EXPLANATORY STATEMENT
Customs By-law No. 1540737
Customs Act 1901
The Customs Act 1901 (the Customs Act) concerns customs related functions and is the legislative authority that sets out the customs requirements for the importation, and exportation, of goods to and from Australia.
Section 271 of the Customs 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 by‑law, the Comptroller‑General of Customs may make by‑laws for the purposes of that item.
A Customs Tariff is defined in section 4 of the Customs Act to mean an Act imposing duties of customs. The Customs Tariff Act 1995 (the Customs Tariff Act) is a Customs Tariff for the purposes of the Customs Act.
Background
Schedule 4 of the Customs Tariff Act identifies concessional rates of duty for certain goods. In particular, item 16 of Schedule 4 provides for goods that are covered by an article of a free trade agreement, being an article that is prescribed by by‑law that relates to the export of goods from Australia for repair, renovation, alteration or other similar processes to be dutiable at the rate of “Free”.
Article 2.4 of the Korea‑Australia Free Trade Agreement (the KAFTA) deals with goods to be re‑entered after those goods are repaired or altered.
Article 2.4(1) of the KAFTA provides that neither Party (to the agreement) shall apply a customs duty to a good, regardless of its origin, that re‑enters its territory after that good has been temporarily exported 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 the territory of the Party from which the good was exported for repair or alteration; or
- may have resulted in an increased value of the good.
Article 2.4(2) provides that neither Party (to the agreement) shall apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of the other Party for repair or alteration.
Article 2.4(3) provides that, for the purposes of this Article, repair or alteration does not include an operation or process that:
- destroys a good's essential characteristics or creates a new or commercially different good; or
- transforms an unfinished good into a finished good.
Relevantly, section 271 of the Customs Act and item 16 of Schedule 4 to the Customs Tariff Act collectively allows for Article 2.4 of the KAFTA to be prescribed in a by‑law.
Instrument
This by‑law, titled “Customs By‑Law No. 1540737” prescribes, and incorporates, Article 2.4 of the KAFTA as a by‑law under the Customs Act.
The KAFTA that was signed in Seoul, South Korea, on 8 April 2014, is not a legislative instrument and, as a result, is incorporated into the by‑law in accordance with paragraph 14(1)(b) of the Legislative Instruments Act 2003 (the Legislative Instruments Act); that is, the by‑law incorporates the relevant Article as in force at the time the by‑law commences.
The purpose of this by‑law is to provide for goods covered by Article 2.4 of the KAFTA to be dutiable at the rate of “Free” if those goods are exported from Australia for the purpose of repair, renovation, alteration or other similar processes.
This by‑law will be registered on the Federal Register of Legislative Instruments and will be a legislative instrument for the purpose of the Legislative Instruments Act, and can then be incorporated in accordance with paragraph 14(1)(a) of that Act.
A statement of Compatibility with Human Rights has been completed for the instrument in accordance with the requirement in paragraph 26(f) of the Legislative Instruments Act, and is at Attachment A.
Consultation
No consultation was undertaken in accordance with section 17 of the Legislative Instruments Act in relation to this by‑law, as it does not substantially alter existing arrangements.
Commencement
This commences on 1 January 2016.
ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Customs By-Law No. 1540737
This legislative instrument, titled “Customs By‑Law No. 1540737” (the by‑law), is compatible with the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
The by‑law No. 1540737 prescribes Article 2.4 of KAFTA for the purpose of item 16 of Schedule 4. Article 2.4 of KAFTA is titled “Goods Re‑entered after Repair or Alteration” and provides that:
- Neither Party shall apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported 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 the territory of the Party from which the good was exported for repair or alteration; or
- may have resulted in an increased value of the good.
- Neither Party shall apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of the other Party for repair or alteration.
- For the purposes of this Article, repair or alteration does not include an operation or process that:
- destroys a good's essential characteristics or creates a new or commercially different good; or
- transforms an unfinished good into a finished good.
The “Korea‑Australia Free Trade Agreement” means the Korea‑Australia Free Trade Agreement done at Seoul, South Korea on 8 April 2014 as in force from the day the instrument is signed.
The purpose of this by‑law is to provide for goods covered by Article 2.4 of the KAFTA to be dutiable at the rate of “Free” if those goods are exported from Australia for the purpose of repair, renovation, alteration or other similar processes.
Human Rights Implications
This by‑law does not engage, impact on, or limit in any way, the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Conclusion
This legislative instrument is compatible with human rights as it does not raise any human rights issues.
Christie Sawczuk
Delegate of the Comptroller-General of Customs