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CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Customs (Tariff Concession System
Validations) Bill 1999
Date Introduced: 23 June 1999
House: Senate
Portfolio: Justice and Customs
Commencement: Royal Assent
To validate certain Australian Customs Service
delegations in consequence of which concessionary customs duty was
collected from various importers.
The Customs Tariff Act 1995 (CTA)
imposes customs duty on goods imported into Australia. In addition,
the CTA sets out the rules to work out the duty payable on
particular goods by reference to a principal tariff specified in
Schedule 3. This tariff classifies goods in accordance with
Australia's obligations under the World Trade Agreement. The rate
of duty applicable to particular goods is determined by this
classification unless a lesser rate of duty is payable under
Schedule 4.
Part XVA of the Customs Act 1901 (CA)
enables people to apply for tariff concession orders (TCO).
Basically, a TCO allows goods to be imported at a concessional rate
of duty in circumstances where there are no local manufacturers or
substitute goods.
The Chief Executive Officer (CEO) of the
Australian Customs Service (ACS) is able to delegate his/her powers
and functions under section 14 of the Customs Administration
Act 1985. Section 8 of the CTA specifies the circumstances
when Schedule 4 applies. Subsection 8(3) provides that for the
purposes of Schedule 4 a reference to a Tariff Concession Order
includes a reference to a commercial tariff concession order made
under Part XVA of the CA. The consequence of a TCO not being valid
is that a higher duty under Schedule 3 would generally be payable
on those goods.
The Bill seeks to validate certain delegations
in consequence of which concessionary customs duty was collected
from various importers. If this validation does not occur the
Government believes that the importers will have a right to claim a
refund of the duty collected by the ACS. The rationale given by the
Government in the Second Reading Speech to the Bill for the
measures proposed is:
In July 1996, the Government made changes to the
Tariff Concession System. Those changes resulted in amendments to
the Customs Act, including the introduction of additional powers
and functions. New delegations were not sought for powers that were
added to sections of the Act which were already the subject of the
November 1995 instrument. It was thought that that instrument was
sufficient. The sufficiency of the delegations for the tariff
concession system was questioned in a recent hearing of the
Administrative Appeals Tribunal. In light of this, the Chief
Executive Officer signed two instruments on 31 May 1999. The first
revoked all existing delegations for the Tariff Concession System.
The second issued new delegations covering all the powers and
functions in relation to the Tariff Concession System. Both
instruments took effect on 1 June 1999. Notwithstanding, it is
possible that certain decisions and actions taken in relation to
the Tariff Concession System subsequent to the 1996 changes to the
Act may not have been the subject of adequate delegations.(1)
Definitions
The term 'affected delegation' is defined by
clause 3 to mean any delegation, or purported
delegation, by the CEO to an ACS officer of ACS powers or functions
conferred on the CEO under Part XVA of the CA if:
- that delegation was made on 27 November 1995 or any later day
before 31 May 1999, and
- a revocation of that delegation was not made, or purportedly
made, before 31 May 1999.
Validation of affected
delegations
Subject to the exceptions specified in
clause 6, the effect of clause 4
is to deem affected delegations to have been revoked and remade and
provide that affected delegations are taken to be of no effect from
1 June 1999.
Subject to the exceptions specified in
clause 6, the effect of clause 5
is to validate decisions and actions taken by ACS officers under
Part XVA of the CA after 15 July 1996 in relation to affected
delegations.
Exceptions to validations of affected
delegations
Clause 6 provides that
clauses 4 and 5 will not
apply:
- Where a person has, before 1 June 1999, sought a review by the
Administrative Appeals Tribunal (AAT), of:
- a decision of an ACS officer not
to pay a refund of customs duty, or
- a decision of a delegate of the
CEO of the ACS to revoke a TCO under subsection
269SD(1AB) of the CA, and
the AAT has not made a decision on the review
before 1 June 1999.
- To any application for a refund of customs duty that:
- is lodged with an ACS officer
before 1 June 1999 and
- gives as a reason for entitlement
to a refund that a decision to revoke a TCO was
illegal, or the TCO should never have
been revoked, and
in respect of which, before 1 June 1999, no
decision has been made whether to pay a refund or reject the
application.
A question has arisen in relation to the Bill
whether it is a law for the acquisition of property on unjust terms
contrary to section 51(xxxi) of the Constitution.
Section 51(xxxi) provides:
The Parliament, shall subject to this
Constitution, have power to make laws for the peace, order, and
good government of the Commonwealth with respect to:-
The acquisition of property on just terms from
any State or person for any purpose in respect of which the
Parliament has power to make laws.
