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House of Representatives

Customs Legislation Amendment (Border Compliance and Other Measures) Bill 2006

Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Christopher Martin Ellison)

Customs Legislation Amendment (Border Compliance and Other Measures) Bill 2006

OUTLINE

1. The purpose of this Bill is to amend the Customs Act 1901 (the Customs Act) to:

1.1.1.
allow the Chief Executive Officer of Customs (the CEO) or a Regional Director for a State or Territory to dispose of goods seized by Customs, if the CEO or Regional Director is satisfied that the retention of the goods would constitute a danger to public health or safety;
1.1.2.
allow a Customs officer to restrict access by holders of a security identification card to section 234AA places, ships, aircraft and wharves;
1.1.3.
make minor technical amendments to provisions implementing the Australia-United States Free Trade Agreement;
1.1.4.
allow authorised officers of Customs to request from issuing authorities updated required identity information in relation to security identification cards issued by the issuing authorities;
1.1.5.
require issuing authorities to notify Customs when a security identification card issued by the issuing authorities has expired or has been revoked;
1.1.6.
implement an Accredited Client Program that would enable importers meeting the accreditation requirements to utilise a streamlined entry, reporting and duty payment procedure for the importation of goods;
1.1.7.
confer protection from criminal responsibility for the possession, conveyance and facilitation of the conveyance, of prohibited imports, prohibited exports and smuggled goods (including narcotics) on officers of Customs who engage in those acts in the course of duty and on persons who engage in those acts on instructions from officers of Customs acting in the course of duty; and
1.1.8.
remake a misdescribed amendment to the Customs Act.

Financial Impact Statement

2. The Bill has no financial impact.

Notes on Clauses

Clause 1 Short title

3. This clause provides for the Bill, when enacted, to be cited as the Customs Legislation Amendment (Border Compliance and Other Measures) Act 2006.

Clause 2 Commencement

4. Subclause (1) provides that each provision of this Act specified in column 1 of the table in that subclause commences or is taken to have commenced in accordance with column 2 of the table.

5. Item 1 of the table provides that sections 1 to 3 and anything in this Act not elsewhere covered by the table will commence on the day on which the Act receives the Royal Assent.

6. Item 2 of the table provides that Schedule 1 commences on the day after this Act receives the Royal Assent. Schedule 1 allows the CEO or a Regional Director for a State or Territory to dispose of seized goods in certain circumstances. This commencement will ensure that these powers can be used as soon as possible.

7. Item 3 of the table provides that Schedule 2 commences on the 28th day after the Act receives the Royal Assent. Schedule 2 allows Customs officers to restrict access by holders of a security identification card to section 234AA places, ships, aircrafts and wharves.

8. Item 4 of the table provides that Schedule 3 commences on the day after which the Act receives the Royal Assent.

9. Item 5 of the table provides that Schedule 5 commences on a single day to be fixed by Proclamation. However, if Schedule 5 does not commence within the period of 6 months after the Act receives the Royal Assent, Schedule 5 will commence on the day after the end of that period.

10. Item 6 of the table provides that Schedule 6 will commence on the day on which the Act receives the Royal Assent.

11. Item 7 of the table provides that items 1 and 2 of Schedule 7 will commence on the day on which the Act receives the Royal Assent.

12. Item 8 of the table provides that items 3 and 4 of Schedule 7 are taken to have commenced immediately after the commencement of item 2 of Schedule 3 of the Customs Legislation Amendment Act 2003 on 4 December 2003. Items 3 and 4 merely correct a drafting error in an earlier Act and makes no change to the substantive law.

13. Subclause (2) provides that column 3 of the table contains additional information that is not part of the Act.

Clause 3 Schedule(s)

14. This clause is the formal enabling provision for the Schedule to the Bill, providing that each Act specified in a Schedule is amended in accordance with the applicable items of the Schedule. In this Bill the Customs Act is being amended.

