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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Customs Amendment Bill (No. 1)
1999
Date Introduced: 31 March 1999
House: Senate
Portfolio: Justice and Customs
Commencement: The amendments proposed by
items 4 and 5 of the Bill are
taken to have commenced on 1 September 1992. The remaining
amendments commence on Royal Assent.
To address the
consequences of a recent decision of the Supreme Court of
Queensland in Re Gregg Prechelt which held that customs
duty is not payable on goods which are not required to be entered
for home consumption.
Section 68 of the Customs Act 1901 (the
CA) requires that goods, other than certain specified goods, that
are imported into Australia must be 'entered' for home consumption,
warehousing, or transhipment. Until goods are entered customs duty
cannot be levied and the goods cannot be delivered from the control
of the Australian Customs Service (ACS). An entry can be effected
by document or by computer.
Accompanied or unaccompanied personal or
household effects of a passenger or member of crew of a ship or
aircraft, that are not intended to be sold or used for trading
purposes in Australia, and goods being consigned from one person to
another, by post, where their value is less than $1 000, or where
their value is less than $200, and certain containers, are exempted
from the import entry obligation.
The amendments proposed by the Bill seek to
address the consequences of a recent decision of the Supreme Court
of Queensland in Re Gregg Prechelt.(1)
In Re Gregg Prechelt the Supreme Court
of Queensland, held that customs duty is not payable on goods which
are not required to be entered for home consumption.
The case arose following Prechelt's importation
of 25 cartons of cigarettes into Australia from Norfolk Island. The
ACS refused to allow the goods for delivery into home consumption
until the duties imposed by s.15 of the Customs Tariff Act
1995 (the CTA) had been paid. In addition, the ACS told
Prechelt that s.68(1)(f) of the CA applied to the goods and no
formal customs entry for home consumption was required before the
ACS would be able to allow delivery of the goods. The ACS also
stated that the customs duties imposed under the CTA could be paid
on provision of information required under s.71(1) of the CA and
that Prechelt was required to supply enough information to allow
the ACS to determine the value of the goods in accordance with
s.68(5) of the CA.
Prechelt challenged the ACS's refusal to release
the cigarettes unless the customs duty was paid arguing that
neither the CA or CTA imposed customs duties on goods to which
s.68(1)(f) applied. Prechelt maintained that while s.15 of the CTA
imposed customs duties and s.16 prescribed the way in which the
rate of duty is to be calculated, s.132 of the CA sets the rate of
duty for all goods by reference to the date on which the goods are
entered for home consumption.
In summary, Prechelt argued that unless the
cigarettes/goods were entered for home consumption, no rate of
customs duty could be set for the goods and consequently no duty
would be payable.
Muir J held:
Although customs duties are imposed on imported
goods by secs 15 and 16 of the Tariff Act, those
provisions operate in conjunction with other provisions of the
Customs Act and Tariff Act. For example, rates of
duty specified in the third column of Schedule 3 to the Tariff
Act fluctuate with amendments to that Schedule and, in certain
cases, by indexation effected by s 19 of the Tariff Act.
It is apparent that it is inappropriate to look at sections 15 and
16 of the Tariff Act, as Customs seeks to do, in order to
establish liability to duty. Although there is nothing in either
Act which expressly provides that it is to be read together with
and in the light of the other, it is plain in my view, that the two
Acts comprise an overall legislative scheme and should be construed
accordingly. Section 132 of the Customs Act performs the
function of stipulating the rate of duty applicable to imported
goods. It fixes the rate by reference to the date of entry for home
consumption. The submission that sec 132 applies only in respect of
goods entered for home consumption is accurate in a sense, but only
because the underlying assumption of that section and others, which
I have earlier identified, is that duty is payable only in respect
of goods entered for home consumption. Section 132 (1) makes that
relatively plain by providing:
'... the rate of any import duty payable on
goods is the rate of duty in force when the goods are entered for
home consumption.'
Section 132 performs the critical function of
identifying the amount of tax to be calculated and assessed. Absent
such provision, there is no mechanism by which tax imposed in a
general way by secs 15 and 16 can attach to particular goods.
The fact that the scheme of the legislation,
since its inception shortly after Federation, has been to fix the
rate of duty by reference to the date of entry for home consumption
... also suggests that the applicant's submissions are correct. For
all these reasons I conclude that the subject goods are not
dutiable.(2)
The Government's stated objective in addressing
the consequences of Re Gregg Prechelt is to protect
revenue:
from the risk that importers of certain high
duty commodities will change their importing practices to take
advantage of the perceived legislative loophole.(3)
The effect of the amendment proposed by
item 1 of Schedule 1 is to make
subsection 71(2) of the Customs Act 1901 (the Principal
Act) subject to proposed subsection 71(2A) which
is being inserted in the Principal Act by item 2
of Schedule 1. Section 71 of the Principal Act
sets out the informational entry requirements for goods not
required to be formally entered form home consumption. Section 71
goods include goods that are accompanied or unaccompanied personal
or household effects of a passenger, or member of a crew, of a ship
or aircraft, and goods that are included in a consignment consigned
through the Post Office that have a value not exceeding $1 000.
A new subsection 71(2A) is
inserted in the Principal Act by item 2 of
Schedule 1 of the Bill which provides that Customs
must not authorise the delivery of imported goods for home
consumption unless the duty and any other charge or tax payable on
those goods has been paid.
A new subsection 132 (4) is
inserted in Principal Act by item 4 of
Schedule 1 which provides that the rate of any
import duty on section 71 goods is the rate in force at the later
of the following times:
-
- the time when the information is provided; or
-
- the time when the goods arrive in Australia.
This amendment is necessitated by the fact that
section 132 does not specify the rate of duty for section 71
goods.
Item 5 of Schedule
1 provides that proposed new subsection
132(4) will apply to goods imported on or after 1
September 1992. The rationale given for the retrospective
commencement of the amendment proposed by item 4 is that:
The effect of this retrospective application
will be that all money collected as duty between 1 September 1992
and the date on which this Bill receives the Royal Assent can be
treated as having been properly collected under the Act.(4)
-
- Re Gregg Prechelt , Queensland Supreme Court, Muir J,
3 March 1999.
- Australian Customs Law and Practice, 85-471.
- Customs Amendment Bill (No. 1) 1999, Explanatory
Memorandum, 3.
- Ibid.
Ian Ireland
31 May 1999
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1999
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