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TAXATION LAWS AMENDMENT (EXCISE ARRANGEMENTS) BILL 2000

1998-1999-2000

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

TAXATION LAWS AMENDMENT (EXCISE ARRANGEMENTS) BILL 2000

EXPLANATORY MEMORANDUM

(Circulated by authority of the
Treasurer, the Hon Peter Costello, MP)

ISBN: 0642 464359

Table of contents

Glossary

The following abbreviations and acronyms are used throughout this Explanatory Memorandum.

General outline and financial impact

Taxation Laws Amendment (Excise Arrangements) Bill 2000

This Bill amends the Excise Act and related legislation to:

• transfer the general administration of excise legislation from the CEO of Customs to the Commissioner;

• insert a confidentiality protection provision in the Excise Act;

• incorporate in the Excise Act the powers of officers that are currently conferred by the Customs Act for excise purposes;

• require forfeited goods seized by police officers to be dealt with in the same way as forfeited goods seized by officers exercising powers for excise purposes; and

• repeal redundant provisions in the Distillation Act and the Spirits Act.

This Bill amends the Customs Act to transfer administrative responsibility for the provisions in that Act relating to the Diesel Fuel Rebate Scheme to the Commissioner.

This Bill will also amend the Customs Act, the CAA 1985, and the TAA 1953 as a consequence of the amendments to the excise legislation.

Date of effect: The amendments to be made by this Bill will commence from the earlier of 1 July 2001 or 28 days from Royal Assent.

Proposal announced: Not announced. These amendments will give effect to the changed administration of the excise legislation following the Administrative Arrangements Order of 21 October 1998.

Financial impact: None.

Compliance cost impact: None.

Chapter 1
Transfer of administration

Outline of chapter

1.1 This chapter explains the largely technical amendments to transfer the general administration of the Excise Act and related legislation from the CEO of Customs to the Commissioner.

Summary of the amendments

1.2 The amendments will redefine, repeal or amend Customs-related terms and references in the excise legislation. Consequential amendments will also be made to customs legislation and the TAA 1953.

1.3 As the excise legislation will fall within the meaning of ‘taxation law’, a number of provisions of the TAA 1953 will apply to the administration of excise laws. The excise legislation will be amended to expressly adopt the provisions of the TAA 1953 relating to ‘approved forms’ and the processes for the review of appeals against decisions on excise matters.

1.4 The TAA 1953 will be amended to expressly adopt, for excise purposes, the provisions relating to the collection and recovery of tax-related liabilities. It will also be amended to expressly exclude the application of its offences and prosecution provisions to excise matters, as excise and DFRS offences will continue to be prosecuted under the provisions of the Excise Act.

1.5 A secrecy provision consistent with that of other taxation secrecy provisions will be inserted in the Excise Act to protect the confidentiality of excise information and documents.

1.6 Provisions in the excise legislation inconsistent with taxation administrative practices will be repealed. Redundant provisions in the Distillation Act and Spirits Act will also be repealed.

1.7 Technical drafting changes will be made to adopt gender-neutral language and to replace the maximum dollar amount of penalties stated for offences with the ‘penalty unit’ standard specified by the Crimes Act. Other minor drafting changes correct references and add notes where appropriate.

Detailed explanation of new law

Background

1.8 Excise legislation comprises the:

• Excise Act 1901;

• Excise Tariff Act 1921;

• Distillation Act 1901;

• Spirits Act 1906;

• Coal Excise Act 1949; and

• Fuel (Penalty Surcharges) Administration Act 1997 and associated penalty surcharge imposition Acts.

1.9 The CEO of Customs currently has the general administration of customs and excise legislation and a number of provisions in those Acts are interrelated. As a consequence of portfolio changes made by the Administrative Arrangements Order of 21 October 1998, the excise legislation and the DFRS have been administered by certain ATO officers under delegation from the CEO of Customs. These amendments will give statutory effect to the transfer of administrative responsibility.

Definitions

1.10 The definition of CEO in the Excise Acts will be redefined as the Commissioner of Taxation rather than the CEO of Customs. [Schedule 2, item 4, definition of ‘CEO’ in subsection 4(1); Schedule 4, item 2, definition of ‘CEO’ in subsection 6(1); Schedule 5, item 3, definition of ‘CEO’ in subsection 3(1); Schedule 6, item 2, definition of ‘CEO’ in section 4; Schedule 7, item 10, definition of ‘CEO’ in subsection 3(1)]

1.11 The general administration of the Excise Acts will be stated to be by the ‘CEO’, rather than the ‘CEO of Customs’. [Schedule 2, item 18, section 7; Schedule 4, item 1, section 3; Schedule 5, item 1, section 2A; Schedule 6, item 1, section 2A; Schedule 7, item 9, section 1A]

1.12 The Excise Acts provide for functions to be carried out by officers variously identified as the ‘CEO’, ‘Collector’, ‘authorised officer’ or ‘officer’. The term ‘Collector’ is currently a specific designation under the Customs Act. For excise purposes, Collector will be defined as meaning ‘CEO’ or, where an authority is held by an authorised officer in relation to a section of the excise legislation which refers to ‘Collector’, that ‘authorised officer’. [Schedule 2, item 6, definition of ‘Collector’ in subsection 4(1); Schedule 4, item 3, definition of ‘Collector’ in subsection 6(1); Schedule 5, item 4, definition of ‘Collector’ in subsection 3(1); Schedule 6, item 3, definition of ‘Collector’ in section 4]

1.13 For excise purposes, the definition of officer as an ‘officer of Customs’ will be redefined as a person employed under the Public Service Act 1999, who is exercising powers or performing functions in relation to a taxation law, as defined in the TAA 1953. [Schedule 2, item 12, definition of ‘officer’ in subsection 4(1); Schedule 4, item 4, definition of ‘officer’ in subsection 6(1); Schedule 5, item 7, definition of ‘officer’ in subsection 3(1); Schedule 6, item 4, definition of ‘officer’ in section 4]