15. The clause also provides that the other items of the Schedules have effect according to their terms. This is a standard enabling clause for transitional, savings and application items in amending legislation.

Schedule 1 - Dangerous Goods

Customs Act 1901

Item 1 After subsection 206(1)

16. Item 1 inserts new subsection (1A) into section 206 of the Customs Act.

17. Currently, section 206 allows the CEO or a Regional Director for a State or Territory to dispose of goods seized under a seizure warrant or seized without a warrant under subsections 203B(2), 203(2A), 203CA(3) or 203CB(2), where the goods:

17.1.1.
are perishable goods or live animals and the CEO or Regional Director is satisfied that the retention of those goods would constitute a danger to public health, the health of other animals or to plants or to agricultural produce; and
17.1.2.
are a vessel in the possession of an officer of Customs and the CEO or Regional Director is satisfied that the vessel is so unseaworthy that its custody or maintenance is impracticable.

18. However, the current provisions of section 206 do not allow for the disposal of other classes of seized goods the retention of which would also potentially constitute a danger to public health and safety (e.g. explosive material, chemical and biological agents). Customs does not currently possess the necessary staff or infrastructure to safely store these types of goods for extended periods of time.

19. New subsection (1A) allows the CEO or a Regional Director to dispose of any seized goods (including the destruction of the goods) where he or she is satisfied that the retention of the goods would constitute a danger to public health or safety.

Items 2 to 5 Consequential amendments

20. Items 2 to 5 amend the references to subsections 206(1) and 206(2) in subsections 206(3), 206(6) and 206(7) and paragraph 206(5)(c) to include a reference to new subsection 206(1A).

Item 6 Application

21. Item 6 provides that the amendments made by Schedule 1 apply only to goods seized on or after the commencement of this item.

Schedule 2 - Unauthorised entry

Customs Act 1901

22. Section 234AA of the Customs Act allows a Collector of Customs to display a sign at or near a place that is to be used by officers of Customs for the questioning of ship or aircraft passengers, the examining of the personal baggage of such passengers and as a holding place for such passengers. These places are defined as section 234AA places.

23. Under subsection 234A(1) of the Customs Act, it is an offence for a person to:

23.1.
enter into a section 234AA place; or
23.2.
enter on, or be in or on a ship, aircraft or wharf at which a ship is berthed where the personal baggage of a disembarking or embarking passenger is being examined or in the vicinity of the ship, aircraft or wharf.

24. Subsection 234A(1A) sets out several circumstances in which the offence in subsection 234A(1) does not apply. Three such circumstances are where a person enters into the relevant place by authority (paragraph 234A(1A)(a) and (b)) or where the person is a holder of a security identification card who enters into or is in the relevant place for the purposes of his or her employment (paragraph 234A(1A)(ab)). Currently, a security identification card is either an Aviation Security Identification Card (ASIC) or a Visitor Identification Card (VIC) under section 213A of the Customs Act and regulation 170B of the Customs Regulations 1926.

25. In the circumstance where a person is the holder of a security identification card, it is proposed to tighten the exemption from the offence in subsection 234A(1). In addition to holding a card, the person must also not be subject to a written direction from a Collector not to enter into, or be in or on, the relevant place.

26. In most instances, the holders of a security identification card will not be subject to such a written direction from a Collector. However, there are some circumstances in which Customs may wish to issue such directions.

27. For example, there may be instances where the holder of a security identification card asserts that he or she is in a relevant place for the purposes of his or her employment but Customs may not be satisfied that this is the case, particularly if they are in the place outside their normal working hours.

28. Another example is where security identification cards are issued to people who are not employed at airports. For example, ASICs have been issued to foreign officials in order that they may meet visiting foreign diplomats on the tarmac of an international airport. If Customs decides that the presence of these officials in a section 234AA place is of concern due to the security risk posed by such unfettered access or during periods of peak activity, they may issue them with a written direction.

