Commonwealth Numbered Regulations - Explanatory Statements

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CUSTOMS AMENDMENT REGULATIONS 2011 (NO. 3) (SLI NO 203 OF 2011)

EXPLANATORY STATEMENT

Select Legislative Instrument No. 203

Issued by the Authority of the Minister for Home Affairs

Customs Act 1901

Customs Amendment Regulations 2011 (No. 3)

Section 270 of the Customs Act 1901 (the Act) provides, in part, that the Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to the Act.

The purpose of the amending Regulations is to amend the Customs Regulations 1926 (the Principal Regulations) to implement certain aspects of the Customs Amendment (Export Controls and Other Measures) Act 2011 (the Exports Act).

The Exports Act received the Royal Assent on 29 June 2011 and some provisions commenced by Proclamation on 28 November 2011. The Exports Act amends the Act and the Customs Depot Licensing Charges Act 1997 (the Charges Act) to strengthen the extent of Customs controls over export cargo and ensure consistent depot and warehouse licence conditions.

The Exports Act includes new provisions empowering a Collector to give directions in relation to goods for export and goods no longer for export. Under new section 112C, a Collector may give written directions to certain people in relation to goods for export and goods no longer for export, including a direction that is for the purposes of ensuring compliance with prescribed laws. The amending Regulations prescribe laws for the purposes of section 112C.

The Exports Act will also extend the purposes for which conditions can be imposed on both a depot licence and a warehouse licence to include for the purposes of ensuring compliance with prescribed laws. The Exports Act will also extend the circumstances in which a depot licence can be cancelled to include for the purposes of ensuring compliance with prescribed laws. The amending Regulations also prescribe laws for the purposes of the extended provisions.

The Exports Act will also include a new head of power relating to the refund of warehouse licence fees. New subsections 85(4) and (5) of the Act will provide that the regulations may make provision for, and in relation to, the refund of any warehouse licence fees. The amending Regulations prescribe these provisions.

The amending Regulations also make other amendments to the Principal Regulations that are not related to the Exports Act amendments. The amending Regulations amend the provisions relating to the method of applying for a refund of Customs duty. The amending Regulations also make one minor technical amendment to Schedule 1AAA to the Principal Regulations.

The amending Regulations are set out in greater detail in the Attachment.

An exposure draft of the amending Regulations was released for public consultation and no adverse comments were received.

The Regulations commence:

(a) For regulations 1 to 3 and Schedule 1, which are the amendments not related to the Exports Act amendments - on the day after they are registered;

(b) For regulation 4 and Schedule 2, which are the amendments related to the Exports Act amendments - on the commencement of Schedules 1 and 2 to the Customs Amendment (Export Controls and Other Measures) Act 2011).

1119220A

Attachment

details of the amending Customs Amendment Regulations 2011 (no. 3)

Regulation 1 - Name of Regulations

Regulation 1 provides that the amending Regulations are the Customs Amendment Regulations 2011 (No. 3).

Regulation 2 - Commencement

Regulation 2 provides that the amending Regulations commence:

(a) For regulations 1 to 3 and Schedule 1 - on the day after they are registered;

(b) For regulation 4 and Schedule 2 - on the commencement of Schedules 1 and 2 to the Customs Amendment (Export Controls and Other Measures) Act 2011 (the Exports Act).

Schedule 1 to the amending Regulations sets out the amendments that are unrelated to the Exports Act amendments. Therefore, these amendments commence on the day after they are registered.

Schedule 2 to the amending Regulations sets out the amendments related to the Exports Act amendments. These amendments therefore commence at the same time as the amendments in the Exports Act commence.

Regulation 3 - Amendment of Customs Regulations 1926

Regulation 3 provides that Schedule 1 amends the Customs Regulations 1926 (the Regulations).

Regulation 4 - Amendment of Customs Regulations 1926

Regulation 4 provides that Schedule 2 amends the Regulations.

Schedule 1 - Amendments commencing on day after registration

Item [1] Subregulation 128(2)

Item [1] of Schedule 1 omits the phrase "same import declaration or self-assessed clearance declaration" in subregulation 128(2) and substitute the following:

"same:

(a) import declaration; or

(b) self-assessed clearance declaration; or

Regulation 126 of the Regulations sets out the circumstances in which a refund, remission or rebate of customs duty is payable. Regulation 128 sets out the requirements in relation to making an application for such a refund, rebate or remission. In particular, subregulation 128(2) currently provides that the goods for which such an application is made must be goods covered by the same import declaration or self-assessed clearance document.