Excise legislation will become taxation law

1.14 As the excise legislation will fall within the meaning of ‘taxation law’ as defined in section 2 of the TAA 1953, the meaning of an ‘approved form’ for excise purposes will be made consistent with that applicable to taxation legislation. Approved form will have the same meaning as that given by section 388-50 in Schedule 1 to the TAA 1953. The existing provisions relating to an ‘approved form’ in section 4AA of the Excise Act will be repealed. [Schedule 2, item 1, definition of ‘approved form’ in subsection 4(1) and item 16]

1.15 The provisions in the excise legislation relating to the review of certain decisions will be amended to adopt the procedure under taxation legislation for internal review by the Commissioner before the matter is referred to the AAT. Consequently, subsection 162C(1) of the Excise Act will be amended to provide that a person dissatisfied with a reviewable decision may object in the manner provided for in Part IVC of the TAA 1953. Minor amendments will be made to reflect terms used in the provisions of Part IVC. [Schedule 2, items 106, 108, 110, 111 and 112; Schedule 4, item 51, subsection 82B(1); Schedule 5, item 24, subsection 20(2); Schedule 6, item 20, section 27A]

1.16 This Bill also allows for changes proposed by the Administrative Review Tribunal Bill 2000 and makes amendments contingent on the commencement of the relevant parts of that Bill. [Schedule 2, item 109; Schedule 4, item 53; Schedule 5, item 26; Schedule 6, items 22 and 23]

1.17 The provisions relating to the recovery of debts arising under excise laws will be repealed and the collection and recovery provisions in the TAA 1953 will be adopted. [Schedule 2, item 107, section 161; Schedule 4, item 26, section 50A; Schedule 7, items 35 and 36]

1.18 Provisions in the excise legislation that empower the CEO of Customs to give directions concerning the exercise of powers of officers under the excise legislation will be repealed. [Schedule 2, item 71, section 83; Schedule 4, item 36, section 59B; Schedule 5, item 28, subsections 22(4) and (5); Schedule 6, item 18, subsections 25(2) and (3); Schedule 7, item 24, section 46]

1.19 Section 12A of the Excise Act is also inconsistent with taxation administration practice and will be repealed. This section provides that, where there is a proclamation under the Customs Act which has the effect of attaching a part of a State or Territory to an adjoining State or Territory for the purposes of the administration of the Customs Act, the provision will apply for the purposes of the Excise Act. [Schedule 2, item 20, section 12A]

Protecting the confidentiality of information

1.20 The confidentiality of information obtained by officers in the course of their employment for excise purposes is currently protected by a provision that applies to both customs and excise laws. As this provision will cease to operate for excise purposes, a provision will be inserted in the Excise Act to restrict the dissemination of information obtained for excise purposes.

1.21 A person who holds protected information or documents obtained in the course of official employment will be prohibited from making a record of the information or disclosing it to anyone else, except in specified circumstances. The penalty for a breach of this prohibition is imprisonment for 2 years or 500 penalty units. [Schedule 2, item 105, subsections 159(1) and (2)]

1.22 A person will be able to record or disclose protected information if:

• the recording or disclosure is for the purposes of an excise law;

• it happens in the course of official employment;

• the person is the Commissioner or the Deputy Commissioner and the disclosure is to the CEO of Customs, to the Australian Statistician for census or statistics purposes, to another person carrying out functions under a taxation law or to the AAT in proceedings under a taxation law; or

• the person making the disclosure has been authorised by the Commissioner or Deputy Commissioner to disclose the information and the disclosure is to the CEO of Customs, to Australian Statistician for census or statistics purposes or to another person carrying out functions under a taxation law.

[Schedule 2, item 105, subsection 159(3)]

1.23 There is no authorisation for disclosure to a Minister. [Schedule 2, item 105, subsection 159(4)]

1.24 Disclosure of information or production of a document can be made to a court if it is necessary for the purposes of an excise law. A person acting in the course of official employment will not otherwise be required to produce protected information or documents to a court. [Schedule 2 , item 105, subsection 159(5)]

1.25 Protected information will be defined as information obtained under an excise law in the course of official employment and relating to the affairs of another person. Protected documents will be documents made or given under, or for the purposes of, an excise law. Official employment will mean, as well as employment by the Commonwealth, performance of services for the Commonwealth or the exercise of powers or functions under a delegation by the Commissioner. [Schedule 2, item 105, subsection 159(6)]

Securities required under the Excise Act

1.26 There are linkages between the Excise Act and the Customs Act in dealing with excisable goods, where it is intended that the goods be exported. Under section 61 of the Excise Act, excisable goods are controlled for excise purposes until they are delivered for exportation, while under section 114C of the Customs Act, an authority to deal with the goods must be provided for goods that have been entered for export.

1.27 Under section 61AB, where an authority to deal with excisable goods in accordance with an export entry is granted under section 114C of the Customs Act, that authority is treated for the purposes of the Excise Act as a permission to deliver those goods for exportation. Section 16 of the Excise Act provides for the taking of securities for the protection of revenue and pending the giving of the required security, delivery of goods or passing of any entry may be refused. These amendments will add a note to section 16 to provide that authorities given under section 114C of the Customs Act can be subject to conditions relating to securities under section 16. [Schedule 2, item 23, section 16]

1.28 A note will also be added to section 61AB of the Excise Act to the effect that, if an authority under section 114C of the Customs Act to deal with goods is subject to a condition that any security is required under section 16 of the Excise Act, the authority is not taken to have been given until the security is given. [Schedule 2, item 41, note to section 61AB]

1.29 A corresponding amendment is to be made to section 114C of the Customs Act to provide that an authority to deal with goods may be subject to a condition that any security required under section 16 of the Excise Act be given. Where any such security is required, the authority is not taken to be given until that security has been given. [Schedule 3, item 13, subsection 114C(3A) and item 14, subsection 114C(5)]

Consequential amendments to excise legislation

1.30 Tables 1.1 to 1.6 set out the other amendments to the excise legislation that are required to redefine, amend or repeal provisions relating to Customs administration.

