Explanatory Memorandum(Circulated by authority of the Minister for Justice and Customs, Senator the Hon Christopher Martin Ellison)
Chapter 4 - Exports Measures
The Customs Legislation Amendment and Repeal (International Trade Modernisation) Bill 2000 includes amendments to improve Customs capacity to ensure requirements in relation to exported goods are complied with. The purpose of the amendments is to enable Customs to more effectively perform its role of preventing the export of prohibited exports and monitoring compliance with the GST law in relation to the GST-free status of supplies of goods for export. To achieve these outcomes the Bill amends the Customs Act to:
- allow Customs officers to examine goods for export prior to being subject to Customs control;
- tighten Customs control over customable/excisable goods for export;
- ensure that Customs is aware of goods delivered to a Cargo Terminal Operator (CTO) for export by requiring CTO operators to report export cargo to Customs;
- allow shipping companies and airlines to report outward manifests to Customs up to three days after departure;
- require an export entry for all goods the export of which requires a permission under an Act or instrument made under an Act;
- align the export entry threshold to $2000 for all cargo, with the exception of goods requiring an export licence or permit; and
- introduce strict liability offences for export reporting offences.
The power to examine goods for export is considered crucial to the control of exports, for the detection of prohibited exports and the prevention of evasion of excise duty or GST liability by diversion of goods into the domestic market. The general power of Customs to examine goods in section 186 of the Act applies to goods that are subject to the control of Customs.
The difficulty is that not all goods for export are subject to Customs control, while others that are subject to Customs control cannot be examined at places where they come under that control (such as a wharf or airport or licensed Customs depot) either because of the limited time that they are located there, or the way in which they have been packaged for export. It is therefore proposed to extend Customs control to all goods for export and to extend the powers of examination beyond the current prescribed places to overcome logistical and time sensitivity problems.
Item 1 of Schedule 1 to the Bill will amend paragraph 30(1)(d) of the Act to remove the requirement that goods for export must be protected objects or subject to conditions or restrictions under an Act or regulation for them to be subject to Customs control. This means that all goods for export will now come under Customs control from the time that they are brought to a prescribed place for export, giving Customs the power to examine them.
Item 5 of Schedule 1 inserts new Division 3A into Part VI of the Act to confer powers on authorised officers to enter premises and examine goods that are reasonably believed to be intended for export. Before being authorised to exercise powers under this Division, the CEO must be satisfied that the officer is suitably qualified - they must have the ability and experience to exercise those powers ( new section 122F(4) ).
The powers are exercisable before the goods become subject to the control of Customs and are conferred for the purpose of enabling officers to assess whether the goods meet the requirements of the Customs Act relating to exports. The powers are exercisable only with the consent of the occupier of the premises at which goods are situated ( new section 122H ). This consent may be withdrawn by the occupier of the premises at any time ( new section 122J ).
Once an authorised officer has been given consent to enter a premises, the officer may:
- search the premises for export goods and related documents ( new section 122K );
- examine export goods ( new section 122L );
- draw samples of the export goods ( new section 122L );
- examine and make copies of documents that relate to export goods ( new section 122M );
- question the occupier of the premises in relation to the export goods ( new section 122N );
- bring equipment into the premises to search for or examine goods or related documents ( new section 122P );
If a persons property is damaged as a result of the action taken by the Customs officer exercising these powers, the person is entitled to reasonable compensation.
Certain customable and excisable goods are stored under Customs control in licensed Customs warehouses. In particular, high duty rate items such as alcohol and tobacco are stored under Customs control until they are delivered for home consumption or exportation.
It has become apparent that goods are being released from warehouses when the licensee is presented with either false or altered export documentation and some or all of those goods are never exported but rather diverted into the domestic market without the duties having been paid to Customs. Customs effectively loses control of the goods between their departure from the warehouse until they are delivered to a prescribed place for export. It is during this time that dutiable goods are diverted into the domestic market and are not brought to account, resulting in a significant loss of government revenue and commercial disadvantage to legitimate operators.