29. Another example is where the holder of a security identification card comes to Customs' attention as being of concern from a border integrity point of view, such as using their access privileges to transport goods without Customs knowledge, and Customs believes it is necessary to issue a written direction to reduce or alleviate this risk.

Item 1 Paragraph 234A(1A)(a)

30. This item amends paragraph 234A(1A)(a) of the Customs Act by omitting the reference to "by authority" and substituting a reference to "by the authority of a Collector". This amendment clarifies that the offence in subsection 234A(1) will not apply by operation of paragraph 234A(1A)(a) only where a person is in a relevant place by the authority of a Collector.

Item 2 Paragraph 234A(1A)(ab)

31. This item repeals and substitutes paragraph 234(1A)(ab) of the Customs Act. New paragraph (ab) applies where a person is a holder of a security identification card who enters into, or is in the place for the purposes of his or her employment and is not subject to a direction under new subsection 234(1B). Therefore, the offence in subsection 234A(1) will not apply by operation of paragraph 234A(1A)(ab) only where both criteria are satisfied.

Item 3 Paragraph 234A(1A)(b)

32. This item amends paragraph 234A(1A)(b) of the Customs Act by omitting the reference to "by authority" and substituting a reference to "by the authority of a Collector". This amendment clarifies that the offence in subsection 234A(1) will not apply by operation of paragraph 234A(1A)(b) only where a person is in a relevant place by the authority of a Collector.

Item 4 After subsection 234A(1A)

33. This item amends section 234A of the Customs Act by inserting new subsection 234A(1B).

34. For the purposes of new paragraph 234A(1A)(ab), new subsection (1B) sets out the power of a Collector to give a written notice to a person who is the holder of a security identification card (within the meaning of section 213A), directing the person not to enter into, or be in or on:

34.1.
a place in relation to which a sign is displayed under subsection 234AA(1); or
34.2.
any of the following:

34.2.1.
a ship;
34.2.2.
an aircraft;
34.2.3.
the wharf at which, or the part of a wharf adjacent to which, a ship is berthed,

at a time when goods being the personal baggage of passengers disembarking from, or embarking on that ship or aircraft are being examined, for the purposes of this Act, at or in the vicinity of the ship, aircraft, wharf or part of a wharf.

Item 5 Subsection 234A(2)

35. This item amends section 234A of the Customs by repealing and substituting subsection 234A(2).

36. Subsection 234A(2) currently provides that subsection 234A(1) does not prohibit a person:

36.1.
who has, or is a member of an authority which has, the management or control of a wharf or wharves or an airport or airports; or
36.2.
who is employed in connexion with the management or control of a wharf or wharves or an airport or airports,

from entering on, or being in or on, a place, ship, aircraft, wharf or part of a wharf for the purposes of that management or control. The people referred to in a paragraph (b) extends to cleaners, handymen, security staff and other staff who are not the actual management of an airport or wharf but are necessary for management and control.

37. It is no longer considered appropriate that people referred to in paragraph (b) should be completely exempt from the offence in subsection 234A(1). Such people will be removed from subsection 234(2) and will become subject to the offence in subsection 234A(1). They will only be exempt from the offence if they satisfy any of the exemptions in subsection 234A(1A).

38. New subsection 234A(2) will limit the complete exemption from the offence in subsection 234A(1) only to a person who has, or is a member of an authority which has, the management or control of a wharf or wharves or an airport or airports.

Schedule 3 - us originating goods

Customs Act 1901

39. Division 1C of Part VIII of the Customs Act contains the rules for determining whether goods imported into Australia from the United States are "US originating goods" and thereby eligible for preferential rates of customs duty. Division 1C was inserted into the Customs Act by Schedule 1 to the US Free Trade Agreement Implementation Act 2004 and implements, for Australia, the Australia-United States Free Trade Agreement (the Agreement). Division 1C commenced on 1 January 2005.

40. However, Division 1C contains a small number of minor errors which mean that Division 1C does not accurately reflect the terms of the Agreement. The amendments set out in this Schedule will correct these errors.

