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Administrative Review Council - Reports - Import control and customs by-law decisions - Review - Report to the Attorney-General


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The Parliament of the Commonwealth of Australia

ADMINISTRATIVE REVIEW COUNCIL

Review of Import Control and Customs By-law Decisions

Report to the Attorney-General

Presented by Command 20 M ay 1982 Ordered to be printed 27 May 1982

Parliamentary Paper No. 141/1982

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ADMINISTRATIVE REVIEW COUNCIL

REPORT TO THE

__________ATTORNEY-GENERAL

REVIEW OF IMPORT CONTROL AND CUSTOMS BY-LAW DECISIONS

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ADMINISTRATIVE REVIEW COUNCIL

REPORT TO THE ATTORNEY-GENERAL

REVIEW OF IMPORT CONTROL AND CUSTOMS BY-LAW DECISIONS

Australian Government Publishing Service Canberra 1982

@ Commonwealth of Australia 1982

ISBN 0 642 07067 9

Printed by Pirie Printers Pty Limited, Canberra, A.C.T.

CONTENTS

Paragraph(s) Page

PART I — BACKGROUND................................................................ 1 - 6 1

The Reference................................................................................ 1—6 1

PART II — QUANTITATIVE RESTRICTION DECISIONS................. 7 -4 7 1. Types of quotas.......................................................................... 10—16

(a) ‘Normal Quotas’.................................................................. 10—11

(b) Anomalies Reserve Scheme............................................... 12

(c) Market Sharing-based Quotas......................................... 13

(d) ‘Special Quotas’ and other quota.................................... 14—16

Control Decisions 2. Proposals for review of ‘Normal Quotas’............................... 17—42

(a) Approach to Review............................................................ 17 — 18

(b) Reviewable Decisions............................................................ 19—23

(c) Legislation for Review Rights............................................... 24—25

(d) The Review Body................................................................ 26—27

(e) Evidentiary Problems in Quota Reviews.......................... 28—29

(f) The Appropriate Remedy.................................................. 30 — 39

(g) Procedure for Review........................................................ 40 10

(h) Internal Review...................................................................... 41—42 10

3. Proposals for review of other.................................................. 43 — 47 11

Quantitative Restriction Decisions (a) Market Sharing-based Quotas......................................... 43 11

(b) ‘Special Quota’ and other Quota Control Decisions...... 44 — 46 11 (c) Anomalies Reserve Scheme.............................................. 47 11

PART III — ‘NORMAL CRITERIA BY-LAW’ DECISIONS..................... 48-71 12

1. The Decision.............................................................................. 49 — 51 12

2. Proposals for review.................................................................... 52—71 13

(a) The Character of the Decisions........................................ 53 13

(b) Internal Review................................................................... 54 — 56 13

(c) External Review................................................................... 57 — 70 13

Grant or Refusal of By-law................................................ 58 14

(i) Powers of the Review Body...................................... 59 — 60 14

(ii) Review Body................................................................. 61—64 14

(iii) Right of Review............................................................ 65 — 70 15

(d) Bland Committee Recommendations............................... 71 16

PART IV — OTHER ‘BY-LAW’ DECISIONS.......................................... 72-80 16

1. TYPES OF DECISIONS................................................................ 7 2 -7 4 16

(a) Import Licensing for Used Goods.................................... 72 16

(b) ‘Policy By-laws’.................................................................. 73 16

(c) ‘Definitional By-laws’.......................................................... 74 16

2. PROPOSALS FOR REVIEW............................................................. 7 5 -8 0 17

(a) Import Licensing for Used Goods.................................... 75 17

(b) ‘Policy By-laws’.................................................................. 7 6 -7 7 17

(c) ‘Definitional By-laws’.......................................................... 78 — 80 17

PART V — CONCLUSION (a) Quantitative Restriction Decisions.................................... 81 19

(b) ‘Normal Criteria By-law’ Decisions................................... 81 19

(c) Other ‘By-law’ Decisions.................................................... 81 19

ATTACHMENT I Quantitative Restriction Decisions 20

ATTACHMENT II Internal Review of Refusals of ‘Normal Criteria By-law’ Decisions 21

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PART I — BACKGROUND

The Reference

1. By letter dated 12 April 1977, the Attorney-General requested that the Council examine the issues arising from the absence of any provision for review of decisions made pursuant to the Customs (Import Licensing) Regulations. That letter enclosed a letter from the Minister for Business and Consumer Affairs requesting that a reference

be given to the Council and suggesting that the Council’s consideration should cover the following points:

(a) Having regard to the significance of Government policy in decisions made pursuant to the regulations, what administrative elements of the decision making process should be subject to review.

(b) Having regard to the nexus that exists between the regulations and other statutory powers that are central to the Government’s policies in relation to protection for Australian industry, what is the most appropriate avenue of review.

The statutory powers for implementing protection policy include the use of Customs by-laws under section 271 of the Customs Act 1901 and Ministerial determinations under section 273 of the Customs Act, as well as decisions under the Customs (Import Licensing) Regulations. These mechanisms are used to regulate the protection given to Australian industry. The tariff is the major mechanism for protection. The powers covered by this

reference relate to protection in three areas.:

• the imposition of quantitative restrictions on the importation of goods where the tariff provides insufficient or uncertain protection to Australian industry (quota decisions); • the reduction or elimination of the protective affect of the tariff where there are

no Australian-made goods to compete with imported goods (‘normal criteria by­ law’ decisions); and • variation for other purposes of the tariff level by admitting, duty free or at reduced duty, goods of particular descriptions (other ‘by-law’ decisions).

The term ‘quantitative restrictions’ is used throughout this paper to cover both tariff quotas and import licensing. The term ‘by-law’ extends beyond the making of by-laws under section 271 to decisions, however given effect, which reduce duty payable under a tariff item or permit entry of goods duty free notwithstanding that the tariff provides for duty.

2. The report examines all areas of decision making and recommends suitable review arrangements. Proposals have been made bearing in mind the extent and nature of appeal rights currently available (in particular the jurisdiction of the Administrative Appeals Tribunal) and the possibility of further review rights being recommended as a result of Council’s general review of decision making under Customs and Excise

legislation.

3. In preparing this report, the Council has not been able to measure the extent to which a need for external review is felt. The proposed review of quantitative restriction decisions may give rise to cases where there is no suitable remedy which can be made available to a successful applicant, but the Council is unable to determine the likely

frequency of such cases or their possible financial implications for the applicants concerned.

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4. The complexity of decision-making in this area is reflected by the proposed review process which is correspondingly complex. Whether the recommendation would require changes in the procedures of the relevant Departments and if so what the costs of those changes might be are questions which the Council has not been able to assess fully. Still less has the Council been able to assess the effects of the proposed process on the costs of industry.

5. The Council is of the view that the decisions discussed in this report are susceptible of external review in the manner proposed. The recommendations made are considered to be the most efficient and suitable way of providing external review. However, implementation of the proposed system will no doubt be affected by an evaluation of the matters referred to in the preceding two paragraphs.

6. The Council established a subcommittee consisting of Mr G. K. Kelts, and Mr E. J. L. Tucker. That subcommittee consulted with the Departments of Business and Consumer Affairs, and Industry and Commerce, the Industries Assistance Commission, and a number of outside persons and bodies. The views expressed have been taken into account in this paper and are referred to where appropriate.

PART II — QUANTITATIVE RESTRICTION DECISIONS

7. For protection policy purposes, Cabinet may decide to impose quantitative restric­ tions on the importation of designated goods.

