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Tradex Duty Imposition Bill 1999

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1999

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

TRADEX SCHEME BILL 1999

 

TRADEX DUTY IMPOSITION BILL 1999

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of Senator the Honourable Nick Minchin,

Minister for Industry, Science and Resources)



 



TRADEX SCHEME BILL 1999

TRADEX DUTY IMPOSITION BILL 1999

 

CONTENTS

 

OUTLINE........................................................................................................................................ 4

 

FINANCIAL IMPACT STATEMENT............................................................................................ 4

 

REGULATION IMPACT STATEMENT....................................................................................... 5

 

Tradex Scheme Bill 1999 - Notes On Clauses........................................................................ 12

 

Part 1 - Preliminary................................................................................................................. 12

 

Part 2 - Register of Tradex Orders........................................................................................ 13

 

Part 3 - Making of tradex orders............................................................................................ 13

 

Part 4 - Variation of tradex orders......................................................................................... 14

 

Part 5 - Revocation, suspension and cessation of tradex orders...................................... 15

 

Part 6 - Liability to pay tradex duty in respect of nominated goods in certain circumstances          17

 

Part 7 - Keeping of records................................................................................................... 18

 

Part 8 - Audit............................................................................................................................ 19

 

Part 9 - Offences..................................................................................................................... 20

 

Part 10 - Penalty in lieu of prosecution................................................................................. 21

 

Part 11 - Miscellaneous.......................................................................................................... 22

 

Part 12 - Transitional.............................................................................................................. 24

 

Tradex Duty Imposition Bill 1999 - Notes On Clauses............................................................ 26

 



TRADEX SCHEME BILL 1999

TRADEX DUTY IMPOSITION BILL 1999

 

OUTLINE

The Tradex Scheme is a key initiative arising from the Government’s Investing for Growth industry statement.  The objective of the Tradex Scheme is to allow for the importation of goods, without payment of customs duty or other taxes, provided the goods are subsequently exported or incorporated in other goods that are exported.

 

The Tradex Scheme Bill 1999 and the Tradex Duty Imposition Bill 1999 together with the Customs Tariff Amendment (Tradex) Bill 1999 provide the legislative basis for the new scheme.

 

The Tradex Scheme Bill 1999 establishes the Tradex Scheme and provides for the administration of the program.

 

The Tradex Duty Imposition Bill 1999 provides for circumstances where goods entered under the provisions of the Tradex Scheme are not exported or are consumed or used in the Australian domestic market.  In particular, this Bill provides for the imposition of Tradex Duty - an amount equal to the customs duty that would have been payable if the goods had not been imported under the provisions of the Tradex Scheme.

 

The Customs Tariff Amendment (Tradex) Bill 1999 inserts a new item into Schedule 4 to the Customs Tariff Act 1995 .  This will allow for the importation, without payment of customs duty, of goods included in a “tradex order” under the Tradex Scheme, where those goods are imported by the holder of the order.

 

The Tradex Scheme will replace the existing Tariff Export Concession (TEXCO) Scheme and allow most Duty Drawback users to gain up-front exemption from customs duty and other taxes on goods imported for re-export either in their original or modified form.

 

FINANCIAL IMPACT STATEMENT

The financial impact of the introduction of Tradex is difficult to estimate accurately.  The cost of revenue forgone will be highly dependent of the level of utilisation of the Tradex Scheme.

 

Analysis of unpublished data provided by the Australian Bureau of Statistics has indicated that the utilisation rate of the existing TEXCO and Duty Drawback Schemes is currently running at approximately 50 per cent.  This suggests that approximately $100 million of eligible claims are currently being forgone by the exporting community.  This figure provides an estimate of the amount of additional revenue forgone as a result of a 100 per cent utilisation of the existing schemes.  With the introduction of Tradex, it is expected the utilisation rate will increase because of the more streamlined processes associated with the scheme.  However, the take-up rate is difficult to predict in an environment of low and declining tariffs where small claims may not be cost effective for business. 

 

Forward estimates make provision for an additional $30 million a year (revenue forgone) as a result of the introduction of the Tradex Scheme.

 

REGULATION IMPACT STATEMENT

 

Introduction

It has long been international practice to allow exemption from Customs duty and sales tax for goods that are imported and later re-exported, either in their original form or in a processed form.  The international rules governing drawback are set out in the International Convention on the Simplification and Harmonisation of Customs Procedures (the Kyoto Convention).  Australia’s Tariff Export Concession Scheme (TEXCO) and Duty Drawback schemes are consistent with the convention and are broadly similar to those operated by many other countries.

Duty drawback involves repayment of import duty, excise duty and/or sales tax on imported goods that are exported in the same condition or that are exported after being processed.  TEXCO allows importation free of duty and/or sales tax but is limited to goods that are intended for export after being processed or incorporated in other goods.

A review of TEXCO, duty drawback and temporary importation provisions was undertaken by a Taskforce of Officials during the latter half of 1997 as part of the Commonwealth Legislation Review Schedule.  The aim of the Commonwealth Legislation Review process is to examine the case for retaining, modifying or reforming current regulatory arrangements.  The guiding principle is that legislation should not restrict competition unless it can be demonstrated that the benefits of the restriction to the community as a whole outweighs the cost, and the benefits of the legislation can only be achieved by restricting competition.

The Taskforce concluded that the programs under review generally facilitated competition rather than restricted it.  While the Taskforce was not able to quantify the net public benefit of the schemes, evidence suggested that there were significant positive net benefits associated with the programs and these benefits were widely dispersed.  The direct economic costs involved were mostly restricted to administration and compliance while the indirect economic costs were considered to be relatively minor.  The Taskforce received evidence that lack of access to schemes such as TEXCO and drawback would make a broad range of Australian exports less competitive on world markets.  On balance, the Taskforce concluded that the net economic benefit to Australia of TEXCO and duty drawback was likely to be significantly positive.

