Bills Digest no. 113 2007–08
Customs Legislation Amendment (Modernising) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Customs Legislation Amendment (Modernising) Bill 2008
Date introduced: 20
March 2008
House: House
of Representatives
Portfolio: Home
Affairs
Commencement: Sections
1 to 3 commence upon Royal Assent. Operational provisions commence on
various dates as outlined in the Main Provisions part of this Digest.
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
Schedule 1 of the Bill
will amend the Customs Act 1901 (the Customs Act) to reflect the
new Certificate of Origin requirements for the Singapore-Australia Free
Trade Agreement.
Schedule 2 will amend the Customs Act to
update brokers licensing provisions to accommodate locum customs brokers
who can then be employed by a number of different corporate customs brokers
at any one time.
Schedule 3 of the Bill will make amendments to the Customs Act in response
to the decision in Malika Holdings Pty Ltd v Stretton (2001) 204 CLRL
290 (‘Malika’) to put the time available to recover customs duty beyond
doubt, and modernise the duty recovery provisions.
Schedule 4 amends the Customs Act to provide that a statement or declaration
made is taken to be a statement made to the Chief Executive Officer of
the Australian Customs Service (‘ACS’ or ‘Customs’).
The Customs Legislation Amendment (Modernising)
Bill 2008 contains provisions taken from two Bills previously considered
by the Commonwealth Parliament. Schedule 1 of the current Bill, relating
to Certificates of Origin, is identical to Schedule 2 of the Customs
Legislation Amendment (Modernising Import Controls and Other Measures)
Bill 2006 which was referred to the Senate Legal and Constitutional
Legislation Committee for inquiry on 22 June 2006. The Committee Report
was tabled on 8 August 2006. However, the second reading of the Customs
Legislation Amendment (Modernising Import Controls and Other Measures)
Bill 2006 was adjourned on 21 June 2006.
Schedules 2-4 of the current Bill are also identical to Schedules 2-4
of the Customs
Legislation Amendment (Augmenting Offshore Powers and other Measures)
Bill 2006 which was referred to the Senate Legal and Constitutional
Legislation Committee for inquiry on 7 December 2006. The Committee Report
was tabled on 8 February 2007. Similarly, the second reading of the Customs
Legislation Amendment (Augmenting Offshore Powers and other Measures)
Bill 2006 was adjourned on 1 March 2007.
Selected provisions (as described above) from both of these lapsed Bills
are now re‑introduced (without alteration) in the Customs Legislation
Amendment (Modernising) Bill 2008. This Digest has been prepared using
information contained in the two previous Bills Digests that were prepared
in respect of the 2006 proposed reforms.[1]
Rules of Origin identify the nationality of a product. Amongst other
things, this ensures that only products originating from a particular
country will benefit (such as tariff concessions) as a result of a free
trade agreement.
Australia signed a free-trade agreement with Singapore in 2003. Singapore
is Australia’s sixth largest trading partner with Australian exports valued
at $6.38 billion in 2005,[2] principally in services (legal, education and telecommunications)
and merchandise (fuel, agricultural and mineral products).[3] According to press reports, the main outcome
of the Singapore Australia
Free Trade Agreement (SAFTA) has been to cement what was already a
productive and friendly economic relationship.[4]
The SAFTA agreement provided for Ministerial review one year after entry
into force and every two years thereafter. The first Ministerial review
in July 2004[5] led to amendments
that related to the recognition of law degrees, government procurement,
rule of origin certificates, and agreement on food standards and horticultural
goods.[6] Three of the four
amendments did not require legislative amendment and have entered into
force with an exchange of notes between the Government of Singapore and
the Government of the Commonwealth of Australia confirming completion
of the Parties’ respective domestic procedures. Schedule 1 of this Bill
amends the Customs Act to implement the SAFTA amendments on rule of origin
certificates.
In the case of broker’s licences held by corporations or partnerships,
such licences must, amongst other things, specify those persons who may
act as nominees for the licence holder and the places where the various
nominees may act as a customs broker. To be eligible to be a nominee a
person cannot be the nominee of another customs broker. According to the
Explanatory Memorandum, corporate customs brokers are increasingly employing
locum or freelance customs brokers who can be employed by a number of
different corporate customs brokers, but such locums cannot act as nominees
for more than one corporate broker by virtue of paragraph 183CD(1)(f)
of the Customs Act. Accordingly, the paragraph is being repealed.