8. The process by which a decision is made to impose a control or ‘quota’ and to issue quota to interested eligible importers includes the following steps:

• Following representations from producers or manufacturers seeking protection from import competition, the Minister for Business and Consumer Affairs (on advice of the Minister for Industry and Commerce, or for Primary Industry, as appropriate) may refer the matter to the Industries Assistance Commission, the Tempory As­ sistance Authority, or the Textile Authority (a division of the Industries Assistance Commission) for inquiry and report on the protective needs of the industry concerned.

• The report is examined by the Standing Committee on Industries Assistance (comprising representatives of a number of departments) and a Cabinet submission is prepared on the basis of the Committee’s report.

• Cabinet decides on the major elements of the controls, including whether ‘fine tuning' (see below) is to apply, and the extent and nature of the controls are announced in a Ministerial statement; the administrative detail is then set out in a departmental notice which invites importers who consider themselves to be eligible for quota to supply relevant information.

• The Department of Industry and Commerce or Primary Industry determines the nett import ceiling (i.e. after allowance for any anomalies reserve scheme [see paragraph 12]etc.) available for allocation by the Department of Business and Consumer Affairs.

• The Department of Business and Consumer Affairs allocates quota among the interested eligible importers.

• The ‘fine tuning’ committee, consisting of one representative from industry and from the Departments of Business and Consumer Affairs and of Industry and Commerce, recommends to the Ministers any final variations to the nett import ceiling, given any changes in industry conditions that may have occurred relating to the factors underlying the determination of the nett import ceiling by up to + or - 10%, and in practice has chiefly been applied in the major areas of quota control, which cover clothing, textiles and footwear).

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• The Department of Business and Consumer Affairs recalculates the nett import ceiling to take account of ‘fine tuning’ and allocates any additional quota among eligible importers.

• ‘Special quotas’ (see paragraph 14) may be granted in certain circumstances by the Minister for Industry and Commerce, and allocated.

Quantitative restrictions may be implemented either by:

• Tariff quotas. Under a tariff quota system, a tariff structure is established with a substantive tariff item incorporating a rate of duty together with a ‘by-law’ item for the same goods which allows for concessional entry at lower rates or free from duty. Imports up to a specified amount in the given period (which constitutes the quota element of the system) are permitted entry at the concessional rates. Payment of

the higher or ‘penalty’ duty thus provides disincentive to importation of quantities in excess of quota.

or

• Import licensing. Under the customs (import licensing) regulations, all imported goods are subject to licensing unless they have been excepted by the Minister. The Minister has made a general exception from the requirement of licences. Licences are required only in the case of designated goods to which quantitative restrictions apply and in the case of certain second-hand equipment (the criterion for issue of these latter licences is that no suitable locally produced eqivalent is reasonably

available — discussed below, paragraph 72).

Licensing is used in preference to tariff quotas where an absolute restriction to a particular quantity is desired (goods imported without a licence are prohibited imports and subject to seizure).

9. Existing Appeal Rights. An appeal to the Administrative Appeals Tribunal is currently available where duty on imported goods has been paid under protest pursuant to section 167 of the Customs Act. An appeal is also available to the Adminsitrative Appeals Tribunal against refusals to refund duty under Customs Regulation 128B. These appeal rights avail an importer affected by a quantitative restriction decision only if the question is whether the particular goods he is seeking to import fall within the controls. They do

not provide a means whereby any of the decisions associated with the imposition or allocation of quotas may be challenged (see Re Zimmax Trading Co. Pty Limited and Department of Business and Consumer Affairs [decision of 8 January 1979] at page 6).

1. Types of Quotas

(a) ‘Normal Quotas’ 10. A nett import ceiling level (see paragraph 5) is imposed for allocation among importers who imported goods of the type specified in the decision to impose quotas during a nominated ‘base’ period. A range of factors may affect the amount of quota to which an importer is entitled, i.e.:

• the quantity of goods which he entered for home consumption during the base period; • the quantity of goods entered for home consumption under ‘by-law’ in the base period; • whether all importers with performance in the base period apply for quota; • Whether any special provision is to be made for goods in transit or in bond or covered

by an irrevocable letter of credit at the date the control is imposed; • whether goods from designated countries are exempted from controls; • whether reserves are set aside for imports from particular countries (e.g. New Zealand under NAFTA);

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• whether a special reserve of quota has been established for anomalies (discussed below, paragraph 12) as in the case of certain clothing, textiles and footwear.

A detailed breakdown of the matters which must be ascertained or decided in the process is set out in Attachment 1.

11. The administration of quantitative restrictions is currently subject to review by the Department of Business and Consumer Affairs. In a recent announcement the Minister raised the possibility of abandonment of current allocation measures in favour of the sale of quotas, although he indicated that there would be no change during the currency of existing arrangements (Commonwealth Record, 1 January 1979, p.3). In spite of possible changes to the system, the Council is of the view that proposals for review should still be formulated, since the nature, timing and extent of these changes are still uncertain, and because of the value of work in this area as a precedent for review of other quota allocation decision-making processes. A further view will be necessary if these changes are introduced.

(b) Anomalies Reserve Scheme 12. A fixed proportion of the quota ceiling for certain textiles, clothing and footwear imports is reserved for allocation in cases involving ‘anomalies’ (mainly for off-shore ventures). The criteria upon which allocation used to be made are not public, nor have they been revealed to the Council. A recent announcement has advised that those certain criteria will no longer be applied, and that importers who did not receive an allocation under the anomalies reserve scheme in the first eighteen months of the scheme will not be eligible to apply for an anomalies reserve quota in the remaining twelve months of the scheme (Commonwealth Record, 22 December 1978, p.1704). Allocations are made by a committee of Ministers after receiving the report of a committee consisting of representatives from a number of departments and an independent chairman.

(c) Market Sharing-based Quotas 13. These quotas exist at present in the area of files and rasps and of completely built- up motor vehicles. Eligibility to import files and rasps is based upon the importer having purchased locally made files and rasps. An import licence is granted to eligible importers to purchase a given number of goods in proportion to the local goods purchased. Motor vehicle quotas falling within this class of quota are based, in contrast, on the numbers of locally produced units sold in the market as a whole. Unlike ‘normal quotas’ there is no predetermined nett import ceiling. The number of units permitted to enter Australia depends on the volume of sales of locally produced goods. Other market sharing schemes operate by ‘by-law’ without there being any quota element involved. Examples are porcelain insulators, certain primary products, and the local content plan for motor vehicles. These latter schemes will be considered in the context of by-laws (see paragraphs 73, 76-77).

(d) ‘Special Quotas’ and other Quota Control Decisions 14. Generally, quota categories are expressed in terms of the tariff or statistical keys, which allows for the collation of import performance data. In some cases, because of this method of definition, certain products, usually of a specialty type, are covered by quota categories when their import is not intended to be constrained because they are

considered not to be directly competitive with local production. There may also be situations where goods not intended to be covered by the quantitative restriction become covered because of:

• the grant or revocation of a ‘normal criteria by-law’ (see paragraph 44); or • a change to the content of a tariff item.

This situation may be dealt with in two ways. Cabinet decisions covering quota arrangements usually set out the circumstances in which ‘special quota’ may be authorised in relation to such products. These decisions at times also specify other circumstances in which special quota allocations may be authorised. Alternatively, the Minister for Industry and Commerce, in consultation with the Minister for Business and

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Consumer Affairs, may decide that quantitative restriction arrangements should not apply in respect of certain goods which were not intended to be the subject of controls (either because of problems of definition or because the matter had not been raised when the Cabinet decision was taken). The distinction between the above alternatives is on the one hand Ministerial determinations to grant licences or ‘by-law’ entry automatically and without a ceiling, and on the other a formal change in the decision imposing quantitative

restrictions or in the tariff item or statistical key concerned.