Table 1.1: Excise Act amendments

Table 1.2: Distillation Act amendments

Table 1.3: Spirits Act amendments

Table 1.4: Coal Excise Act amendments

Table 1.5: Excise Tariff Act amendments

Table 1.6: Fuel (Penalty Surcharges) Administration Act 1997

Redundant provisions

1.31 The Distillation Act and the Spirits Act contain provisions that are no longer applicable or relevant to current practice. The amendments will repeal the following:

Distillation Act:

• references to Part XIII and section 162A of the Excise Act which have been previously repealed [Schedule 4, items 6 and 7, subsection 8(1)];

• the provision for the supervision of activities in the distillery by an officer and the requirements to be met by the distiller, including the provision of sufficient light, maintenance of burning lamps, etc. [Schedule 4, item 15, section 31];

• the obligation on the distiller to receive into the distillery, distillation feed stock (wash, wine, etc.) or to mix different distillation feedstock within the distillery [Schedule 4, item 19, section 35];

• the provisions requiring approval to remove spirits and for the checking of quantities after removal. Current practice relies on the provisions contained in section 61 of the Excise Act concerning movement of excisable goods [Schedule 4, item 22, sections 40 and 44];

• the obligation on the distiller to close down operations for 12 hours on the last day of each month for accounting purposes [Schedule 4, item 28, section 52];

• the requirement for operations to be carried out under the supervision of an officer and that the vigneron shall provide board and lodging for the officer [Schedule 4, item 30, sections 55 and 56];

• the provision for remuneration to a person who provides board and lodging for an officer at the request of the Collector [Schedule 4, item 48, section 81];

• the prohibition on the sale of Australian wine containing more than 23% by volume of alcohol, the addition of any wine to spirits for the purpose of reducing the strength of the spirits and the sale of any spirits reduced by the addition of wine [Schedule 4, item 46, section 76]; and

• the prohibition on the sale of spirits from a place within 90 metres of the distillery [Schedule 4, item 46, section 77].

Spirits Act:

• the provision that an officer may, at the request of an owner, mark the description on casks or vessels or label bottles [Schedule 5, item 10, subsection 7(2)];

• the determination by the Commissioner whether spirits are inferior quality. This is no longer relevant as quality control is an industry responsibility [Schedule 5, item 14, section 13];

• the Schedule for the standards for industrial spirits and mineralised spirits. These standards are no longer a requirement for end use provisions [Schedule 5, item 15 and 32, subsection 14(3) and Schedule 1];

• the reference to spirits methylated before the commencement of the Act [Schedule 5, item 22, section 19]; and

• the limitation on the quantity of methylated spirits able to be sold or held in storage at any one time [Schedule 5, item 27, section 21].

Penalty units

1.32 Penalties applying to offences under the excise legislation will be amended to refer to the appropriate penalty units in place of fixed amounts to reflect current practice in taxation legislation. A note will be added to the sections containing penalty units referring to section 4AA of the Crimes Act, which gives the current value of a penalty unit. The sections amended are set out in Table 1.7.

Table 1.7: Penalty units

Gender neutrality

1.33 To achieve gender neutrality in the excise legislation, provisions in the Excise Acts that refer to ‘he’, ‘him’, ‘his’, ‘himself’ are to have ‘or she’, ‘or her’ or ‘or herself’ added. Where appropriate he, him or his will be replaced with the ‘person’, ‘distiller’, ‘Collector’, ‘officer’ or ‘producer’. [Schedule 2, items 84 and 85; Schedule 3, item 17; Schedule 4, items 9 to 12, 17, 21, 23 to 25, 27, 40, 43, 44 and 49; Schedule 5, items 2, 18, 20 and 21; Schedule 6, items 9, 11, 12 and 16]

Minor drafting changes

1.34 A number of minor changes of a technical drafting nature will also be made to correct drafting errors or to improve the language used in the legislation. [Schedule 2, items 7, 10, 39, 40, 62, 72, 73, 75, 76 and 115]

Application and transitional provisions

1.35 The amendments to be made by this Bill are to commence from the earlier of 1 July 2001 or 28 days from Royal Assent. [Subclause 2(1)]

1.36 Amendments that allow for changes proposed by the Administrative Review Tribunal Bill 2000 will apply from the commencement of the relevant provisions of that Bill. [Subclause 2(2)]

1.37 Provisions having transitional effect will apply to ensure that:

• anything done under the Excise Acts by the CEO of Customs in force before the commencement of this Act is taken, after the commencement of this Act, to have been done by the Commissioner in that capacity [Schedule 2, item 5];

• officers of Customs for the purposes of the Excise Acts before the amendments continue to be officers after their commencement [Schedule 2, item 13; Schedule 4, item 5; Schedule 5 item 8; Schedule 6, item 5];

• a form approved under the Excise Act before the commencement of this Act is taken to be an approved form under the terms of the new definition [Schedule 2, item 17];

• any securities taken under section 16 of the Excise Act held by Customs on the Commonwealth’s behalf immediately before the commencement of this Act, are taken, after its commencement, to be held by the CEO on behalf of the Commonwealth [Schedule 2, item 22];

• an application for a review of a decision under the Excise Acts made before the commencement of the amendments will not be affected by the proposed requirement for objections to be dealt with in accordance with Part IVC of the TAA 1953 [Schedule 2, item 113; Schedule 4, item 52; Schedule 5, item 25; Schedule 6, item 21]; and

• under the Customs Act, where matters are already the subject of action under Part XII , the amendments transferring search and seizure powers to the Excise Act will not apply [Schedule 3, item 90].

Consequential amendments

Table 1.8: Customs Act amendments

Table 1.9: Customs Administration Act amendments

Taxation Administration Act amendments

1.38 The TAA 1953 will be amended to exclude the provisions of Part III and Subdivision 284-B in Schedule 1 which relate, respectively, to the prosecution of offences and to administrative penalties, from applying to the excise legislation and the diesel fuel rebate provisions in the Customs Act. [Schedule 7, items 30, 31, 34 and 37]

1.39 An outdated reference to ‘Comptroller-General’ will be changed to ‘Chief Executive Officer’. [Schedule 7, item 33]

Chapter 2
Administration of the Diesel Fuel Rebate Scheme

Outline of chapter

2.1 This chapter explains the amendments necessary to give effect to the transfer of the administration of the DFRS from the CEO of Customs to the Commissioner.

Summary of the amendments

2.2 The Customs Act and the Excise Act provide a joint legislative basis for the DFRS. By amendments proposed by this Bill, the Commissioner will have the general administration of the Excise Act and of the DFRS provisions contained therein. Amendments to the Customs Act will also be made to ensure that the Commissioner has administration of the DFRS provisions in that Act.

