Customs Regulations (Amendment)

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Customs Regulations (Amendment) 1991 No. 228

EXPLANATORY STATEMENT

STATUTORY RULES 1991 No. 228

CUSTOMS ACT 1901

CUSTOMS REGULATIONS (AMENDMENT)

ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR SMALL BUSINESS AND CUSTOMS

Section 270 of the Customs Act 1901 ("the Act") provides in part that "the Governor-General may make regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed for giving effect to this Act or for the conduct of any business relating to the Customs ..."

Background

The proposed Statutory Rules will amend the Customs Regulations (the Regulations)to provide for the electronic transmission to the Australian Customs Service of information concerning imported goods, and the electronic lodgement of import entries in respect of such goods. At present entries can be created electronically by importers who have access to the Customs Computer system, however the importer must produce to Customs the signed 'hard copy' of the entry to comply with the legislative requirements for entries. The proposed electronic entry system will provide an alternative to the documentary system by enabling importers to give entries electronically without the need for paper entries, and will enable Customs to electronically give authority under the Act to deal with imported goods. The removal of the need for paper entries and authorities will significantly enhance the efficiency of and control over the increasing volume of Australia's international trade, and improve the monitoring of that trade by providing more accurate and timely statistics of imports.

An electronic entry regime for exports known as EXIT was introduced earlier this year by the Customs and Excise Legislation Amendment Act 1990 (Act No. 111 of 1990). A pilot scheme of electronic lodgement for imports has operated since July 1990 under the Motor Vehicles Plan, and has proved extremely successful. Since that pilot scheme, and the success of the EXIT exports regime, there has been a public expectation and strong pressure from all interested parties, including the Government, to continue to expand electronic facilities so that the benefits of the paperless trading system can be made available to the entire trading community.

In particular the proposed Statutory Rules, amend the Regulations to provide that entries may be given to Customs electronically from 29 July 1991 via a prescribed computer system operated by the Customs Service. The proposed amendments also prescribe the information required to be given with an electronic entry and provide that authority to deal with goods may also be given electronically. All of the amendments are explained in greater detail below:

Amendments to the Customs Regulations

1)       Commencement

Regulation 1.1       provides that these Regulations commence on 29 July 1991.

2)       Amendment

Regulation 2.1       is a formal machinery provision which provides that the Customs Regulations are amended as set out in these Regulations.

3)       Regulation 23AA (Authority to deal with goods)

Regulation 3.1       is a technical provision which amends subregulation 23AA(1) consequential upon new subregulation 23AA(1A). The effect of the amendment is to restrict this subregulation to those entries which are not given electronically by means of the new Compile 3 computer system; eg. manual or documentary entries in particular.

Regulation 3.2       inserts new subregulation 23AA(1A) which provides that where an entry is given electronically by means of the Compile 3 system, an authority to deal with those goods under section 39 of the Customs Act 1901 must also be given by that electronic facility.

The new subregulation also prescribes that such an authority must set out:

-       the name of the owner of the goods;

-       the name of the agent of the owner, if any;

-       the entry to which the authority relates, which is evidenced by the entry number;

-       any conditions under subsection 39(2) of the Customs Act 1901 to which the authority is subject; and

-       the date on which the authority is given.

4)       Regulation 36 (Entry - manner in which made)

Regulation 4.1       is a technical provision which amends subregulation 36(1) consequential upon new regulation 36A. The effect of the amendment is similar to Regulation 3.1 above; it effectively restricts this subregulation to those entries which are not given electronically by means of the new Compile 3 computer system.

Regulation 4.2       is a technical provision which amends subregulation 36(2) consequential upon new regulation 36A, for similar reasons to those outlined above.

5)       New Regulation 36A

Regulation 5.1 inserts new regulation 36A which provides that for the purposes of Sections 36 and 37 of the Customs Act 1901 an entry may be given electronically by means of the "Compile 3" computer system used by Customs on 29 July 1991 for the purpose of handling such entries.

The "Compile 3" computer system is the vehicle by which the facility of electronic lodgement and clearance of entries will be made available to the importing community, as an alternative to the manual, documentary means of entering goods. It contains, as part of the system, sophisticated risk management profiles which will maintain the necessary levels of intervention where community protection issues are involved, while not prejudicing the overall advantages of a paperless trading system.

6)       Regulation 7 (Entries for home consumption or warehousing: required particulars)

Regulations 6.1, 6.2 and 6.3 are technical provisions which amend subregulations 37(1), 37(2) and 37(3) respectively, consequential upon new regulation 36A. The amendments have the same effect and are for the same reason as outlined in proposed Regulation 4.

Regulation 6.4       omits subregulation 37(4) from the Regulations. This subregulation prescribed the required particulars for entries of good owned by the Commonwealth which at the time they are entered for home consumption or warehousing are not intended to be used for the purposes of trade. Since the repeal of Item 1 of Part I of Schedule 4 to the Customs Tariff Act 1987 by Act No. 127 of 1990 (which provided for the concessional entry of such goods) subregulation 37(4) has become unnecessary.

