Customs By-Law No. 1540737

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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:

  1. 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:
    1. could be performed in the territory of the Party from which the good was exported for repair or alteration; or
    2. may have resulted in an increased value of the good.
  2. 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.
  3. For the purposes of this Article, repair or alteration does not include an operation or process that:
    1. destroys a good's essential characteristics or creates a new or commercially different good; or
    2. 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

Overview

The Customs By-law No. 1540737, enacted in 2015 under the authority of the Customs Act 1901, addresses the specific need to implement provisions of the Korea-Australia Free Trade Agreement (KAFTA) regarding the temporary export of goods for repair, renovation, alteration, or similar processes. The by-law was introduced to ensure compliance with Article 2.4 of the KAFTA, which mandates that neither party shall apply customs duties to goods that are re-entered after being temporarily exported for repair or alteration, irrespective of whether the repair or alteration could have been performed within the exporting party's territory or has resulted in an increased value of the goods. The by-law was enacted by the Parliament of Australia and incorporates relevant provisions from the KAFTA, ensuring that such goods are dutiable at the rate of “Free” when re-entering Australia. This legislative measure is designed to facilitate smoother trade between Australia and South Korea by removing customs duties on goods that undergo repair or alteration in the other country.

Scope and Application

The Customs By-Law No. 1540737, issued under the Customs Act 1901, applies to goods that are covered by Article 2.4 of the Korea-Australia Free Trade Agreement (KAFTA), which deals with the export of goods from Australia for repair, renovation, alteration, or similar processes, and their subsequent re-entry into Australia. This by-law aims to implement the duty-free re-entry of these goods, in alignment with the provisions of the KAFTA. It is applicable nationally across Australia and is a legislative instrument under the Legislative Instruments Act 2003. The by-law excludes any goods whose repair or alteration results in the destruction of essential characteristics or the creation of a new or commercially different good, or the transformation of an unfinished good into a finished good, as specified in Article 2.4 of the KAFTA. The by-law came into effect on 1 January 2016 and is compatible with human rights as it does not impact or limit any rights recognised under relevant international instruments.

Key Provisions

The Customs By-law No. 1540737, enacted under the authority of the Customs Act 1901, primarily serves to implement Article 2.4 of the Korea-Australia Free Trade Agreement (KAFTA) regarding the duty-free treatment of goods that are exported from Australia to South Korea for repair, renovation, alteration, or similar processes. This by-law, which commenced on 1 January 2016, is designed to align with the provisions of item 16 of Schedule 4 to the Customs Tariff Act 1995, which provides for concessional rates of duty on certain goods. Specifically, the by-law ensures that goods covered by Article 2.4 of the KAFTA are dutiable at the rate of “Free” when they are exported from Australia for repair or alteration. Entities and individuals involved in the export of goods from Australia to South Korea for repair, renovation, alteration, or other similar processes must adhere to the provisions of the by-law. This includes ensuring that the goods meet the criteria specified in Article 2.4 of the KAFTA, such as not undergoing a process that destroys their essential characteristics or transforms an unfinished good into a finished good. Exporters are required to provide appropriate documentation and certification that the goods are being exported for the purposes allowed under the by-law. Failure to comply with these requirements may result in the goods being subject to customs duties upon re-entry into Australia. The by-law does not explicitly outline specific offences or penalties for breach within its text. However, under the broader framework of the Customs Act 1901, breaches of customs regulations can result in both civil and criminal consequences. Civil penalties can include fines, with the exact amount determined by the court, while criminal penalties can include imprisonment. The severity of these penalties can vary depending on the nature and extent of the breach, with maximum penalties potentially applying in cases of serious or repeated violations. Additionally, the by-law incorporates the KAFTA as in force at the time the by-law commences, ensuring that the provisions are consistent with the agreement's terms as they existed when the by-law was enacted. The by-law was registered on the Federal Register of Legislative Instruments and is considered a legislative instrument under the Legislative Instruments Act 2003. It has been assessed for compatibility with human rights and was found not to impact any human rights recognised under the Human Rights (Parliamentary Scrutiny) Act 2011.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.