The Taskforce report recommended the retention of the main elements of duty drawback, TEXCO and temporary importation provisions on the basis that they provide compensation for a government induced market imperfection caused by the tariff regime and indirect tax system.  The existing TEXCO and duty drawback schemes provide relief for exporters from import duties and sales tax with the key rationale for these schemes being the destination principle of taxation law.  That is, taxes should only be levied on goods sold into the domestic market for home consumption.  Goods which enter a country and which are subsequently re-exported without entering home consumption should generally not, according to the destination principle, be subject to taxes in that country - they should instead be taxed in the country in which they are finally consumed.

The Taskforce made a number of recommendations designed to improve the efficiency and effectiveness of the programs.  The Taskforce noted that the utilisation of the present programs was estimated to be running as low as 50 per cent and that this amounted to approximately $100 million in customs duty and sales tax being collected which could have been claimed by the exporting community.  The Taskforce suggested that much of the unclaimed entitlement reflected high access and compliance costs and outdated regulatory arrangements.

The deliberations of the Review Taskforce and the recommendations included in the draft report formed the basis of the Government’s Tradex initiative announced in the Prime Minister’s Investing for Growth industry statement of 8 December 1997.

The key features of the Tradex scheme, as announced in Investing for Growth , were as follows:

·        Tradex will provide relief from customs duty and sales tax on imported goods intended for re-export or used as inputs to exports.

·        The existing Duty Drawback and TEXCO arrangements will be integrated into a single, simplified and more accessible scheme.

·        Tradex will improve the effectiveness of existing arrangements by:

§  moving to an exemption based system, thereby reducing compliance costs for users.  A drawback facility will still be available for instances where, at the time of import, it was not known that the goods would be re-exported or used as inputs to exports;

§  adopting a more light handed approach to access and compliance requirements, and stronger reliance on self assessment in its day to day operation; and

§  relaxing some regulatory arrangements in relation to eligibility, registration and on going compliance requirements.

This Regulation Impact Statement has been prepared within the context of the Tradex Scheme having been announced as Government policy.

 

Problem

In essence the problem to be addressed is the low utilisation rates, high compliance and administrative costs associated with the current schemes.  It has been estimated that the current levels of utilisation of these schemes is approximately 50 per cent.  This equates to over $100 million in customs duty and sales tax that is unclaimed by Australian exporters with the consequential detrimental impact on their international competitiveness.

Under present arrangements, imported goods incur a duty liability when they are landed in Australia, and before being used in the manufacturing process prior to export or re-exported in the same condition at a later time.  In circumstances where the goods are re-exported the producer uses duty-drawback provisions to claim the import duty and sales tax back.  These arrangements for handling temporary imports represent a cost and burden for domestic manufacturers who use imports in their exported production.

Apart from the administrative work required to claim back the duty paid after the goods have been exported, firms also suffer a cash-flow cost.  The capital funds that are tied up in the duty payment are not available for productive investment, therefore the potential return on investment is foregone.

Exporters who undertake industrial processing of imports prior to export may be eligible for up-front exemption from import duties and wholesale sales tax under the TEXCO scheme.  However, the TEXCO scheme makes no allowance for imports that are exported in the same condition or that do not fulfil the ‘industrial processing’ requirement.

 

Objectives

The Government’s overall policy objective is to put in place a more competitive customs regime in order to facilitate additional economic activity and help generate employment.  A specific element of this is implementing programs that facilitate export activities by streamlining the administration of the customs regime applying to imports which are used in exported goods or exported in the same condition.  Specifically,  the objective of the introduction of Tradex is to increase utilisation of up-front exemption, reduce compliance costs and minimise administration costs.

 

Options

The options examined in this section use the Government’s announcement of the Tradex scheme as the starting point and focus on the alternatives available to meet the Government’s objectives outlined above.

Status quo

The continuation of the existing TEXCO, drawback and temporary importation provisions does provide exporters with an avenue to recoup customs duties and sales tax paid on goods that are exported.  However, the recent review, while fully supporting the rationale behind the schemes highlighted the low participation rates and high compliance and administrative costs associated with them.  The Government’s announcement of the Tradex initiative removes this approach as a feasible option.

One completely integrated scheme

The Government’s Tradex initiative could be achieved with the introduction of a complete redrafting of all the legislation and regulations associated with the three programs and their integration into one stand-alone Act.  On close inspection the replacement legislation would largely mirror the existing provisions with minor amendments.  There are three distinct streams of clients for the existing schemes.  That is, those exporters who import inputs that are used in an industrial process currently have access to TEXCO;  those exporters who do not meet the industrial processing requirements of TEXCO have access to duty drawback;  and those people who import goods under prescribed conditions via the Temporary Importation Provisions (Sections 162 and 162A of the Customs Act 1901 ) and subject to international agreements. 

Expansion of the administered TEXCO scheme to accommodate non-processed exports

The key feature of the Tradex initiative is to provide exporters with an up-front exemption from customs duty and sales tax.  In other words, one option is to broaden the availability of the exemption features of the current TEXCO scheme so that exporters who do not undertake industrial processing can also participate.  This option would involve amending the wording of Item 21 of the Fourth Schedule of the Customs Tariff Act 1995 (and associated By-Law) to remove the condition that goods must under go an industrial process and allow for goods to be imported and re-exported in the same condition or after incorporation into other goods.  This approach would require very limited legislative change and result in a significant expansion in the number of registered users of TEXCO.  TEXCO, however, is an administered scheme and there is some uncertainty as to whether the program administrators have sufficient legal powers to ensure the recovery duty and sales tax liabilities and general compliance with the conditions of the scheme.

Introduction of a legislated scheme to provide up-front exemption component of Tradex, continuation of drawback and Temporary Importation Provisions (with amendments)

This option is broadly the same as the option above in relation to the mechanism used to provide up-front exemption.  That is, the amendment of Item 21 or the introduction of a new item to the Fourth Schedule to the Customs Tariff Act 1995 (and associated By-Law).  However, this option also provides Tradex with a legislative basis that will provide a number of benefits to both users of the scheme as well as administrators.