15. In order to overcome rigidities in the system, Cabinet may permit the transfer of quotas between importers within individual categories of goods subject to restraints. No conditions have been attached to the transfer of quota entitlement within such categories.

16. Import licences are required in the case of second-hand materials-handling equip­ ment and four-wheel drive vehicles. The criterion for granting licences is whether there are suitably equivalent reasonably available Australian-made new goods. Since this criterion is the same for ‘normal criteria by-laws’, these decisions will be considered in Part III (paragraphs 72 and 75).

2. Proposals for Review of ‘Normal Quotas’ (a) Approach to Review 17. The decision-making process involves a number of elements, some of which describe the parameters by which the decision to establish quantitative restrictions is to be given effect, and others are applications of those parameters. The Council considers that in principle, decisions describing the parameters of quantitative restrictions in

respect of an item are the responsibility of Government and should not be reviewable. Decisions in application of the parameters are, on the other hand, in principle justiciable by an independent review body. However, the boundary between the two classes of decision is not clear-cut, nor is it practicable to establish criteria which in any particular context will clearly identify any particular decision as belonging to one class or the other. The Council considers that the only practicable approach is to divide the decisions which are, or may be, required into two categories, ‘reviewable’ and ‘non-reviewable’. In

Council’s view, the ‘non-reviewable’ decisions would be those which described the parameters. All other decisions would be reviewable.

18. In considering which decisions fall into each category, the following aspects appear relevant: • Decisions as to the nature and extent of assistance to Australian producers involve questions of protection policy and the management of the economy and are not

amenable to tribunal review.

• Decisions on fundamental matters such as the goods to be subject to restrictions, the volume of imports to be permitted, the period of restriction and the means by which eligibility to import is to be determined are generally made by Cabinet.

• Cabinet decisions generally tend to describe the parameters of establishing quan­ titative restrictions in respect of an item; departmental decisions are usually applications of those parameters; decisions by Ministers (other than Cabinet de­ cisions) may fall into either category according to circumstances.

(b) Reviewable Decisions 19. In the light of these considerations the Council considers the following decisions should not be reviewable, viz. those which determine:

(a) the categories of goods to be subject to controls; (b) the total volume of permitted imports; (c) the period of restriction;

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(d) the method of criteria by which eligibility to import is to be ascertained; (e) whether import licensing or tariff quota is to be used; (f) any provision for exemption from controls of goods from specified countries; (g) exemption for specified goods, goods entered under ‘by-law’ etc.

(h) the provision for and size of quota to be held for allocation in cases involving anomalies (so far only applied to certain clothing, textiles and footwear com­ modities) or for other reasons (e.g. NAFTA); (i) the treatment of goods in transit, in bond or under an irrecoverable letter of credit

at the time of introduction of quantitative restrictions; (j) whether and when ‘special quota’ will be allocated; (k) whether and by whom global quotas will be adjusted should shortages of supply of goods in question occur (as distinct from the implementation of that decision

if implemented otherwise than by Cabinet decision); (l ) in the case of tariff quota, what level of penalty duty is to be applicable to goods imported in excess of, or without, quota entitlement; (m) whether ‘fine tuning’ is to apply; (n) the period of validity of quota instruments; (o) whether transfers of quota are to be permitted.

20. The Department of Industry and Commerce has suggested that a further category of non-reviewable decisions should be included, namely, ‘any other matters specifically mentioned in Cabinet’s decision’. This suggestion is not favoured by the Council. The justification for regarding any decision as unreviewable lies in the character of the substance of the decision. The identity of the decision maker is irrelevant to that decision. It may be, however, accepted that in the context of import controls Cabinet decisions have tended to relate to matters which should be unreviewable.

21. The Department of Business and Consumer Affairs has suggested two further categories of non-reviewable decisions, namely decisions whether to grant (a) an extension of the period of validity of quota instruments and (b) an extension of the time for application of quota. The primary reason advanced as to the former was that an extension would take the validity of the instrument through to the next quota period, so permitting more goods to be imported in that period than had been determined as appropriate by the Government. In the case of imports of motor vehicles this could trigger off an increase of duty across the board. It should be noted, however, that this objection suggests equally that extentions should never be granted. The objection is not pursuasive of the conclusion that there should be no review. As to the latter, it was suggested that extensions would make it very difficult for the deadlines in allocating quota to be met. Two further reasons application to both decisions were advanced. It was said that the Administrative Appeals Tribunal would be likely to grant extensions too readily and without regard to the problems giving rise to the primary reasons advanced above. The Council does not accept this. If the Department puts its case fully to the Tribunal there is no reason to suppose that the Tribunal would decide upon a wrong basis or in ignorance of the implications of its decision. It was further suggested that review is inappropriate because the Minister is moving to make extensions more difficult to obtain or is eliminating extensions. It was suggested that the Minister may prefer to have no discretion to extend time than to have exercised of his discretion reviewed. The Council is of the view that in principle where there is a power to grant extensions of time, there should be review. There is considered to be no valid reason why there should be a discretion to extend times in import quota matters which is not reviewable.

22. All decisions other than those set out in paragraph 19 should, in the view of the Council, be reviewable. The Department of Industry and Commerce has suggested that there may be decisions analogous to those in paragraph 19 which have not been included and that it would be better to list the reviewable decisions and make all others non- reviewable. The Council does not favour this suggestion, but considers that adminis­

trative decisions which have a significant impact upon individuals or businesses should

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be reviewable unless they are non-justiciable or otherwise inappropriate for review. Where there is a bundle of closely related decisions forming one general area, the proper approach is considered to be to make the whole area reviewable subject to the exclusion of particular decisions. The Council does not regard the decisions in paragraph 19 as exhaustive, and should there subsequently be other decisions which are properly

analogous to those decisions the Council would not oppose their inclusion in the non- reviewable category.

23. It is estimated that this appeal right would give rise to a number in excess of twenty appeals per annum depending on the number of areas subject to quotas and the findings of the review body in the early cases.

(c) Legislation for Review Rights 24. At present quota decisions are not taken pursuant to a particular statutory provision; rather, decisions to apportion quota are given effect by the use of the power either to grant an import licence (regulations 11 and 12 of the Import Licensing

Regulations) or to make a Ministerial determination under section 273 of the Customs Act. In order to provide for review of appropriate sub-decisions, it would be necessary to provide a legislative basis for quota decisions themselves.

25. Review arrangements proposed would be best given effect by providing for review of a decision in respect of an application for quota allocation, but excluding those matters set out in paragraph 16 as grounds for review.

(d) The Review Body 26. Because of the significance of the decisions involved, it is desirable that there be independent tribunal review. The two options are:

(a) the Administrative Appeals Tribunal; or (b) a specialist tribunal (perhaps located within or associated with the Department but not subject to its direction), possibly with a right to apply to the Administrative Appeals Tribunal for review of the specialist tribunal’s decisions.

27. Option (a) is preferred for several reasons. Firstly, the Administrative Appeals Tribunal currently exercises jurisdiction in respect of a number of Customs matters. Secondly, It is doubtful whether there would be a sufficient volume of quota appeals to justify the establishment of a new tribunal. Thirdly, the Administrative Appeals Tribunal

is established with the object of its possessing jurisdiction over all but exceptional areas of appeal, and there is no sufficient reason to place quota control review otherwise than in the Tribunal. It may be, however, that proposals emanating from the Council’s general review of Customs and Excise decisions might lead to a situation where the second reason

no longer applies. In that case it will fall to be considered whether the Administrative Appeals Tribunal should hold primary jurisdiction in high volume areas of decision making, and, if not, what relationship it should have with specialist tribunals in such areas. The latter issues arise also in other contexts, such as Social Security appeals.

