Explanatory Memorandum
(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Christopher Martin Ellison)Schedule 1 - Trade Modernisation
Part 1 - Timing and content of outturn reports
Section 64ABAA (which is to be inserted into the Customs Act by the ITM Act) requires that when a container is unloaded from a ship at a port, the stevedore must communicate electronically to Customs an outturn report in respect of the container. Subsection 64ABAA(2) requires that the outturn report must set out a list of the containers that have been unloaded. Under section 64ABAB (as inserted by ITM), the outturn report must be made every three hours regardless of whether any more containers have been unloaded during that period (ie stevedores will be required to lodge a nil report).
Customs is only interested in receiving reports about the unloading of cargo and not the failure to unload cargo.
Item 1 amends section 64ABAB to ensure that nil cargo reports will not be required.
New subsection 64ABAB(2A) sets out when a stevedore must communicate an outturn report - being at the end of a period that starts at a time described in subsection (2B) and that is 3 hours long and during which a container is unloaded.
New subsection (2B) sets out the times at which a reporting period may start. This time may be either:
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- at the time the first container is unloaded at the wharf; or
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- immediately after the end of the most recent reporting period - so if containers continue to be unloaded, a new reporting period starts immediately after the end of the previous 3 hour reporting period; or
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- at the first time a container is unloaded after the end of the most recent reporting period - so, if there has been a break in the unloading of the containers, the reporting period starts when the unloading of containers recommences.
New subsection (2C) requires that the first outturn report must state the time that the first container is unloaded. This requirement will remain the same.
New subsection (2D) requires that the last outturn report state the time when the unloading of the containers was completed. This requirement remains the same.
New subsection (2E) covers a situation where it is decided not to unload any more containers and the previous outturn report made did not state the time at which unloading was completed. In this case, the stevedore must communicate a further report stating that the unloading has been completed. This report must be made within 3 hours of the decision not to unload more containers.
New subsection (2F) allows a different reporting period than 3 hours to be prescribed. Currently the period of the first report must be made 3 hours (or such prescribed time) after the first container is unloaded. Subsequent reports have to be made 3 hours (or such prescribed time) after the previous report. These prescribed times can be different, but under new subsection (2F), any prescribed period will apply to both the first outturn report and subsequent outturn reports.
This item limits the application of the amendments made by item 1 to the unloading of containers that start after the commencement of this Part.
Part 2 - Notice of removal of export goods
The ITM Act will replace many of the provisions of the Customs Act relating to the importation and exportation of goods and arrival/cargo reporting. These amendments are required in part because Customs is designing new computer systems. The amendments also introduce new requirements to ensure increased compliance with the Customs Act.
Provisions as contained in the ITM Act will be referred to as 'new'.
In particular, new section 114F will require a person who takes delivery of goods for export at certain wharves or airports to report the receipt of those goods to Customs. In addition, new subsection 114F(1B) will require that person to report to Customs the removal of those goods from the wharf or airport (other than if they are removed for the purpose of being loaded onto a ship or aircraft for export). Currently the report must be given within a prescribed time after the goods have been removed.
Item 3 replaces new subsection 114F(1B) so that the removal of the relevant goods from a wharf or airport must be reported (in a notice) to Customs before the goods are removed. The notice must state that the goods are to be removed and give such particulars of the proposed removal as are required by an approved form (see section 4A of the Customs Act for the requirements relating to approved forms).
In addition, the regulations can require the person to give the notice at least by a specified time before the removal. If there are no such regulations the notice must be given before the goods are released.
Part 3 - Electronic communications
Division 1 - Communications relating to exports
This item amends new subsection 114(4) to remove the requirement that an electronic export declaration be communicated only by the owner of the goods concerned. This corresponds with provisions elsewhere in the Customs Act (e.g. in subsection 181(4A)) that allow for any person to act for an owner for the purposes of export transactions. It also recognises that a range of service providers, including brokers, freight forwarders and bureaus can and commonly do communicate electronically with Customs on behalf of people who have obligations to report to Customs under the Customs Act.
Note: A similar amendment to new section 71A of the Customs Act in relation to the making of an import entry has already been made by the Customs Legislation Amendment Act (No. 1) 2002 , but has yet to commence.
This item replaces the heading to new Part VIA of the Customs Act. This part (which has not commenced) currently requires the Chief Executive Officer of Customs (the CEO) to establish and maintain 'information systems' to enable persons to communicate electronically with Customs and allows the CEO to determine certain information technology requirements. Further the Part sets out what happens if information systems are temporarily inoperative.
The new heading to the Part reflects the amendments that will be inserted by item 6 below.
The Customs Act currently describes by name the computer systems that people must use in order to electronically communicate with Customs. In particular, the COMPILE system must be used in respect of the entry of imported goods and the EXIT system must be used in respect of the:
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- entry of goods for export;
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- reporting of goods for export (submanifests and outward manifests); and
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- reporting of departures of ships and aircraft from Australia (outward manifests).
The Air and Sea Cargo Automation Systems are used to:
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- report the impending arrival of ships;
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- report the arrival of ships and aircraft;
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- report the arrival of cargo in Australia; and
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- apply for permission to move goods under Customs control.
The ITM Act will repeal these provisions and replace them with new Part VIA, as described above, on proclamation (or on the default commencement date if no proclamation is made). It is anticipated that the amendments relating to exports will be proclaimed to commence in early 2004 and the amendments relating to arrival/cargo reporting and imports later in 2004.
In repealing all the references to the named 'legacy' IT systems, provisions in sections 67D, 77B, 122B and 241 for the attribution and non-repudiation of communications made using those systems have also been repealed without corresponding provisions being made for the new generic information systems.
Section 77B of the Customs Act currently provides that if a computer import entry or a withdrawal of such entry is communicated to Customs using a registered COMPILE user's PIN number without authority and the registered user has not notified Customs of a possible breach of security, the entry or withdrawal will be taken, subject to any evidence of the user to the contrary, to have been communicated by the registered user.
Section 122B contains similar provisions in respect of computer export entries, computer submanifests, computer outward manifests and withdrawals of such communications.
