods entry fee. This is the FR (the flat rate) plus the LR (line rate) multiplied by the number of relevant lines. The flat rate for:

  • a computer import entry will be $5.00, or a prescribed amount; or
  • a documentary import entry will be $26.75, or a prescribed amount.

The line rate for:

  • a computer import entry will be $0.20, or a prescribed amount, for each line after the tenth line of the entry; or
  • a documentary import entry will be $0.80, or a prescribed amount, for each line after the first line of the entry.

The term 'line' is defined to mean the description of goods covered by the import entry that come within a single tariff classification to which a duty attaches.

Depots

A new Part IV (proposed sections 77F-77ZA), dealing with depot licences, is inserted in the Principal Act by item 25 of Schedule 1. Power to grant a depot licence is vested in the Chief Executive Officer (CEO). The CEO may grant a depot licence to use a place for certain purposes, including: the holding of imported goods; the holding of goods for export; the examination of goods by ACS officers; or for a specified purpose/s (proposed section 77G).

Under proposed section 77H, applications for a depot licence must be made by the person or partnership who would occupy and control the depot. Applications must be accompanied by the proposed depot licence application charge. Australia Post will not be liable to pay the proposed depot licence application charge where it applies for the whole or a part of an International Mail Centre to be covered by a depot licence.

The CEO must not grant a depot licence in certain circumstances, including:

  • if the applicant, is a natural person, and is not a fit and proper person to hold a depot licence (In making a determination whether a person is a fit and proper person, the CEO is to have regard to certain matters including whether he/she has any prior convictions committed within the previous 10 years and whether he/she is an insolvent under administration.);
  • the applicant, if it is a company, is not a fit and proper company to hold a depot licence (In making a determination whether a company is a fit and proper company, the CEO is to have regard to certain matter including whether the company has any prior convictions committed within the previous 10 years and at a time when any person who is currently a director, officer or shareholder was a director, officer or shareholder of the company.); and
  • the physical security of the proposed depot is not adequate having regard to the nature of the place, the procedures and methods for ensuring the security of goods and the records that would be kept would not be suitable to all the ACS to adequately audit those goods (proposed section 77K).

Proposed section 77K also provides that the CEO:

  • may refuse to grant a depot licence if he/she believes that the proposed depot would be too remote from the nearest place where ACS officers regularly perform their functions for them to conveniently check compliance with Customs Acts;
  • must not grant a depot licence where the depot is to be used for imported goods arriving by sea and the applicant is not a registered user of the Sea Cargo Automation System;
  • must not grant a depot licence where the depot is to be used for imported goods arriving by air and the applicant is not a registered user of the Air Cargo Automation System; and
  • must not grant a depot licence where the depot is to be used for imported goods arriving by sea and air and the applicant is not a registered user of the Sea Cargo Automation System and Air Cargo Automation System.

Proposed section 77L deals with the granting of a depot licence. The CEO must make a determination as to the grant of a depot licence within 60 days of the receipt of an application or, where the CEO requires the applicant to provide additional information in relation to the application, within 60 days of the receipt of that additional information. Where the CEO does not make a decision within 60 days this will be taken to be a refusal.

Proposed sections 77N-77Q deal with depot licence conditions. All depot licences will be subject to certain general conditions. Provision is also made for specified conditions to attach to a depot licence. General conditions include:

  • payment to the ACS any prescribed travelling expenses payable in relation to travelling to and from the depot by a Collector;
  • stacking and arranging goods in the depot so that ACS officers have reasonable access to, and can examine, the goods;
  • when requested to do so by the ACS, allow ACS officers to enter and remain in the depot to examine goods which are subject to control of the ACS, or which an ACS officer has reasonable grounds for believing are subject to ACS control; and
  • retaining for five years from the day goods are received into the depot, of related commercial records and records created as required by Customs Acts.

The CEO is accorded power under proposed section 77Q, for the purpose of ensuring compliance with Customs Acts, or protecting revenue, to specify conditions in a depot licence in addition to the general conditions specified in proposed sections 77N and 77P and to vary specified conditions.

Proposed section 77R makes it an offence, punishable by a maximum fine of 50 penalty units ($5 000), for the holder of a depot licence to breach a proposed section 77N-77Q licence condition.

Proposed section 77U requires a depot licensing charge to be payed for the grant of a depot licence by the person or partnership seeking it. As with the proposed depot licence application charge (see proposed section 77H), Australia Post is not liable to pay the depot licence charge for each grant or renewal of a depot licence that covers the an International Mail Centre.

Remark

The Explanatory Memorandum to the Bill does not contain an interpretation of proposed section 77U. </ ul>

Proposed section 77V accords the CEO the power to revoke a depot licence in certain circumstances. The circumstances, for the most part, are identical to the conditions which apply to an application for a depot licence under proposed 77K.

Refund Application Fee

Section 163 of the Principal Act deals with refunds, rebates and remissions of duty. A fee of $200 is payable for an application for a refund of duty paid. Subsection 163(1D) sets out the circumstances in which the $200 fee is not payable, these circumstances include:

  • where a ACS officer assisted in making up the entry in respect of which the application for a refund of duty is made;
  • where the duty was paid under protest;
  • where the duty was paid as a consequence of advice given, or a ruling made, by a ACS officer; and
  • where all duty amounts were paid in good faith.

The current $200 fee and exceptions are being repealed by item 26 of Schedule 1 and new subsections 163(1C) and (1D) substituted.

Under proposed subsection 163(1C), where a person makes an application for a refund of duty paid they will be liable to pay the refund application fee. Proposed subsection 163(1D) specifies what amount of the refund application fee is payable. The refund application fee is:

  • where the application is transmitted to the ACS via a prescribed computer system, $45.00, or a prescribed amount; or
  • where the application is made in an approved form, $65.00, or a prescribed amount.

Remark

As noted, subsection 163(1D) sets out circumstances where the fee for a refund of duty paid is not payable. This subsection, and as a consequence the exemptions from the fee, is being repealed. This raises the question of whether any exemptions will apply under the newly constituted section 163. The Note to item 26 states that 'Regulations made under paragraph 163(1)(b) may provide that under certain circumstances a person is entitled to a refund of duty without the need to make an application. In those cases an application fee is therefore not payable under subsection 163(1C).' It might be inferred from the Note that paragraph 163(1)(b) will be used to provide exemptions to the proposed refund application fee. </ ul>

Review of Decisions by Administrative Appeals Tribunal

Section 273GA of the Principal Act lists those decisions for which an application may be made to the Administrative Appeals Tribunal for a review. Item 30 of Schedule 1 includes in the list:

  • a decision by the CEO under proposed section 77G not to grant a depot licence;
  • a decision by the CEO under proposed section 77J not to extend the period within which further information concerning a depot licence application is to be supplied;
  • a decision by the CEO under proposed section 77P not to grant an extension of time for goods to be warehoused;
  • a decision by the CEO under proposed section 77Q to vary the conditions of a depot licence; and
  • a decision by the CEO under proposed section 77V to revoke a depot licence.

Endnotes

  1. Budget Statements 1996-97, Budget Paper No. 1, p. 4-24.
  2. ibid.
  3. The Canberra Times, 13 August 1996, p. 2.

Contact Officer and Copyright Details

Ian Ireland Ph. 06 277 2438
2 December 1996
Bills Digest Service
Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9031
© Commonwealth of Australia 1996

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 2 December 1996

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