EXPLANATORY STATEMENT
Customs By-law No. 0904405
Customs Act 1901
Section 271 of the Customs Act 1901 (the Act) provides, in part, that where an item of a Customs Tariff is expressed to apply to goods, or to a class or kind of goods, as prescribed by a by-law, the Chief Executive Officer of Customs may make by-laws for the purposes of that item. A Customs Tariff is defined in section 4 of the Act to mean an Act imposing duties of customs, that is the Customs Tariff Act 1995 (the Customs Tariff Act).
Background
Item 20C was inserted into Part II of Schedule 4 to the Customs Tariff Act by the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008 (Act No. 128 of 2008). Item 20C sets out a duty rate of ‘Free’ for goods that are covered by an article of a free trade agreement between Australia and a foreign country relating to the export of goods from Australia for one or more of the following:
a) repair;
b) renovation;
c) alteration;
d) other similar processes.
Both the relevant article, and the free trade agreement between Australia and a foreign country are required to be prescribed by by-law.
Article 2.6 of the Australia-US Free Trade Agreement (the Agreement), done at Washington DC on 18 May 2004 provides, in part, that:
Neither Party may apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been exported temporarily from its territory to the territory of the other Party for repair or alteration, regardless of whether the repair or alteration could be performed in its territory.
In this context, Australia and the United States are Parties.
Item 20C gives effect to Article 2.6 of the Agreement.
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Instrument
New By-law No. 0904405, which has effect on and from the date that Schedule 1 to the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008 commences, prescribes for the purposes of item 20C in Part II of Schedule 4 to the Customs Tariff Act, Article 2.6 of the Australia-US Free Trade Agreement.
Consultation
No consultation was undertaken specifically in relation to the amendments as they implement Australia’s international obligations under the Agreement.
Commencement
New By-law No. 0904405 takes effect on and from the date that Schedule 1 to the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008 commences, that is 6 March 2009.
Overview
The Customs By-law No. 0904405, enacted in 2009, was introduced to facilitate the implementation of Australia's obligations under the Australia-US Free Trade Agreement, specifically relating to the temporary export of goods for repair or alteration. This by-law was made under section 271 of the Customs Act 1901, which allows the Chief Executive Officer of Customs to create by-laws for items in the Customs Tariff that are prescribed by a by-law. The policy objective is to ensure that goods exported temporarily for repair or alteration from Australia to the United States and vice versa are exempt from customs duties upon re-entry, as stipulated in Article 2.6 of the Australia-US Free Trade Agreement. The by-law prescribes Article 2.6 of the Agreement for the purposes of item 20C in Part II of Schedule 4 to the Customs Tariff Act, which was inserted by the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008. The by-law came into effect on 6 March 2009, the same date that Schedule 1 of the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008 commenced.
Scope and Application
The Customs By-law No. 0904405 applies to goods covered by the Australia-US Free Trade Agreement, specifically those exported temporarily from Australia to the United States for repair or alteration and subsequently re-entering Australia. This by-law implements section 271 of the Customs Act 1901, allowing the Chief Executive Officer of Customs to make by-laws to enforce certain items in the Customs Tariff. The by-law prescribes Article 2.6 of the Australia-US Free Trade Agreement, which ensures that goods re-entering Australia after temporary export for repair or alteration are exempt from customs duties. This applies nationally under Australian law, aligning with the obligations set out in the trade agreement. The by-law does not specify exclusions or exemptions beyond the terms of the agreement and takes effect from 6 March 2009, the commencement date of the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008.
Key Provisions
The Customs By-law No. 0904405 implements specific provisions under the Customs Act 1901 and the Customs Tariff Act 1995, particularly focusing on item 20C in the Customs Tariff Act. This by-law applies to goods exported from Australia for repair, renovation, alteration, or similar processes, and subsequently re-entering Australia without incurring customs duty. As per section 271 of the Customs Act, the Chief Executive Officer of Customs is empowered to create by-laws that enforce such provisions. Item 20C, which was inserted into the Customs Tariff Act through the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008, sets the duty rate at 'Free' for these specified goods, provided they are covered by an article in a free trade agreement between Australia and a foreign country. This by-law specifically references Article 2.6 of the Australia-US Free Trade Agreement, which ensures that neither Australia nor the United States imposes customs duties on goods that re-enter their territory after being temporarily exported for repair or alteration.
The Customs By-law No. 0904405 imposes obligations on entities exporting goods from Australia for repair or alteration under the provisions of item 20C. These entities must ensure that the goods are documented and handled in compliance with the by-law to avoid any customs duty upon re-entry. Additionally, they must adhere to the conditions stipulated in Article 2.6 of the Australia-US Free Trade Agreement, ensuring that the goods are exported and re-imported under the specified temporary export regime. The by-law also mandates that the relevant articles of the free trade agreement, as well as the agreement itself, be prescribed by the by-law to enforce the duty-free treatment of the goods.
Failure to comply with the provisions of the Customs By-law No. 0904405 can result in significant legal consequences. While the explanatory statement does not explicitly detail the penalties or consequences for breach, it is implied that non-compliance with the Customs Act 1901 could result in penalties under that Act. Typically, breaches of customs laws can lead to financial penalties, seizures of goods, or other enforcement actions. The exact penalties can vary depending on the severity and nature of the breach, but they may include fines and potential criminal charges for more serious infractions. The by-law ensures that the duty-free status of the goods is maintained, thereby protecting both Australian exporters and importers from undue customs charges.