Section 67D contains similar provisions relating to computer reports made in the Air and Sea Cargo Automation Systems using a registered user's identifying code (these reports would include impending arrival reports, arrival reports, cargo reports and movement applications).
Further subsection 241(1) of the Customs Act requires Customs to keep a record of certain transmissions made to or by it under COMPILE and EXIT. Those transmissions are those relating to import entries, export entries, submanifests, manifests and the withdrawal of such communications.
Subsection 241(2) provides that in any proceedings under the Customs Act, the record retained by Customs under subsection 241(1) is admissible in evidence and is prima facie evidence that:
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- the person whose PIN number or identifying code was used made the statements made in the transmission (in respect of a record of a transmission made to Customs);or
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- Customs made the statements contained in the transmission (in respect of a record of a transmission made by Customs).
This item inserts sections 126DB and 126DC into the new Part VIA of the Customs Act to mirror the effect of the sections being repealed.
New section 126DB replaces sections 67D, 77B and 122B.
New subsection 126DB(1) provides that an electronic communication that is made to Customs and is required or permitted by the Customs Act will be taken to be made by a particular person, even if he or she did not authorise it, if the communication meets the information technology requirements as determined by the CEO relating to providing a person's signature and the person does not notify Customs of a breach of security relating to those information technology requirements before the communication. However, the person can provide evidence to the contrary.
For example, if an employer becomes aware that a former employee had access to the employer's electronic signature, the employer should ensure Customs is informed. If they do not do so, an unauthorised communication will be taken to be the employer's communication. However, the employer may provide evidence that they did not authorise such communication.
It is expected that the CEO will determine, under new section 126DA, that a person must attach a digital signature (in accordance with public key infrastructure (PKI) technology) to an electronic communication in order to satisfy the requirement that they sign a communication, but section 126DB has been drafted generally so that the CEO can amend the relevant information technology requirements to reflect future changes in technology.
Whilst sections 67D, 77B and 122B refer to specific communications (by reference to the types of communications or the named system used), the range of corresponding communications introduced by the ITM Act is both more extensive and more complex to describe. For example, an import entry will be communicated by an import declaration or an RCR and one or more periodic declarations, and cargo reporting functions are as diverse as self-assessed clearance declarations and notices of receipt of goods for export at a wharf or airport.
Consequently proposed section 126DB will cover the communications that are currently covered by section 67D, 77B and 122B, as well as their replacements, by applying to all communications to Customs that are required or permitted to be made by the Customs Act. Further, section 126DA will ensure that if future amendments to the Customs Act introduce new communication obligations or powers, those communications will be subject to section 126DB.
New section 126DC replaces section 241 of the Customs Act. New subsection 126DC(1) requires the CEO to keep each electronic communication made as required or permitted by the Customs Act for 5 years. This will cover communications made to Customs (e.g. import and export declarations) and those made by Customs (e.g. authorities to deal, movement permissions etc.).
Such records will be admissible in proceedings under the Customs Act and in such proceedings the record will be prima facie evidence that a particular person (whose electronic signature is attached to the statement in accordance with the CEO's determination made under section 126DA) made the statements in the communication. In respect of communications made by Customs, the record will be prima facie evidence that Customs made the statements in the communication, if the record purports to be a record of an electronic communication that was made by Customs.
Again, new section 126DC will cover all electronic communications required or permitted by the Customs Act. This will ensure that communications made under future communication requirements and powers will be covered.
Since the 1992 inclusion of provisions in the Customs Act concerning the operation of the named legacy systems, the Commonwealth has put in place the Electronic Transactions Act 1999 to ensure that there is a baseline for certainty between parties communicating electronically as to their liability for their communications. The existing provisions of the Customs Act have continued to operate despite the effect of section 15 of the Electronic Transactions Act, which provides that generally the purported originator of an electronic communication is bound by that communication only if the communication was sent by the purported originator or with the authority of the purported originator. For the avoidance of doubt new section 126DD provides that new sections 126DB and 126DC have the same effect as their Customs Act predecessors, namely despite section 15.
Division 2 - Communications relating to imports
This item amends new subsection 71F(4) to remove the requirement that an electronic withdrawal of an import entry be communicated only by the owner of the goods. This corresponds with a similar amendment in relation to the making of an import entry that has already been made by the Customs Legislation Amendment Act (No. 1) 2002 , but which has yet to commence. It also corresponds with provisions elsewhere in the Customs Act (e.g. in section 181) that allow for an agent to act for an owner for the purposes of Customs Act transactions and recognises that a range of service providers, including brokers, freight forwarders and bureaus can and commonly do communicate electronically with Customs on behalf of people who have obligations to report to Customs under the Customs Act.
Note: A similar provision already exists in relation to the withdrawal of an export entry (see new subsection 119A(3) of the Customs Act, which is to commence by operation of the ITM Act.)
Part 4 - False and misleading statements
Currently there are a number of provisions in the Customs Act which make it an offence to 'make a statement that is false or misleading in a material particular' or to 'omit a thing or a matter from a statement, without which it is false or misleading in a material particular'. They are as follows:
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- section 234 makes it an offence to intentionally make a statement (or omission) reckless as to the fact that the statement is false or misleading in a material particular (or reckless as to the fact that without the matter or thing the statement is false or misleading in a material particular);
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- section 243T provides that the owner of goods commits an offence if a false or misleading statement is made and it results in duty being underpaid (or a refund or drawback of duty being overclaimed);
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- section 243U provides that a person who makes a false or misleading statement (other than in a cargo report or outturn report) that does not result in duty being underpaid (or does not result in a refund or drawback of duty being overclaimed) commits an offence; and
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- section 243V provides that a person who makes a false or misleading statement in a cargo report or outturn report commits an offence.
Penalty infringement notices can be served on people in respect of the offences in sections 243T, 243U and 243V (as these are strict liability offences).
To complement these provisions and to make people accountable for the communications that they make, section 240AB requires people who make communications to Customs under the Customs Act to keep a record that verifies the contents of the communication for 1 year after the communication is made.
