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CUSTOMS AMENDMENT REGULATIONS 2006 (NO. 2) (SLI NO 170 OF 2006)
EXPLANATORY STATEMENT
Select Legislative Instruments 2006 No. 170
Issued by the Authority of the Minister for Justice and Customs
Customs Act 1901
Customs Amendment Regulations 2006 (No. 2)
Subsection 270(1) 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 or for the conduct of any business relating to the Customs.
The purpose of the Regulations is to amend the Customs Regulations 1926 (the Principal Regulations) to:
-- prescribe certain goods for the purposes of the new definition of "excise-equivalent goods" in subsection 4(1) of the Act;
-- update the list of goods that have been prescribed for the purposes of the definition of "like customable goods" in subsection 69(1) of the Act; and
-- prescribe a licence fee for the granting of a warehouse licence in respect of a place that is used primarily for the manufacture of excisable petroleum products.
These amendments are a consequence of the amendments to the Act and the Customs Tariff Act 1995 (the Tariff Act) made by the Customs Amendment (Fuel Tax Reform and Other Measures) Act 2006 (the Customs Amendment Act) and the Customs Tariff (Fuel Tax Reform and Other Measures) Act 2006 (the Tariff Amendment Act). These Amendment Acts implement the Government's reform of the fuel tax arrangements and the outcomes of a review of the arrangements that apply to all excisable (that is, locally manufactured) products and their imported equivalents (the Review). These goods are alcohol (other than wine), petroleum products and tobacco and tobacco products.
Details of the Regulations are set out in the Attachment.
No consultation was undertaken in relation to the amending Regulations as they are of a minor or machinery nature and do not substantially alter existing arrangements.
The Regulations commence on 1 July 2006.
0608093A
ATTACHMENT
Regulation 1 provides that the Regulations are the Customs Amendment Regulations 2006 (No. 2).
Regulation 2 provides that the Regulations commence on 1 July 2006.
Regulation 3 provides that Schedule 1 amends the Customs Regulations 1926 (the Principal Regulations).
This item amends the Principal Regulations by inserting new regulation 1D.
Amendments to the Customs Act 1901 (the Act) have been made by the Customs Amendment (Fuel Tax Reform and Other Measures) Act 2006 (the Customs Amendment Act). These amendments implement the Government's reform of the fuel tax arrangements and the outcomes of a review of the arrangements that apply to all excisable (that is, locally manufactured) products and their imported equivalents (the Review). These goods are alcohol (other than wine), petroleum products and tobacco and tobacco products.
One of the main outcomes of the Review was the decision to strengthen the compliance and other legal arrangements that apply to imported equivalents of excisable goods that are used in the manufacture of excisable goods. For example, imported petroleum may be blended with locally manufactured petroleum, which creates an excisable product. It was considered necessary to strengthen the controls over these goods because they are high value goods and therefore represent a greater likelihood of risk to the revenue, and with more significant consequences, than other imported goods.
For the purposes of these new arrangements which are contained in new Part VA of the Act, (as inserted by the Customs Amendment Act), the imported goods are described as "excise-equivalent goods". In subsection 4(1) of the Act, the term "excise-equivalent goods" is defined as goods that are prescribed by the regulations for the purposes of this definition.
New subregulation 1D(1) provides that for the definition of "excise-equivalent goods" in subsection 4(1) of the Act, the goods classified under any of the subheadings set out in the subregulation are prescribed. The subheadings are those subheadings of Schedule 3 to the Customs Tariff Act 1995 (the Tariff Act) under which petroleum products, alcohol (other than wine) and tobacco and tobacco products are classified.
New subregulation 1D(2) provides that in subregulation (1), a reference to a subheading is a reference to that subheading in Schedule 3 to the Tariff Act as in force from time to time.
This item amends the Principal Regulations by substituting a new subregulation 32(1).
Section 69 of the Act sets out a regime that applies to "like customable goods". This term is defined as goods listed in the table to section 19 of the Tariff Act and any other goods that are prescribed for the purposes of section 69. Like customable goods are primarily goods that would attract excise duty if they were locally produced, for example petroleum, alcohol and tobacco, but they also include some products that are subject to the Wine Equalisation Tax.
Customs warehouse licence holders that import like customable goods may apply to Customs for permission to settle with Customs on a weekly basis. A 'Weekly Settlement Permission' (WSP) entitles that warehouse operator to deliver goods from the warehouse prior to Customs entry and prior to payment of duty and GST for up to one week. This allows petroleum to travel down pipelines and large quantities of tobacco and spirits to be moved down distribution channels on demand. At the end of each week the amount that has left the warehouse is tallied and a return lodged together with payment of the duty involved. Like customable goods are the only imported goods that are eligible for WSP.
Regulation 32 of the Principal Regulations prescribes goods for the purposes of section 69 principally by reference to the subheadings in Schedule 3 to the Tariff Act under which the goods are classified. As a result of the Review, some of these subheadings will be amended by the Customs Tariff (Fuel Tax Reform and Other Measures) Act 2006 (the Tariff Amendment Act) to remove all existing duty concessions in relation to petroleum products and to impose a uniform rate of customs duty. It is therefore necessary to amend subregulation 32(1) to update the subheadings applicable to petroleum products to align them with these changes.