New section 102A will require Customs to be notified if goods are released from a warehouse for export (subsection (2)) and if goods previously released from a warehouse for export are returned (subsection (3)) ( item 97A of Schedule 3 ).
This notification requirement only applies to the holder of a warehouse licence in respect of prescribed goods or prescribed classes of goods.
The notification must:
- be made electronically;
- be made within the period prescribed by the regulations;
- state that the goods have been released/returned; and
- give such particulars to the release/return as are required by an approved statement.
It is an offence to contravene new subsections 102A(2) or (3) with a penalty not exceeding 60 penalty units. An offence is an offence of strict liability.
Subsection 113(1) of the Act provides that the owner of goods intended for export must enter the goods for export and must not allow the goods to leave the place of export (if the goods are not going to be exported on a ship or aircraft) or be loaded on the ship or aircraft without an authority to deal. The goods may be loaded if they are or are included in a class of goods prescribed in the regulations. The section is being amended because of a grammatical and formatting errors in the current provision. New subsection 113(1A) makes an offence against new subsection 113(1) an offence of strict liability.
Amendments to section 99 of the Customs Act by item 97 of Schedule 3 makes it an offence for a warehouse operator to permit warehoused goods to be removed from the warehouse for export unless they have been entered for export and an authority to deal is in force. If the goods are prescribed goods the operator must ascertain those two things from information made available by Customs (new subsection (99)(3)). New section 117AA (item 62 of Schedule 3) will require that customable/excisable goods may only be consolidated for export at a licensed depot, and that when they are delivered for consolidation, and subsequently released, these movements are reported to Customs.
This will mean that Customs will be made aware of the movements of customable/excisable goods for export by warehouse and depot operators, allowing Customs to have a greater degree of control over these high revenue goods.
The definition of authority to deal in subsection 4(1) of the Customs Act is amended to take into account that it is proposed that, where an ACEAN is communicated to Customs in respect of an accredited clients goods, an authority to deal with the goods will not have to be sought from Customs and the ACEAN constitutes the authority to deal.
New subsection 114C(1) makes it clear that Customs has to only give an export entry advice in respect of goods that are entered for export by the making of an export declaration. Section 114C currently applies to all export entries . However, goods entered for export by the use of an ACEAN will not be subject to an export entry advice. Instead the ACEAN will itself be the authority to deal with the goods ( new subsection 114C(4B)).
New subsections 114C(3A),(4A) and 114D(3) make special provision in relation to the export of excisable goods. These provisions take account of amendments to current sections 114C and 114D of the Act proposed in the Taxation Laws Amendment (Excise Arrangements) Bill 2000, which is expected to commence before this Bill.
The information reported on outward manifests by carriers is presented to Customs within sometimes as little as one hour prior to departure. This is not a sufficient amount of time for Customs to locate, verify and, if need be, examine goods that are subject to GST compliance or are suspected of being prohibited exports
New section 114E ( item 62 of Schedule 3 ) will require persons delivering goods for export to a wharf or airport to provide the operator of the wharf or airport with details of the goods, including the particulars of the authority to deal if one is required. If no authority to deal has been obtained, the operator of the wharf or airport may lodge an export entry and obtain an authority to deal. Persons delivering goods to a wharf or airport for which an authority to deal is not required, ie those exempt from export entry requirements, must also provide details relating to the goods to the operator of the wharf or airport.
New section 114E makes it an offence to deliver to a wharf or airport all goods for export unless certain conditions have been met.
New section 114E will provide that it is not an offence to deliver goods that are required to be entered for export to a wharf or airport without entry if the goods are prescribed by the regulations. In those circumstances, the details of the prescribed goods must be given to the person receiving the goods in the prescribed manner. The deliverer can give the details by giving to the operator the submanifest number given to the deliverer by Customs under new subsection 117A(3).
New section 114F ( item 62 of Schedule 3 ) will require the operator of the wharf or airport to report the details to Customs of the goods delivered to or removed from (other than for export) the wharf or airport within a prescribed time of delivery. New section 114F applies to all persons who take delivery of goods for export at a wharf or airport other than those wharfs and airports that are not excluded by the regulations. This is because at some wharfs and airports there will be no facilities to meet these obligations.