As explained above, when the amendments in the ITM Act commence, there will be new ways in which people will be able to electronically communicate with Customs. It is expected that there will be people who will offer to send communications to Customs (and receive communications) on behalf of other people who do not have the relevant computer software or hardware in order to communicate directly with Customs. Where these people are engaged to send communications to Customs they will be the people who 'make' the relevant communications for the purposes of the provisions set out above. In some circumstances they may be engaged by the person who is obliged to make the communication, but they may also be engaged by that person's agent. For example, in respect of an import declaration, the owner of goods may engage a Customs broker to make the declaration and the broker may then use a bureau to send the declaration to Customs.
Currently, section 257 of the Customs Act deems the actions of an agent to be the actions of their principal. Further, the actions of a person who has acted at the direction or with the consent or agreement of the agent will also be deemed to be those of the agent's principal. However, the direction, consent or agreement has to be within the scope of the actual or apparent authority of the servant or agent.
That provision also deems, in respect of Customs prosecutions, the state of mind of an agent to be the state of mind of the principal.
With the advent of the new systems, the provisions highlighted above will no longer capture all the persons who may currently be potentially liable for making a false or misleading statement. Many of the amendments in this Part, are needed to reflect the changes in practice that will arise out the changes in technology that Customs is implementing.
The remaining amendments correct anomalies in those provisions and are explained in further detail below.
This item amends paragraph 234(1)(d) as a result of the amendments in item 12 that inserts two new subparagraphs into that paragraph.
Item 9 - Subparagraph 234(1)(d)(i)
Subparagraph 234(1)(d)(i) of the Customs Act makes it an offence to intentionally make a statement to an officer, reckless as to the fact that the statement is false or misleading in a material particular.
As explained above, once the new systems are used to communicate with Customs, this provision may not be wide enough to capture all those people who are currently potentially subject to it. Hence it is proposed to amend it so that those people who intentionally 'cause to be made' a statement to an officer, reckless as to the fact that the statement is false or misleading in a material particular will commit an offence under this provision.
For example, if a broker intentionally instructs a bureau to make an import declaration to Customs in which goods are undervalued and the broker is reckless as to whether the import declaration is false or misleading in a material particular, the broker will commit an offence against subparagraph 234(1)(d)(i).
Item 10 - Subparagraph 234(1)(d)(i)
This item is also a technical amendment required as a result of the two new subparagraphs being inserted by item 12.
Item 11 - Subparagraph 234(1)(d)(ii)
Subparagraph 234(1)(d)(ii) of the Customs Act makes it an offence to intentionally omit from a statement made to an officer any matter or thing, reckless as to the fact that without the matter or thing, the statement is false or misleading in a material particular.
As explained above, this provision may not in the future be wide enough to capture those people that are currently potentially captured by it. Hence it is proposed to amend it so that those people who intentionally 'cause to be omitted' a matter or thing from a statement, reckless as to the fact that without it the statement is false or misleading in a material particular, will commit an offence under this provision.
For example, if a broker intentionally instructs a bureau to make an import declaration to Customs in which the description of the goods omits that they are made of wood and the broker is reckless as to whether the declaration is false or misleading without that description, the broker will commit an offence against subparagraph 234(1)(d)(i).
Item 12 - At the end of paragraph 234(1)(d)
This item inserts two new subparagraphs into paragraph 234(1)(d) to cover people who may give information to another person for inclusion in a communication to Customs but who do not 'cause' the statement to be made (those people who cause the statement to be made will be captured by items 9 and 11 above).
Under the common law, A will cause B to do something, if A has some control over B's movements. A must be in a position of control or dominance so as to be able to decide whether the action should be done or not (see
O'Sullivan v Truth and Sportsman Ltd
(1957)
96 CLR 220
). In the case where an owner uses a Customs broker who then engages a bureau to communicate with Customs, it may be difficult to argue that the owner caused the bureau to make the communication, as the owner does not usually have any control over the bureau's actions.
Hence, it is proposed to insert new subparagraphs 234(1)(d)(iii) and (iv) so that those people who intentionally give information to another person, knowing that the information is false or misleading and knowing that the other person or someone else will include the information in a statement, will commit an offence. Further, if a person intentionally gives information to another person, knowing that it is misleading because of an omission, and knowing that other person or someone else will include that information in a statement, they will commit an offence.
In the example above, if the owner of the goods intentionally provides a false invoice, which incorrectly states the amount paid for the goods to their Customs broker, knowing that the information in the invoice is false and knowing that the broker will include that information in an import declaration or the broker will pass it on to the bureau for inclusion in the import declaration, the owner will commit an offence.
The penalties that currently apply in respect of the offences in paragraph 234(1)(d) will also apply to these new offences. They are:
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- where duty is payable on particular goods an amount not exceeding the sum of $5,000 and twice the amount of the duty payable on the goods;
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- where the offence relates to diesel fuel rebate, an amount not exceeding the sum of $5,000 and twice the amount of the excess rebate claimed; or
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- in any other case, an amount not exceeding 100 penalty units.
It is considered that the offences of giving false or misleading information for inclusion in a statement to Customs are as serious as those of making the false or misleading statement to Customs and hence should be subject to the same penalties.
Item 13 - At the end of subsection 240AB(1)
Section 240AB of the Customs Act provides that people who make communications to Customs under the Customs Act must keep, for the period of one year after the communication is made, a record that verifies the contents of the communication.
As explained above, with the commencement of the new electronic systems, different people will be making communications to Customs than those currently doing so. As well as amending the false or misleading statement offences, the obligations to keep records of communications made to Customs also need to be extended to ensure that people who pass information to other people for inclusion in communications to Customs are required to keep records of that information.
The amendment in this item extends section 240AB so that it applies to someone who gives someone else information for inclusion in a communication to Customs.
Item 14 - At the end of subsection 240AB(2)
Subsection 240AB(2) of the Customs Act sets out the purpose of section 240AB. This amendment will ensure that the description of the purpose reflects the changes proposed to be made to section 240AB.
This item will limit the current obligation to keep records that is contained in subsection 240AB(3) of the Customs Act to those people who make communications to Customs.