2.3 The main changes are:

• the insertion in the Customs Act of terms and definitions relating to the Commissioner’s administration of the DFRS;

• the application of Excise Act provisions to the prosecution of all DFRS offences; and

• the application of TAA 1953 provisions to the review of DFRS decisions.

2.4 The amendments will not affect the entitlements and obligations of persons eligible for a DFRS rebate.

Detailed explanation of the amendments

Background

2.5 The DFRS provides a rebate for the excise duty or customs duty which has been paid on locally produced or imported diesel and like fuel purchased for use in certain eligible activities. These include specific off-road uses in mining, primary production, marine use and rail transport, at a hospital, nursing home, aged persons home, and for certain residential power generation.

2.6 Both the Customs Act and the Excise Act provide the legislative basis for the operation of the DFRS. They cover the usages of the fuel that attract entitlement to a rebate, matters relating to applications for a rebate and the assessment of rebate entitlements. Both Acts provide the necessary authority to pay and audit claims, to prosecute offences and to confer powers needed to administer the DFRS.

2.7 At present, ATO officers administer the DFRS under delegation from the CEO of Customs. These amendments will give the Commissioner the legislative authority to administer the DFRS.

Amendment of the Excise Act

Changes to defined terms

2.8 A defined term diesel fuel rebate Customs provisions will be inserted to refer to the sections of the Customs Act that are relevant to the DFRS. [Schedule 2, item 9, definition of ‘diesel fuel rebate Customs provisions’ in subsection 4(1)]

2.9 The term ‘diesel fuel rebate’ is presently defined for Excise Act purposes as a rebate payable under section 78A. That definition will not apply to proposed paragraph 120(1)(vd) which refers to the rebate payable under section 164 of the Customs Act. [Schedule 2, item 8]

2.10 The defined term ‘authorised officer’ will replace the term ‘Customs’ in relation to the conduct of audits under the Excise provisions. [Schedule 2, item 65]

References to DFRS offences under the Customs Act

2.11 As the prosecution of all DFRS offences will be dealt with under the provisions of the Excise Act, the definition of ‘Excise prosecutions’ will be replaced with a new definition to include proceedings for the recovery of pecuniary penalties under the Customs Act for contraventions relating to diesel fuel rebate Customs provisions. [Schedule 2, item 99, section 133]

2.12 A paragraph will be inserted in the Excise offence provisions to include the knowingly or recklessly obtaining or retaining of a diesel fuel rebate to which a person is not entitled under section 164 of the Customs Act. This enables the offence to be prosecuted as an Excise prosecution and corresponds to the offence under the Excise Act when a person knowingly or recklessly obtains or retains diesel fuel rebate to which the person is not entitled under section 78A of the Excise Act. [Schedule 2, item 89, paragraph 120(1)(vd)]

2.13 A reference to this DFRS offence will be inserted in section 78AD of the Excise Act. This section deals with the audit of diesel fuel rebate applications and excludes certain records from being used in evidence against the person in proceedings for an offence, except in certain circumstances. The circumstances where records are admissible in proceedings will include the offence when a person knowingly or recklessly obtains a rebate to which he is not entitled under section 164 of the Customs Act. This is consistent with the admissibility of records in proceedings for the corresponding offence under section 78A of the Excise Act. [Schedule 2, item 64]

2.14 The corresponding section in the Customs Act, section 164AC, will be amended to reflect the relocation of this DFRS offence provision. [Schedule 3, item 61]

Review of DFRS decisions

2.15 This Bill will amend the Excise Act to enable a person to object against a diesel fuel rebate assessment in the manner that applies to taxation laws generally as set out in Part IVC of the TAA 1953. Under this Part, the objection is reviewed by the Commissioner before the matter is referred to the AAT or a court.

2.16 References to review by the AAT will be replaced with references to review under Part IVC. [Schedule 2, items 66 to 68, 70 and 77]

2.17 A reference to the AAT will be replaced with one to the ART on commencement of provisions proposed by the Administrative Review Tribunal Bill 2000. [Subclause 2(2); Schedule 2, item 69]

Amendment of the Customs Act

General administration of the DFRS provisions

2.18 The general administration provision will be redrafted to ensure that the Commissioner has the general administration of the diesel fuel rebate provisions. [Schedule 3, item 10, section 7]

Changes to defined terms

2.19 The term Commissioner, as used in the DFRS provisions, will be defined to mean the Commissioner of Taxation. [Schedule 3, item 4, definition of ‘Commissioner’ in subsection 4(1)]

2.20 A defined term diesel fuel rebate provision will be inserted to mean any of the particular sections in the Customs Act that relate to the DFRS. [Schedule 2, item 5, definition of ‘diesel fuel rebate provisions’ in subsection 4(1)]

2.21 As officers performing functions in relation to the DFRS provisions in the Customs Act will be taxation officers rather than officers of Customs, existing references to officers in the DFRS provisions will be amended to reflect the change. These amendments and other changes to terms used in the Customs Act are set out in Table 2.1.

2.22 The definition of approved form will be amended so that its meaning in relation to the DFRS provisions will be the same as that in the Excise Act, that is, an approved form in relation to a DFRS application will have the meaning given by section 388-50 in Schedule 1 of the TAA 1953. [Schedule 3, item 8, subsection 4A(1AA)]

2.23 Any form that was approved under section 4A of the Customs Act and was used in connection with the diesel fuel rebate, is taken to be a form approved in the terms of section 388-50 in Schedule 1 of the TAA 1953. [Schedule 3, item 9]

Prosecution of DFRS offences

2.24 Offences against the diesel fuel rebate provisions will be prosecuted under the Excise Act provisions. The offence provisions in the Customs Act will be amended to exclude the offence of obtaining a diesel fuel rebate to which a person is not entitled under section 164 under the Customs Act. [Schedule 3, item 93]

2.25 The defined term ‘Customs prosecutions’ will also be redrafted to exclude proceedings for the recovery of pecuniary penalties for contravention of the diesel fuel rebate provisions. [Schedule 3, item 95, section 244]

2.26 The revised definition of ‘Customs prosecution’ will not apply to any Customs prosecution instituted before the commencement of this Act. [Schedule 3, item 96]