In particular, the legislation for Tradex will:

·        Clearly spell out eligibility criteria so that potential applicants have a degree of certainty as to the conditions they must meet in order to participate in the scheme;

·        Enable unsuccessful applicants to have a right of review of the relevant adverse decision by the Administrative Appeals Tribunal;

·        Provide the administrators of the scheme with the appropriate audit and recovery powers and penalty provisions to help ensure compliance.

A drawback facility will still be available for instances where, at the time of import, it was not known that the goods would be re-exported or used as inputs to exports.

 

Impact Analysis

The key objective of the Tradex scheme is to provide exporters with up-front exemption from Customs duties and sales tax on imported inputs and thus largely remove the need to drawback these charges after export.  This approach will result in substantially lower compliance costs for industry and lower processing costs for Government as a result of greater use of self-assessment and risk management strategies.  These lower compliance costs along with a targeted publicity/education program should make the Tradex scheme more attractive to business and result in higher utilisation rates.  This in turn will improve the international competitiveness of Australian exporters.

 

The movement to an exemption based program would result in substantial gains to current and potential duty drawback users as well as reducing administration costs by removing the implicit “double handling” involved in a drawback type system.

 

Evidence provided to the Taskforce Review suggested that business compliance costs in relation to duty drawback are in the order of 10 to 15 per cent of the amount refunded.  Using 1997-98 as a base year when approximately $80 million of drawback payments were made, business compliance costs could equate to approximately $8 - $12 million.

 

In addition, evidence presented to the Taskforce suggested that an exemption based program (in this case the current TEXCO scheme) was significantly cheaper to administer than the existing drawback process.  For example, the average drawback claim costs around $49 to process while the cost of a TEXCO exemption per import entry line is only around $9.  Wider use of an exemption based system would drop the average cost down towards the TEXCO level.

 

The introduction of the Tradex scheme and a resultant increase in the utilisation rate by business would also have implications for Government revenue or more particularly “revenue forgone”.  As mentioned earlier, the imposition of Australia’s import duties and sales taxes are based on the destination principle, that is, they are levied only on goods sold into the domestic market.  Goods exported are exempt from such taxes.  Thus exporters paying duty and sales tax on goods imported and subsequently exported are entitled to relief from those taxes.  Using this as the starting point, drawback can be regarded as an entitlement rather than as a concession or form of assistance.  Duty forgone can be largely seen as irrelevant in this instance because the duties and sales tax are subject to drawback.  In this sense, it was never Government revenue to forgo.  Therefore, the difference between the amount of duty actually claimed and the amount which exporters were entitled to claim could be seen as a windfall gain to the Government at the expense of non-claiming exporters and importers.  This unclaimed entitlement has a negative impact on the international competitiveness of Australian exporters.

 

There are also some indirect economic costs in terms of resource allocation in the economy.  In theory by conferring an advantage on firms best able to take advantage of the Tradex scheme, resources will be encouraged into those activities and existing users of TEXCO and drawback will be better able to retain resources than would be the case in the absence of the schemes.  However, in an environment of generally low or declining tariffs across most imported goods, these resource allocation costs are unlikely to be high.  In addition, it is mainly internationally competitive exporters who gain from the existing schemes (and Tradex in the future) and this further ameliorates resource distortions.

 

All of the options outlined in the previous section (excluding the status quo) would have broadly the same impact on both business and government.  That is, the introduction of an exemption-based scheme would be more attractive to business by lowering of compliance costs (with resultant increase in utilisation rates) as well as reducing administration costs for government.

 

A summary of the impacts of each option is presented below.

 

RIS summary

 

Objective: Streamline the administration of the customs regime applying to imports which are used in exported goods or exported in the same condition (consistent with the Government’s announcement of the Tradex scheme)

 

Option

IMPACT ON

 

Likely benefit/comment

 

Importers/exporters

Government

 

1          Status Quo

 

No change

No change

Not acceptable given the Government’s announcement of the Tradex initiative.

 

2          One completely integrated scheme

 

Greater access to up-front exemption and lower compliance costs

Lower administration costs. An increase in revenue forgone (assuming a greater participation rate by business).

Provides greater access to up-front exemption, however, a drawback facility will still be required. Special provisions for Temporary importations need to remain consistent with international agreements.

 

3          Expansion of the existing TEXCO administered scheme

 

Greater access to up-front exemption and lower compliance costs

Lower administration costs. An increase in revenue forgone (assuming a greater participation rate by business).

Provides greater access to up-front exemption, however, less transparent and uncertainties remain as to the administrator’s legal powers to recover duty

1          Legislated scheme to provide up-front exemption component of Tradex

 

Greater access to up-front exemption and lower compliance costs.

Greater certainty for business.

Lower administration costs. An increase in revenue forgone (assuming a greater participation rate by business). Provides the administrators of the scheme with the appropriate audit and recovery powers and penalty provisions to help ensure compliance.

Provides greater access to up-front exemption.  Results in greater transparency of the scheme and gives appropriate legal powers to administrators to help ensure compliance.

 

Consultation

There were two distinct phases of consultation.  The first being the review of the existing TEXCO, duty drawback and temporary importation provisions undertaken by a Taskforce of Officials during the latter half of 1997 (as part of the Commonwealth Legislation Review Schedule).  The Taskforce was chaired by the then Department of Industry, Science and Tourism.  Other agencies represented were Treasury, the Department of Foreign Affairs & Trade, the Australian Customs Service and the Australian Tax Office.

 

The Taskforce approach to the Review involved:

·           the preparation of a discussion paper to guide interested parties wishing to make a submission to the Review;

 

·           the placement of an advertisement in "The Australian" and "The Australian Financial Review" inviting public submissions to the Review;

 

·           the consideration of 35 written submissions from interested parties including importers, exporters and customs brokers;

 

·           follow up consultations with 16 parties that made submissions; and

 

·           the preparation of a report evaluating the programs, incorporating stakeholder comments and suggestions and the drafting of recommendations concerning the programs under review.

