EXPLANATORY STATEMENT
Select Legislative Instrument 2009 No. 91
Issued by the Authority of the Minister for Home Affairs
Customs Act 1901
Customs Amendment Regulations 2009 (No. 1)
Section 270 of the Customs Act 1901 (the Act) provides, in part, that the Governor‑General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed, or as may be necessary or convenient to be prescribed, for giving effect to the Act.
The purpose of the amending Regulations is to terminate the Manufacturing in Bond Scheme which is contained in regulations 70 to 74G of the Customs Regulations 1926 (the Principal Regulations) and to repeal a number of other regulations in the Principal Regulations which are no longer used.
Repeal of the Manufacturing in Bond Scheme - Regulations 70 to 74G of the Principal Regulations
Regulations 70 to 74G of the Principal Regulations set out the Manufacturing in Bond Scheme (the Scheme). The Scheme, which was set up in 1998, allows approved manufacturers to defer the payment of duty payable on imported goods if the imported goods are to be incorporated into goods which are for export.
A review of the Tradex and Manufacturing in Bond Schemes, which was completed in 2006, recommended that the Scheme should be terminated as it had not been used by manufacturers since it commenced and the Tradex Scheme provides manufacturers with equivalent benefits without the compliance cost involved with the Scheme.
The amending Regulations, which omit regulations 70 to 74G from the Principal Regulations, implement the recommendation of the review to terminate the Scheme.
Repeal of other Regulations
Regulation 102 of the Principal Regulations provides for the granting of a Certificate of Clearance if an application for the certificate has been made under subsection 118(2) or (5) of the Act and the application has been made in accordance with Form 40. Form 40, which contains a guarantee to pay duty on inwards goods that have been reported but not produced, is contained in Schedule 1 to the Principal Regulations.
As all inwards cargo is now reported electronically in the Integrated Cargo System and the delivery of goods cannot take place without the payment of relevant duties, the guarantee in Form 40 is no longer relied upon. The amending Regulations repeals Form 40 and regulation 102 from the Principal Regulations.
Regulation 104 of the Principal Regulations requires the Master of an overseas vessel arriving at an Australian port from overseas and travelling to another Australian port or for an overseas destination via an Australian port to take out a transire (a Customs permit) in Form 22A. Form 22A, which is contained in Schedule 1 to the Principal Regulations, is required to be produced to the Collector at each subsequent port of call in Australia and retained by the Collector at the vessel's last Australian port of call.
As the Act contains other mechanisms to control and record the movement of goods to be exported, the requirement to take out a transire and to produce the transire at each subsequent port is no longer required. The amending Regulations repeals Form 22A and regulation 104 from the Principal Regulations.
Relevant stakeholders including industry and industry associations were consulted as part of the review of the Tradex and Manufacturing in Bond Scheme. While the repeal of the other regulations does not substantially alter existing arrangements, the relevant industry association was consulted as part of the repeal process.
The amending Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
0906396A
Overview
The Customs Amendment Regulations 2009 (No. 1) were enacted to address the inefficiency and redundancy in the existing customs regulations by terminating the Manufacturing in Bond Scheme and repealing several unused regulations. This legislative instrument, issued under the authority of the Minister for Home Affairs, seeks to streamline customs operations and reduce compliance costs for industry, in line with the recommendations of a 2006 review. The review found that the Manufacturing in Bond Scheme was no longer being used by manufacturers and that the Tradex Scheme provided equivalent benefits, making the existing scheme redundant. Additionally, the regulations also removed outdated requirements such as the Certificate of Clearance and transire permits, which are no longer necessary due to advancements in electronic reporting systems and other statutory mechanisms for controlling goods movement.