(e) Evidentiary Problems in Quota Reviews 28. Entitlement to quota is currently established by evidence of the quantity of goods of the relevant class entered during a base period. A problem arises in that the tariff item or statistical code ascribed to goods by the importer at the time of entry might

have been incorrect, or the code might have been varied in content since the time of entry with the consequence that the customs entry documents will not suffice as evidence. In either case, the actual goods or other sufficient evidence of their nature (which may be difficult to obtain after the passage of time) will be required. This evidentiary difficulty

might be alleviated to some extent with increased publicity of the importance of correct entry details, with the result that disputes as to classification of goods will arise more often at the time of entry. Resolution of disputes at that stage would reduce the likelihood

of incorrect assessment of quota entitlement.

29. The Department of Business and Consumer Affairs has expressed concern that it might be placed in the position of having to justify the correctness of the recorded

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entry details rather than that the applicant should prove that they were in error. A possible solution might appear to be to provide legislatively that the applicant bears the onus of proof. An applicant before the Administrative Appeals Tribunal bears no onus of proof as applicant, though there remains the 'natural' onus of proof on any person who advances a proposition or who has the material necessary for proof in his own possession

(Re Ladybird Childrens Wear Pty Ltd and Department of Business and Consumer Affairs (1976) 1 ALD 1 at 5). In the view of the Council, the onus of proof will fall ‘naturally’ upon the applicant, and the situation of concern to the Department will not eventuate. Whilst problems of evidence may exist, some bodies representing importers which were consulted on this report have doubted that they would be a serious problem. Legislation on an onus of proof is considered to be unnecessary.

(f) The Appropriate Remedy 30. A decision of a review body to grant quota entitlement or increase a quota entitlement previously granted must be capable of implementation without causing unacceptable dislocation by the consequent reapportioning of shares of the other quota holders and without breach of the level of protection sought by the quantitative restrictions. The Council has identified a number of possible remedies which would not have these effects, none of which on its own would provide an answer in all situations. The Council proposes that all should be available as alternative remedies, since, depending on the circumstances of a particular case, one remedy might provide greater scope to accommodate a reapportionment decision than would the others. It is envisaged that the Tribunal ascertain quota entitlement and refer back to the Department the making of provision for implementing that decision (see also paragraph 39).

31. The possible remedies are:

(a) an increase in the size of the nett import ceiling to accommodate the grant of quota entitlement to a successful applicant, or an increase in his share, so as to avoid a reapportionment among quota holders;

(b) management of the quota allocation and review process so that any adjustment could be made early enough to be accommodated at or before the stage of ‘fine tuning’ where there is ‘fine tuning’; (c) creation of a ‘quota appeals reserve’ involving the reservation of a proportion of

quota for allocation by a certain date (possibly the date of ‘fine tuning’ where there is ‘fine tuning’), taking into account any allocation appeal decision; (d) adjustment of future quotas to take account of any allocation review decision by conferring a notional import performance in the quota period in issue and making

an allocation in a future period of the amount assessed by the Tribunal together with the quota the applicant would ordinarily be entitled to in that future period.

Where there is an adjustment of quota entitlement for the period in respect of which the review is made, it is not envisaged that this would result in a reduction of the quota for that period held by other importers.

32. The feasibility of each of these options was discussed with officers of the Depart­ ments of Business and Consumer Affairs, and of Industry and Commerce, and with the Industries Assistance Commission.

33. Remedy (a) is of limited value. Quota ceilings are based on a judgment of the desirable level of imports and Cabinet is unlikely to countenance any significant increase in ‘quota’ above that initially determined. If successfully appeals are few or involve only small quantities, accommodation by increasing the ceiling may be feasible.

34. Remedy (b) may be an appropriate remedy where cases can be resolved early and where there is ‘fine tuning’. The following timetable would apply for a quota period of 1 January to 30 June 1980 with a ceiling of 100 000 units for all 1980.

1 June 1979 — allocation of 40 000 units notified to entitled importers and in the Commonwealth Gazette.

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1 November 1979 — following deliberations of ‘fine-tuning’ committee, further units may be allocated among entitled importers. If the committee recommends no variation to the ceiling, then 10 000 units will be available, but if variation is recommended this may result in any amount from no units to 20 000 units

becoming available.

It would be possible for a successful applicant to have his entitlement accommodated at the ‘fine-tuning’ stage where his application has been determined in time and there is sufficient lead time to order the goods and have them delivered within the quota period. Only if the aggregate of additional units granted by the Administrative Appeals Tribunal exceeded the number of units available for allocation after ‘fine tuning’ would another

remedy have to be availed of. In the example above, applications for review made to the Administrative Appeals Tribunal could be lodged by 28 June, and statements of reasons and relevant documents lodged by 14 July, and, allowing three weeks notice

of setting down the applications for hearing, hearings could commence in mid-August. This should leave adequate time for decisions to be rendered.

35. It has been suggested to the Council by the Departments and the Industries Assistance Commission that the ‘fine-tuning’ allowance should not be used for accom­ modating successful appeals. It is said that since the ‘fine-tuning’ mechanism is applied solely to ensure that the protection policy is attained, any additional units emerging from

it should be allocated solely pro rata on the amounts previously allocated. The principle of allocation suggested in this argument does not, however, follow from the philosophy of ‘fine tuning’. So long as the ceiling as varied by the ‘fine-tuning’ committee is not departed from, it is open for the ‘fine-tuning’ allocation to be used, firstly, to accom­ modate successful applicants, and, secondly, for pro rata allocation among all entitled

importers. At a point in time at which it may be anticipated that all relevant appeals will have been determined, an amount of quota may remain unallocated, and indeed, it may be undetermined whether an amount will be allocated. No importer will have a

vested interest in any proportion of ‘fine-tuning’ quota. There may therefore be an amount of quota which may properly be used to implement the Tribunal’s decision.

36. Remedy (c) differs from (b) in that it requires a portion of the quota ceiling to be set aside from the first allocation (1 June 1979 in the above example), and there is no clear terminal date for allocating quota unallocated to successful applicants, unless the date for ‘fine tuning’ (if there is to be or had there been 'fine tuning’) is used. There are the following objections to remedy (c):

• The problem of determining the size of the reserve.

• The creation of a reserve within the quota ceiling with no clear terminal date on its being allocated would mean that the final orders would be delayed. This would exacerbate existing problems of uncertainty as to final entitlement arising in the case of the anomalies reserve scheme and ‘fine-tuning’ adjustments.

• There might still be an unallocated portion of the reserve after conclusion of review which would have to be distributed pro rata. The Department of Business and Consumer Affairs has suggested that this may require some tens of thousands of new Ministerial determinations or licences for quantities as small as one item of

little value. However, this does not appear to have been a problem with ‘fine tuning’ and there is no reason to assume it would be a problem in this option.

37. Remedy (d) is the one most easily applicable but still raises certain problems:

• An applicant quota holder might suffer loss resulting from the delay in implementing a reallocation decision.

• Other quota holders, whose entitlement will be reduced (because of the appeal) during the future period by comparison with their entitlement during the relevant base period, would be disadvantaged, and this might be particularly significant where there has been a transfer of quota.

• Quota arrangements may not be applicable during a future period.