2.27 A definition of ‘offence’ in section 183UA will be amended to exclude offences relating to the diesel fuel rebate. [Schedule 3, item 89]

Review of DFRS decisions

2.28 A person dissatisfied with a decision made under a diesel fuel rebate provision will be able to object against it in the manner that applies to taxation laws generally as set out in Part IVC of the TAA 1953. The appeal provisions of the Customs Act will be amended to enable objections to be made against a DFRS decision in the manner specified in Part IVC of the TAA 1953. [Schedule 3, items 99 and 101, section 273JB]

2.29 References to the appeal provisions in the DFRS provisions in the Customs Act will be amended as a consequence. [Schedule 3, items 81, 82 and 84]

2.30 The amendments to the appeal provisions do not affect the consideration of any application for review of a decision made under section 273GA of the Customs Act before the commencement of this Act. [Schedule 3, items 100 and 102]

2.31 References to the AAT will be replaced with references to the ART on commencement of provisions proposed by the Administrative Review Tribunal Bill 2000. [Subclause 2(2); Schedule 3, items 83 and 103]

Table 2.1: Changes to terms used in the Customs Act

Amendment of the TAA 1953

2.32 As the diesel fuel rebate provisions in the Customs Act will be administered by the Commissioner, they will come within the meaning of ‘taxation law’ in the TAA 1953. The amendments will insert a reference to the ‘Customs diesel fuel rebate provisions’ in the definition of ‘taxation law’. [Schedule 7, item 29, paragraph (bb), definition of ‘taxation law’ in section 2]

2.33 The term Customs diesel fuel rebate provision will be defined as meaning any of the sections of the Customs Act relating to diesel fuel rebate or any regulation made under the Customs Act relating to these provisions. [Schedule 7, item 28, definition of ‘Customs diesel fuel rebate provision’ in section 2]

2.34 Offences under the diesel fuel rebate provisions will be prosecuted under the provisions of the Excise Act. The TAA 1953 will be amended to exclude the operation of Part III (which relates to Prosecutions and Offences) from applying to the diesel fuel rebate provisions. [Schedule 7, items 31 and 32, subsection 2(2)]

Chapter 3
Officers’ powers

Outline of chapter

3.1 This chapter explains the amendments to the Excise Act relating to the powers and obligations of authorised officers who perform certain functions under an excise law.

Summary of the amendments

3.2 The search and seizure provisions that apply to the excise legislation currently exist in the Customs Act. The amendments transfer, from the Customs Act to the Excise Act, the legislative authority for officers to exercise search and seizure powers. These powers are currently exercised under delegation from the CEO of Customs. The amendments do not confer any additional powers. The powers are exercised in accordance with a warrant issued by a magistrate, to search for and seize evidential material relating to offences under an excise law, or to seize goods forfeited under the Excise Act, the Distillation Act, the Spirits Act or the Coal Excise Act.

3.3 Additionally, the amendments will provide for forfeited goods seized by police officers, or by persons assisting the officer executing the warrant, to be dealt with in the same way as forfeited goods seized by the executing officers.

3.4 The search and seizure provisions do not affect the law relating to legal professional privilege. [Schedule 1, item 1, section 107AB]

Detailed explanation of the amendments

Powers and obligations transferred from the Customs Act

3.5 Provisions governing search and seizure powers are modelled on those in the Crimes Act, and reflect the current standard on the use of those powers. The powers are generally subject to judicial scrutiny by the requirement that the powers be exercised under warrant.

3.6 Warrants may be issued to an authorised officer exercising excise functions either to:

• search for and seize material that is relevant to the prosecution of an offence against any of the Excise Acts; or

• seize goods that are forfeited under a provision of any of the Excise Acts.

The term ‘Excise Acts’ is defined in section 4 of the Excise Act to mean any Act, and instruments under such an Act, relating to excise in force within the Commonwealth.

When can a search warrant to search for evidential material be issued?

3.7 A warrant to search premises can be issued if a judicial officer is satisfied by information on oath that there are reasonable grounds for suspecting that there is evidential material (other than forfeited goods) at the premises. A warrant can be issued if evidential material will be at the premises within the next 72 hours. This permits a warrant to be obtained in advance of a delivery that, according to information held, is expected. [Schedule 1, item 1, subsection 107BA(1)]

3.8 An applicant for a search warrant must note in the application whether the premises have been the subject of previous search or seizure applications. The premises need not be noted in the application if they are an ‘excise place’, being premises specified in a producer, dealer, manufacturer or storage licence issued under the Excise Act, as these are ordinarily subject to regulatory inspection. [Schedule 1, item 1, subsection 107BA(2)]

3.9 Matters that must be stated in a warrant include:

• the relevant offence;

• a description of the premises;

• the kind of evidential material to be searched for;

• the name of the executing officer;

• the period (not exceeding 7 days) during which the warrant remains in force; and

• the time of day when the warrant may be executed.

[Schedule 1, item 1, subsection 107BA(3)]

3.10 Other matters which must be stated in a warrant are:

• whether it authorises the seizure of evidential material relating to any other excise-related offence; and

• whether it authorises the search of persons at or near the premises.

[Schedule 1, item 1, subsection 107BA(4)]

3.11 The 7-day limit that applies to a particular warrant does not preclude the issuing of successive warrants for the same premises. [Schedule 1, item 1, subsection 107BA(5)]

3.12 For a warrant arranged by telephone, the period during which evidential material must be expected to be on the premises is reduced to 48 hours, and the period during which the warrant can remain in force is also limited to 48 hours. [Schedule 1, item 1, subsection 107BA(6)]

3.13 In recognition of the national character of the excise function, a judicial officer of a particular State or Territory may issue a warrant for the search of premises in another State or Territory. [Schedule 1, item 1, subsection 107BA(7)]

3.14 The power to search under warrant does not limit or derogate from existing search powers that apply under the Excise Acts for regulatory purposes. [Schedule 1, item 1, subsection 107BA(8)]

What does a search warrant authorise?

3.15 A warrant to search for evidential material (other than forfeited goods) authorises:

• entry onto the specified premises to search for and seize the evidential material;

• the search and recording of fingerprints or other forensic material; and

• the search of a person, if provided for in the warrant.