The new obligations relating to people who give information to other people for inclusion in a communication to Customs will be contained in subsection 240AB(3A).
Item 16 - After subsection 240AB(3)
As explained above, it is proposed to extend the record keeping obligations so that a person who gives information to another person for the recipient or someone else to include in a communication to Customs, must keep certain records. Those records are records that:
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- either verify the information or, if the giver was given the information by someone else, verify that the giver was given that information and identify the person who gave it to the giver; and
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- verify the fact that the giver gave the information to the recipient; and
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- identify the recipient.
For example, if a broker gives information to a bureau for inclusion in a communication to Customs, the broker will have to keep records that:
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- verify the information given to the broker or if the owner gave the information to the broker, the broker will have to keep a record that verifies that the owner gave that information, and the identity of the owner;
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- verify that they gave the information to the bureau; and
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- identify the bureau.
In this example, the owner who gave the information to the broker, would be required to keep records that:
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- verify the information;
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- verify the fact that the owner gave the information to the broker; and
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- identify the broker.
The penalty for these people failing to keep records will be the same as that which applies to people who make communications to Customs, ie, 30 penalty units.
The owner will also have obligations under section 240, see item 17 below.
Item 17 - At the end of section 240AB
This item makes it clear that section 240AB does not affect the operation of section 240. Section 240 requires:
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- the owner of goods imported into, or exported from, Australia;
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- people who cause goods to be imported into, or exported from, Australia;
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- people who receive goods that have been imported into, or are to be exported from, Australia;
to keep certain commercial documents.
Whilst these people may be required to keep records under section 240AB (as a giver of information that is included in a statement to Customs) that obligation does not override the obligations in section 240. Many of the commercial documents that have to be kept under section 240 will satisfy the requirements in section 240AB (and no further records will have to be kept).
Item 18 - Paragraph 243T(1)(b)
This item is a technical amendment required as a result of the amendments made by item 19 below.
Item 19 - Subparagraphs 243T(1)(b)(ii) and (iii)
Under section 243T of the Customs Act, if a person makes certain types of false or misleading statements (or omissions) in respect of goods, the owner of the goods commits an offence. This section is limited to circumstances where Customs duty is underpaid or refund (subparagraph 243T(1)(b)(ii)) or drawback (subparagraph 243T(1)(b)(iii)) of duty is overpaid.
Currently the provisions relating to the refund or drawback of duty only apply if the duty is actually paid back to the owner. However, there may be circumstances where Customs receives a refund or drawback application and discovers a false or misleading statement (or omission) in it. In those circumstances, the owner commits an offence only if Customs pays the overclaimed refund or drawback.
This item will ensure that the owner will be taken to commit an offence even if the overclaimed amount is not paid.
This item also combines those paragraphs and refers to the overclaimed amount as 'the excess'.
This item amends subsection 243T(3) as a result of the amendment in item 19 which refers to the overclaimed amount of refund or drawback as the excess.
Item 21 - Paragraphs 243T(3)(a), (b) and (c)
This item also amends subsection 243T(3) as a result of the amendment in item 19.
Currently, subsection 243T(4) provides that the owner of goods does not commit an offence relating to a false or misleading statement if the person who made the statement gives a notice to a Customs officer stating that the statement is false or misleading and they have not received a notice from Customs stating that they are going to be audited under the monitoring powers provisions in Subdivision J of Division 1 of Part XII.
This item amends section 243T so that the notice (known as an error notice) that is given to Customs must be given voluntarily (new paragraph 243T(4)(a) refers). Currently an error notice does not have to be given voluntarily. There may be circumstances where Customs thinks that a statement may be false or misleading, and so asks the owner for additional information. At that time, owing to Customs' intervention, if a person gives the error notice the owner will not commit an offence despite the fact that an error notice was given following action by Customs.
Whilst it is not possible to specify all of the circumstances in which an error notice will not be given voluntarily, it is proposed to specify some circumstances. New subsection 243T(4A) provides that an error notice is taken not to be given voluntarily if it is given after:
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- an officer of Customs exercises a power under a Customs-related law to verify information in the statement;
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- an infringement notice is served under Division 5 on the owner of the goods for an offence against subsection 243T(1); or
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- proceedings are commenced against the owner of the goods for an offence against subsection (1).
In the example above, the request by an officer for additional information would fall into the first category as it would an exercise of power under subsection 71D(2) of the Customs Act to require the owner to deliver to the officer the commercial documents in respect of the goods.
A 'Customs-related law' refers to the Customs Act, the Excise Act and any other Act in so far as the Act relates to the importation or exportation of goods, where the importation or exportation is subject to compliance with any condition or restriction or is subject to any tax, duty, levy or charge (and any regulations under those Act). Hence, if a Customs officer exercises a power under one of those laws to verify information in the statement and an error notice is given in respect of the statement, the owner will still have committed an offence.
Further, paragraphs 243T(4A)(b) and (c) will ensure that people cannot avail themselves of the protection provided in subsection 243T(4) after an infringement notice is served or proceedings commenced. Significant administrative difficulties would arise if a person could take action removing their liability for an offence after an infringement notice is served or after proceedings commenced.
Currently, the error notice can be given up until the time when the person who made the statement receives an audit notice from Customs. Where an error notice is given after the audit notice is given, the owner will not receive the benefit of the defence in subsection 243T(4).
Commonly, Customs brokers make communications on behalf of owners. Currently, the audit notice is only relevant if it is given to the broker being the person who made the statement. In circumstances where the audit notice is given to the owner, and the owner is audited and errors found, the broker can give an error notice on behalf of the owner and the owner will not commit an offence. New paragraph 242T(4)(b) ensures that if the owner of the goods or, an agent who made the statement, (Customs brokers are a specific type of agent) receives an audit notice, the error notice will be ineffectual as a defence.
If the owner changes brokers, and the second broker receives an audit notice, that broker can still send an error notice in respect of the owners' communications as they did not make the original communication.