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38. In some cases it might not be practicable to employ any one or combination of the above remedies for providing quota to a successful applicant. In other cases every remedy might still leave the successful applicant unfairly disadvantaged. It has been considered whether, in these circumstances, monetary compensation might be an appropriate remedy. Such compensation would relate to, e.g. penalty duty paid and loss of profit because the importer is unable to obtain any quota in an import licensing scheme

by reason of all quota having been already distributed. Other loss, e.g. arising from delays, or having to make several buying trips (but excluding the cost of litigation itself) might also be compensable. Major difficulties beset implementation of compensation as a remedy. Should compensation be a right, it is likely that the determination of the proper amount of compensation would be an exercise of the judicial power of the Commonwealth and so beyond the competence of the Administrative Appeals Tribunal Tribunal review of ex gratia payments, or the creation of an intermediate status for compensation decisions equally poses difficulties. For those reasons, it is inappropriate to recommend that provision be made for compensation as a remedy. However, the Council considers that in principle monetary compensation should be available, and would be in favour of it if the constitutional problems could be overcome. Further, the Council draws the attention of the Attorney-General to the desirability of making ex gratia payments where the remedies considered above leave a successful applicant unfairly disadvantaged.

39. A decision regarding the manner in which a remedy should be effected is one which is of considerable significance for departmental management of the quota allocation process and for this reason should generally be taken by the administration rather than the Administrative Appeals Tribunal. This could be achieved by the Tribunal determining the appropriate entitlement of the applicant, and remitting the matter to the Minister with, at the Tribunal’s discretion, a recommendation as to the appropriate manner of giving effect to the entitlement, taking account of the need to mitigate the damage suffered by the importer by virtue of the incorrect primary decision. The resulting decision of the Minister would not, however, be reviewable.

(g) Procedure for Review 40. Assuming that the above arrangements were implemented, it should be noted that considerable pressure would exist for an early resolution of applications for review in order to maintain the greatest flexibility of remedy. To promote this, it would be desirable for section 29 of the Administrative Appeals Tribunal Act to be amended as to this jurisdiction to provide that the time for lodgment of an application for review shall commence from the notification of allocation in the Gazette (i.e. be limited to 28 days therefrom regardless of any individual notification or request for reasons under section 28 of the Act). It would be possible for the Administrative Appeals Tribunal to order its business so as to determine all cases in relation to a particular quota period for a particular item as one proceeding or as a series of proceedings one after another.

(h) Internal Review 41. A system of prompt internal reconsideration of departmental decisions as a preliminary to external review is generally desirable to ensure that costly review resources are not needlessly expended. In the case of quota control decisions, an internal review arrangement, providing the potential for a speedier resolution of a dispute, is particularly important in view of the problems of reapportionment discussed above. However, because of the significance of time factors, and the opportunity available to the Department to revise its decision after lodgment of an appeal with the Administrative Appeals Tribunal, it is suggested that internal review should not be a prerequisite to an application for review.

42. On any internal reconsideration of a decision, the powers of the reviewer would of course need to be the same as those associated with external review arrangements suggested above, i.e. if the option of compensation were to be available on external

review it would likewise need to be open at the internal review stage.

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3. Proposals for Review of other Quantitative Restrictions Decisions (a) Market Sharing-based Quotas 43. The legal situation here for review of decisions is essentially no different from that for ‘normal quota’ decisions. It does not appear to be necessary for there to be a separate statutory basis for the decisions; they may be subsumed to the proposed provision

relating to ‘normal quota’ decisions (see paragraph 24). The description of matters not available as grounds for review (see paragraph 25) should be so drawn as to be applicable to the equivalent matters in these decisions.

(b) ‘Special Quota’ and other Quota Control Decisions 44. ’Special Quota’ (paragraph 14) involves, of necessity, the incidence of protection for Australian industry, albeit that the incidence of protection has differed from that originally intended because of a change in tariff classifications occurring otherwise than

pursuant to the particular quota control decision concerned or because particular goods were not intended to be covered by the quantitative restriction. The Department of Industry and Commerce has suggested that there might be difficulties in review arrangements because, pursuant to section 23 of the Industries Assistance Commission

Act 1973, there might have to be a reference to the Industries Assistance Commission, the Temporary Assistance Authority, or the Textiles Authority, before corrective action can be taken. These difficulties are technical problems of primary decision making, and need not preclude review.

45. The two methods of dealing with the situation discussed in paragraph 11 involve: (a) a Cabinet decision describing the parameters of when ‘special quota’ is to be allocated, or Ministerial determination on when quantitative restriction arrange­ ments are not to apply;

(b) ascertainment that the requisite conditions for ‘special quota’, or for grant of licences or ‘by-law entry’ have arisen; and (c) allocation of quota, or grant of licences or ‘by-law’ entry.

Decisions covered in (a) are contained in paragraph 16 as unreviewable matters. The Council regards decisions made in (b) and (c) as matters which should be reviewable. The legislative structure for review rights set out above in paragraphs 24 and 25 is therefore appropriate for these decisions.

46. Transfer of quota (see paragraph 15) as presently administered does not require review rights. The decision whether to permit transfer is unreviewable (see paragraph 19(o)), and there have been no restrictions attached to the transfer of quota entitlement

within individual categories of goods subject to restraints. Should restrictions on individual transfers be imposed in the future, the application of those restrictions will automatically and properly become reviewable under the legislative scheme proposed in paragraphs 24 and 25.

(c) Anomalies Reserve Scheme 47. Given the recent change to this scheme (by which allocation is understood to be an arithmetical function without decision making in accepting or rejecting applications) outlined in paragraph 12, it would be inappropriate for the Council to propose review arrangements. However, the Council is of the view that the criteria governing adminis­ trative discretions should not be kept secret unless there is some pressing reason, such

as defence or security requirements, for doing so. Should any analogous anomalies reserve scheme be introduced in the future, or should the existing scheme revert to the criteria for entitlement previously obtaining, then:

(a) There should be a right of review of decisions taken under the Scheme, and for this purpose.

(b) The criteria for entitlement should be properly established and made public.

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PART III — ‘NORMAL CRITERIA BY-LAW’ DECISIONS

48. The decisions in this and the following part operate to remove or reduce the protection provided by the tariff. They may be implemented by either the making of by-laws under section 271 of the Customs Act or by Ministerial determinations under section 273.

1. The Decision 49. Under Item 19 of Schedule 2 of the Customs Tariff, ‘by-laws’ may be made prescribing goods ‘a suitable equivalent of which that is the produce or manufacture of Australia is not reasonably available’ (here ‘SERA’) with the result that these goods may be entered duty free. The interpretation and application of SERA may affect the extent of protection granted to local industry.

50. An importer wishing to gain ‘by-law entry’ for a certain class of goods approaches the Department of Business and Consumer Affairs and is required:

• to complete an application form; where an overseas order has been placed, he must lodge the application within a reasonable time thereafter; and • to provide particulars requested in the form, principally, evidence that a suitable equivalent to the goods is not reasonably available from local manufacturers (usually

in the form of correspondence with local manufacturers concerning their ability to produce the goods in question).

In considering an application, the Department relies upon its knowledge of industry, contacts potential manufacturers and often arranges conferences of importers and manufacturers in order to resolve issues. Officers liaise with importers and manufacturers and give guidance on the application of ‘by-law’ criteria. Decisions to permit ‘by-law entry’ are generally made in the context of individual applications, but the decision, once

made, is applicable to every entry of goods of the class concerned no matter by whom they are entered. If the class of goods can be expressed sufficiently clearly for legislative purposes, then the ‘by-law’ is included in the Consolidated By-law References. This is included in the Department’s ‘working tariff’ so that every person importing goods subject to that ‘by-law’ may enter his goods at the preferential rate, administratively just as if the rate was the rate prescribed in the tariff. Where there is no Consolidated By-law

Reference, an importer must apply to the Department for an authorisation which will be produced when entering the goods. This authorisation is given automatically. All ‘by­ law’ decisions are published in the Commonwealth Gazette.