It has been held by the High Court that if an
imposition is held to be a tax it cannot at the same time be an
acquisition of property. This was reiterated by the High Court in
Federal Commissioner of Taxation v Barnes.(2)
The measures in the Bill will validate certain
steps taken under the CA to collect customs duty albeit
retrospectively. It will therefore be a law with respect to
taxation under section 51(ii) of the Constitution.
Section 51(ii) provides:
The Parliament, shall subject to this
Constitution, have power to make laws for the peace, order, and
good government of the Commonwealth with respect to:-
Taxation: but not so as not to discriminate
between States or parts thereof.
Customs or excise duties are simply a species of
taxation(3) and the measures which relate to the customs duties
payable by affected importers will be laws with respect to taxation
under section 51(ii) of the Constitution. The measures in the Bill
together with the measures in the CTA will lead to the imposition
of tax in the form of customs duty on affected importers.
The imposition of customs duty on these
importers will require them to pay the duty. This duty will
certainly be met by the amount paid to Customs as duty without
authority and to which they have a right of refund. This right to a
refund which these importers have for the duty collected without
authority is in no way denied by the measures in the Bill. The
practical effect of the measures in the Bill is to set off the
refunds due against the duty now properly imposed on affected
importers. On this view the measures in the Bill do not amount to
an acquisition of property on unjust terms.
There may be scope to argue that the exaction of
duty without authority denied the importers the right to the use of
the property represented by the amounts paid to Customs until the
measures in the Bill are enacted. The counter to this argument is
that if the concessionary tariff under the TCO did not apply to
these importers they would have paid the non-concessionary customs
duty before their goods were permitted to enter Australia. This
would generally be a higher duty and by the same token these
importers have benefited by paying less than the higher duty which
could have been imposed on them under the Customs Tariff Act
1995. Thus there would not appear to be even a case to
consider an interest payment for the amounts paid until the
measures in the Bill are enacted.
For these reasons the writers take the view that
the measures in the Bill are laws with respect to taxation under
section 51(ii) of the Constitution and are not laws for the
acquisition of property under section 51(xxxi) of the
Constitution.
However, if it is conceded that the measures in
the Bill are laws for the acquisition of property the question that
arises is whether the terms of acquisition are unjust.
A number of principles have emerged on the
interpretation of this section, following the decisions in 5 cases
handed down by the High Court in 1994: Mutual
Pools(4), Peverill(5), Georgiadis(6),
Lawler(7), and Nintendo.(8) The
Attorney-General's Legal Practice Briefing No. 13 of 28 July 1994
examined the developments in the interpretation of section 51(xxxi)
in those cases against the pronouncements of the High Court in the
earlier cases. The comments from the Legal Practice Briefing on the
meaning of 'just terms' is set out below.
The cases produced little discussion on 'just
terms'. The Commonwealth had argued that 'just terms' did not
necessarily involve full monetary compensation but involved general
notions of fairness, and that a range of factors could be
considered. Only Brennan J considered these arguments. He rejected
them: in his view section 51(xxxi) is a guarantee that, when
property is acquired in the circumstances to which the provision
applies, the burden will be borne by the taxpayers (or, possibly,
the person acquiring the property) and not by the individual whose
property is confiscated. This appears to be a more restrictive view
than had been put in statements in some earlier cases, which
suggested that there might be circumstances in which compensation
at less than full value of the property could be 'just'.(9)
Thus compensation to affected importers on the
restricted meaning of 'just terms' may require the consideration of
some interest payment from the date of payment of unauthorised duty
until the measures in the Bill are enacted.
However, the overriding consideration is that
the measures in the Bill are laws with respect to taxation under
section 51(ii) of the Constitution and not laws for the acquisition
of property under section 51(xxxi) of the Constitution. Being laws
with respect to taxation, as the measures in the Bill confirm a
concessionary rate of duty as against the higher duty that would
have been otherwise payable, the case for considering any interest
payment under the tax system may not arise.
-
- Customs (Tariff Concession System Validations) Bill 1999,
Second Reading Speech, p. 2.
- (1975) 133 CLR 483 at pp. 494-495
- Harper v Sea Fisheries Minister (1989) 168 CLR 314 at
p. 334; Elliott v Commonwealth (1936) 54 CLR 657 at p.
667.
- Mutual Pools and Staff Pty Ltd v Commonwealth (1994)
119 ALR 577
- Health Insurance Commission v Peverill (1994) 119 ALR
675
- Georgiadis v Australian and Overseas Telecommunications
Corporation (1994) 119 ALR 629
- Re DPP; Ex parte Lawler (1994) 119 ALR 655
- Nintendo Co Ltd v Centronics Systems Pty Ltd (1994)
121 ALR 577
- Legal Practice Briefing No. 13 of 28 July 1994, p. 4
Ian Ireland and Bernard Pulle
13 September 1999
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1999
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