 

A significant outcome from the public consultation process was a general agreement on the need to retain the key elements of the current programs with modifications and streamlining.  In addition, many stakeholders advocated a greater availability of the up-front exemption based system available in TEXCO rather than the more cumbersome drawback arrangements.  The Taskforce considered these views and largely reached the same conclusion.

 

The Taskforce draft report formed the basis for the for the Government’s announcement of the Tradex scheme as part of the Investing for Growth industry statement.

 

The second phase of consultations involved discussions between the Department of Industry Science and Resources and the Australian Customs Service on the best mechanism for the implementation of the Tradex initiative.  During this time various stakeholders (importers, exporters and customs brokers) were consulted prior to finalisation of the initiative.

 

Conclusions and Recommended Option

With the exception of the Status Quo, all of the options proposed would provide the benefits of an up-front exemption system for industry involved in the importation of inputs or goods prior to their ultimate export.  However, the recommended option for the introduction of the Tradex initiative is via legislation.  This option provides both industry and Government with significant benefits in the delivery of an up-front exemption scheme.  In particular, legislation for the implementation of Tradex will:

·        clearly spell out eligibility criteria so that potential applicants have a degree of certainty as to the conditions they must meet in order to participate in the scheme;

·        enable unsuccessful applicants to have a right of review of the relevant adverse decision by the Administrative Appeals Tribunal;

·        provide the administrators of the scheme with the appropriate audit and recovery powers and penalty provisions to help ensure compliance given the self-assessment nature of the scheme.

 

Implementation and Review

The Tradex initiative will be implemented via legislation and amendments to various Customs Regulations.  In particular, the Customs Tariff Act 1995 will be amended to include a new item (item 21A) to allow for the wider scope of the Tradex scheme.  Legislation covering the administration and operation of Tradex has been drafted and a number of issues highlighted in the review will result in the amendment/removal of onerous or redundant Customs regulations.

 

The Department of Industry, Science and Resources in consultation with other relevant government agencies will establish a targeted education/awareness program to help promote utilisation of the Tradex scheme. 

 

Periodic reviews will be undertaken to monitor the performance of the scheme and detail the level of utilisation.

 

The necessity for arrangements such as Tradex will be formally reviewed after any significant changes in Australian tariff policy.

 

 



Tradex Scheme Bill 1999 - Notes On Clauses

Part 1 - Preliminary

 

Clause 1 - Short title

This clause provides for the Bill, when enacted, to be cited as the Tradex Scheme Act 1999 .

 

Clause 2 - Commencement

This clause provides that the Act commences on a day to be fixed by Proclamation.

 

Clause 3 - Object of the Act

This clause provides that the object of the Act is to establish the Tradex Scheme, under which goods may be imported without the payment of Customs duties and other taxes (that would normally apply on import) provided that the goods are subsequently exported or incorporated in other goods that are exported.

 

Clause 4 - Definitions

This clause provides definitions of certain terms contained in the Act.

 

Clause 5 - Core criteria for applying for or holding a tradex order

Subclause (1) outlines the Core Criteria that must be met for a person to make an application for, or an application for a variation of, a tradex order.  Subclause (1) provides that:

 

·        the person intends to import goods that are to be subsequently exported;

 

·        the requirements of the Drawback Regulations under Section 168 of the Customs Act 1901 are complied with or the goods are included in an exempt class (goods declared by the regulations to be eligible for importation under a tradex order, but may not comply with some or all of the of the Drawback Regulations);

 

·        the goods will be exported within one year after importation (unless the Secretary allows an extension of time);

 

·        the person has appropriate record-keeping and accounting systems to substantiate that the goods imported were exported in line with the conditions of the scheme.

 

Subclause (2) largely mirrors subclause (1) but deals with the core criteria for the holding of a tradex order.

 

Clause 6 - Disqualifying circumstances

This clause defines circumstances where the holder of a tradex order may be disqualified from utilising the Tradex Scheme.  Subclauses (a) to (e) provide that disqualifying circumstances exist if:

 

·        the core criteria under clause 5 have not been complied with, except where the person became liable to pay and paid tradex duty under clause 21; or

 

·        the person has provided information or documents that the person knew, or ought to have known, to be false or misleading; or

 

·        the person was ineligible to apply for or hold a tradex order; or

 

·        the person has failed to pay tradex duty in accordance with clause 21.

 

Clause 7 - Act not to extend to external Territories

This clause states that the Act does not extend to external Territories.

 

Clause 8 - Act not to bind Crown

This clause states that the Act does not bind the Crown in any of its capacities.

 

Part 2 - Register of Tradex Orders

This Part outlines the responsibility of the Secretary to establish and maintain a Register of tradex orders.

 

Clause 9 - Secretary to ensure that Register is kept

This clause requires the Secretary to establish a Register of tradex orders (containing particulars and in a form that the Secretary considers appropriate).  The Register may be kept in an electronic form.  The Secretary also has the responsibility to ensure that particulars contained in the Register are altered when circumstances change or when the Secretary is made aware that incorrect information is contained in the Register.  The Secretary must also provide the holder of a tradex order with details of the recorded particulars.

 

The holder must notify the Secretary in writing of changes to the recorded particulars within 14 days of any change occurring.

 

Part 3 - Making of tradex orders

This Part outlines the procedure for making an application for a tradex order and the process that the Secretary must undertake when making/refusing to make a tradex order.

 

Clause 10 - Application for tradex order

Subclause (2) sets out the procedure for making an application for a tradex order.  In particular, the person must apply in writing in accordance with the approved form.  The application must specify the type of goods to be imported under the tradex order and contain any information as required by the approved form.  The application must be signed and lodged with the Secretary.

 

Subclause (3) allows the Secretary to require the applicant to provide in writing information in relation to:

 

·        the proposed export activities that would make the goods eligible for drawback when exported;

 

·        the measures to be taken to ensure that the goods comply with drawback regulations (if not included in an exempt class of goods);

 

·        the record-keeping or accounting systems in place to account for the goods prior to export;

 

·        any other information relevant to the Secretary’s consideration of the application.