As there are so many changes to the subheadings in subregulation 32(1), subregulation 32(1) is to be substituted completely.
New paragraph 32(1)(c) includes the new subheadings of Schedule 3 to the Tariff Act that apply to petroleum products. The subheadings that apply to alcohol (other than wine) in paragraph 32(1)(b) are unchanged. Paragraph 32(1)(a) of new subregulation 32(1) refers to "tobacco and tobacco products" only.
This item amends the Principal Regulations by substituting new regulations 50, 50A and 50B for current regulation 50.
One of the elements of the new arrangements applying to the use of excise-equivalent goods in the manufacture of excisable goods that arose from the Review is that this manufacture must occur at a place that is licensed under both the Act and the Excise Act 1901 (the Excise Act). This new requirement is set out in new section 105E of the Act, as inserted by the Customs Amendment Act. Under the Excise Act, there is no fee attached to the granting of a manufacturer's licence. However, under section 85 of the Act, such fees as are prescribed are payable in respect of a warehouse licence.
A place that is covered by a warehouse licence can be used for the storage of goods that are still subject to Customs control, mainly to defer the payment of customs duty on the goods. While goods are in a warehouse, other authorised activities may take place in relation to the goods, including packing, blending and manufacture.
Regulation 50 previously set out the fees for the granting of a warehouse licence, which is $7,000 for a licence granted for a full 12 months (or a pro rata amount for a licence granted for less than 12 months) and the renewal of this licence, which is $4,000. Regulation 50 also set out when these fees were payable.
Due to the administrative arrangements that have been in place since 2003, the manufacture of excisable goods using imported alcohol and tobacco products already occurs at dual-licensed places. Therefore, the new legal requirement in section 105E will impose no further financial burden on the manufacturers of excisable goods using those goods. However, the current administrative arrangements do not extend to the manufacture of excisable petroleum products using imported petroleum products.
The financial impact of the dual licensing requirement on the manufacture of such products will be ameliorated by:
a) prescribing a lower fee for the grant of an initial warehouse licence; and b) exempting licensees from the payment of the renewal fee.
New regulation 50 prescribes the same warehouse fees that were previously prescribed under regulation 50. However, these fees are now subject to new regulation 50A. Provisions stating when the fees are payable are included in new regulation 50B.
New regulation 50A prescribes the new fee in respect of the granting of a warehouse licence where the warehouse is used primarily for the manufacture of excisable petroleum products using imported petroleum products.
New subregulation 50A(1) inserts the following definitions for the purposes of regulation 50A:
(a) dual licences which means a warehouse licence granted under Part V of the Act and a manufacturer licence granted under the Excise Act 1901;
(b) warehouse licence which has the same meaning as in Part V of the Act.
New subregulation 50A(2) provides that regulation 50A applies if a person is required to hold dual licences under section 105E of the Act and:
(a) the place in respect of which a warehouse licence is to be granted is used primarily for the manufacture of excisable goods classified under item 10 of the Schedule to the Excise Tariff Act 1921. These goods are basically petroleum products; and
(b) goods classified under any of the subheadings listed in paragraph 50A(2)(b) are used in the manufacture of those excisable goods.
New subregulation 50A(3) provides that, in paragraph 50A(2)(b), a reference to a subheading is a reference to that subheading in Schedule 3 to the Tariff Act as in force from time to time.
New subregulation 50A(4) provides that for section 85 of the Act, the fee for the grant of a warehouse licence that comes into effect on any day is $1000. There is no pro rata amount of this fee where a warehouse licence is granted for a period of less than 12 months.
New subregulation 50A(5) provides that no fee is payable for the renewal of the warehouse licence.
New subregulation 50A(6) provides that, if, at any time, the primary use of the warehouse changes:
(a) subregulation 50A(5) does not apply; and
(b) a fee for the renewal of the warehouse licence is payable as if subregulation 50(2B) applied to the licence. This means that the renewal fee of $4000 is payable in those circumstances.
New regulation 50B sets out when the fees for the granting and the renewal of a warehouse licence are payable.
New subregulation 50B(1) inserts the definition of year, which means a period of 12 months commencing on 1 July.
New subregulation 50B(2) replicates previous subregulation 50(3) which set out when the $4000 warehouse fee in respect of a licence granted or renewed for 12 months commencing on 1 July was payable. There is no change from previous times for, and manner of, payment. The provisions also extend to the payment of the fee for the renewal of a warehouse licence should new subregulation 50A(6) operate.
New subregulation 50B(3) replicates previous subregulation 50(4) which set out when the $4000 warehouse fee in respect of a licence granted for less than a period of 12 months was payable. There is no change from current requirements.
New subregulation 50B(4) sets out when the new warehouse licence fee of $1000 is payable. This fee is payable on the day on which the warehouse licence comes into effect. There is no facility to pay this fee by instalment, in the same way that the full $4000 fee can be paid.