Items 1 and 2 Subsection 153YA(1)

41. These items will amend subsection 153YA(1) of the Customs Act by repealing the current definition of "national" and inserting a new definition of "person of the US" which is defined as a person of a Party within the meaning, in so far as it relates to the US, of Article 1.2 of the Agreement. This new definition is being inserted for the purposes of items 3 and 4 of Schedule 3.

Item 3 and 4 Paragraphs 153YB(2)(g) and (h)

42. These items omit the references to "national of the US" and substitute references to "person of the US" in paragraphs 153YB(2)(g) and (h) of the Customs Act.

43. Paragraphs 153YB(2)(g) and (h) set out the circumstances in which goods are wholly obtained or produced entirely in the US and are therefore US originating goods. In general terms, they apply to goods taken from the seabed by a national of the US or taken from outer space by national of the US. "National of the US" has the meaning given by Annex 1-A to Chapter 1 of the Agreement.

44. The reference to a "national of the US" is considered too narrow because Annex 1-A defines this term to be only a natural person. It was not proposed to restrict eligibility under these paragraphs to natural persons only.

45. Article 1.2 of the Agreement defines "person of a Party' as a national or an enterprise of a Party and an "enterprise" is defined as any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association. Therefore, eligibility under paragraphs153YB(2)(g) and (h) will be extended beyond a natural person to all those associations, in so far as they relate to the US.

Item 5 Subparagraph 153YE(2)(b)(i)

46. This item amends subparagraph 153YE(2)(b)(i) of the Customs Act by inserting the phrase "that do not satisfy the transformation test (see subsection (8))" after "materials".

47. Section 153YE sets out the circumstances in which manufactured goods, other than textiles and clothing, are US originating goods. Subsection 153YE(2) sets out the first requirement that applies if a change in tariff classification is specified in column 3 of the Schedule 1 tariff table opposite the final classification of the goods. The first requirement relates to the change in tariff classification provisions set out in paragraph (b) of Article 5.1 and paragraph 1(a) of Article 5.2 of the Agreement.

48. The principle of change in tariff classification only applies to non-originating materials and means that goods that are sourced from outside or within the US or Australia and that are used to produce other goods may not have the same classification under the Harmonized System or the Harmonized US Tariff Schedule as the final goods into which they are produced.

49. A change in tariff classification requires that the goods must be classified under one tariff classification before the production process and under a different tariff classification after the production process. This approach ensures that sufficient transformation of materials has occurred within the US, or the US and Australia, to justify the claim that the goods are the produce of the US. The change in tariff classification concept is implemented in subsection 153YE(8) by the transformation test in relation to goods other than textiles or clothing.

50. Under paragraph (b) of Article 5.1 of the Agreement, all the non-originating materials used to produce a good must satisfy the change in tariff classification applicable to that good for the good to be an US originating good. Paragraph 1(a) of Article 5.2 of the Agreement provides a qualification to paragraph (b) of Article 5.1 known as the de minimis rule applicable to Annex 5-A, which covers goods that are not textiles or clothing. The effect of this rule is that, if the total value of all non-originating materials used to produce a good that do not undergo the required change in tariff classification does not exceed 10% of the customs value of the good, the good does not have to meet the change in tariff classification requirement set out in paragraph (b) of Article 5.1.

51. Subparagraph 153YE(2)(b)(i) is intended to give effect to the de minimis rule set out in paragraph 1(a) of Article 5.2 of the Agreement. However, current subparagraph 153YE(2)(b)(i) applies the de minimis rule in respect of all non-originating materials, as opposed to all non-originating materials that do not undergo the required change in tariff classification (i.e. that do not satisfy the transformation test). Therefore, the phrase "that do not satisfy the transformation test" is inserted into this provision to ensure that section 153YE more accurately reflects the terms of paragraph 1(a) of Article 5.2 of the Agreement.

