Commonwealth Numbered Regulations - Explanatory Statements

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CUSTOMS AMENDMENT REGULATIONS 1998 (NO. 6) 1998 NO. 278

STATUTORY RULES 1998 NO. 278

Issued by the Authority of the Minister for Customs and Consumer Affairs

Customs Act 1901

Customs Amendment Regulations 1998

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 for giving effect to the Act.

Section 163 of the Act provides that refunds, rebates and remissions of duty may be made in respect of goods generally, or in respect of the goods included in a class of goods, in such circumstances and subject to such conditions and restrictions as are prescribed. Regulation 126 of the Customs Regulations 1926 prescribes those circumstances that have been prescribed for the purposes of section 163 of the Act.

Purpose of the Regulations

The purpose of the Regulations is to amend the Customs Regulations 1926 by:

a)        inserting a new refund circumstance for customs duty paid on a clean fuel

which has been packaged into containers of not more than 210 litres capacity

and which has been sold. so packaged, for use as a solvent (regulation 4); and

b)        effecting a technical amendment of subregulation 134(4) to replace the

outdated reference to "Comptroller" with a reference to the new term "CEO"

(regulation 5).

Background

In early 1998, the Government's fuel substitution legislation, a package of 9 Acts implementing the Government's Budget decision to combat revenue loss through the minimisation of fuel substitution practices, commenced. These practices involve the substitution of fuel entered at concessional rates of duty (generally for non-automotive use) for fuel used in automotive engines. These practices cause significant revenue leakage in respect of the duty avoided on the substituted fuel.

The legislation package addresses these practices by providing for the introduction of a chemical marker into concessionally entered fuel, and imposing document keeping and retention obligations, audit powers and sanctions in relation to the acquisition, storage and disposal of fuel. Penalty surcharges are also imposed on certain activities in relation to products containing the chemical marker. including their blending with unmarked, fully duty paid products under the Fuel Blending (Penalty Surcharge) Act 1997.

Under subheadings in headings 2701, 2707 and 2710 of Schedule 3 to the Customs Tariff Act 1995 ("the Customs Tariff"), petroleum products that are intended for non-fuel use are dutiable at the rate of "Free". This means that under the fuel substitution legislation these petroleum products must contain the chemical marker.

However, in some cases, unmarked bulk solvents are required where the marker could have an adverse effect on the performance of the marked product or other undesirable outcomes in certain specialised applications. For example, some of the non-fuel applications of petroleum products include their use as solvents in the production of foodstuffs such as margarine and in the manufacture of paints. Where a petroleum p product is used as a solvent in these circumstances, it is considered inappropriate, on health and efficiency grounds, for the petroleum product to contain the chemical marker.

Paragraph 126(1)(mb) of the Customs Regulations 1926 permits the refund of duty where a product has actually been used as a solvent. These Regulations allow for refunds of duty where duty has been paid on a product prior to its actual use as a solvent. provided that it has been packaged and sold for use as a solvent, in accordance with new paragraph 126(1)(me), see regulation

The technical amendment made by regulation 5 of these Regulations formally gives effect to the change made by the Customs, Excise and Bounty Legislation Amendment Act 1995 (Act No. 85 of 1995) in relation to the replacement of references to the term "Comptroller" with references to the term "CEO".

The Regulations are explained in greater detail in the Attachment.

The Regulations commenced on gazettal.

ATTACHMENT

Regulation 1 - Name of regulations

This regulation provides for these Regulations to be named the Customs Amendment Regulations 1998.

Regulation 2 - Commencement

This regulation provides that these Regulations commenced on gazettal.

Regulation 3 - Amendment

This regulation provides that the Customs Regulations 1926 are amended as set out in these Regulations.

Regulation 4 - Regulation 126 (Circumstances under which refunds, rebates and remissions are made)

Subregulation 4.1 amended subregulation 126(1) by inserting new paragraph 126(1)(mc).

New paragraph 126(1)(me) inserts a new refund circumstance where duty has been paid on a petroleum product that:

a)       is a clean fuel within the meaning of subsection 4(1) of the Act; and

b)       falls within a classification in heading 2707, 2709 or 2710 of Schedule 3 to the Customs Tariff Act 1995 (these classifications relate to hydrocarbon products than can or could be used as solvents). and

c)       has been packaged. delivery into home consumption. into a package of not more than 210 litres capacity. and

d)       has been sold, so packaged, for use as a solvent.

The intention of this new refund circumstance is to allow persons carrying out the packaging to claim the refund.

Regulation 5 - Regulation 134 (Conditions relating to the payment of drawback of import duty)

Subregulation 5.1 amended subregulation 134(4) of the Customs Regulations 1926 by omitting the reference to outdated term "Comptroller" and substituting the new term "CEO". This technical amendment was required as a result of the changes made by the Customs Excise and Bounty Legislation Amendment Act 1995 (Act No. 85 of 1995) ("the CEBLA Act"). The CEBLA Act provided in subsection 18(1) that a reference to the Comptroller-General of Customs, the Comptroller-General or the Comptroller is taken on and after 1 July 1995 (the date of Royal Assent of the CEBLA Act) to be a reference to the Chief Executive Officer of Customs ("the CEO", section 4 of the Act refers).