Bills Digest No. 187  1998-99 Customs Amendment Bill (No. 1) 1999

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Passage History
Main Provisions
Contact Officer and Copyright Details

Passage History

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)


Main Provisions

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)



  1. Re Gregg Prechelt , Queensland Supreme Court, Muir J, 3 March 1999.

  2. Australian Customs Law and Practice, 85-471.

  3. Customs Amendment Bill (No. 1) 1999, Explanatory Memorandum, 3.

  4. Ibid.


Contact Officer and Copyright Details

Ian Ireland
31 May 1999
Bills Digest Service
Information and Research Services

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ISSN 1328-8091
© Commonwealth of Australia 1999

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Published by the Department of the Parliamentary Library, 1999.

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