Item 6 After paragraph 153YH(1)(b)

52. This item amends subsection 153YH(1) of the Customs Act by inserting a new paragraph (ba).

53. Section 153YH sets out the circumstances in which manufactured goods that are textiles or clothing are US originating goods. Subsection 153YH(1) sets out the requirements that must be met in order for the textiles or clothing to be US originating goods, pursuant to Chapter 4 of the Agreement. However, subsection 153YH(1) does not include the requirement set out in paragraph 7 of Article 4.2 of Chapter 4 of the Agreement.

54. Under paragraph 7 of Article 4.2 of the Agreement, goods that are textiles or clothing containing elastomeric yarns in the component of the goods that determines the final classification of the goods shall be considered to be US originating goods only if the elastomeric yarns are produced entirely in the US or Australia.

55. Elastomeric yarns are threads that are made using fibres formed from elastic, rubber-like substances occurring naturally (natural rubber) or produced synthetically (butyl rubber, neoprene). An example of an elastomeric yarn is the synthetic fibre elastane (known in the US as spandex, a commercial brand of which is Lycra).

56. New paragraph 153YH(1)(ba) gives effect to the requirement set out in paragraph 7 of Article 4.2 of the Agreement.

Item 7 Subsection 153YH(1)(note)

57. This item is a technical amendment to the note at the end of subsection 153YH(1) as a consequence of the insertion of a new note by item 8 of this Schedule.

Item 8 At the end of subsection 153YH(1)

58. This item amends subsection 153YH(1) of the Customs Act by inserting a new note. This note provides that new paragraph (1)(ba) relates to paragraph 7 of Article 4.2 of the Agreement.

Item 9 Subparagraph 153YH(2)(b)(i)

59. This item amends subsection 153YH(2) of the Customs Act by repealing and substituting subparagraph (b)(i).

60. Section 153YH sets out the circumstances in which manufactured goods that are textiles or clothing are US originating goods. Subsection 153YH(2)(b) sets out the first requirement that applies if a change in tariff classification is specified in column 3 of the Schedule 2 tariff table opposite the final classification of the goods. The first requirement relates to the change in tariff classification provisions set out in paragraph (c) of Article 5.1 of the Agreement and paragraph 6 of Article 4.2 of the Agreement. The change in tariff classification principle is implemented in subsection 153YH(7) by the transformation test in relation to goods that are textiles or clothing.

61. Under paragraph (c) of Article 5.1 of the Agreement, all the non-originating materials used to produce a textile or clothing good must satisfy the change in tariff classification specified in Annex 4-A. Paragraph 6 of Article 4.2 of the Agreement sets out the de minimis rule applicable to Annex 4-A (which covers goods that are textiles or clothing) that provides a qualification to paragraph (c) of Article 5.1. The effect of this rule is that, if the total weight of all non-originating materials that:

61.1.
are used to produce the component of the good that determines the tariff classification of the good; and
61.2.
do not undergo the required change in tariff classification,

does not exceed 7% of the total weight of that component, the good does not have to meet the change in tariff classification requirement set out in paragraph (c) of Article 5.1.

62. Subparagraph 153YH(2)(b)(i) is intended to give effect to the de minimis rule set out in paragraph 6 of Article 4.2 of the Agreement. Current subparagraph 153YH(2)(b)(i) does not accurately implement paragraph 6 of Article 4.2 because the subparagraph covers the weight of all non-originating materials rather than the weight of the non-originating materials of the component that determines the tariff classification of the good.

63. New subparagraph 153YH(2)(b)(i) sets out the circumstance that enlivens the de minimis rule as when the total weight of all the relevant non-originating materials does not exceed 7% of the total weight of the component that determines the final classification of the goods. The term "relevant non-originating materials" is defined by new subsection 153YH(8) (inserted by item 10A to this Schedule) and means, in relation to goods, non-originating materials that:

63.1.
are used to produce the component of the good that determines the final classification of the goods; and
63.2.
do not satisfy the transformation test.