Currently, if an error notice is given to Customs and the audit notice has not been given, the owner does not commit an offence. In the majority of circumstances covered by section 243T, the owner will owe Customs duty (or overpaid refund or drawback of duty). Whilst Customs can pursue the owner to recover the duty, it is proposed to insert a new provision into subsection 243T(4) which requires duty properly payable on the goods to be paid to Customs in order for the defence in that subsection to apply (new paragraph 243T(4)(c) refers). The duty will have to be paid to Customs prior to either an infringement notice being served or proceedings commencing against the owner of the goods for the offence relating to the false or misleading statement. As with the error notices, the duty must be paid before the penalty action is taken. To allow someone to pay the duty and receive the benefit of subsection 243T(4) after an infringement notice has been served or proceedings commenced, would result in administrative difficulties.
Similarly, in respect of overpaid refunds and drawbacks, the excess must be repaid before an infringement notice is served or relevant proceedings are commenced (new paragraph 243T(4)(d) refers).
These paragraphs will ensure that people who give error notices do not get the benefit of subsection 243T(4) if the duty owed (or refund or drawback that is overpaid) is not paid to Customs.
Item 23 - Subparagraph 243U(1)(a)(i)
Section 243U of the Customs Act provides that if a person makes a false or misleading statement and it does not result in duty being underpaid (or refund or drawback overpaid) the person commits an offence.
It was intended that if an owner of goods made the relevant communication directly to Customs, the owner would commit the offence and if a broker made the communication on behalf of an owner of goods, the broker would commit the offence.
When the ITM amendments relating to exports, imports and arrival/cargo reporting commence, new information systems will be used to communicate with Customs. It is expected that there will be a number of businesses that will offer to communicate to Customs on behalf of people who do not have the necessary software or hardware to communicate directly with Customs. These people are known as 'bureaus'. Bureaus will not be authorised to amend the content of a communication, but will 'make' communications to Customs. Hence, under section 243U these people, if they communicate to Customs false or misleading statements, will commit an offence.
This item amends subparagraph 243U(1)(a)(i) so that a person who causes a false or misleading statement to be made to Customs will also commit an offence. See item 27 for provisions relating to 'causing' a statement.
Item 24 - Subparagraph 243U(1)(a)(ii)
This item amends subparagraph 243U(1)(a)(ii) so that a person who causes a matter or thing to be omitted from a statement and without which the statement is false or misleading, also commits an offence.
Item 25 - Paragraph 243U(1)(b)
This item makes an amendment as a consequence of the amendment in the following item.
Item 26 - Subparagraph 243U(1)(b)(ii) and (iii)
Item 19 amends section 243T in relation to refunds and drawback of duty. This item makes a complementary amendment so that section 243T and 243U relate to different statements.
Item 27 - After subsection 243U(3)
Items 23 and 24 will amend section 243U so that those people who cause a false or misleading statement to be made to a Customs officer (or cause a matter or thing to be omitted from a statement) will commit an offence. As explained above, under the common law, the people who may 'cause' statements to be made to Customs may not, when the new electronic systems commence, extend to all of the people who are currently potentially covered by these provisions. New subsections 243U(3A) and (3B) will set out when certain persons will be taken to have caused a statement to be made (or to have caused a relevant omission). Those provisions also make it clear that these provisions do not limit the ways in which a person may cause a statement or omission to be made.
These provisions will apply where a person provides information to another person for inclusion in a statement to Customs and that person or another person includes that information in a statement to Customs (new subsection 243U(3A) refers).
For example, if an owner provides a false invoice to his or her broker and the broker or their bureau includes that information in a communication to Customs, the owner will be taken to have caused the false or misleading statement to be made.
New subsection 243U(3B) relates to omissions and will apply if a person gives information to another person for inclusion in a statement to Customs and that information is false or misleading because of an omission of other information that the person has, and the other person or someone else makes such a statement including the information.
This item makes similar amendments to those in item 22. This item will require a error notice to be given voluntarily and deems certain error notices not to be given voluntarily (new paragraph 243U(4)(a) and subsection 243U(4A) refer).
New subsection 243U(4) will ensure that where an error notice is given before an audit notice is given to the person who made a statement, or caused a statement to be made, the person who omitted a mater or thing or the person who caused a matter or thing to be omitted, will be exempt from committing the offence under section 243U.
Item 29 - Paragraph 243V(1)(a)
This item amends section 243V so that a person who causes a statement in a cargo report or outturn report to be false or misleading also commits an offence (see item 23 for further explanation).
Item 30 - Paragraph 243V(1)(b)
This item amends section 243V so that a person who causes a matter or thing to be omitted from a statement in a cargo report or outturn report, and without which the statement is false or misleading, also commits an offence.
Item 31 - At the end of section 243V
Item 31 makes similar amendments to those contained in item 9A so that certain actions of giving false or misleading information (or omitting information) to another person for inclusion in a statement to Customs will be deemed to be causing such a statement to be made and such people will commit an offence.
This item ensures that all of the amendments relating to the false or misleading statement offences, only apply to statements made after the commencement of these provisions. These provisions will commence 28 days after the Bill receives the Royal Assent. This will give Customs time to inform people when the amendments will commence.
Part 5 - Technical correction
Customs Legislation Amendment Act (No. 1) 2002
Item 33 - Item 5 of Schedule 3
Item 5 of Schedule 3 to the Customs Legislation Amendment Act (No. 1) 2002 (the CLA Act) inserts new section 64ADAA "after section 64AD" of the Customs Act.
Item 5 commences either immediately after the commencement of item 118 of Schedule 3 to the ITM Act and or on the day on which the CLA Act received the Royal Assent whichever is the later. Since item 118 of Schedule 3 to the ITM Act has not commenced, item 5 of Schedule 3 to the CLA Act will commence immediately after item 118.
However, item 5 of Schedule 6 to the Border Security Legislation Amendment Act 2002 repealed sections 64AC and 64AD and replaced them with sections 64ACA to 64ACE. This amendment commenced on 5 January 2003. Hence, when item 5 of Schedule 3 to the CLA Act commences, there will be no section 64AD to insert section 64ADAA after.
This item amends item 5 of Schedule 3 to the CLA Act to insert section 64ADAA after section 64ACE.