 

Clause 11 - Making of tradex order

This clause sets out the process to be undertaken by the Secretary when making/refusing to make a tradex order.

 

Subclause (1) states the Secretary must be satisfied that the core criteria are complied with (under clause 5) and that the applicant is not ineligible to make an application.  The Secretary needs to be satisfied the person has not given the Secretary any information or a document that the person knew, or ought to have known, to be false or misleading, and has not failed to pay tradex duty in accordance with clause 21.  If satisfied of the above matters the Secretary must make an order allowing the goods to be entered under item 21A of Schedule 4 to the Customs Tariff Act 1995.

 

Subclause (2) states the Secretary may refuse an application (in whole or in part) if not satisfied under subclause (1).

 

Subclause (3) requires the Secretary to give written notice of his or her decision on a tradex application to the applicant.

 

Subclause (4) states that if a notice under subclause (3) has not been received by the applicant with 40 days of lodgement of the application, the Secretary is taken to have refused the application.

 

Subclause (5) states that the notice refusing the application must set out the Secretary's findings on material questions of fact, refer to the evidence or other material on which the decision was based and give reasons for the decision.  (A notice granting the application must include the matters set out in subclause 7(c) (see below)).

 

Subclause (6) states that the tradex order must be in writing, be signed by the Secretary, and comes into effect on the date stated in the order.

 

Subclause (7) states that when the Secretary makes a tradex order, the Secretary is required to allocate a distinguishing number to the order (the tradex number), record the particulars and tradex number in the Register, and include in the notice given under subclause 3 the tradex number, the goods covered by the order and the date of effect of the order.

 

Subclause (8) states a tradex order is not a statutory rule within the meaning of the Statutory Rules Publication Act 1903 .

 

Part 4 - Variation of tradex orders

This Part outlines the procedure for making a variation to a tradex order and the process that the Secretary must undertake when granting or refusing an application for variation of a tradex order.

 

Clause 12 - Application for variation of tradex order

This clause outlines the procedure for making an application for variation of a tradex order.

 

Subclause (2) allows for the addition and/or deletion of goods specified in a tradex order.

 

Subclause (3) states that the application must be in writing and in accordance with the approved form.  It must state the tradex order number, set out the details of the proposed variation and contain such other information as required by the form.  The application must be signed and lodged with the Secretary.

 

Subclause (4) provides that the Secretary may, by written notice, also require the applicant to provide in writing any information that the Secretary considers relevant to consideration of the application.

 

Clause 13 - Grant or refusal of application for variation

This clause provides for the process by which the Secretary may grant or refuse an application for variation.

 

Subclause (1) states that if the application is for, or includes a request for, the removal of goods from the tradex order, and the Secretary is satisfied there are no disqualifying circumstances, the Secretary must grant the application.

 

Subclause (2) states that if the application is for, or includes a request for, the inclusion of goods and the Secretary is satisfied that the core criteria are met and there are no disqualifying circumstances, the Secretary must grant the application.

 

Subclause (3) states the Secretary may refuse an application (in whole or in part) in all other circumstances.

 

Subclause (4) provides that the Secretary must give written notice to the applicant of the Secretary’s decision.

 

Subclause (5) states that if a notice under subclause (4) has not been issued to the applicant within 40 days of lodgement of the application for variation, the Secretary is taken to have refused the application.

 

Subclause (6) states that if the decision is to reject the application the Secretary must set out his or her findings on material questions of fact, refer to the evidence or other material on which the decision was based and give reasons for the decision.

 

Subclause (7) states that if the application is granted the Secretary must vary the tradex order to give effect to the decision.

 

Subclause (8) states that the variation of a tradex order must be in writing signed by the Secretary and comes into effect on the date stated in the instrument of variation.

 

Subclause (9) states that if the order is varied the Secretary must alter the particulars in the Register, and include in the notice given under subclause (4) the various matters mentioned in subclause 9(b).

 

Part 5 - Revocation, suspension and cessation of tradex orders

This Part outlines the procedures and processes to be followed in the event that a tradex order is revoked or suspended by the Secretary.  This Part also specifies when a tradex order ceases to exist.

 

Clause 14 - Request by holder for revocation of tradex order

This clause allows the holder of a tradex order to request the Secretary to revoke the order.

 

Subclause (2) states that for the order to be revoked the holder must make a request to the Secretary in writing (on the approved form), state the tradex order number, include all information required by the form, be signed by the holder and lodged with the Secretary.

 

Clause 15 - Holder to notify ineligibility

Subclause (1) provides that if the holder of a tradex order becomes aware that they were ineligible to apply for, or have become ineligible to hold, an order, the holder must give notice to the Secretary in accordance with subclause (2) within 7 days.

 

Subclause (2) outlines the form and matters that must be included in the written notice to the Secretary.

 

Clause 16 - Notice to show cause why tradex order should not be revoked

This clause requires the Secretary to give the holder written notice requesting the holder to show cause why a tradex order should not be revoked if it appears to the Secretary that any circumstances that may be disqualifying circumstances have occurred in relation to the holder.  The written notice provided to the holder must set out the particulars of the circumstances and invite the holder (within 28 days) to provide evidence that the circumstances do not exist, or if they do, that they are not disqualifying circumstances.

 

Clause 16 does not apply where the Secretary has received notice from the holder under clause 15.

 

Clause 17 - Suspension of tradex order

This clause outlines the circumstances and procedures whereby the Secretary may suspend a tradex order.

 

Subclause (1) states that the Secretary may suspend the order if a notice under clause 16 is issued and the Secretary believes that disqualifying circumstances exist and considers it appropriate in the circumstances to take such action.

 

Subclause (2) states that the Secretary must notify the holder in writing of his or her decision to suspend the tradex order and the reasons for the suspension, and the date of effect of the suspension.  This notice may be included in the notice given by the Secretary under clause 16.

 

Subclause (3) states a tradex order that has been suspended is not in force for the period of the suspension.