51. The Department in some circumstances recommends to its Minister that a ‘by­ law’ reference be given to the Industries Assistance Commission. This occurs in two situations: • where there is a dispute between a manufacturer and importer which the Department

is unable to resolve; • where the Department seeks guidance as to the application of SERA. In addition, the Industries Assistance Commission during its normal references on industry assistance may consider the desirability of granting or cancelling ‘by-law’. It may of its own motion inquire into and report on ‘by-law’ matters (paragraph 24(3Xb) of the industries Assistance Commission Act 1973). Given the significance of the decisions being made there will always be a need for some form of independent review. There is at present no right to have the Industries Assistance Commission consider a

‘by-law’ matter, hence the present process should not be said to constitute an adequate system of external review. The Department of Business and Consumer Affairs regards its internal review process as ‘both fair and realistic’, especially given the existing potentiality for Industries Assistance Commission review, but does not oppose a right to have ‘by-law’ decisions reviewed by the Commission.

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2. Proposals for Review 52. The Department of Business and Consumer Affairs exercises a discretion:

• to refuse to consider applications for by-law on the basis of: (i) unreasonable delay in the lodgment of an application; or (ii) inadequate provision of particulars; • to grant or refuse a by-law after application of the SERA test.

(a) The Character of the Decisions 53. The making of a by-law under section 271 of the Customs Act is in form an exercise of a delegated legislative power and hence not reviewable by the Administrative Appeals Tribunal and strictly not within the Council’s functions under section 51 of the Adminis­ trative Appeals Tribunal Act. However, by-laws are in practice rarely used in this area of decision making. Ministerial determinations under section 2-3 of the Customs Act are the usual means of implementing ‘normal criteria by-law’ decisions. Ministerial

determinations are not legislative in form, but may arguably be legislative in character. The interpretation and application of SERA is, however, administrative in procedure and character. The decision whether to use section 271 or 273 is essentially an internal management decision of the Department and hence not appropriate for review.

(b) Internal Review 54. Each year the Department receives 10 000-12 500 applications for ‘by-law’ from importers or from local manufacturers wishing to import raw materials, supplies and other requirements of manufacture. Of these, 85% to 93% are approved. Of those refused, about 400 ‘appeal’ to the Department or Minister. Where applications are approved, there is a much smaller number of objections by manufacturers whose level of protection

is thereby affected. Similarly, a smaller number of objections to the revocation of ‘by­ law’ are received. The Department has recently introduced an improved system of internal review to deal with refusals to grant ‘by-law’ (see Attachment 2). The system has the

following features:

• Initial review by the original decision maker; if he does not accept the objection then it is dealt with by a ‘review’ section which consults with the operational area, at increasing levels in the hierarchy with the aim of reaching a consensus.

• A second request for review is dealt with in the review area, consulting if necessary with the operational area.

• A third request for review may be determined by the head of the operational area.

• Subsequent requests for review are dealt with by the next level in the hierarchy (there have been no such requests so far).

55. Statistics provided by the Department indicate that of those applicants obtaining an adverse decision initially or at any stage of the appeal process, about 30-45% take the matter further. Their success rate varies from 35% on the initial review to 15% on the third request, by which stage the number receiving an adverse decision is about

twenty.

56. The internal review procedures are characterised by an involvement of officers at a more senior level than the primary decision maker and a willingness to entertain a series of reconsiderations should the applicant so wish. The effectiveness of departmental arrangements in ‘filtering out’ dissatisfied applicants is demonstrated by the statistics

above. It is not certain what part attrition plays in the process.

(c) External Review 57. Refusal to Consider Applications. Decisions to refuse to consider applications for ‘by-law’ (paragraph 52) are based on straightforward issues. They do not concern protection policy. It is therefore recommended that these decisions should be reviewable by the Administrative Appeals Tribunal. Given the recommendations made by the Council

13

concerning review of the granting or refusal of ‘by-law’ (paragraph 63), this represents a splitting of ‘normal criteria by-law’ review jurisdiction. Refusals to consider applications for ‘by-laws’ are, however, discrete and the splitting of jurisdiction is unlikely to cause difficulties. It may be noted by way of analogy that the Administrative Appeals Tribunal

has jurisdiction to review extensions of time under the Patents Act 1952, although the substantive application is considered by another body.

58. Grant or Refusal of By-law. In respect of decisions granting or refusing to grant ‘by-law’, the following issues require resolution in considering external review arrange­ ments: (i) whether the powers of the review body should be recommendatory or de­

terminative (i.e. involving a power of substitution for the original decision); (ii) which body should undertake the review; (iii) the extent to which a right of review should be available.

59. (i) Powers of the Review Body. As mentioned in paragraph 49, the interpretation given to SERA may affect the extent of protection afforded to manufacturers concerned. Given the significance of protection policy decisions, it would not be appropriate to usurp the executive’s role by substituting an external review body with full power to impose its own decision. Apart from providing no review at all, the alternatives are a recommendatory review, or a determinative review with a power for the Minister to prescribe certain matters which are to be binding on the review

body.

60. The latter alternative would be feasible if the Ministerial directive were relatively specific, e.g. that no by-law is to be granted in respect of certain goods. However, a more general directive regarding an approach to be taken, e.g., that a restrictive attitude is to prevail in respect of certain goods, would present difficulties. Moreover, there would inevitably be cases where Government would still wish to retain the power to reject the review body’s decision in this area. It is therefore submitted that a recommendatory review should be available.

61. (ii) Review Body. Three options are available:

(a) review by the Administrative Appeals Tribunal; (b) review by a specialist tribunal (if such a tribunal were to be instituted — see paragraph 27); (c) review by the Industries Assistance Commission.

62. Application of the SERA test involves the following elements:

• the question of ‘reasonable availability’ of goods; • the question of product substitutability; • the question whether goods are the ‘produce or manufacture of Australia’.

While the above issues would no doubt be capable of resolution by tribunals suggested in options (a) and (b) the IAC is regarded as the most appropriate review body.

63. This choice of review body is largely dictated by the current role of the industries Assistance Commission. Given that the Industries Assistance Commission from time to time makes recommendations on ‘by-law’ matters in its normal references (see paragraph 51), there would be a potential for conflicting sources of authority on the application of the SERA criteria if another body were to be entrusted with a review role (see also paragraph 75). Moreover, in view of the protection policy implications of ‘normal criteria by-laws', it is desirable that the Industries Assistance Commission, the body with the broader protection policy involvement, should be the sole authority. The Industries Assistance Commission in addition already has a developed expertise in this area. It has been suggested that if proposals of this report are adopted, it may be desirable for ‘by-law’ review to be undertaken by particular members of the Commission established as a division of the Commission (as is the Textile Authority)

14

under section 19 of the Industries Assistance Commission Act 1973. The Council considers this a matter of internal administration within the Commission and therefore inappropriate for its recommendation, but sees no objection to this course being taken.

64. The role of the Industries Assistance Commission proposed here is consistent with its present advisory function. It is not envisaged that there would be such a substantial volume of reviews under this proposal as to work a qualitative change in the nature of its role.

65. (iii) Right of Review. Access to the Industries Assistance Commission could be:

(a) a right of review; or (b) subject to leave of the Industries Assistance Commission, the refusal to grant leave being reviewable by the Administrative Appeals Tribunal; or (c) subject to referral by the Minister for Business and Consumer Affairs, the refusal

to refer being reviewable by the Administrative Appeals Tribunal.