This technical amendment will operate retrospectively to correct item 5 of Schedule 3 to the CLA. This is a technical correction to ensure that a currently misdescribed amendment will be able to commence.
Part 5A - Commencement of the Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001
Customs Legislation Amendment and Repeal Act (International Trade Modernisation) Act 2001
This item amends subsection 2(7) of the ITM Act by omitting the reference to 3 years and substituting "4 years". Subsection 2(7) of the ITM Act contains the default commencement provision for the amendments to the Customs Act that will underpin the new Cargo Management Re-Engineering project (CMR project) being undertaken by Customs. The amendment will mean that the period within which these amendments can commence is up to 4 years after the ITM Act received the Royal Assent, instead of 3 years.
CMR involves the development of complex new computerised information systems, the main components of which are known as the Integrated Cargo System (ICS) and the Customs Connect Facility (CCF). Customs and industry will require the systems to be fully operational to support the amendments to the Customs Act once they commence.
Currently, the amendments to the Customs Act relating to the CMR project are expressed to commence upon Proclamation or, if the Proclamation does not occur within the period of 3 years beginning on the day on which the ITM Act received the Royal Assent, on the first day after the end of that period i.e. 20 July 2004. It was originally considered that the 3 year period was sufficient time to allow not only for the development of the ICS and CCF by Customs, but also for the development, testing and deployment by industry of business systems compatible with them for communicating with Customs. However, it has become apparent that this time frame will place pressure on the trading community's ability to adjust, particularly to the new import components of the system, which could in turn significantly disrupt trade.
It is therefore proposed as a contingency measure to extend the period to 4 years beginning on the day on which the ITM Act received the Royal Assent. While this extension of time will allow an extra year for development and testing of the ICS, it is expected that the ICS will be operational well before the end of the period.
Part 6 - AAT review of decisions about remitting penalty under old law
Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001
Item 34 -At the end of Schedule 2
Before 1 July 2002, sections 243T, 243U and 243V of the Customs Act related to the administrative penalty scheme. These sections were repealed by item 5 of Schedule 2 to the ITM Act on 1 July 2002 and replaced with the penalty infringement notice scheme. Item 5A of Schedule 2 to the ITM Act contained a savings provision so that despite their repeal, those provisions would continue to apply in respect of statements made before the repeal. These statements are not subject to the penalty infringement notice scheme. Prior to those amendments being made, a person could apply to the Administrative Appeals Tribunal (the AAT) for review of a decision to not remit a penalty (section 243U of the Customs Act referred).
Item 7 of Schedule 2 to the ITM Act, which also commenced on 1 July 2002, repealed the ability to seek AAT review of old section 243U decisions (as set out in paragraph 273GA(1)(ka) of the Customs Act). Whilst there was a savings provision for sections 243T, 243U and 243V, there was no savings in respect of the provision that allow affected people to apply for review of remission decisions.
This item will insert a new savings provision into the ITM Act (new item 8 of Schedule 2) so that such applications for review can be made.
New subitem 8(1) sets out what the item is about, being the making of an application to the AAT for review of a decision of the CEO under section 243U as saved by item 5A of Schedule 2 to the ITM Act, not to remit a penalty payable or to remit only part of such a penalty.
Because the time to make applications will be extended under this provision, the note makes it clear that this item only relates to decisions made on or after 1 July 2002. It was possible to apply for review of a decision made before that date owing to the operation of section 8 of Acts Interpretation Act 1901.
New subitem 8(2) sets out the time in which such applications can be made. If the person who applied for a remission was informed of that decisions 28 days before this Bill receives the Royal Assent or the CEO is taken to have made that decision before that day, the person has until that day to apply for review.
This will give those people notified of decisions who would have otherwise been out of time (because of paragraphs 29(1)(d) and subsections 29(2), (3), (4), (5) and (6) of the Administrative Appeals Tribunal Act 1975 (the AAT Act)) to apply 28 days after this Bill receives the Royal Assent to apply for review.
Subitem 8(3) provides that if a decision is made 28 days after this Bill receives the Royal Assent, the person can apply for review in accordance with normal procedures.
Subitem 8(4) provides that this item has effect despite the repeal of paragraph 273GA(1)(ka) of the Customs Act by item 7 of Schedule 2 to the ITM Act.
Subitem 8(5) provides that a reference to an old provision of the Customs Act is a reference to that provision as it continues to apply because of item 5A of Schedule 2 to the ITM Act. This saves sections 243T, 243U and 243V.
Subitem 8(6) defines 'decision' to have the same meaning as in the AAT Act.
Part 7 - Transitional arrangements for exports
Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001
The International Trade Modernisation Act will repeal all of those provisions of the Customs Act which relate to the computer systems that are currently used to communicate with Customs (ie EXIT, COMPILE, Air Cargo Automation System and Sea Cargo Automation System). These provisions will be replaced with generic provisions which require the CEO to maintain "information systems" and to determine the information technology requirements that have to be satisfied in order to communicate electronically with Customs.
Items 82 and 84 of Schedule 3 to the ITM Act contain savings provisions relating to the COMPILE and EXIT computer systems. It is expected that the provisions relating to EXIT will be proclaimed to commence in early 2004, and the provisions relating to COMPILE will be proclaimed to commence later in 2004.
The savings provision relating to the EXIT computer system provides that certain communications to Customs that are effected by means of the EXIT computer system, will become export declarations for the purposes of the Customs Act after it has been amended. This would require Customs to convert and migrate certain communications made via EXIT into the new computer system. Due to incompatibilities between the two computer systems, this will not be practical.
The savings provisions as currently worded contemplates the transition between the EXIT system and the ICS as being a clean break rather than, in accordance with the provisions explained below, a phased in approach. The requirement for provisions which phase in the transition between EXIT and the ICS became apparent during consultation with industry. It was noted that, by necessity, electronic export processes commence with a significant amount of lead-in time prior to the actual date of export. Given the impracticalities of communicating data between EXIT and the ICS, this would mean that at the time of cut-over, electronic export processes initiated in the EXIT system which had not been finalised would cease to exist, thereby preventing export.