 

Subclause (4) allows the Secretary to remove the suspension of the tradex order.

 

Subclause (5) provides that written notice of the removal of the suspension is to be given to the holder.

 

Subclause (6) provides that the suspension, or the removal of the suspension, by the Secretary, must be in writing and takes effect on the date nominated in the instrument of suspension or removal.

 

Subclause (7) provides that the details of the suspension, or removal of the suspension, must be entered in the Register.

 

Subclause (8) states that the suspension ceases to have effect, if not sooner removed, if the tradex order is revoked.

 

Clause 18 - Revocation of tradex order following request under section 14

This clause provides that where the holder has requested under clause 14 that a tradex order be revoked, the Secretary must as soon as practicable after receipt of the request revoke the order, give the holder written notice of the revocation and its date of effect, and amend the Register.

 

Clause 19 - Revocation of tradex order following notice given to Secretary under section 15 or given by Secretary under section 16

Subclause (1) requires the Secretary to revoke a tradex order if the holder of the order has notified the Secretary under clause 15, or if the Secretary has given to the holder written notice under clause 16 and the holder does not satisfy the Secretary within the specified period of either of the matters specified in subclause (1)(b).

 

Subclause (2) provides that the revocation must be in writing, signed by the Secretary and takes effect on the date stated in the instrument of revocation.

 

Subclause (3) provides that the Secretary must provide to the holder written notice of his or her decision.

 

Subclause (4) provides that the notice must state the date of revocation, set out the Secretary’s findings on material questions of fact, refer to evidence or other material used as a basis for the decision and provide reasons for the decision.

 

Subclause (5) requires the Secretary to amend the Register where a tradex order is revoked under clause 19.

 

Clause 20 - Where individual holder dies or incorporated holder cease to exist

This clause provides that where an individual holder dies, or an incorporated holder ceases to exist, the Secretary must record such occurrence in the Register.

 

Part 6 - Liability to pay tradex duty in respect of nominated goods in certain circumstances

The purpose of this Part is to outline the circumstances in which the holder of a tradex order becomes liable to pay tradex duty.  For example, a holder may import goods that were originally intended to be exported in accordance with the requirements of the Tradex Scheme, however, for whatever reason (eg the export order is cancelled) the goods are ultimately sold in the domestic market.  In this circumstance, the holder becomes liable to pay tradex duty. 

 

Clause 21 - Liability of holder to pay tradex duty

Subclause (1) outlines the circumstances in which the holder of an order becomes liable for the payment of tradex duty.  These circumstances are where, in respect of any of the nominated goods, the goods:

 

·        are consumed or used by the holder in Australia;

 

·        are disposed of by the holder to another person in Australia for the purposes of being consumed, or used by another person in Australia;

 

·        do not satisfy the requirements of the Drawback Regulations (except for goods included in an exempt class under the tradex regulations); or

 

·        are not exported within one year after importation, or within any further period allowed by the Secretary.

 

Subclause (2) states that where any of the circumstances specified in subclause (1) apply, the holder becomes liable to pay tradex duty in respect of the goods.

 

Subclause (3) defines the amount of tradex duty to be an amount equal to the customs duty that would have been payable on the goods at the time of importation if the goods had not been subject to a tradex order.

 

Subclause (4) states that tradex duty is payable within 28 days of the happening of whichever event specified in this subclause is applicable.

 

Subclause (5) provides that an amount of tradex duty not paid within the period specified in subclause (4) becomes a debt due to the Commonwealth and is recoverable by action in any court of competent jurisdiction.

 

Subclause (6) provides that a person continues to be liable to pay the tradex duty even if the person is convicted of an offence or pays a penalty under Part 10 of the Act, in respect of the failure to pay the amount.

 

Part 7 - Keeping of records

The purpose of this Part is to specify the records that a holder of a tradex order must keep in order to justify and substantiate the holder's use of the Tradex Scheme.

 

Clause 22 - Holder of tradex order to keep records in relation to nominated goods

Subclause (1) requires the holder of a tradex order to keep the required records (see subclause (2)) or ensure that another person keeps the required records on behalf of the holder, in accordance with clause 23.

 

Subclause (2) outlines the required records that the holder must keep.  These include records containing particulars of:

 

·        any incorporation of the goods into other goods;

 

·        the storage of the goods;

 

·        the consumption or use of the goods in Australia by the holder;

 

·        the consumption or use of the goods in Australia by another party;

 

·        the exportation of the goods or any goods in which they have been incorporated;

 

·        any payment of tradex duty; and

 

·        any other matters as specified in the regulations.

 

Clause 23 - Provisions relating to keeping required records

Subclause (1) stipulates that the required records must be kept at a place in Australia.

 

Subclause (2) states that the required records are to be written in the English language or be in a form (including an electronic form) that can be converted into English.

 

Subclause (3) states that the required records are to be kept for a period of 5 years after the last occasion on which any act was done in relation to the goods by or at the request of the holder.

 

Part 8 - Audit

The purpose of this Part is to outline the procedures involved and the powers an authorised officer has to conduct audits under the Act.

 

Clause 24 - Audit powers

Subclause (1) states that an authorised officer may not exercise his or her powers under clause 24 to enter premises except with the consent of the occupier or under the authority of a monitoring warrant issued under clause 25.  Also, an authorised officer may not enter such premises if the occupier has asked the officer to produce his or her identity card and the officer has not complied with this request.

 

Subclause (2) specifies the audit powers that an authorised officer has in relation to a holder of a tradex order.  The authorised officer may:

 

·        require the holder to make available documents that are in his or her possession, or to which the holder has access, and which are relevant to whether any disqualifying circumstances exist;

 

·        require the holder to demonstrate the operation of record keeping or accounting systems used in respect of the nominated goods;

 

·        conduct testing of the record keeping or accounting systems for accuracy;

 

·        subject to subclause (1), enter premises the holder has indicated or documents inspected by the authorised officer have indicated, that nominated goods have been, are, or may be on;

 

·        search on premises entered under subclause 2(d) for any nominated goods, and to examine, open or retain samples of any such nominated goods;

 

·        examine and/or make copies or take extracts from documents made available in accordance with subclause 2(a), or found on the premises entered under subclause 2(d);

 

·        require the holder or agent or employee of the holder to answer questions concerning the matters specified in subclause 2(g).

