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 1repeals 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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