Import declarations and self-assessed clearance declarations (SACs) are two of the means by which information on imported goods is communicated to Customs. Both of these documents are required to be communicated to Customs at the time goods are imported into Australia and before such goods are delivered from Customs control into home consumption. SACs are required to be communicated electronically and most import declarations are also communicated to Customs electronically using Customs' computer system, the Integrated Cargo System (ICS). Most refund applications are also processed electronically using the ICS, by reference to the import declaration or SAC that is associated with the goods the subject of the refund application. In order to enable the effective electronic processing of refund applications, a refund application cannot apply in relation to goods that are covered by more than one import declaration or SAC. This limitation is reflected in current subregulation 128(2).

Under section 69 of the Customs Act 1901 (the Act), permission can be granted whereby certain imported goods can be delivered into home consumption without having to first be reported to Customs on an import declaration. Under present arrangements, for permissions given under subsection 69(5) of the Act, such goods must then be reported to Customs on a weekly basis on a return and customs duty paid at the same time the return is lodged. The return requires the same information in relation to the goods as an import declaration, plus additional information. All such returns are communicated to Customs electronically using the ICS. Similar arrangements exist under section 70 (for special clearance goods) and section 105C (for imported goods used in the manufacture of excisable goods) of the Act.

However, the restriction in subregulation 128(2) does not expressly apply in relation to the refund of duty on goods that are reported to Customs on a return under section 69, 70 or 105C. Therefore, an importer could apply on a single refund application form for a refund in relation to goods reported on more than one return. Current Customs policy however is to require a single refund application for a single return, consistent with arrangements for import declarations and SACs. This supports electronic recording and processing of the refunded amount and financial accountability requirements for refunding Commonwealth revenue.

The amendments in item 1 amend subregulation 128(2) to include a reference to a return under subsections 69(5), 70(7) and 105C(2) of the Act. This means that the goods for which an application is made must be goods covered by the same return. An importer is unable to use a single refund application from for refunds in relation to goods reported on more than one return, consistent with current policy.

Item [2] Schedule 1AAA

Item [2] of Schedule 1 amends Schedule 1AAA to the Regulations by inserting a reference to the Australian Harmonized Export Commodity Classification (AHECC) Code 2208.90.00.

Schedule 1AAA to the Regulations sets out the AHECC subheadings and statistical code combinations for the purposes of regulation 95AA and 95AB of the Regulations. These regulations and Schedule 1AAA prescribe matters for sections 99 and 102A of the Act, which set out requirements in relation to certain goods being released from a Customs warehouse for export. For example, section 102A requires that where prescribed goods are to be released from a Customs warehouse for export, the warehouse licence holder must give Customs notice of this event. Goods are prescribed for the purposes of section 102A in Schedule 1AAA by reference to the classification under the AHECC Code.

The insertion of the reference to the AHECC Code 2208.90.00, which applies to certain spirituous beverages, corrects an oversight in the omission of this subheading in Schedule 1AAA when it was originally included in the Regulations.

Schedule 2 - Amendments commencing on commencement of schedules 1 and 2 of the customs amendment (Export controls and other measures act 2011

Item [1] Regulation 23

Item 1 of Schedule 2 amends regulation 23 of the Regulations by inserting a reference to new paragraph 30(1)(e) of the Act.

Regulation 23 of the Regulations prescribes certain places as prescribed places for export for the purposes of paragraph 30(1)(d) of the Act. Paragraph 30(1)(d) sets out the circumstances in which goods for export are subject to the control of the Customs, and this control commences when the goods are made, prepared, or brought into, any prescribed place for export. The places that are prescribed for paragraph 30(1)(d) include a wharf, airport and Customs depot.

The Exports Act will include a new circumstance in paragraph 30(1)(e) of the Act in which goods that were, but are no longer, for export will be subject to the control of the Customs. It will also apply to goods that are made or prepared in, or brought into, a prescribed place for export. Item 1 prescribes the same places in regulation 23 that are prescribed for paragraph 30(1)(d) to be also prescribed for new paragraph 30(1)(e).

Item [2] Regulation 51

Item 2 of Schedule 2 amends the Regulations by repealing and substituting regulation 51.

