EXPLANATORY STATEMENT
Statutory Rules 1985 No. 306
Customs Regulations (Amendments)
Issued by the Authority of the Minister of State for Industry, Technology and Commerce.
Sections 22 and 24 of the Customs and Excise Amendment Act 1982, which are to be brought into operation concurrently with these amendments to the Customs Regulations amend the Customs Act 1901 (“the Act”) to:
(a) in the case of section 22 - insert a new section 96A into the Act to provide a framework of provisions to govern the licensing, operation and control of duty free shops and to define the responsibilities and obligations placed severally on proprietors and relevant travellers to ensure that goods sold and delivered to travellers duty free are, in fact, exported in accordance with the requirements applying; and
(b) in the case of section 24 - amends section 99 of the Act to provide that warehoused goods may, in appropriate circumstances (including where purchased from duty free shops for export by intending travellers), be delivered from the warehouse without the furnishing of formal entries to Customs.
At present, control of duty free shops is exercised in the context of permissions granted pursuant to section 40AA of the Act. This has been found to be inequitable in that all obligations in respect of goods purchased fall on proprietors and none on travellers. In correcting this inequity the opportunity has been taken to introduce a new legislative framework in respect of duty free shops.
The purpose of the regulations is to amend the Customs Regulations (“the Regulations”) to
(a) prescribe for the purposes of sub-sections 96A(2), (5) and (13) of the Act (regulation 2):
(i) circumstances under which permission may be given to deliver goods duty free for export (sub-regulations 93(3) and (4));
(ii) matters to be taken into account by a Collector when considering whether to give such a permission (sub-regulation 93(5));
(iii) conditions to which such a permission is to be subject (sub-regulations 93(6), (7), (8), (9), (10) and (11)). These conditions include requirements that travellers are to provide evidence that they are entitled to make an international flight and that proprietors are to keep records and notify a Collector of all sales of duty free goods; and
(iv) grounds upon which a Collector may revoke a permission to deliver goods duty free for export (sub-regulation 93(12)); and
(b) amend regulation 49A of the Regulations to establish as an offence any business use of words that falsely imply, or are likely to lead to the mistaken belief, that the business concerned is a duty free shop operating under the authority of a licence granted under the Act (regulation 1).
In accordance with sub-sections 4(1) and (2) of the Acts Interpretation Act 1901 the amendments to the Regulations come into operation on the day fixed by Proclamation as the day sections 22 and 24 of the Customs and Excise Amendment Act 1982 are to come into operation. The day proposed to be fixed by Proclamation is 2 December 1985.
The regulations are as follows:
Regulation 1
Amends regulation 49A to also make it an offence to use the words “Duty Free Shop”, “Duty Free” or words resembling them in connection with a business that is not the holder of an appropriate licence. An appropriate licence is defined in proposed new sub-regulation 49A(3).
Regulation 2
Inserts a new regulation 93 to prescribe, for the purposes of section 96A of the Customs Act 1901 (“the Act”), the necessary regulations required in respect of duty free shops.
Sub-regulation 93(1) defines certain terms for the purposes of the regulations.
Sub-regulation 93(2) provides for words and phrases used in the regulations to have the same meaning as in section 96A of the Act. Sub-section 96A(1) defines, amongst other things, the terms “proprietor” and “relevant traveller”.
Sub-regulation 93(3) prohibits a Collector from giving a permission under sub-section 96A(2) of the Act unless an application has been made in accordance with this regulation. Sub-section 96A(2) provides for permission to be given to deliver goods from a duty free shop to a relevant traveller and for that traveller to export the goods duty free without requiring those goods to be entered for export.
Sub-regulation 93(4) provides that an application for a permission under sub-section 96A(2) to export goods duty free is to:
(a) be in writing;
(b) relate to a single duty free shop;
(c) specify certain details concerning the duty free shop; and
(d) be lodged with a Collector for the place where the duty free shop is situated.
Sub-regulation 93(5) requires a Collector, when deciding whether or not to give permission under sub-section 96A(2), to consider the ability of the shop proprietor to comply with the conditions specified at paragraphs 93(7)(g), (h) and (j) (see sub-regulation 93(7)).
Sub-regulation 93(6) provides for a permission under sub-section 96A(2), (see sub-regulation 93(3)), to have effect from the day of the permission and for the period specified in the permission.
