EXPLANATORY STATEMENT
CEO Specification No. 3 of 2005
Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Act 2004
Section 6 of the Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Act 2004 (the Application Act) provides: “The CEO must, by legislative instrument, specify a time not more than 40 days (including Sundays and holidays) after the import cut-over time as the turn-off time.”
Background and Instrument
On 15 July 2005, the CEO specified 2 am in the Australian Capital Territory on 7 October 2005 to be the turn-off time in CEO Specification No. 2 of 2005 to meet his statutory obligation. At that time, section 6 of the Application Act required the CEO to specify the turn-off time before the ITM import amendments commenced (which, not having been proclaimed earlier, commenced on 19 July 2005).
As was indicated in the Explanatory Statement to CEO Specification No. 2 of 2005, the Minister for Justice and Customs had announced that a Bill would be introduced into the Parliament during the 2005 Spring Sittings to allow the import cut-over time to be extended until 12 October 2005 and turn-off time delayed until 21 November 2005. This was to address the concerns of the importing community and their agents that they would not have the systems in place in time to communicate with Customs using the new Integrated Cargo System in relation to ships and aircraft (or goods on board) arriving on or after 2am in the Australian Capital Territory on 28 August 2005. The extra time would allow communicators additional time to prepare and test their electronic systems.
The Customs Amendment (Extension of Import Cut-over Time) Act 2005 repealed and substituted sections 5 and 6 of the Application Act. New section 5 set the import cut-over time as 2am in the Australian Capital Territory on 12 October 2005. The repeal and substitution of section 6 required the CEO to make a new legislative instrument to specify a new turn-off time.
In CEO Specification No. 3 of 2005 , the CEO has specified that the turn-off time is 2am in the Australian Capital Territory on 21 November 2005. This is the latest possible day that the CEO could specify under the legislation. The 40 day gap between import cut-over time and turn-off time will enable processes started in SCA, ACA and COMPILE to be completed in those systems. This is because these systems are not compatible with the ICS.
Consultation
The importing community and their agents have been consulted about the proposal to specify the turn-off time.
All electronic cargo reports, impending arrival and actual arrival reports for vessels and aircraft are now being made under the Integrated Cargo System (ICS). The Sea Cargo Automation and Air Cargo Automation systems will therefore be able to be turned off on 21 November 2005.
There are still some brokers and freight forwarders who have not been able to successfully move from the legacy system for import declarations (COMPILE) to the ICS. As at 14 November 2005, about 7% of declarations (Customs entries) were being submitted in COMPILE. Despite a concerted effort by Customs, software providers and the businesses concerned, a residual group of service providers do not expect to be able to conduct their business successfully in ICS by the turn-off time. If COMPILE were not available after 21 November 2005, and their clients were not able to quickly find other ways to make declarations to Customs, their imports might be impeded. The CEO has therefore made CEO Determination No. 2 of 2005 which provides that, for a group of brokers/forwarders, COMPILE will continue to be used as a contingency arrangement for a short period.
Commencement
The instrument commences on the day on which it is registered.
Overview
The Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Act 2004 was enacted to streamline the process of importing goods into Australia by transitioning from legacy systems to a more modern, integrated system. The Act was introduced to address the need for updating customs operations to align with international trade practices and improve efficiency. It was enacted by the Parliament of Australia to facilitate the implementation of the International Trade Modernisation measures. The policy objective of the Act was to ensure a smooth transition to the new Integrated Cargo System (ICS) for handling import declarations, thereby reducing delays and improving the accuracy of customs processes. CEO Specification No. 3 of 2005, made under this Act, specifies the turn-off time for legacy systems and sets the timeline for transitioning to the ICS, ensuring that the importing community has adequate time to adjust to the new systems while minimizing disruptions.
Scope and Application
The Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Act 2004 applies to entities and individuals involved in the import and export of goods in Australia, including brokers, freight forwarders, importers, and exporters. The Act primarily concerns the implementation of international trade modernisation measures and other legislative changes, with a focus on the transition from legacy systems to the Integrated Cargo System (ICS). Geographically, the Act applies nationally, encompassing all states and territories within Australia. The Act was amended by the Customs Amendment (Extension of Import Cut-over Time) Act 2005, which extended the transition period for these systems. The CEO Specification No. 3 of 2005 further refines the implementation timeline, setting the turn-off time for legacy systems to 2 am in the Australian Capital Territory on 21 November 2005, to accommodate the transition to the ICS. Any exclusions or exemptions are minimal, primarily focusing on the contingency arrangements for a small group of brokers and forwarders who have not yet transitioned to ICS, as outlined in CEO Determination No. 2 of 2005.
Key Provisions
The Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Act 2004 (the "Application Act") mandates that the Chief Executive Officer (CEO) of Customs must specify a turn-off time for the legacy systems used in customs processes. This is to ensure a smooth transition to the new Integrated Cargo System (ICS). Section 6 of the Application Act requires that the turn-off time is not more than 40 days after the import cut-over time (section 6(1)). The CEO is tasked with determining this turn-off time through a legislative instrument, ensuring that the transition to the new system is managed efficiently and within a legally prescribed timeframe.
In fulfilling his obligations under the Act, the CEO has issued CEO Specification No. 3 of 2005, which specifies that the turn-off time will be 2 am in the Australian Capital Territory on 21 November 2005 (section 6(1)). This is the latest allowable date under the legislation, providing ample time for the transition from the old systems (SCA, ACA, and COMPILE) to the new ICS. The specification aims to allow businesses sufficient time to adapt to the new electronic reporting requirements and to complete any outstanding processes in the legacy systems before they are turned off. The CEO has also consulted with the importing community and their agents to address their concerns and ensure that the transition is as smooth as possible.
Breach of the provisions outlined in the Act or the CEO’s specifications can have significant consequences. Although the Act does not explicitly state penalties for non-compliance with the turn-off time, failure to adhere to the specified timelines could result in operational disruptions and potential legal ramifications for businesses that do not transition to the ICS by the turn-off time. Additionally, the CEO has provided a contingency arrangement under CEO Determination No. 2 of 2005, allowing a residual group of brokers and freight forwarders to continue using the COMPILE system for a short period beyond the turn-off time. This determination is intended to prevent any significant impediments to import processes for those who are not yet ready to fully transition to the ICS.
The Act and the accompanying specifications serve to provide a structured and legally compliant framework for the transition to the new ICS. The CEO’s role in specifying the turn-off time and providing contingency arrangements underscores the importance of collaboration and communication with stakeholders to ensure a successful transition. Businesses are expected to comply with the specified timelines to avoid any potential operational disruptions or legal issues.