Current regulation 51 sets out the formula for the refund of a warehouse licence fee where a warehouse licence is surrendered by the licence holder. However, new subsection 87(1A) of the Act, which is being inserted by the Exports Act, will provide that the Chief Executive Officer of Customs must cancel a warehouse licence if the CEO receives a written request from the licence holder to so cancel the licence. This could be because the warehouse business is closing down. This new provision will replace the current regime of surrendering a licence. Therefore, the current operation of regulation 51 is redundant and has been repealed.

New regulation 51 sets out the formulae to calculate the refund of a warehouse licence fee for the purposes of new subsections 85(4) and (5) of the Act, which are also being inserted by the Exports Act. Subsection 85(1) of the Act provides that such fees as are prescribed are payable in respect of warehouse licences. These fees are prescribed under regulations 50 and 50A of the Regulations. Regulation 50B of the Customs Regulations sets out the methods by which warehouse licence fees are payable. The fees can either be paid in full, or by instalments in accordance with the times set out in the regulations. However, currently there is no provision in the Act whereby a licence holder can receive a refund of the warehouse licence fee where a warehouse licence is cancelled before the end of the financial year.

Under new subsections 85(4) and (5), the regulations may make provision for, and in relation to the refund of any warehouse licence fees. New regulation 51 of the Regulations sets out the formulae for the refund of these fees where the fees are paid either by instalments or in full and the warehouse licence is cancelled before the end of the financial year.

Subregulation 51(3) sets out a table that is to be used to calculate the amount of a refund where a licence fee is paid by instalments. The amount of the refund is in direct proportion to the ratio of the number of days remaining in the instalment period after the licence is cancelled to the number of days in the instalment period. Subregulation 51(1) provides that an instalment period is either a period of 3 months commencing on a day specified in paragraph 50B(2)(b) (where the instalments are paid from the first day of a financial year) or a period of time commencing on the day specified in paragraph 50B(3) (where the instalments are paid other than from the first day of a financial year).

Subregulation 51(4) sets out a table that is to be used to calculate the amount of a refund where a licence fee is paid in full for a year or part of a year. The amount of the refund is in direct proportion to the ratio of the number of days remaining in the year after the licence is cancelled to the number of days to which the licence fee payment relates.

Item [3] Schedule 1AAD, item 2, column 3

Item 3 of Schedule 2 amends the Regulations by repealing and substituting column 3 of item 2 of Schedule 1AAD.

Regulation 167 of the Regulations provides that an Act (other than the Customs Act 1901) specified in an item of Schedule 1AAD is prescribed:

(a) for the provision or provisions of the Customs Act 1901 specified in the item; and

(b) to the extent (if any) specified in the item.

Current item 2 of Schedule 1AAD prescribes the Aviation Transport Security Act 2004 for the purposes of subparagraph 186A(1)(b)(ii) of the Act. Section 186A provides that officers of Customs may copy, or take extracts from documents relevant to, inter alia, the commission of any offence against a prescribed Act.

The Exports Act will extend the purposes for which conditions can be imposed on both a depot licence and a warehouse licence to include for the purposes of ensuring compliance with prescribed laws. The Exports Act will also extend the circumstances in which a depot licence can be cancelled to include for the purposes of ensuring compliance with prescribed laws.

The Exports Act will also insert new provisions into the Act empowering a Collector to give directions in relation to goods for export and goods no longer for export. Under new section 112C, a Collector may give written directions to certain people in relation to goods for export and goods no longer for export, including if the direction is for the purposes of ensuring compliance with prescribed laws.

The effect of new column 3 of item 2 of Schedule 1AAD is to also prescribe the Aviation Transport Security Act 2004 for the purposes of the new power to impose conditions on a depot and a warehouse licence, the new power to cancel a depot or a warehouse licence, and the new directions power in relation to goods for export and goods no longer for export.

In particular, new column 3 of item 2 of Schedule 1AAD prescribes the Aviation Transport Security Act 2004 for the following provisions of the Act:

(a) paragraph 77Q(1)(b);

(b) subparagraph 77V(5)(b)(ii);

(d) paragraph 77X(2)(g);

(e) subsection 77Y(1);

(f) paragraph 82(3)(b);

(g) paragraph 82A(1)(b);

(h) subsection 86(1);

(i) subparagraph 86(3)(b)(ii);

(j) paragraph 86(7)(e);

(k) paragraph 87(1)(b); and

(l) paragraph 96A(6)(b);

(m) paragraph 96B(6)(b).

(n) paragraph 112C(1)(b); and

(o) subparagraph 186A(1)(b)(ii)

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