[Schedule 1, item 1, section 107BB]

Use of testing equipment

3.16 The executing officer or a person assisting may bring equipment reasonably necessary to examine or process things found on the premises to determine whether they may be seized. [Schedule 1, item 1, subsection 107BC(1)]

3.17 Things may be moved from the premises for testing only with the consent of the occupier. [Schedule 1, item 1, subsection 107BC(2)]

3.18 If things are moved for testing, the occupier must be informed of the place and time at which testing is to occur and be permitted to be present for the testing. [Schedule 1, item 1, subsection 107BC(3)]

3.19 Equipment already on the premises may be used by the officer or a person assisting to determine whether the thing is liable for seizure. [Schedule 1, item 1, subsection 107BC(4)]

3.20 Compensation is payable if any damage is caused during the examination or processing of things on the premises. [Schedule 1, item 1, section 107BE]

Use of computers and other electronic equipment

3.21 The executing officer or a person assisting may use computer or other electronic equipment to access evidential material providing it can reasonably be used without damaging it. [Schedule 1, item 1, subsection 107BD(1)]

3.22 Evidential material that is accessed may be reproduced in printed form or copied onto disk, tape or other storage device. [Schedule 1, item 1, subsection 107BD(2)]

3.23 If it is impracticable to reproduce or copy the material, the equipment and storage devices may be seized. [Schedule 1, item 1, subsection 107BD(3)]

3.24 If expert assistance is required to operate the equipment, the executing officer may safeguard the equipment to prevent the risk of destruction or interference with the evidential material. Notice of that course of action must be given to the occupier. [Schedule 1, item 1, subsections 107BD(4) and (5)]

3.25 The expert assistance must be obtained within 24 hours unless an extension of that time is obtained from a judicial officer. [Schedule 1, item 1, subsections 107BD(6) and (7)]

3.26 Compensation is payable if any damage is caused to the computer or other electronic equipment. [Schedule 1, item 1, section 107BE]

3.27 In determining the amount of any compensation, any warnings or guidance given or that should have been given by the occupier of the premises, or employees or agents of the occupier, will be taken into account. [Schedule 1, item 1, subsection 107BE(4)]

Copies of seized documents given to the occupier

3.28 Copies of seized documents, in printed or electronic form, must be provided on request to the occupier, or their representative at the time the warrant is executed, if they can readily be copied, as soon as practicable after the seizure. [Schedule 1, item 1, section 107BF]

When can a seizure warrant for forfeited goods be issued?

3.29 A warrant to seize goods can be issued if a judicial officer is satisfied by information on oath that there are reasonable grounds for suspecting that forfeited goods are at the premises, and that the necessity for seizure has been demonstrated. A warrant can be issued if the goods will be at the premises within the next 72 hours. This permits a warrant to be obtained in advance of a delivery that, according to information held, is expected. [Schedule 1, item 1, subsection 107CA(1)]

3.30 The necessity for seizure may be demonstrated by reference to:

• the seriousness of the relevant offence;

• the circumstances surrounding the offence;

• the penalty for the offence;

• the nature and value of the goods; and

• the inconvenience and cost of seizure to the owner of the goods.

[Schedule 1, item 1, subsection 107CA(2)]

3.31 An applicant for a search warrant must note in the application whether the premises have been the subject of previous search or seizure applications. The premises need not be noted in the application if they are an ‘excise place’, being premises specified in a producer, dealer, manufacturer or storage licence issued under the Excise Act, as these are ordinarily subject to regulatory inspection. [Schedule 1, item 1, subsection 107CA(3)]

3.32 Matters that must be stated in a warrant include:

• a description of the relevant goods;

• a description of the premises;

• the name of the executing officer;

• the period (not exceeding 7 days) during which the warrant remains in force; and

• the time of day when the warrant may be executed.

[Schedule 1, item 1, subsection 107CA(4)]

3.33 A warrant must also state whether it authorises the search of persons at or near the premises. [Schedule 1, item 1, subsection 107CA(5)]

3.34 The 7-day limit that applies to a particular warrant does not preclude the issuing of successive warrants for the same premises. [Schedule 1, item 1, subsection 107CA(6)]

3.35 For warrants arranged by telephone, the period during which evidential material must be expected to be on the premises is reduced to 48 hours, and the period during which the warrant can remain in force is also limited to 48 hours. [Schedule 1, item 1, subsection 107CA(7)]

3.36 In recognition of the national character of the excise function, a judicial officer of a particular State or Territory may issue a warrant for the seizure of goods at premises in another State or Territory. [Schedule 1, item 1, subsection 107CA(8)]

What does a seizure warrant authorise?

3.37 A warrant to seize forfeited goods authorises:

• entry onto the specified premises to search for and seize the goods reasonably suspected to be forfeit; and

• the search of a person, if provided for in the warrant.

[Schedule 1, item 1, section 107CB]

How is the search of a person to be conducted?

3.38 The search of a person may be by ordinary search or by frisk search. In either case, the search must be conducted by a person of the same sex unless it is impractical to do so. [Schedule 1, item 1, section 107DA]

3.39 An ordinary search is defined to mean the search of a person or their possessions requiring the person to remove any coat, jacket, gloves, shoes or hat and examining those items. [Schedule 1, item 1, definition of ‘ordinary search’ in section 107AA]

3.40 A frisk search is defined to mean the search of a person by quickly running the hands over their outer garments and examining anything worn or carried by the person that is conveniently and voluntarily removed by the person. [Schedule 1, item 1, definition of ‘frisk search’ in section 107AA]

How are search and seizure warrants executed?

