Commonwealth Numbered Regulations - Explanatory Statements

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Issued by the authority of the Minister for Customs and Consumer Affairs

Customs Act 1901

Customs (Prohibited Imports) Regulations (Amendment)

Section 50 of the Customs Act 1901 (the Act) provides in part that:

"(1)       The Governor-General may, by regulation, prohibit the importation of goods into Australia.

(2)        The power conferred by the last preceding subsection may be exercised - ... (c) by prohibiting the importation of goods unless specified conditions or restrictions are complied with.

(3)       Without limiting the generality of paragraph 2(c), the regulations - ... (a) may provide that the importation of the goods is prohibited unless a licence, permission, consent or approval to import the goods or a class of goods in which the goods are included has been granted as prescribed by the regulations;"

The Customs (Prohibited Imports) Regulations (the Regulations) control the import of goods specified in the various Regulations or the Schedules to the Regulations, by prohibiting importation absolutely, or making importation subject to the permission of a Minister of a specified person.

Fuel Substitution Package

During the 1997 Spring sittings, Parliament passed the Government's fuel substitution legislation, a package of 9 Acts which implements the Government's Budget decision to combat revenue loss through the minimisation of fuel substitution practices. These practices involve the substitution of fuel entered at concessional rates of duty (generally for nonautomotive use) for fuel used in automotive engines. Such substitution practices are harmful to the engines of the (usually unwitting) motorist concerned, and cause significant revenue leakage in respect of the duty avoided on the substituted fuel.

The legislation package addresses the problem by providing for the introduction of a chemical marker into concessionally entered fuel, and imposing document keeping and retention obligations, audit powers and sanctions in relation to the acquisition, storage and disposal of fuel. Importantly, these measures are directed at those dealing in large volumes of fuel, and it is intended that the average motorist be exempted from these obligations in the normal course of dealing.

Supporting Regulations

Supporting Regulations are required to:

*       amend the Excise Regulations to prescribe the chemical marker and the proportions which are to be added to fuels;

*       enact the Fuel (Penalty Surcharges) Administration Regulations to prescribe the record keeping particulars and to exempt the "average motorist" from the document keeping and retention obligations and audit provisions in the package;

*       amend the Customs (Prohibited Imports) Regulations to prohibit the importation of fuel that is not appropriately marked;

*       amend the Excise Regulations and the Customs Regulations to allow concessions in relation to certain uses of fully duty paid fuels (such as their use as solvents, which are non-fuel uses) ; and

*       make consequential amendments to the Customs Regulations and Excise Regulations to take account of revised structures of Customs and Excise tariff headings which apply to petroleum products to incorporate the introduction of the chemical marker.

The purpose of these Regulations is to amend the Customs (Prohibited Imports) Regulations to prohibit the importation of fuel which is marked fuel but not designated fuel unless the permission of the Minister or an authorised person has been granted.

As referred to above, fuel which is to be entered at concessional rates of duty must contain the chemical marker. The proportion at which the marker is to be added has been prescribed under the Excise Regulations as 20 milligrams per litre of fuel. Fuel which contains the prescribed proportion of marker is defined as "designated fuel". This definition is relevant only for determining whether the fuel can be entered at concessional rates of duty.

In relation to imported fuel, it is possible that prior to its importation, it may be marked overseas and that an insufficient proportion of the marker may be added, Fuel which contains the marker down to 1 milligram per litre is defined as "marked fuel". Fuel which contains marker at less than 1 milligrams per litre or no marker is defined as "clean fuel". Imported fuel with insufficient marker would be "marked fuel" and under the new structure of the Customs Tariff, this fuel would be dutiable at the highest duty rate.

In order to ensure the overall effect and integrity of the fuel substitution legislation package, the importation of marked fuel which contains less than the proportion of 20 milligrams per litre is prohibited unless the permission of the Minister or an authorised person has been granted. A permission can be subject to the condition that the marked fuel be converted to clean fuel or designated fuel before its delivery into home consumption (regulation 3 refers). If it is converted to designated fuel by the addition of more marker, the fuel can then be entered at a concessional rate of duty.

The regulations commence on 31 January 1998 (regulation 1 refers), which is the date on which the fuel substitution legislation package has been proclaimed to commence.

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