Sub-regulation 93(7) provides that a permission under sub-section 96A(2) (see sub-regulation 93(3)) for an off-airport duty free shop is subject to the conditions specified in this sub-regulation. Paragraphs (a) to (k) and (n) deal with the conditions to be complied with by shop proprietors and paragraph (m) deals with the conditions to be complied with by relevant travellers. The paragraphs, in essence, are as follows:
(a) goods are not to be sold to a person unless that person produces to the shop proprietor a ticket or document approved by a Collector as evidence that the person is entitled to make an international flight;
(b) the proprietor is to retain a copy of the evidence required in paragraph (a);
(c) goods are not to be delivered from a duty free shop earlier than two business days of the shop before the person is to depart on the flight to which a ticket under paragraph (a) relates;
(d) the goods must be delivered to the traveller in a certain package that complies with this paragraph;
(e) at the time of the sale the proprietor is to prepare a detailed invoice in accordance with this paragraph;
(f) after preparing the invoice in accordance with paragraph (e) the proprietor is to deal with the copies of that invoice in accordance with this paragraph;
(g) the proprietor is to provide to a Collector at the airport of departure of the traveller, and not less than 2 hours before the relevant traveller’s flight is scheduled to depart, the information specified in this paragraph concerning that traveller, the shop and the goods;
(h) where the traveller does not intend to carry the duty free goods in the cabin of the aircraft and, therefore, surrenders the package for carriage, the proprietor is to have the package examined to ensure it has not been tampered with or opened. If the goods have not been tampered with or opened the proprietor is to remove a copy of the invoice. If the package has been opened or tampered with paragraph (k) will apply;
(j) where the traveller intends to carry the duty free goods in the cabin of the aircraft and takes the package into a departure area, the proprietor is to have the package, whilst in the departure area, examined to ensure it has not been tampered with or opened. If the package has not been tampered with or opened the proprietor is to remove a copy of the invoice and compare the invoice removed with both the goods and the invoice in the package. If the goods have been tampered with or opened, or a discrepancy arises between the invoice removed and the goods or the invoice in the package, paragraph (k) will apply;
(k) where a package is dealt with in accordance with paragraph (h) or (j) and:
(i) it has been tampered with or opened; or
(ii) a discrepancy exists between the invoice attached to the package and the invoice included in the package or between either the invoice attached to or included in the package and the goods or if either invoice is not present,
the proprietor is to immediately notify a Collector of details of the relevant traveller, the traveller’s flight and the nature of the discrepancy;
(m) sets out the conditions imposed on a relevant traveller who purchases duty free goods. The conditions are detailed in sub-paragraphs (1) to (v) of paragraph (m) and, in effect, provide that:
(i) the traveller is not to interfere with, or allow a person to interfere with, the invoice attached to the outside of the package;
(ii) the traveller is not to open, or allow a person to open, the package;
(iii) the traveller is to allow the proprietor to examine the package and remove the invoice as required under paragraphs (h) and (j);
(iv) where the goods are not exported by the traveller on the scheduled flight, the traveller is to, not later than noon on the next working day of the shop, notify the proprietor:
(A) if the goods are to be exported on a subsequent flight that is not more than 48 hours after the earlier scheduled flight - details of the new flight; or
(B) if the traveller intends to export the goods on a subsequent flight 48 hours or more after the scheduled flight or no longer intends to export the goods - of that intention. The traveller is also to return the goods to the shop before the close of business on the second working day of that shop after the departure time of the scheduled flight,
(v) where a traveller notifies the proprietor of a subsequent intended flight, under (A) of sub-paragraph (iv) above, but does not export the goods on that subsequent flight, the traveller is to:
(A) notify the proprietor, before noon on the next working day of the shop after the scheduled departure time of the subsequent flight, that the goods were not exported; and
(B) return the goods before noon on the second working day of the shop after the scheduled departure time of the subsequent flight;
(n) the proprietor is to lodge a return with a Collector, within 10 working days of the shop after the end of each month, setting out details of any invoices issued by the proprietor for which the proprietor has not retrieved a copy of the invoice on departure as required by sub-paragraph (h)(ii) or (j)(ii). The proprietor is required to pay any customs duty payable on goods delivered to travellers and covered by those invoices.
Sub-regulation 93(8) provides that a permission under sub-section 96A(2) (see sub-regulation 93(3)) for an on-airport duty free shop is subject to the conditions specified in paragraphs (a) to (f) of this sub-regulation. The paragraphs, in effect, provide that -
(a) goods are not to be sold except to a person who intends to make an international flight;
(b) the invoice to be prepared by the proprietor when the traveller is a pilot or a crew member of an aircraft shall conform to precise requirements and contain specified particulars;
(c) similarly to (b), the invoice to be prepared by the proprietor when the traveller is a passenger shall conform to precise requirements and contain specified particulars;
(d) after preparing an invoice for the purposes of paragraph (b) or (c) above, the proprietor is to give a copy to the traveller, pilot or crew member and retain a copy;
(e) the proprietor is to lodge a weekly return with a Collector setting out the name of the shop and a full inventory of the goods sold during the week; and
(f) the proprietor is to attach to the weekly return for the purposes of paragraph (e) copies of all invoices prepared for the purposes of paragraph (b) or (c) in relation to the period of the return.
Sub-regulation 93(9) prescribes, for the purposes of paragraph 96A(10)(b) of the Act, the method and time (as defined in sub-regulation (10)) within which a proprietor is to provide a Collector with proof of the export of any goods delivered duty free to a traveller.
In relation to an off-airport duty free shop the proprietor is to provide a copy of the invoice removed from the outside of the package not later than one hour after the departure of the relevant traveller’s flight.
In relation to an on-airport duty free shop the proprietor is to complete and lodge the return referred to in paragraphs (8)(e) and (f) not later than one week after the week to which the return relates.
Sub-regulation 93(10) defines the terms “prescribed way” and “prescribed time” for the purposes of sub-regulation (9). Paragraph 96A(10)(b) of the Act provides that a permission under sub-section 96A(2) of the Act to operate a duty free shop is conditional on a proprietor providing proof to a Collector in a prescribed way and within a prescribed time of the export of goods delivered to travellers duty free.
Sub-regulation 93(11) provides that a permission under sub-section 96A(2) of the Act to deliver goods duty free for export may be revoked (see sub-regulation (12)) if a proprietor, or an agent or servant of the proprietor, enters into an agreement with a traveller for the goods to remain with, or to be transferred to, the proprietor.
(a) failure to comply with any of the conditions to which the permission is subject as prescribed in the Regulations; or
(b) that the revocation is necessary to protect the revenue or to ensure compliance with the Customs Act.
Sub-regulation 93(13) requires a Collector when revoking a permission under sub-regulation (12) to serve on a proprietor either personally or by post a notice in writing. Sub-section 96A(14) of the Act specifies the matters to be included in a notice of revocation of permission and further provides that those matters are also to be included in a notice under sub-section 96A(2) of the Act refusing to grant a permission. Sub-section 96A(14) of the Act was inserted by the Statute Law (Miscellaneous Provisions) Act (No. 1) 1984.