These amendments to the Customs Regulations 1926 aim to modernise the regulatory framework, ensuring it remains effective and efficient for contemporary trade practices. The policy objective is to enhance the operational efficiency of customs processes while maintaining robust controls over the importation and exportation of goods. The repealing of the Manufacturing in Bond Scheme and other redundant regulations is expected to simplify compliance for manufacturers and reduce administrative burdens. The Customs Amendment Regulations 2009 (No. 1) were developed after consultations with relevant stakeholders, including industry associations, to ensure that the changes would not adversely affect existing trade practices.
Scope and Application
The Customs Amendment Regulations 2009 (No. 1) apply to the administration and enforcement of the Customs Act 1901, specifically targeting the regulations governing the Manufacturing in Bond Scheme and other outdated procedures within the Customs Regulations 1926. These regulations impact entities such as approved manufacturers who previously deferred duty payments on imported goods intended for export under the Manufacturing in Bond Scheme, as well as vessels travelling between Australian ports and overseas destinations, which were subject to specific transire permit requirements. Geographically, the application of these amendments extends across the Commonwealth of Australia, affecting all entities and persons subject to the Customs Act. The amendments also affect the Customs officials and other government entities responsible for enforcing and administering the repealed regulations. Exclusions from the scope of these amendments include any other schemes or procedures within the Customs Regulations 1926 that remain unaffected by the repeal of the specific regulations mentioned. The Regulations implement the termination of the Manufacturing in Bond Scheme and the repeal of certain forms and procedures that have become obsolete due to changes in reporting and duty payment systems.
Key Provisions
The Customs Amendment Regulations 2009 (No. 1) primarily focus on the termination of the Manufacturing in Bond Scheme, which is encapsulated in regulations 70 to 74G of the Customs Regulations 1926 (section 2). This scheme, which was established in 1998, enabled approved manufacturers to defer the payment of duty on imported goods if these goods were intended to be incorporated into products for export. However, given that the scheme has not been utilized by manufacturers since its inception, and with the Tradex Scheme offering similar benefits at a lower compliance cost, the amending regulations implement the recommendation from a 2006 review to terminate the Manufacturing in Bond Scheme. This involves the omission of regulations 70 to 74G from the Principal Regulations.
The amending regulations also address the repeal of several other regulations in the Principal Regulations that are no longer in use or relevant. For instance, regulation 102, which allowed for the granting of a Certificate of Clearance based on an application and Form 40, is repealed (section 3). Form 40, which included a guarantee to pay duty on inwards goods that have been reported but not produced, is also repealed. This change is due to the fact that all inwards cargo is now reported electronically in the Integrated Cargo System, and the delivery of goods cannot occur without the payment of relevant duties. Additionally, regulation 104, which required the Master of an overseas vessel to obtain a transire (a Customs permit) in Form 22A, is repealed. The requirement to take out a transire and present it at each subsequent port is deemed unnecessary given other mechanisms in the Customs Act 1901 for controlling and recording the movement of goods for export.
Entities and individuals governed by these regulations must now adhere to the updated provisions, which include the termination of the Manufacturing in Bond Scheme and the repeal of certain forms and regulatory requirements. Manufacturers who previously relied on the Manufacturing in Bond Scheme must now seek alternative arrangements for deferring duty payments on imported goods intended for export. The repeal of Form 40 and regulation 102 means that Certificates of Clearance can no longer be issued based on this form, and the guarantee requirement is no longer applicable. Similarly, the requirement for overseas vessels to obtain a transire in Form 22A is no longer in effect, and these vessels no longer need to present the transire at subsequent Australian ports of call.
Breaches of the Customs Act 1901 and the Customs Regulations 1926 may result in various penalties. For instance, failure to comply with the regulations regarding the deferral of duty payments, or improper use of a Certificate of Clearance, could result in financial penalties. The maximum penalties for contraventions of the Customs Act can include fines up to $22,200 for individuals and $111,000 for corporations, depending on the severity and intent of the offence. Additionally, criminal proceedings could be initiated for serious or repeated breaches, leading to further penalties including imprisonment. The specific penalties for each contravention would be determined based on the relevant sections of the Act and the nature of the breach.