New subsection 114F(1A) provides that the person taking delivery of the goods must give notice to Customs stating that they received the goods.
New subsection 114F(1B) contains the obligation to notify Customs if goods are removed from a wharf or airport otherwise than for the purpose of being loaded onto a ship or aircraft for export.
These notices must:
- be given electronically
- given within the period prescribed in the regulations;
- state that the goods have been received/removed; and
- give such particulars of the receipt/removal as are required by an approved statement.
Failure to meet these new obligations will constitute strict liability offences which may, in lieu of prosecution, be dealt with by an infringement notice. See Chapter 5 of this memorandum for a detailed discussion of the new infringement notice system for strict liability offences.
These amendments will mean that Customs will know where goods for export have been delivered, this facilitating their verification.
New section 116 provides that if goods are entered for export by the making of an export entry and if some or none of the goods are exported in accordance with the entry within the period of 30 days after the intended day of exportation notified in the entry, the authority to deal with the goods is taken to have been revoked.
New section 116A provides that if goods are entered for export using an ACEAN and the goods have not been exported within 30 days after the day that the ACEAN was communicated, the entry is taken to have been withdrawn and the ACEAN cannot be used to enter those goods or any other goods for export.
New subsection 117A(1) of the Customs Act provides that the person in charge of the place at which a consolidation of goods is carried out must communicate to Customs a submanifest of goods which have been consolidated. Customs then sends a submanifest number to the person for inclusion in the outward manifest.
Current industry practice is to provide Customs with the outward manifest immediately prior (ie, one hour) to the departure of the vessel or aircraft. This affords industry with as much time as possible to compile the necessary information while still conforming as closely as possible with the requirements of the Act.
This manifest has a dual function for Customs purposes. First, as export entries may be lodged any time prior to exportation, the manifest is used as the confirmation that the goods are to be actually exported and to identify where the goods are located to facilitate their potential examination and prevent the exportation of prohibited exports. Second, the manifest is used by Customs, the Australian Bureau of Statistics (ABS) and other government departments and agencies to identify which goods have been exported from Australia for statistical and cargo control purposes.
As the first of these functions will be redundant following the amendments described above requiring cargo terminal operators to report the arrival of export goods at the wharf or airport, the main purpose of the outward manifest will be the provision of accurate export statistics. New section 119 of the Customs Act ( item 62 of Schedule 3 ) will allow shipping companies and airlines to report outward manifests to Customs up to three days after departure. This will allow them to collect all of the necessary information for the manifest so that the manifest that they report to Customs is complete and correct.
Subsection 113(2) of the Customs Act exempts certain goods (primarily passenger and crew baggage and lower value goods) from the requirement to lodge an export entry. These exemptions apply even if the exportation of the goods requires a permission under Customs or other commonwealth legislation, significantly reducing the amount of information Customs receives in relation to such goods and hence its ability to monitor controlled exports. To address this problem, the amendment proposed at item 4 of Schedule 1 to the Bill will insert new subsection 113(2A) to provide that the exemptions in subsection 113(2) do not apply to goods that require a permission under an Act, or an instrument under an Act, before they can be exported.
There are currently two different value thresholds for the lodgement of an export entry with Customs. Goods exported via Australia Post require an export entry if the consignment is valued at over $2000, while goods exported as air or sea cargo require an export entry if the goods are valued at over $500.
Item 56 of Schedule 3 will repeal paragraphs 113 (2)(b) and (c) of the Customs Act and replace them with a standard export entry threshold of $2000 for goods for export, regardless of mode of export. This will standardise the export entry threshold across all modes of export and simplify export entry requirements for the export industry.
Many of the problems with export data accuracy stem from a lack of effective penalties for non-compliance with Customs requirements. The introduction of strict liability offences with the option of issuing an infringement notice in lieu of prosecution is intended to provide incentive to improve compliance in relation to exports where other avenues for compliance improvement have been unsuccessful. See Chapter 5 of this Memorandum for a detailed discussion of the new penalty system.