Subject to successful passage of the legislation, revised
hard-copy Customs Tariff ‘working pages’ incorporating the HS changes and new
statistical codes will be printed and distributed to Customs clients.
4. Australian
Customs Notice 2006/45 indicates that tariff advices affected by the HS2007
changes will lapse and that revised tariff advices cannot be lodged until after
1 January 2007. Is it the case that importers and their customs brokers will
therefore be at risk of liability for incorrect statements without being able
to rely on the protections in a tariff advice?
Response
Customs’ Compliance Philosophy is to improve the level of
voluntary compliance by clients within the broader context of managing the
security and integrity of Australia’s borders, which includes the prevention of
the illegal movement of cargo across our borders and the collection of revenue
on border related transactions.
In performing this role Customs believes that the correct
and timely reporting of information relating to cargo is crucial to the smooth
movement of goods into the marketplace and for our efforts in identifying
suspect transactions and cargo. With this in mind Customs and industry have
worked closely together in recent years to achieve improved reporting and
compliance. Customs has encouraged a regime of voluntary compliance through
education, examination and feedback.
There is a legislated Infringement Notice Scheme that deals
with non-compliance. The Infringement Notice Scheme (INS) Guidelines (a
legislative instrument tabled in Parliament) provide the importer or customs
broker with some protection from penalties issued under that scheme.
A decision to issue an infringement notice can only be made by a delegate
of the CEO of Customs. A judgement is made in each case based on the
individual circumstances of the case. The delegate of the CEO may exercise
discretion in this process, including whether an offence occurred as a result
of recent legislative change or a reliance on Customs advice.
The INS Guidelines provide the importer or customs broker
with protection from penalty by requiring a delegate of the Chief Executive
Officer of Customs to consider the:
- significance of the breach;
- effort/attempt to comply;
- any reliance on Customs advice; and
- reasons beyond the person’s control.
The Customs Act 1901 (the Act) also contains two
legislative defences to liability for a false and misleading statement – the
‘amberline’ defence and the voluntary disclosure defence. These defences can
protect importers and their customs brokers from liability where they are
awaiting a tariff advice. For example, penalties may not apply in certain
circumstances where a person specifies uncertainty as to the accuracy of
information included (or omitted) – that person will not be considered to have
committed an offence if the statement was incorrect.
In a self-assessment environment for import declarations,
false and misleading statement offences are generally identified by Customs
some time after the goods were first entered for home consumption. Therefore,
once an importer or customs broker has received a tariff advice indicating that
goods have previously been entered in error, it should be possible to voluntarily
disclose to Customs those entries in error and not be liable for the offence of
a false and misleading statement.
It should be noted that Customs is disseminating all
information about the proposed changes as it becomes available, including
information concerning the voiding and replacement of Tariff Advices, to
affected parties. Customs would expect those parties to take that information
into account when entering imported goods from 1 January 2007.
5. Why has Customs set a deadline of 6 October
2006 for comments to be provided on changes to the statistical codes being
drafted by the Australian Bureau of Statistics, to reflect the HS2007 changes?
How does this deadline give interested parties enough time to properly advise
Customs of concerns they may have?
Response
The Australian Bureau of Statistics (ABS) set
the deadline of 6 October 2006 for comments to be provided on changes to the statistical
codes being drafted by the ABS.
This deadline ensures that the ABS will have
sufficient time to consider any comments and provide Customs with final
statistical codes in time for the classifications to be advised to exporters,
importers, their agents and statistical users for a 1 January 2007 implementation.
The majority of the statistical codes proposed
by the ABS were released on the ABS website on 20 September with the remainder
released on 25 September. The timing proposed by the ABS was advised in a
discussion paper ABS Implementation in January 2007 of Revisions to
International Trade Classifications, 2007 (ABS Cat. no. 5368.0.55.005)
released on 9 June 2006. The availability of this information paper was announced
in relevant ABS publications and the Foreign trade theme page of the ABS
website and was notified to clients receiving detailed statistical information.
The ABS approach to determining the statistical
codes differed significantly from that used with the introduction of Harmonized
System 2002, in that, the ABS approach for HS2007 was to maintain the existing
statistical codes in the Customs Tariff and AHECC where possible.
The discussion paper
mentioned above contained the following statement:
USER OPPORTUNITY TO
REVIEW STATISTICAL CODE CHANGES
As the ABS is intending to maintain current
statistical codes wherever possible, the ABS will generally not consult clients
as part of this review. However, the ABS will appreciate feedback on any
apparent errors in the statistical codes or concordances.
The ABS will progressively issue proposed changes to the
8-digit export statistical codes from August 2006 and then provide a limited
period for interested parties to provide feedback. A similar process will be
followed for the 10-digit import statistical codes, once Customs has released
the 8-digit tariff items.
After the consultation period, the final new
classifications will be made available progressively on the ABS website, so
importers, exporters and their agents and statistical users can update their
systems. It is expected that these will be available by mid to late November
2006. [Subsequent note: this is dependent on the passage of the related
Customs’ legislation through Parliament].
The above timing did not provide a long period
for comment but the impact on statistical codes was not anticipated to be large
and no requests for additional timing have been received. Any such requests
would have been considered on a case-by-case basis.