3.41 The executing officer must, before entry, announce that he or she is authorised to enter and give the occupier the opportunity to allow entry unless there are reasonable grounds to believe that the effective execution of the warrant may be frustrated, or that the safety of any person may be at risk, if entry is not immediate. [Schedule 1, item 1, section 107DB]

3.42 The executing officer must identify himself or herself to the person where the warrant is executed. A copy of the search or seizure warrant must be made available to the occupier of the premises, or their representative, at that time. A copy of the warrant must also be shown to any person who is searched. [Schedule 1, item 1, section 107DC]

3.43 The occupier of premises, or a representative who is present at the time the warrant is executed, is entitled to observe the search or seizure being conducted, providing they do not impede the search or seizure. [Schedule 1, item 1, section 107DD]

3.44 The executing officer may obtain such assistance, and use such force against persons or things as is necessary and reasonable in the circumstances. [Schedule 1, item 1, section 107DE]

3.45 The executing officer, or a person assisting, may:

• take photographs or video recordings of the premises or things on the premises [Schedule 1, item 1, subsection 107DF(1)];

• temporarily cease the execution of a warrant and then resume the search or seizure within one hour or such further time as is agreed in writing by the occupier [Schedule 1, item 1, subsection 107DF(2)]; and

• resume execution of a warrant if it had been stopped by court order which had later been revoked or reversed, providing the warrant remains in force [Schedule 1, item 1, subsection 107DF(3)].

3.46 If execution of a warrant had been stopped by court order which had later been revoked or reversed, and the warrant had ceased to be in force, the court may reissue the warrant if it is satisfied as to the requirements for doing so. [Schedule 1, item 1, subsections 107DF(4) and (5)]

3.47 Warrants may be obtained by telephone, fax or other electronic means in urgent cases or where delay could frustrate the execution of the warrant. Before the end of the day following the execution of such a warrant, the executing officer must complete the form of the warrant and give or transmit it to the judicial officer together with the information duly sworn. [Schedule 1, item 1, section 107DG]

3.48 Receipts for things seized must be provided by the executing officer or a person assisting. [Schedule 1, item 1, section 107DH]

Offences relating to warrants

3.49 Knowingly making a false or misleading statement in an application for a warrant is an offence punishable by imprisonment for up to 2 years. [Schedule 1, item 1, section 107DI]

3.50 Offences, punishable by imprisonment for up to 2 years, are committed if:

• a judicial officer is incorrectly named as the issuer of a telephone warrant;

• a matter is knowingly stated on a warrant that departs materially from that for which the telephone warrant was issued;

• a document purporting to be a telephone warrant is presented, or purported to be executed, when it is known to be false or unauthorised; or

• a form of warrant is given to a judicial officer that is not the form of warrant the person purported to execute.

[Schedule 1, item 1, section 107DJ]

How is seized evidential material dealt with?

3.51 Things seized as evidential material can only be retained for the purpose of prosecuting the offence which justified their seizure. They must be returned if the reason for their seizure no longer exists, or if it is decided that they are not to be used in evidence. If proceedings have not been commenced within 120 days of the seizure, the seized material must be returned unless a court order is made either for further retention of the material or for its destruction or disposal. [Schedule 1, item 1, subsection 107EA(1)]

3.52 Things returned must be in as near as practicable to the condition they were in at the time they were seized. [Schedule 1, item 1, subsection 107EA(2)]

3.53 In ordering the retention of material for a period beyond the initial 120 days, or any later period previously ordered, a magistrate must be satisfied that the continued retention is necessary:

• for investigating whether an offence has been committed; or

• to enable evidence to be assembled for prosecution purposes.

3.54 The magistrate must also be satisfied that there has been no avoidable delay in conducting the investigation or in assembling the evidence. The officer who intends to make an application for further retention must take reasonable steps to find out who has interest in the material and to notify them of the intention to seek further retention of the material. [Schedule 1, item 1, section 107EB]

3.55 In making an order for further retention of evidential material a magistrate is performing an administrative function in his or her personal capacity as ‘persona designata’, rather than as a member of a court. A magistrate, nevertheless, has the same protection and immunity as if he or she were performing the function as a member of a court. [Schedule 1, item 1, section 107GA]

How are seized forfeited goods dealt with?

3.56 An officer who seizes goods reasonably believed to be forfeited under an Excise Act must take them to a storage place approved by the Collector. [Schedule 1, item 1, subsections 107FA(1) and (2)]

Seizure notice issued

3.57 A seizure notice must be served on the owner, or the person in whose possession the goods were when seized, within 7 days of the seizure. The notice must be served personally or by post, or if neither can be effected, by publishing a copy of the notice in a newspaper circulating in the location in which the goods were seized. [Schedule 1, item 1, section 107FB]

3.58 Service of the notice by post is taken to be properly addressed if it is sent to the last known address of the person. [Schedule 1, item 1, section 107FL]

3.59 The seizure notice must contain:

• a statement identifying the goods;

• the day on which the goods were seized;

• the grounds on which they were seized; and

• a statement that in the absence of a claim for return of the goods within 30 days of the notice being served, the goods will be deemed condemned as forfeited to the Crown.

[Schedule 1, item 1, section 107FC]

Claim for return of the seized goods

3.60 A claim for return of the goods may be made by the owner, in the approved form, which specifies the grounds on which the claim is made. [Schedule 1, item 1, section 107FD]

3.61 If no claim is made within 30 days of the seizure notice being served the goods are deemed condemned as forfeited to the Crown. [Schedule 1, item 1, section 107FE]

3.62 If a claim for return of the goods is made, they must be returned unless prosecution proceedings are commenced within 120 days of the making of the claim, or if the goods have been disposed of under section 107FJ (which provides for the disposal or destruction of perishable goods). If proceedings have not been commenced within 120 days of the making of the claim, the seized material must be returned unless a court order is made for further retention of the material. On completion of the proceedings a court order for condemnation of the goods as forfeited to the Crown will preclude their return. [Schedule 1, item 1, paragraphs 107FF(2)(a) to (c) and subsections 107FF(3) and (9)]

3.63 If the goods were seized as special forfeited goods (i.e. goods forfeited under the Distillation Act or the Spirits Act), proceedings may be commenced within 120 days of the making of the claim, or such further time as is ordered for further retention, for the goods to be declared as special forfeited goods. On completion of the proceedings a court order for condemnation of the goods as forfeited to the Crown will preclude their return. [Schedule 1, item 1, paragraphs 107FF(2)(d) and (e) and subsections 107FF(4) and (5)]

3.64 If a finding of a court is taken on appeal, the goods are to be retained until the completion of that appeal. [Schedule 1, item 1, subsection 107FF(7)]

3.65 Goods that are returned must be in as near as practicable to the condition they were in at the time they were seized. [Schedule 1, item 1, subsection 107FF(8)]