As the ICS, under the current legislation, would not legally exist until the time of cut-over, industry noted that there would be a very limited amount of lead-in time for the exporting industry to initiate new electronic export processes in the ICS. Industry indicated that this would result in increased costs, resourcing difficulties and significant delays in trade.
Hence, it is proposed to repeal item 84 and replace it with a provision that will establish a transitional period during which EXIT and the new system can be used (although in respect of certain communications). The new transitional provisions are explained in detail below.
Item 35 - At the end of item 62 of Schedule 3
This item inserts a note at the end of item 62 of Schedule 3 to the ITM Act which explains that this Part of this Bill explains how the amendments made by item 62 and other items that start at the same time will apply.
Item 36 - Item 84 of Schedule 3
This item repeals item 84 of Schedule 3 to the ITM Act which sets out the existing savings provisions. These current savings provisions will be replaced by the provisions explained below.
Item 37 - What the rest of this Part is about
Subitem 37(1) explains that this Part is about the application of certain amendments to be made by the International Trade Modernisation Act (the ITM amendments). Further, this Part relates to the arrangements for transition to the Customs Act as amended by the International Trade Modernisation Act from the unamended Customs Act.
Subitem 37(2) defines a number of terms for the purposes of this Part as follows.
The term 'amended Customs Act' means the Customs Act as amended by the ITM amendments.
The term 'cut-over time' means the time specified by the CEO under subitem (3). The transitional period commences at the time the ITM amendments commence and finishes at the cut-over time.
The term 'ITM amendments' mean those amendments to the Customs Act 1901 relating to exports made by the following legislation:
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- the items of Schedule 3 to the International Trade Modernisation Act that commence when item 62 of that Schedule commences;
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- items 28 and 30 to 43 (inclusive) of Schedule 3 to the Customs Legislation Amendment Act (No. 1) 2002;
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- Part 4 of Schedule 3 to the Customs Legislation Amendment Act (No. 1) 2003 (currently the Customs Legislation Amendment Bill (No. 2) 2002 as introduced into the House of Representatives in December 2002); and
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- items 3 and 4 of this Schedule.
It is expected that all of the provisions relating to exports in the International Trade Modernisation Act, including item 62, will be proclaimed to commence in early 2004. In particular, the way in which export entries are able to be made will be changed so that export entries will be able to be made by making an export declaration or using an ACEAN (an accredited client export approval number). There are a number of amendments to the export provisions in the International Trade Modernisation Act that will be made by the legislation set out in the last three dot points. All of these amendments will commence immediately after item 62 of Schedule 3 to the ITM Act. The Customs Legislation Amendment Bill (No. 2) 2002 is currently before the Parliament but it is anticipated that the export amendments in the ITM Act will be proclaimed to commence in early 2004 and hence these provisions will only be effective from early 2004.
The term 'unamended Customs Act' means the Customs Act 1901 as in force without the ITM amendments.
Item 38 - Delayed application of ITM amendments to exports
When the ITM export amendments commence there will be a transitional period during which EXIT and the new computer system (the Integrated Cargo System or ICS) will operate. The Chief Executive Officer of Customs (the CEO) will set the period of the transitional period by setting the cut-over time (subitem 37(3) refers). He will have to do that before the commencement of item 62 of Schedule 3 to the International Trade Modernisation Act and the period cannot be longer than 30 days (including Sundays and holidays (see definition of days in subsection 4(1) of the Customs Act)). The end of that period is known as the 'cut-over time'.
However, under these provisions a person will not have a choice as to what system they use during the transitional period. These items set out which system must be used. For goods that are intended to be exported after the cut-over time, the amended Customs Act will apply to that exportation and hence if the person communicating an entry to Customs wants to do so electronically they must do so using the ICS (it is proposed that the CEO will make a determination under section 126DA so that the ICS must be used to communicate with Customs electronically) (subitem 38(1) refers). Further, all of the new obligations relating to goods intended to be exported will apply to those goods, however see the qualifications below.
For those goods that are intended to be exported prior to the cut-over day the unamended Customs Act will apply to those goods, and hence if the person wants to send an export entry to Customs by computer in respect of those goods, he or she must do so using EXIT (subitem 38(1) refers - see note).
The International Trade Modernisation Act will introduce a number of new obligations in respect of goods intended to be exported as follows:
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- new subsection 99(3) will prohibit a holder of a warehouse licence from releasing goods for export from the warehouse unless they have been entered for export, there is an authority to deal in force and in respect of certain goods, the holder has checked with Customs that there is such authority;
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- new section 102A provides that a holder of a warehouse licence must report to Customs certain receipts and removals of goods intended to be exported;
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- new subsection 114E(1) provides that certain goods cannot be delivered to a wharf or airport unless there is an authority to deal with the goods;
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- new section 114F requires a person who receives certain goods at a wharf or airport to report the receipt of the goods to Customs and to report to Customs the removal of those goods in certain circumstances; and
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- new section 117AA introduces requirements in respect of the consolidation of prescribed goods.
During the transitional period these provisions will apply to goods intended to be exported after the cut-over time, but people who breach them will not commit an offence. Subitem 38(2) provides that an act or omission before the cut-over time does not constitute an offence against new subsection 114E(1) or 114F(2).
The other provisions, ie subsection 99(3) and sections 102A and 117AA, apply in respect of prescribed goods. If no goods are prescribed, the obligations in these provisions do not operate. Hence, it is proposed that the regulations which will prescribe the goods for the purposes of these provisions will not commence until the end of the transitional period. That is, those provisions will not impose any obligations on people during the transitional period.
Item 39 - Goods originally intended to be exported before the cut-over time but not exported before that time
The provisions in item 38 provide that during the transitional period the unamended Customs Act applies to exportations and departures intended before the cut-over time and that EXIT must be used for any computer communications. For exportations and departures intended at or after the cut-over time, the amended Customs Act applies to them and the ICS must be used to communicate electronically with Customs. Since these systems are not compatible, provisions are required to cover the circumstance where a goods' exportation or a ship or aircraft's departure is delayed. Items 39, 40 and 41 deal with these circumstances.