64. The substituted wording in new subparagraph (b)(i), read together with new subsection 153YH(8), more accurately reflects the terms of paragraph 6 of Article 4.2 of the Agreement.

Item 10 Subsection 153YH(2)(note)

65. This item amends the note to subsection 153YH(2) of the Customs Act to correct the reference to the relevant provision of the Agreement.

Item 10A At the end of section 153YH

66. This item inserts new subsection 153YH(8) of the Customs Act which defines the term "relevant non-originating materials" for the purposes of section 153YH(8). This term is used in new substituted subparagraph 153YH(2)(b)(i).

Item 11 Paragraph 153YL(1)(b)

67. This item amends paragraph 153YL(1)(b) of the Customs Act by inserting the phrase "or any other operation" after "production".

68. Section 153YL sets out the consignment rule for goods imported from the US. If goods fail to comply with the consignment requirements, they will not be US originating goods. Currently paragraph 153YL(1)(b) applies where goods undergo any process of production in a country or place (other than unloading, reloading, any operation to preserve them in good condition or any operation that is necessary for them to be transported to Australia).

69. However, goods should also not be US originating goods if they undergo any other operation, other than a process of production, in a country or place that is not the US or Australia (other than the specified operations). Some examples of other operations include the labelling of goods, the packaging of goods, and the breaking and repacking of bulk goods into sets.

70. Current paragraph 153YL(1)(b) may not have the required effect. The amendment to paragraph 153YL(1)(b) will ensure that section 153YL more accurately reflects the terms of Article 5.11 of the Agreement.

Schedule 4 - providing customs with information

Customs Act 1901

71. Employees at international airports include:

71.1.1.
airport employees, for example airport management and cleaners;
71.1.2.
airline employees, for example baggage handlers and maintenance staff;
71.1.3.
employees of retail businesses that operate in the airport; and
71.1.4.
government employees (including Customs and AQIS officers).

72. Only a limited number of people working at international airports in Australia with access to restricted areas require a security clearance, yet all are involved in a vetting process as part of their being issued with Aviation Security Identification Cards (ASICs). All people working at international airports must wear an ASIC. Visitors to international airports may also be required to wear a Visitor Identification Card (VIC). Under the Customs Act, these cards are collectively known as a security identification card.

73. A class of restricted areas to which ASIC and VIC holders have access is the section 234AA place. This is an area at an airport, covered by a notice under section 234AA of the Customs Act, that is used by Customs for the questioning of aircraft passengers, the examining of the personal baggage of such passengers and as a holding place for such passengers.

74. The presence of ASIC and VIC holders in a section 234AA place can potentially pose a threat to the integrity and security of the border. In order to monitor this threat, under section 213B of the Customs Act, a person who issues an ASIC or a VIC to another person in respect of an international airport must provide specified information to an authorised officer of Customs within 7 days of doing so. Presently, the information that must be provided is:

74.1.1.
the name and address of the other person;
74.1.2.
the date and place of birth of the other person; and
74.1.3.
the details of any area that is covered by a notice under section 234AA to which the other person has access to perform his or her duties (this detail is only relevant to the holder of an ASIC).

This information is collectively defined under the Customs Act as required identity information.

75. At present, however, there is no mechanism whereby Customs can receive updates of any of the information provided in accordance with the original obligation. For example, when a person is initially issued with an ASIC, their duties at that time may not require access to a section 234AA place. If, after the initial obligation to provide information has been satisfied, a change in their duties requires access to a section 234AA place, the person who issued the ASIC has no obligation to inform Customs of the change. Customs also has no way of finding out this change. Customs, therefore, may not have details of all ASIC holders who have access to a section 234AA place at any particular point in time.

76. The amendments to section 213B of the Customs Act will give Customs the ability to seek updates of information in relation to the holder of an ASIC or a VIC that has been provided in accordance with the original obligation.