Existing paragraph 183CD(1)(j) provides that a person is eligible to
be the nominee of a customs broker if he is not a customs broker at any
other place. To avoid the unduly restrictive nature of this paragraph,
the policy has been adopted of declaring ‘all places in the Commonwealth’
as places where licensed brokers can practise. Accordingly this condition
has become obsolete and is being repealed.
The amendments being made in Schedule 3 of the Bill are to overcome the
High Court decision of Malika. That decision held that the 4-year time
limit within which Customs may recover customs duty only applied if the
under payment of duty or the overpayment of a duty rebate was due to a
Customs error. However, as a matter of policy, Customs applies the 4-year
time limit to all duty recovery, other than in cases of fraud, whether
or not there is a customs error. The proposed amendments seek to bring
the Customs Act into line with this policy by placing a 4-year time limit
on all duty recovery (other than in cases of fraud or evasion). Further
discussion of these amendments and details can be found in the ACS submission
to the Committee inquiry into the Customs Legislation Amendment (Augmenting
Offshore Powers and other Measures) Bill 2006 and the Explanatory
Memorandum to the current Bill.
Schedule 4 makes amendments that will effectively broaden the scope of
the offence of making a false or misleading statement by providing that
information given to Customs under section 71 is taken to be a statement
made to the ‘CEO’. According to the Explanatory Statement, this is in
response to the automated passenger processing system known as SmartGate
which was introduced in August 2007 – thus persons entering false or misleading
statements into the automated SmartGate system will be committing an offence.[7]
The Explanatory Statement[8]
also states that consequential amendments are proposed to the Customs
Regulations 1926, regulation 41.
The Explanatory Memorandum states that the
Bill has no financial impact.
Item 1 of Schedule 1 repeals
existing subsection 153VE(1) of the Customs Act 1901 and substitutes
a new subsection. Proposed subsection 153VE(1) implements agreed
amendments to Articles 11 and 12 of Chapter 3 of SAFTA that deal with
the new documentary requirements to apply when an Australian importer
claims the preferential rate of duty for goods imported from Singapore.
In practice, a claim for a preferential rate of duty is made as part of
the import declaration when entering the relevant goods for home consumption.[9]
At present an Australian importer needs a
Declaration, issued by the Singapore exporter, and a Certificate of Origin,
issued by the Government of Singapore, to claim a preferential rate of
customs duty under SAFTA. A Certificate of Origin can be used for multiple
shipments within two years of its issue, provided that the first shipment
occurs within the first year of issue. A Declaration is required for each
shipment. Both documents must be issued before the goods are exported
from Singapore to Australia. According to ACS:
Approaches to Australian Customs by both
Australian importers and Singaporean exporters raised administrative
difficulties with regard to preparation of the Certificate of Origin.
For example, before exportation of bulk goods from Singapore, the Certificate
of Origin could not be properly prepared to cover all of the goods in
a given shipment as the exact volumes were not known until after loading.
The problem was exacerbated in circumstances where goods were loaded
after-hours or on weekends.[10]
Following the amendments to SAFTA that are
to be implemented by this Bill, an Australian importer will be required
to have either a Certificate of Origin for each shipment (provided that
the Certificate was used within one year of issue) or a Certificate of
Origin for multiple shipments (provided that the Certificate was used
within two years of the date of issue and the first shipment occurred
within the first year) and a Declaration. Where a Certificate of Origin
is to be used for multiple shipments, a Declaration would not be required
for all subsequent shipments.
The Report of the Joint Standing Committee
on Treaties which considered the proposed amendments to SAFTA stated that:
At a practical level, the changes mean that a Declaration
and a Certificate of Origin will not both be required for the initial
shipment of goods. Instead, a Certificate of Origin is required for
the initial shipment of goods, and for each subsequent shipment, a Declaration
is required that states the goods are identical to the first shipment.
Following the changes, importers of goods
need only possess a Declaration before the goods enter the territory
of the importing country for goods to be afforded preferential treatment.