Item 39 applies to goods that were intended to be exported prior to the cut-over period which were not so exported, and subsequently there is an intention to export them after the cut-over period (subitem 39(1) refers).
Without any further provisions, once the cut-over time has elapsed and goods have not been exported, the goods become subject to the amended Customs Act (subitem 39(2) sets this out to avoid doubt). A person wishing to export must re-enter the goods for export under the ICS.
If a Certificate of Clearance has not been given before the cut-over time and departure time is changed to some time after the cut-over time, anything done under the unamended Customs Act in relation to the proposed exportation of the goods does not have effect for the purposes of the amended Customs Act (subitem 39(3) refers). Under the amended and unamended Customs Act, section 118 makes it an offence for a master or pilot to depart with his or her ship or aircraft without a Certificate of Clearance. A Certificate of Clearance is the last thing that a master of a ship or a pilot of an aircraft must get from Customs before departing Australia. Under these provisions if a Certificate of Clearance has not been given and the goods are intended to be exported after the cut-over time, any entries made under the unamended Customs Act will no longer have any effect and they will have to be remade. If a Certificate of Clearance has been given, the goods will not need to be re-entered and the Certificate of Clearance has effect for the amended Customs Act (see subitem 40(3) below). So, the master or pilot may lawfully depart with his or her ship or aircraft.
There are no charges for making communications to Customs relating to exports and it is considered that in most circumstances if a Certificate of Clearance has not been given it will not be too onerous to require people to resubmit certain communications in the new system. However, item 41 does set out an exemption to this, where the CEO can, in effect, exempt people from the requirement to remake their communications in exceptional circumstances.
Item 40 - Departures originally intended to happen before the cut-over time but not happening before that time
Item 40 deals with ships and aircraft whose departure is delayed from before the cut-over time until after that time. There are a number of obligations in the Customs Act that apply to the departure of a ship or aircraft. Item 40 sets out what will happen if these are delayed so that the intended date of departure changes from before the cut-over time to after that time (subitem 40(1) refers).
Once the transitional period has finished the ITM amendments will apply to the departure of the ship or aircraft (subitem 40(2) makes this clear).
However, if a Certificate of Clearance has been given under the unamended Customs Act to the master or pilot, the Certificate will have effect for the purposes of the amended Customs Act (subitem 40(3) refers). Under the unamended Customs Act a Certificate of Clearance is given once an outward manifest is given to Customs. The outward manifest specifies all of the goods, except certain prescribed goods, on board the ship or aircraft. That is, an outward manifest will be lodged with Customs once the goods are on board the ship or aircraft, and hence the Certificate of Clearance will only be given once the goods are on board. The Certificate of Clearance is the last clearance that a ship or aircraft needs from Customs in order to depart from Australia (and all of the other statutory obligations applying the goods on board and to the ship or aircraft should have been satisfied by this time).
In those circumstances where it was intended that a ship or aircraft depart before the cut-over time and a Certificate of Clearance has been given in respect of the ship or aircraft, but the departure of the ship or aircraft is delayed until after the cut-over time it is considered too onerous to require all of the statutory obligations to be re-satisfied under the amended Customs Act. If this were required, the departure of the ship or aircraft may be further delayed. Hence, if a ship or aircraft has a Certificate of Clearance under the unamended Customs Act it can depart after the cut-over time without further obligations having to be satisfied.
If a Certificate of Clearance has not been given, anything done under the unamended Customs Act in relation to the departure does not have effect for the purposes of the amended Customs Act (subitem 40(4) refers). Under this provision, if a Certificate of Clearance has not been given and the goods are intended to be exported after the cut-over time, any manifests made under the unamended Customs Act will no longer have any effect and they will have to be remade. Under item 39, the goods on board the ship or aircraft will also have to be re-entered. However, note that item 41 contains an exemption to this rule.
Item 41 - Continued application of old law to exportation after cut-over time in exceptional circumstances
As explained above items 39 and 40 provide an exception to the general rule established by item 38 that during the transitional period, exportations and departures intended before the cut-over time are subject to the unamended Customs Act and those intended after the cut-over time are subject to the amended Customs Act. In order to not place too onerous obligations on people, if a ship or aircraft is the subject of a Certificate of Clearance, the Certificate has effect for the new law and the owners of the goods on board do not need to re-enter the goods. If there is no Certificate of Clearance, the goods must be re-entered and the relevant manifests and applications must be remade in accordance with the amended Customs Act.
It is recognised that there may be exceptional circumstances which prevent goods intended to be exported before the cut-over time from being so exported where a Certificate of Clearance has not been given in respect of the relevant ship or aircraft. Under item 41, the unamended Customs Act will continue to apply to an exportation of goods or departure of a ship or aircraft carrying goods, that occurs after the cut-over time if:
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- before the cut-over time:
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- the goods were intended to be exported before the cut-over time;
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- they had been entered for export;
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- they were subject to an authority to deal;
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- less than 30 days has elapsed since the intended day of exportation;
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- the goods were subject to the control of Customs at some time during the transitional period; and
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- the CEO has determined that the new law should not apply to the exportation of the goods.
It is proposed to limit the circumstances in which this exception will apply so that the goods must have been entered, they must have been subject to an authority to deal and must have been under Customs control (that is, they must have been delivered to a prescribed place for export). If the goods meet all of these criteria, and the CEO determines that the amended Customs Act should not apply to the exportation, the unamended Customs Act will apply to the exportation. Further, the unamended Customs Act will only continue to apply for 30 days after the intended day of exportation (being a day as notified in the entry before the cut-over time).
The CEO will only be able to make a determination if he is satisfied that exceptional circumstances will prevent or prevented the exportation of the goods before the cut-over time (subitem 41(3)). It is possible that the CEO may make determinations which apply to goods or to a class of goods. For example, if bad weather delayed ships entering a port and being loaded, but the goods were at the wharf ready to be loaded, he may determine that goods that were not loaded because of such delay would be subject to the unamended Customs Act (and therefore would not require re-entry).
Subitem 41(4) makes it clear that item 41 applies despite items 38, 39 and 40.