 

Subclause (3) requires the holder of a tradex order to make available documents for examination under subclause 2(a) by sending or giving certified copies of the documents to the authorised officer, or by allowing the documents to be examined by the authorised officer at any reasonable time at the premises where they are kept.

 

Subclause (4) provides the occupier of premises entered by an authorised officer under subclause (2)(d) must provide the officer with all reasonable facilities for the effective exercise of the officer’s powers.

 

Clause 25 - Monitoring warrants

Subclause (1) provides that an authorised officer may apply to a magistrate for a monitoring warrant.

 

Under subclause (2), a magistrate is to issue a monitoring warrant where satisfied of the matters listed in that subclause.

 

Subclause (4) provides that a monitoring warrant must authorise the authorised officer named in a warrant to enter the premises and exercise the powers contained in subclauses 24(2)(b), (c), (e), (f), and (g), and must state the various matters mentioned in subclauses 4(b), (c), and (d).

 

Part 9 - Offences

This Part outlines the range of offences that may arise under the Tradex Scheme.

 

Clause 26 - Failure to notify details of change in registered particulars

This clause provides that a holder of a tradex order is guilty of an offence if he or she fails to notify the Secretary of any changes to particulars entered in the Register as required under clause 9.

 

The maximum penalty for an offence against clause 26 is 30 penalty units.

 

Clause 27 - Failure to notify ineligibility

This clause provides that a holder of a tradex order is guilty of an offence if he or she fails to give notice of his or her ineligibility to apply for, or hold, a tradex order as required under clause 15.

 

The maximum penalty for an offence against clause 27 is 30 penalty units.

 

Clause 28 - Failure to pay tradex duty

Subclause (1) provides that a person is guilty of an offence if he or she is liable to pay tradex duty under subclause 21(2) and the person fails to pay the duty within the applicable period under subclause 21(4).

 

The maximum penalty for an offence against clause 28 is an amount equal to the amount of the tradex duty that was not paid within the specified period.

 

Subclause (2) provides that an offence of this kind is an offence of strict liability.

 

Clause 29 - Failure to keep records

This clause provides that a person is guilty of an offence if the person is required to keep records under clause 22 and the person fails to do so.

 

The maximum penalty for an offence against clause 29 is 30 penalty units.

 

Clause 30 - Failure to comply with requirement made by authorised officer

Subclause (1) states a person will be guilty of an offence if the person refuses or fails to comply with a requirement made by an authorised officer that the person:

 

·        make available specified documents (subclause 24(2)(a));

 

·        demonstrate the operation of any record-keeping or accounting systems used in relation to the nominated goods (subclause 24(2)(b)); or

 

·        answer any questions about the nominated goods, or, relevant documents, or record keeping or accounting systems (subclause 24(2)(g)).

 

The maximum penalty for an offence against clause 30 is 60 penalty units.

 

Subclause (2) states that a person is not entitled to refuse to answer a question that he or she is required to answer under subclause 24(2)(g) or make available documents under subclause 24(2)(a), on the grounds that such action might tend to incriminate the person.

 

Subclause (3) states, however, that any answer or documents given are not admissible in evidence against the person in any criminal proceedings (other than proceedings for an offence against Clause 32) or any civil proceedings.

 

Clause 31 - Failure by occupier of premises to provide facilities or assistance for authorised officer

This clause provides that the occupier of premises entered by an authorised officer under subclause 24(2)(d) is guilty of an offence if the occupier does not provide the authorised officer with all reasonable facilities and assistance in the exercise of the officer’s powers .

 

The maximum penalty for an offence against clause 31 is 10 penalty units.

 

Clause 32 - False or misleading statements

This clause provides that a person is guilty of an offence if the person provides false or misleading answers or documents to the Secretary or an authorised officer, and the person knows that the answer or document is false or misleading.

 

The maximum penalty for an offence against clause 32 is imprisonment for 12 months.

 

Part 10 - Penalty in lieu of prosecution

This Part provides the Secretary with the option of issuing an infringement notice to a person if the Secretary believes that the person has committed an offence against clause 28 (ie failure to pay tradex duty).  If the person pays any unpaid tradex duty, and the penalty specified in the notice, within the required period (and provided the infringement notice has not been withdrawn), any liability of the person for an offence against clause 28 is taken to be discharged, the person is not regarded as having been convicted of an offence, and further proceedings cannot be taken in relation to that offence.

 

Clause 33 - When an infringement notice can be served

This clause outlines the circumstances in which the Secretary may issue an infringement notice on a person.

 

Clause 34 - Matters to be included in an infringement notice

Subclause (1) outlines the matters that must be included in an infringement notice.

 

Subclause (2) states that the notice may contain any other matters the Secretary considers necessary.

 

Subclause (3) provides that the amount of the penalty that may be specified in the infringement notice is 20% of the tradex duty that was not paid by the person on whom the notice is served, within the period specified in subclause 21(4).

 

Clause 35 - Withdrawal of infringement notice

Subclause (1) provides that the Secretary may, by written notice, withdraw an infringement notice within the period within which the penalty was required to be paid.

 

Subclause (2) provides a non-exhaustive list of matters the Secretary may take into account in deciding whether or not to withdraw an infringement notice.

 

Subclause (3) provides that where a person has paid the penalty specified in the notice within the period required in the notice, and the notice is subsequently withdrawn, the Secretary must repay the person, out of moneys appropriated specifically for that purpose, an amount equal to the penalty paid.