66. Option (a) has the disadvantage of possibly swamping the Industries Assistance Commission with appeals or at least straining its resources and making its role very much that of an appellate body. By analogy with this jurisdiction (if created) it might be argued that there should a right to a review of assistance levels generally. Furthermore,

it could be argued that the Minister, who it is proposed should have the right to reject the recommendation of the review body, should also have a role in deciding whether he wishes to seek that advice in the first place. Against this it could be said that despite

the recommendatory nature of the review, a right of review is still justified because of the benefits of a public and independent hearing.

67. Option (b) would provide a means of avoiding the problems for the Industries Assistance Commission in option (a) as well as avoiding the possibility that too frequent reviews by the Commission might cause financial hardship to a small manufacturer or importer. It would be necessary to establish criteria for the exercise of the discretion

to grant leave. Possible criteria are discussed in paragraph 69. A more fundamental problem arises from the provision of review of refusals to grant leave. This constitutes yet another link in an already lengthy review chain, and the financial hardship mentioned above is relevant. Furthermore, Administrative Appeals Tribunal review of the leave

decision may lead to a hearing of the substantive issues.

68. Option (c) presents the same difficulties as option (b). It is however, preferred over option (b) because it maintains the present relationship between ‘the Minister and the Industries Assistance Commission’ and eliminates the possibility that an application to the Industries Assistance Commission for leave might develop into a hearing on the merits (as sometimes occurs in analogous situations before courts).

69. Criteria for making a reference to the Industries Assistance Commission for review should be enacted. Given an existing satisfactory process of internal review, Industries Assistance Commission review is required principally to provide guidance on the interpretation of SERA and to ensure that there is an independent ‘check’ on the internal

review system. These elements give rise to two criteria for alternative rights of review:

(a) The matter involves an important principle of wide application.

(b) The applicant establishes an arguable case that the internal review process has been inadequate.

The Department of Business and Consumer Affairs suggested that consideration might be given to a further criterion based on the importance of ‘by-law’ to the applicant’s business. This is not favoured since it would not provide a readily ascertainable test and is unrelated to the purpose of introducing Industries Assistance Commission review.

70. As mentioned in paragraph 54, there are at present more than three levels of internal review. It is recommended that it should be a prerequisite to an application for Industries Assistance Commission review that the applicant has applied for internal

15

reconsideration and a decision adverse to his interests has been made on that reconsideration. It would be open to the Department to undertake further reconsideration when advising its Minister whether to give a reference to the Industries Assistance Commission.

(d) Bland Committee Recommendations 71. The Committee on Administrative Discretions (the ‘Bland Committee’) proposed that a person aggrieved by a ‘normal criteria by-law’ decision should have recourse to a General Administrative Tribunal with recommendatory powers, but that the Minister should have power to remove a particular case which raised sensitive protection policy questions from the Tribunal to the then Tariff Board (Final Report, paragraphs 83-84). The Council’s recommendations accord with those of the Bland Committee in respect of the proposed powers of the review body. However, the Council considers that because of the nature of ‘by-law’ questions it is not desirable to distinguish between review bodies on the basis of ‘sensitive’ protection issues.

PART IV — OTHER ‘BY-LAW’ DECISIONS

1. Types of Decisions (a) Import Licensing for Used Goods 72. The Customs (Import Licensing) Regulations are also used to prohibit the import of used goods where suitably equivalent new goods are reasonably available from Australian manufacturers, and protection cannot be provided adequately by the tariff. They are at present used for this purpose in the case of second-hand material-handling equipment and four wheel drive vehicles. The decision-making process is essentially similar to that applying in the case of ‘normal criteria by-laws’ (see paragraphs 49-51) though it results in the granting or refusal of a licence rather than the making of a

Ministerial determination or by-law.

(b) ‘Policy By-laws’ 73. In addition to ‘normal criteria by-laws’, ‘by-law entry’ of goods is employed to give effect to a number of government policy decisions. These involve the granting of ‘by­

law’ entry when certain conditions have been met. An example of one class of these decisions is that goods specially designed for use by the deaf, dumb, or blind, and imported by public institutions having the care of such persons, are afforded duty-free entry. A second class of decisions relates to protection for primary products, e.g. Australian tobacco or cotton, New Guinea coffee or plywood. In this class, a foreign government or an industry group in consultation with the Department assesses whether the crop has been or is likely to be fully purchased and the Department then issues ‘by-laws’ to permit duty-free or reduced duty entry for imported products. A third class of decisions is represented by the local content plan for motor vehicles.

(c) ‘Definitional By-laws’ 74. ’By-laws’ have been used to define tariff items. Although the introduction of the Brussels nomenclature has led to a reduction of this practice, ‘definitional by-laws’ are still made on occasions. Examples are kitchen carpets and dictating machines.

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2. Proposals for Review (a) Import Licensing for Used Goods 75. These decisions are discussed in paragraph 72. In principle, it would appear to be inappropriate for the Administrative Appeals Tribunal to have jurisdiction over the SERA criteria when an import licence is in issue, while the Industries Assistance Commission has jurisdiction in all other situations (see paragraph 62). However, it would

not be practicable to separate these decisions from other import licensing decisions unless licences based on SERA are given a specific legislative basis. The Council recommends that this should be done and that the Industries Assistance Commission should have jurisdiction to review decisions under that power in the same manner as it is proposed it should review ‘normal criteria by-law’ decisions.

(b) ‘Policy By-laws’ 76. These ‘by-laws’ are discussed in paragraph 73. They range widely in character, purpose, effect, and the procedure which leads to their being made. In consequence, different classes of ‘by-laws’ might appear to require different forms of review or no review, e.g. a ‘by-law’ made following consultation with the Papua New Guinea Govern­ ment on the coffee crop may be considered to be unsuited to review, but the decision to make a ‘by-law’ in the local content plan for motor vehicles may give rise to justiciable

issues. It would not be practicable to separate these classes legislatively so as to facilitate review rights for some classes only; all policy ‘by-laws’ should be treated alike. The Department of Business and Consumer Affairs has submitted that there is no scope

for disagreement on determinations implementing these “ by-laws” (and hence no scope for review) since the Department acts with the agreement of interested parties or in reliance on the facts put forward by them. In the local content plan for motor vehicles, the Department is of the view that the. likelihood of a company seeking review is too

remote. The Department of Industry and Commerce is of the view that there should be no review of these ‘by-laws’ since, as their name suggests, they are matters of policy.

77. The Council notes that if ‘policy by-laws’ are to be unreviewable, it will be necessary to provide a separate statutory basis for them distinct from ‘normal criteria by-laws’. While this could be done, the Council does not favour it and recommends that ‘policy by-laws’ should be reviewable in the same manner as ‘normal criteria by-laws’. In so

far as the Department of Business and Consumer Affairs submission that there is no need for review is based on the proposition that it accepts the facts put forward by the interested parties, the submission rests on Departmental practice only. Refusal of ‘by-law’ can have substantial effects on a business. If the Departmental practice continues then there might be no applications for review. If the Departmental practice

changes, then it would be unfortunate if fresh legislation were needed to confer the desirable review arrangements. ‘Policy by-laws’ should, therefore, be reviewable in the same manner as ‘normal criteria by-laws’.

(c) ‘Definitional By-laws’ 78. The Council considers that the making of these ‘by-laws’ (see paragraph 74) is a legislative act and should not be reviewable. However, questions may arise concerning whether the ‘by-law’ correctly defines a tariff item, and whether specified goods would, if imported, receive a particular classification in the light of the ‘by-law’. These questions could be resolved after importation by means of the existing rights of review. But it may

be desirable to provide review of classification in advance of import. The Department has the practice of issuing tariff classification notices upon request of an importer who can provide a sufficient description of the goods he wishes to import. These notices are not legally binding on the Department but in practice are not departed from to the

detriment of an importer when the goods are in fact entered for home consumption.