While a longer period for feedback on errors may have
been desirable, there were several constraints including when the statistical
codes could be made public; the time required to ensure the classifications and
relevant systems were updated by 1 January; and the need to ensure that the
statistical codes reflected the latest concordances provided by Customs based
on concordances from the World Customs Organisation.
In relation to the first point, the statistical codes
could not be released before the Customs Tariff Bill was tabled in
Parliament, which occurred on 7 September 2006, as the import statistical
codes can not be interpreted without the additional 2 digits used for the
domestic imposition of customs duties detailed in that Bill. In relation to
the third point, the draft Customs 8-digit concordance was substantially
complete by the end of March 2006 but minor amendments continued to be made up
to the time that the related Customs Tariff Bill was introduced into
Parliament, and the draft concordance was published on the Customs website.
6. The Law Council of Australia submission argued
that Customs should provide a six‑month moratorium for importers and
customs brokers to prevent them being held liable for inadvertent errors and
for using “outdated” information in reporting to Customs as a result of the
proposed changes.
- What is Customs’ view on the idea of a moratorium?
- Why doesn’t the legislation contain a provision which
explicitly enables Customs to exercise discretion as to whether or not action
is taken against a person who makes an inadvertent error in reporting to
Customs?
- What is Customs’ response to the argument that a moratorium
may provide some protection from adverse consequences which might result in
financial penalties for imports and customs brokers?
Response
As identified in the answer to
Question 4, the two offences under the Act that would apply to ‘inadvertent
errors’ would be:
- a false and misleading statement resulting in a loss of duty (section
243T of the Act); and
- a false and misleading statement not resulting in a loss of duty
(section 243U of the Act).
The answer to Question 4 explains
the mechanisms in place to provide protections to importers and customs
brokers. Customs does not consider a moratorium to be appropriate for this
situation.
Under
subsection 243ZA(1) of the Customs Act, it is a requirement that the Chief
Executive Officer of Customs develop written guidelines in respect of the
administration of the infringement notice scheme. As identified in the answer
to Question 4, these guidelines must be considered when exercising powers in
relation to the Infringement Notice Scheme.
Discretion
currently exists in the legislation, as it is not mandatory for an infringement
notice to be served in relation to an offence. The Infringement Notice
Guidelines adequately enable such a discretion to be exercised.
Customs does not believe that a
moratorium will be able to afford importers and customs brokers any better
protection than is already available.
7. The committee is concerned about any unintended
consequences of the proposed amendments, which may not arise for some time.
What is your response to the argument that the proposed legislation include a
provision which enables the CEO of Customs to make such orders or regulations
as are necessary to overcome any unintended consequences?
Response
In respect of the amendments contained in the Customs Tariff
Bill - if an error was identified, and Parliament was sitting, the Government
could introduce a Customs Tariff Proposal into the House of Representatives to
correct the error. The moving of a Customs Tariff Proposal is normally treated
as a formal procedure for the purpose of initiating the collection of a duty.
Collection of duties is commenced on authority of an unresolved motion, and
this has been accepted by convention (House of Representatives Practice, Fourth
Edition, 2001).
In the event an error is detected when Parliament is not
sitting, a Notice of a Customs Tariff Proposal may be published by the CEO of
Customs in the Gazette, to correct the error. The Notice is deemed to have
effect from such time, after its publication in the Gazette, as specified in the
Notice. Any Customs Tariff Proposal given notice in this way must be proposed
in the Parliament within seven sitting days of the next meeting of the House of
Representatives.
A Customs Tariff Amendment Bill is introduced at an
appropriate later time to incorporate outstanding Tariff Proposals. These
Bills are necessarily retrospective in nature, reflecting the dates of effect
set out in each Tariff Proposal.
If an error were identified before 1 January 2007, ie before
any importations were impacted by an incorrect rate of duty, the Customs Tariff
Proposal or Notice mechanism could be applied, with a date of effect of 1
January 2007.
Similarly, if an error were identified after 1 January 2007,
which resulted in importers paying a higher rate of customs duty on goods than
that paid prior to the introduction of HS2007, the Customs Tariff Proposal or
Notice would be applied with a date of effect of 1 January 2007. This
would allow importers to claim refunds for any affected consignments.
If, however, an error were
identified after 1 January 2007 that resulted in importers paying a lower rate
of customs duty on goods than that paid prior to the introduction of HS2007,
the Customs Tariff Proposal or Notice could only be applied with a prospective
date of effect. In this case, Customs would not seek the recovery of any duty
shortpaid between 1 January 2007 and the date the error was corrected by the
Customs Tariff Proposal or Notice.
In respect of TCOs, existing provisions under section 269SD
of the Act allow the CEO to revoke and reissue TCOs where the tariff
classification is incorrect or has been changed. Therefore, should a TCO be
revoked or reissued incorrectly under proposed new subsection 269SD(2A),
existing provisions would allow that error to be corrected with effect from
1 January 2007.
Customs is of the view that provisions already exist to
ensure that inadvertent errors made in translating tariff classifications and
TCOs as a result of HS2007 do not adversely impact on importers. Therefore, it
is unnecessary for the proposed legislation to include a provision to enable
the CEO of Customs to make orders or regulations to overcome any unintended
consequences.
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