 

Clause 36 - What happens if unpaid tradex duty and penalty are paid

This clause provides that where an infringement notice is served on a person (and has not been withdrawn), and the person has paid the penalty specified in the notice and any unpaid tradex duty within the period specified in the infringement notice:

 

·         any liability of the person for the offence specified in the notice will be discharged;

 

·         no further proceedings can be taken against the person for the offence; and

 

·         the person is not regarded as having been convicted of the offence.

 

Clause 37 - More than one infringement notice may not be served for the same offence

This clause states that only one infringement notice can be served on a person for the same offence.

 

 

Clause 38 - Infringement notice not required to be served etc

This clause confirms that Part 10 does not:

 

·         require an infringement notice to be served for an offence against clause 28;

 

·         affect the liability of a person to be prosecuted for an offence against clause 28 where an infringement notice is not served, or has been served but subsequently withdrawn under clause 35, or where the person has failed to comply with the terms of the infringement notice; or

 

·         limit the amount of the penalty a court may impose on a person convicted of an offence against clause 28.

 

Part 11 - Miscellaneous

Clause 39 - Reconsideration of certain decisions

Subclause (1) provides that an application may be lodged (within 28 days of receipt of notice of the Secretary’s decision) with the Secretary to reconsider a decision the Secretary has made under either clause 11 (refusal in whole or in part to grant an application for a tradex order) or clause 13 (refusal in whole or in part to vary a tradex order).

 

Subclause (2) provides that the holder of a tradex order may apply to the Secretary (within 28 days of receipt of notice of the Secretary’s decision) to reconsider a decision the Secretary has made under either clause 17 (suspension of a tradex order) or clause 19 (revocation of a tradex order).

 

Subclause (3) specifies the form and particulars to be included in an application for reconsideration.

 

Under subclause (4), the Secretary must record the day of lodgement of an application for reconsideration.

 

Subclause (5) allows the Secretary 28 days in which to make his or her decision on the application for reconsideration. 

 

The matters the Secretary may have regard to in making his or her decision on an application for reconsideration are set out in subclause (6). 

 

If the Secretary fails to make a decision within 28 days, the Secretary will be taken to have affirmed his or her original decision (subclause (7)).

 

Subclause (8) states that the Secretary must give to the applicant written notice of his or her decision on an application for reconsideration under clause 39.

 

Clause 40 - Review of decisions by Administrative Appeals Tribunal

This clause provides that application may be made to the Administrative Appeals Tribunal for a review of a decision made by the Secretary under clause 39.

 

Clause 41 - Evidentiary matters

This clause deals with certain evidentiary matters relevant to a hearing of a prosecution for an offence against clause 28.

 

Clause 42 - Payment by cheque

This clause provides that if a cheque is tendered as payment for all or part of any tradex duty, or as payment for all or part of any penalty specified in an infringement notice, payment is not made unless and until the cheque is honoured on presentation.

 

Clause 43 - Power of Secretary to extend certain periods

This clause allows for extension by the Secretary of the periods set out in the clauses mentioned in subclause (4).

 

Clause 44 - Power of Secretary to approve forms

Subclause (1) states that the Secretary may approve forms for purposes relating to the Act.

 

Subclause (2) provides that the instrument by which a form is approved under subclause (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

 

Clause 45 - Authorised officers

Subclause (1) provides that the Secretary may appoint persons to be authorised officers for the purposes of the Act.

 

Subclause (2) provides that the Secretary may issue an identity card to an authorised officer.

 

Subclause (3) specifies the form and matters to be recorded on an identity card.

 

Subclause (4) provides that a person who ceases to be an authorised office must, as soon as practicable, return his or her identity card.

 

Subclause (5) provides that a person is guilty of an offence if he or she fails to return his or her identity card as required under subclause (4).  The maximum penalty for an offence against subclause (5) is 1 penalty unit.

 

Subclause (6) provides that “person” for the purposes of clause 45, means "an individual".

 

Clause 46 - Tradex order not transmissible

This clause states, for the avoidance of doubt, that a tradex order is not property that is transmissible by assignment, by contract, by will or by operation of law.

 

Clause 47 - Application of Criminal Code

This clause provides that Chapter 2 of the Criminal Code applies to all offences against this Act.

 

Clause 48 - Delegation

This clause allows the Secretary to delegate all or any of his or her functions or powers under the Act to an officer or person employed in the Department.

 

Clause 49 - Regulations

This clause provides the Governor General may make regulations prescribing all matters:

 

(a)            required or permitted to be prescribed by the Act; or

 

(b)           necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

Part 12 - Transitional

 

Clause 50 - Existing users under the TEXCO Scheme

This clause makes provision for persons, who were users of the Tariff Export Concession (TEXCO) Scheme immediately before commencement of the Act, to become holders of tradex orders.  The Tradex Scheme replaces the TEXCO scheme and this provision gives users of the TEXCO scheme the option to become users of the Tradex Scheme.

 

This clause states that if a person who immediately before commencement of the Act was a user of the TEXCO Scheme, notifies the Secretary in writing before the commencement of the Act that he or she wishes to continue importing goods of a kind or description (that he or she had imported under the TEXCO Scheme), the Secretary must make under section 11 such tradex order as would have been made had the person made an application under clause 10.

 



Tradex Duty Imposition Bill 1999 - Notes On Clauses

The Tradex Scheme Bill 1999 sets out the circumstances in which tradex duty becomes payable to the Commonwealth and the process for recovering that duty.  The Tradex Duty Imposition Bill 1999 imposes the liability to pay the tax (known as tradex duty).

 

Clause 1 - Short title

This clause provides for the Bill, when enacted, to be cited as the Tradex Duty Imposition Act 1999 .

 

Clause 2 - Commencement

This clause provides that the Act commences on the same day as the Tradex Scheme Act 1999 .

 

Clause 3 - Imposition of tradex duty

This clause provides that the tax payable under section 21 of the Tradex Scheme Act 1999 is imposed by this clause under the name of tradex duty

 

Clause 4 - Act does not impose tax on property of a State

This clause provides that the Act does not impose a tax on property of any kind belonging to a State (having the same meaning as in section 114 of the Constitution).