79. The present review mechanism is available to the importer to obtain an interpreta­ tion of a ‘by-law’ by appeal to the Administrative Appeals Tribunal against duty levied on goods when imported. However, there is the obvious problem that Tribunal interpreta-

17

tion cannot at present be obtained in advance of importation. Furthermore, it is not available at the instigation of a non-importing manufacturer unless he resorts to the device of importing goods himself. The Council is of the view that there should be provision for obtaining an authorative decision on the classification of goods prior to import.

80. It is recommended that legislative provision should be made for tariff classification notices and that such notices should be reviewable by the Administrative Appeals Tribunal on the application of the person who requested the notice or on the application of any other person affected by the notice. The making of ‘definitional by-laws’ as such would not be reviewable, though their application would be.

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PART V — CONCLUSION

81. Subject to the considerations discussed in paragraphs 3, 4 and 5, it is recom­ mended that:

(a) Quantitative Restriction Decisions (i) legislative provision be made authorising quantitative restrictions, whether they are to be implemented by import licensing or tariff quota; (ii) jurisdiction be vested in the Administrative Appeals Tribunal to review decisions

made under the legislative provision referred to in (i) but excluding those matters set out in paragraph 19 of this report as grounds for review; (iii) the review referred to in (ii) should extend only to finding entitlement to a particular amount of quota, with the matter being referred back to the Minister

for Business and Consumer Affairs to decide which of the remedies set out in paragraph 31 of this report should be used to implement the entitlement decision provided that it would be open to the Tribunal in making its decision on entitlement to make, in its discretion a recommendation as to the appropriate

manner of implementing that decision; (iv) the time for lodgment of an application for review under section 29 of the AAT Act with respect to quantitative restriction decisions should be 28 days from

the notification of the allocation of quota in the Commonwealth Government Gazette whether or not the applicant has requested a statement of reasons under section 28 of the Act; (v) the Administrative Appeals Tribunal should arrange its business so as to

determine all cases in relation to a particular quota period for a particular item as one proceeding or as a series of proceedings one after another; and (vi) should any anomalies reserve scheme be introduced in the future, or should the existing scheme revert to criteria for entitlement previously obtaining, then

(a) there should be a right of review of decisions taken under the scheme, and for this purpose; (b) criteria for entitlement should be properly established and made public.

(b) ’Normal Criteria by-law' Decisions (i) Decisions to refuse to consider an application for ‘by-law’ should be reviewable by the Administrative Appeals Tribunal.

(ii) Decisions to grant, refuse, or revoke, a ‘normal criteria by-law’ should be reviewable by the Industries Assistance Commission.

(iii) The IAC should have the power only of recommendation to the Minister for Business and Consumer Affairs.

(iv) Review by the IAC should be only by referral from the Minister for Business and Consumer Affairs, but his refusal to refer an application should be reviewable by the Administrative Appeals Tribunal.

(v) The criteria for referral should be:

(a) that the matter involves an important principle of wide application, and (b) that the applicant establishes an arguable case that the internal review process has been inadequate; (vi) It should be a prerequisite to application for a referral by the Minister that the

applicant has applied for internal reconsideration by the Department and that the decision upon reconsideration should have been adverse to the applicants interest.

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(c) Other ‘By-law’ Decisions (ii) Import licensing decisions based on Australian-made equivalent goods should be reviewable by the Industries Assistance Commission in the same manner as has been recommended for ‘normal criteria by-laws’.

(ii) Decisions to make ‘policy by-laws’ should be reviewable by the Industries Assistance Commission in the same manner as has been recommended for ‘normal criteria by-laws’.

(iii) Tariff classification notices issued by the Department of Business and Consumer Affairs should be reviewable by the Administrative Appeals Tribunal.

Attachment i

Quantitative Restriction Decisions The Industries Assistance Commission reports to the Department of Business and Consumer Affairs. The report is considered by the Standing Committee on Industry Assistance which provides the basis for a Cabinet Submission by the Minister for Business and Consumer Affairs and relevant policy Minister (Industry and Commerce, or Primary Industry). Particular decisions in the set of decisions constituting the imposition and administration of quantitative restrictions are set out below. Cabinet Decisions may cover (a) to (n). Determination of:

(a) the categories of goods to be subject to controls; (b) the total volume of permitted imports; (c) the period of restriction; (d) the method or criteria by which eligibility to import is to be ascertained; (e) whether import licensing or tariff quota is to be used; (f) any provision for exemption from controls of goods from specified countries; (g) exemption for specified goods, goods entered under ‘by-law’ etc; (h) the provision for and size of quota to be held for allocation in cases involving

anomalies (so far applied to certain clothing, textiles and footwear commodities) or for other reasons (e.g. NAFTA); (i) the treatment of goods in transit, in bond or under an irrecoverable letter of credit at the time of introduction of quantitative restrictions; (j) whether and when ‘special quota’ will be allocated; (k) whether global quotas will be adjusted should shortages of supply of goods in

question occur (as distinct from the implementation of that decision); (l ) in the case of tariff quota, what level of penalty duty is to be applicable to goods imported in excess of, or without quota entitlement; (m) whether ‘fine tuning’ is to apply; (n) the period of validity of quota instruments; (o) whether transfer of quota is to be permitted; (p) whether to accept late application; (q) whether entries claimed as establishing entitlement in fact do so (e.g. Is the entry

in the applicant’s name? Does it relate to goods subject to control? Were goods entered for home consumption within the base period? Were they entered under ‘by-law’? Were they entered under ‘special quota’ or under the anomalies reserve scheme?);

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(r) if special provision exists for goods in transit, bond or subject to an irrecoverable letter of credit, whether goods satisfy the requirements of that provision as at the relevant date; (s) arithmetic calculation of factor and entitlement; (t) amounts to be debited to future quota periods and their subsequent offset; (u) after quota has been allocated, the tariff classification of goods entered for home

consumption and, if necessary, whether goods within a particular classification meet the description of goods subject to control (including whether the goods are from an exempted country). (These aspects are currently appealable to AAT if duty is paid under protest or if a refund application refused.); (v) whether to extend validity period of entitlement, where Cabinet decision permits; (w) whether to reinstate quota, e.g. where the goods have been destroyed; (x) whether to backdate quota use, e.g. where the quota is by value and a post note

increases the valuation of the goods imported assessed by Customs.

Attachment II

Internal Review of Refusals of ‘Normal Criteria By-Law’ Decisions Table of Abbreviations AS Assistant Secretary (By-law Branch) (level 1)

DO By-law Decisions Officer (class 8)

RO By-law Review Officer (class 8)

CO Chief By-law Officer (class 9)

Cl Chief Inspector, By-law Research (class 9)

DIR Director, By-law Operations (class 10)

PRIMARY DECISION DO FIRST REVIEW OF REFUSAL

RO

A Agrees

with DO

Refuse Grant

Disagrees w ith DO

I

to DO

DO disagrees w ith RO

■A. DO agrees w ith RO

DECISION

to CO

Disagrees B. Agrees w ith RO with RO

Disagrees w ith CO

C. Agrees w ith CO

to DIR

21

SECOND REVIEW OF REFUSAL (a) If refusal was at stage A on previous page:

RO

I

-C onsultation ----------- CO

DECISION

(b) If refusal was at stages B or C on previous page:

Grant

RO

*

Cl

DECISION Refuse DIR DECISION

THIRD REVIEW OF REFUSAL (a) Decision on second review by Cl:

_________ Cl___________

Refuse

ito DIR DECISION

(b) Decision on second review by DIR:

DIR

Refuse

Ito AS DECISION

Grant

DECISION

Grant

DECISION

N.B. Matters may be referred higher in the chain of command.

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