7)       New Regulation 38

Regulation 7.1       inserts new regulation 38 which prescribes the particulars required in an entry given electronically by means of the "Compile 3". The necessary particulars are substantially similar to those particulars already required for manual entries, with the addition of the owner's and agent's in-house reference numbers for documents relating to the specific transaction the subject of the entry (new paragraphs 38(1)(d) and (e)).

These particulars are required to enhance the auditing powers of the ACS in respect of electronically entered goods by requiring a means of identifying documents which, at the time of entry, were those relating to the importation. Therefore the owner's or agent's reference number for such entries will perform the identification function in the same manner as documents which are physically presented and inspected when goods are manually entered are perforated.

 

Overview

The Customs Regulations (Amendment) 1991 No. 228 was enacted to address the inefficiencies and outdated practices within Australia's customs process, particularly the reliance on paper-based entry systems for imported goods. This amendment to the Customs Act 1901 was introduced to facilitate the electronic transmission of information and the electronic lodgement of import entries, thus enhancing the efficiency and accuracy of trade monitoring. The policy objective was to modernise customs operations by enabling electronic entry systems, thereby reducing the need for physical documents and improving the accuracy and timeliness of import statistics. The amendments were issued under the authority of the Minister of State for Small Business and Customs and commenced on 29 July 1991. The proposed Statutory Rules amend the Customs Regulations to allow for electronic entries via a specified computer system, the "Compile 3" system, which provides sophisticated risk management capabilities. This change facilitates a more streamlined and efficient customs process, in line with the successful implementation of the EXIT regime for exports. The regulations also specify the particulars required for electronic entries, ensuring that electronic entries are as informative and verifiable as their paper-based counterparts. By replacing the paper-based entry system with an electronic one, the amendments aim to significantly improve the control and monitoring of Australia's international trade.

Scope and Application

The Customs Regulations (Amendment) 1991 No. 228 applies to all importers, exporters, and relevant industry participants who are engaged in the import and export of goods to and from Australia. This amendment introduces the electronic lodgement of import entries and the electronic transmission of information concerning imported goods, thereby updating the existing processes that require paper entries. The scope of this amendment is national, extending to all jurisdictions within Australia and applying to any business conducted under the Customs Act 1901. It is noteworthy that this amendment does not exclude any specific person, entity, or industry from its application, though it does establish a new electronic entry regime that replaces the former paper-based system. The Regulations commence on 29 July 1991 and are designed to enhance the efficiency and control over Australia’s international trade by enabling more accurate and timely statistics of imports. The new electronic system, referred to as the "Compile 3" computer system, provides an alternative to manual entry processes and aims to streamline customs operations. The amendments also include provisions for the electronic giving of authority to deal with imported goods, further integrating the electronic processes into the customs regime.

Key Provisions

The main operative sections of the Customs Regulations (Amendment) 1991 No. 228, issued under the authority of the Minister of State for Small Business and Customs, amend the Customs Regulations to allow for the electronic transmission of information concerning imported goods and the electronic lodgement of import entries. Regulation 36A introduces the electronic entry system, known as "Compile 3," which provides an alternative to the documentary system. This system is designed to enhance efficiency and control over Australia's international trade and improve the accuracy of import statistics. Regulation 23AA(1A) stipulates that when an entry is made electronically, an authority to deal with the goods must also be given electronically, specifying certain details such as the name of the owner and any conditions to which the authority is subject. Regulation 38 prescribes the particulars required for an electronic entry, which are similar to those required for manual entries, including the owner's and agent's in-house reference numbers for documents related to the specific transaction. The Customs Regulations (Amendment) impose several obligations on the parties involved. Importers must now comply with the new electronic entry system by lodging entries electronically via the "Compile 3" computer system. This system is to be used instead of the traditional manual, documentary entry method, unless otherwise specified. Importers are also required to provide specific details when giving authority to deal with goods electronically, as outlined in Regulation 23AA(1A). Additionally, they must ensure that all necessary particulars are included in their electronic entries, as prescribed in Regulation 38. These particulars must be substantially similar to those required for manual entries, with the addition of in-house reference numbers for documents relating to the importation. The Customs Service, on the other hand, must ensure that the "Compile 3" system is operational and capable of handling electronic entries and authorities. They must also maintain the sophisticated risk management profiles within the system to address community protection issues while facilitating the benefits of a paperless trading system. Any breach of the Customs Regulations (Amendment) may result in civil or criminal consequences. While the explanatory statement does not detail specific penalties, breaches of customs regulations generally can lead to fines and other penalties under the Customs Act 1901. For example, under section 262 of the Customs Act, an individual can be fined up to 5,000 penalty units ($830,000 as of 2021) for offences such as failing to comply with a requirement to lodge an entry or providing false or misleading information in an entry. Additionally, under section 263, an individual can be fined up to 10,000 penalty units ($1,660,000 as of 2021) for more serious offences such as smuggling or using false documents. It is essential for importers and the Customs Service to adhere to the new regulations to avoid these potential penalties and ensure smooth operations within the Australian trade system.

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