Order for further retention of the goods

3.66 In ordering the retention of material for a period beyond the initial 120 days, or any later period previously ordered, a magistrate must be satisfied that the continued retention is necessary for investigating whether an offence has been committed or to enable evidence to be assembled for prosecution purposes. The magistrate must also be satisfied that there has been no avoidable delay in conducting the investigation or in assembling the evidence. The officer who intends to make an application for further retention must take reasonable steps to find out who has an interest in the goods and to notify them of that intention. [Schedule 1, item 1, section 107FG]

3.67 In making an order for further retention of forfeited goods a magistrate is performing an administrative function in his or her personal capacity as persona designata, rather than as a member of a court. A magistrate, nevertheless, has the same protection and immunity as if he or she were performing the function as a member of a court. [Schedule 1, item 1, section 107GA]

Compensation in some circumstances

3.68 If goods are disposed of or destroyed because no claim for their return was made, the owner may still apply for compensation providing:

• the goods are not special forfeited goods (i.e. goods forfeited under the Distillation Act or the Spirits Act);

• the goods were not involved in the commission of an offence; and

• the court is satisfied there is a reasonable excuse for the failure to claim the goods.

[Schedule 1, item 1, section 107FH]

Condemnation and disposal of forfeited goods

3.69 Goods that are, or are deemed, condemned as forfeited to the Crown vest in the Commonwealth to the exclusion of all other interests in the goods. [Schedule 1, item 1, section 107FI]

3.70 Goods that are, or are deemed, condemned as forfeited to the Crown are disposed of in accordance with the CEO’s directions. [Schedule 1, item 1, section 107FM]

Immediate destruction of perishable forfeited goods

3.71 If the seized forfeited goods are perishable and are considered to be a danger to public health, the CEO may deal with the goods in the manner considered appropriate, including their destruction. [Schedule 1, item 1, subsection 107FJ(1)]

3.72 Notice of the destruction of the goods must be served on the owner, or the person in whose possession the goods were when seized, within 7 days of their destruction. The notice must be served personally or by post, or if neither can be effected, by publishing a copy of the notice in a newspaper circulating in the location in which the goods were seized. [Schedule 1, item 1, subsections 107FJ(2) and (3)]

3.73 Service of the notice by post is taken to be properly addressed if it is sent to the last known address of the person. [Schedule 1, item 1, section 107FL]

3.74 The notice must:

• identify the goods;

• state that the goods were seized under a warrant and give the reason for the seizure;

• state how and why the goods have been dealt with; and

• state that, in certain circumstances, the owner is entitled to sue for recovery of the market value of the goods at the time they were dealt with.

[Schedule 1, item 1, subsection 107FJ(4)]

3.75 An owner is entitled to sue for recovery of the market value of the goods if:

• the goods are not special forfeited goods (i.e. goods forfeited under the Distillation Act or the Spirits Act);

• the goods were not involved in the commission of an offence; and

• the court is satisfied that the circumstances necessary for immediate disposal or destruction of the goods did not exist.

[Schedule 1, item 1, subsections 107FJ(5) and (6)]

3.76 A court must order payment if the owner establishes a right to recover the market value of the goods. [Schedule 1, item 1, subsection 107FJ(7)]

Release of forfeited goods on security

3.77 The owner of seized forfeited goods (other than special forfeited goods) may apply to a court for an order that the goods be released, providing a security is given to the CEO by the owner of an amount determined by the court. [Schedule 1, item 1, subsections 107FK(1) and (2)]

3.78 In determining whether to order the release of the goods, a court may have regard to the impact that continued retention of the goods might have on the economic interest of third parties and similar matters. [Schedule 1, item 1, subsection 107FK(3)]

3.79 The amount of the security to be determined by the court for release of the goods must not exceed the sum of:

• market value of the goods at the time the order is made; and

• the cost to the CEO of storing the goods since the time the goods were seized until their release,

reduced by the amount of any duty paid on the goods.

[Schedule 1, item 1, subsection 107FK(4)]

3.80 The goods must be released on payment of the security. [Schedule 1, item 1, subsection 107FK(5)]

Offences relating to evidential material and forfeited goods

3.81 It is an offence for a person to:

• destroy, or render incapable of identification, documents or things that are, or might be, evidential material or forfeited goods;

• render illegible or indecipherable such a document or thing; or

• conceal on his or her body or clothing such a document or thing,

with the intention of preventing it from being seized during the exercise of powers by an authorised person.

[Schedule 1, item 1, section 107FN]

Forfeited goods seized by police

3.82 Police officers are authorised by section 9 of the Crimes Act to seize, without warrant, articles which are forfeited, or reasonably believed to be forfeited, under any law of the Commonwealth. Under the provisions of the Crimes Act, articles that are condemned as forfeited must be transferred to the Official Trustee for disposal or destruction.

3.83 To ensure consistency in the treatment of goods forfeited under any of the Excise Acts, police officers are instead to be required to deliver seized goods into the custody of an officer performing excise functions. [Schedule 1, item 1, subsection 107FA(4)]

3.84 Forfeited goods seized by a person assisting an executing officer in the execution of a seizure warrant, such as a police officer, will also be required to deliver seized goods into the custody of an officer performing excise functions. [Schedule 1, item 1, subsection 107FA(3)]

3.85 The officer who receives forfeited goods from a police officer, or other person assisting, must store the goods at an approved storage place [Schedule 1, item 1, subsection 107FA(5)]. The notification and retention obligations that ordinarily apply to seized forfeited goods will apply to goods seized in this way.

Consequential amendments

3.86 The Customs Act will be amended, where appropriate, to remove references to excise laws from the provisions dealing with officers’ powers. [Schedule 3, items 85 to 88, 91 and 92]

3.87 The amendments to the Customs Act do not apply to actions already commenced at the time the amendments commence. [Schedule 3, item 90]

Index

Schedule 1: Amendment of the Excise Act 1901 relating to search and seizure

Schedule 2: Further amendment of the Excise Act 1901

Schedule 3: Amendment of the Customs Act 1901

Schedule 4: Amendment of the Distillation Act 1901

Schedule 5: Amendment of the Spirits Act 1906

Schedule 6: Amendment of the Coal Excise Act 1949

Schedule 7: Amendment of other Acts

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