This will give exporters roughly a week of extra time and will reduce
delays in situations where it is difficult to determine the quantity
of bulk cargo – a requirement for the Declaration – until after the
cargo has been loaded onto a vessel.
The revised arrangements relating to Certificates
of Origin will facilitate the movement of goods from Singapore to Australia
and help to reduce administrative costs for Australian manufacturers.[11]
Commencement: The amendments contained in Schedule 1 will either
commence on the day after the Act receives Royal Assent or on the day
the proposed SAFTA amendments come into force for Australia, whichever
is later. The proposed amendments to SAFTA will enter into force
with an exchange of notes between the Government of Singapore and the
Government of the Commonwealth of Australia confirming completion of the
Parties’ respective domestic procedures. It is anticipated that this exchange
of notes will occur after the Act has received Royal Assent. However,
should the SAFTA amendments not come into force for Australia, then Schedule
1 will not commence. The Minister for Home Affairs is required to announce
by notice in the Commonwealth Gazette the day on which the proposed SAFTA
amendments come into force for Australia. In 2006, the Senate Standing
Committee for the Scrutiny of Bills Report
noted concerns regarding the uncertain commencement date of Schedule 2
of the Customs Legislation Amendment (Modernising Import Controls and
Other Measures) Bill 2006, which the Minister addresses in his response
to the Committee (contained in the Report). In 2008, the Senate Standing
Committee for the Scrutiny of Bills expressed similar concerns in its
Digest
regarding the uncertain commencement date of Schedule 1 of the Customs
Legislation Amendment (Modernising) Bill 2008.
In recognition of the increasing employment of locum and freelance brokers
as nominees by corporate customs brokers, Item 3 repeals paragraph
183CD(1)(f) of the Act which provided that locums cannot act as nominees
for more than one corporate broker. Item 5 repeals paragraph 183CD(1)(j)
of the Act which provided that ‘all places in the Commonwealth’ were places
where licensed brokers could practise.
Commencement: The amendments contained in Schedule 2 come into
force the day after the Act receives Royal Assent.
Item 1 repeals section 153 of the Act which provides that
amounts owed are Crown debts which are payable by the owner of the goods
and recoverable at any time in proceedings in the name of the Collector.
Section 153 is no longer needed as the provision is replicated in new
section 165, inserted by item 4 of the Bill.
Items 4 and 5 repeal and substitute existing section 165 with
new sections 165 and 165A to ensure that any duty that is due and
payable and an amount of drawback, refund or rebate of duty that is overpaid
to a person is a debt due to the Commonwealth, and is payable either by
the owner of the goods (in the case of any duty) or the person who is
overpaid. The concept of error currently in section 165 – see discussion
in the background section of this Digest - is removed in the new provisions.
New subsection 165(5) provides that a demand for payment by the
CEO must be made within 4 years of the triggering event unless the CEO
is satisfied that the debt arose as the result of fraud or evasion.
New subsection 165A allows the CEO to apply a notional amount
of refund, rebate or drawback in respect of goods against the duty payable
on the same goods. Details of how the provision works can be found in
the Explanatory Memorandum.[12]
Items 6 - 8 make various amendments, including technical amendments
to the ‘payments under protest’ regime to replace them with requirements
that are general in nature and easier to comply with.
Items 9 - 12 make transitional and application amendments as a
consequence of amendments proposed in the Bill.
Commencement: The amendments contained in Schedule 3 come into
force 28 days after the Act receives Royal Assent.
Item 1 of Schedule 4 amends section 234 of the Customs
Act to add new subsection 234(2BC) which will have the net effect
that, in the circumstances covered by section 71AAAB, information provided
to Customs pursuant to section 71 of the Act is taken to have been provided
to the CEO of Customs. This means that airline passengers and aircrew
making electronic declarations about their personal or household goods
using the proposed SmartGate system are deemed to be making statements
to an officer of Customs for the purposes of paragraph 234(1)(d). Consequently,
a person making a false or misleading declaration using the SmartGate
system may be prosecuted for an offence against paragraph 234(1)(d), which
carries a maximum penalty of 100 penalty units ($11 000).
Commencement: The amendments contained in Schedule 4 come into
force 28 days after the Act receives Royal Assent.
Elibritt Karlsen
26 May 2008
Bills Digest Service
Parliamentary Library
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