Item 1 Subsection 213B(1)

77. This item repeals and substitutes subsection 213B(1). New subsection 213B(1) refers to an "issuing authority in relation to the card" as opposed to a person who issued a security identification card. This is a technical amendment only to cover the circumstance where the functions of the initial issuing authority are taken over by another issuing authority. A new definition of "issuing authority" is being inserted by item 6 of Schedule 4.

Item 2 Subsection 213B(2)

78. This item amends current subsection 213B(2) to omit the reference to the person who issued a security identification card and substitute it with a reference to "an issuing authority in relation to the card". This is a technical amendment only to cover the circumstance where the functions of the initial issuing authority are taken over by another issuing authority. A new definition of "issuing authority" is being inserted by item 6 of Schedule 4.

Item 3 Subsection 213B(2)

79. This item amends current subsection 213B(2) to omit the reference to "the person so requested" and substitute it with a reference to "the issuing authority". This is a technical amendment only to cover the circumstance when the functions of the initial issuing authority are taken over by another issuing authority. A new definition of "issuing authority" is being inserted by item 6 of Schedule 4.

Item 4 After subsection 213B(2)

80. This item inserts new subsections 213B(2A) and (2B).

81. New subsection 213B(2A) will apply if a person has issued a security identification card (which includes an ASIC) to another person in respect of an airport appointed under section 15 (which includes all Australian international airports). Where this occurs, an authorised officer of Customs may request an issuing authority in relation to the card to provide information for the purposes of updating the required identity information previously provided in respect of the other person under subsection 213B(1) (the original obligation when a security identification card is first issued) or under this new subsection. This information must be provided within 7 days after receiving the request.

82. Such requests can be made on an ongoing basis and will enable Customs to have the most up-to-date required identity information in respect of each card holder.

83. New subsection 213B(2B) will apply where a security identification card expires or is revoked. When either of these events occurs, the issuing authority in relation to the card must notify an authorised officer of Customs of the expiry or revocation within 7 days.

Item 5 Subsection 213B(3)

84. This item amends subsection 213B(3) to insert references to new subsections 213B(2A) and (2B). Subsection 213B(3) sets out how the obligations under subsections 213B(1) and (2) are complied with - either in writing or in such other form as the CEO determines. This amendment will extend these methods to the new obligations under subsections 213B(2A) and (2B).

Item 6 Subsection 213B(4)

85. This item amends subsection 213B(4) by inserting a new definition of issuing authority. "Issuing authority", in relation to a security identification card, means any of the following:

85.1.
the person who issued the card; or
85.2.
the person who is authorised to perform the functions, or exercise the powers, of the person who issued the card.

Item 7 Application

86. This item sets out application provisions in relation to the technical amendment to subsection 213B(1) and new subsection 213B(2B) to ensure that they only have prospective operation.

87. The new amended subsection 213B(1) will only apply in relation to security identification cards issued after the commencement of this Schedule. Similarly, the requirement under new subsection 213B(2B) will only apply in relation to such cards that expire, or are revoked, after the commencement of this Schedule.

88. The power under new subsection 213B(2A) will apply in relation to security identification cards issued before or after the commencement of that new subsection, but not before the commencement of section 213B. Security identification cards issued before that date will continue to be governed by subsection 213B(2).

Schedule 5 - accredited clients

Customs Act 1901

The Accredited Client Program

89. The amendments in this Schedule relate to Subdivision C of Division 4 of Part IV of the Customs Act, which was inserted by the Customs Legislation Amendment (International Trade Modernisation) Act 2001 and which commenced on 19 July 2005.

90. Subdivision C sets out the legislative framework for the Accredited Client Program (ACP) relating to the importation of goods. Under the ACP, a person who has met certain audit requirements may enter into an import information contract with Customs. Such a person ("an accredited client") is then able to enter goods that are covered by the contract for home consumption by making a request for cargo release (RCR) in respect of the goods.

91. An accredited client will only need to provide minimum information about the goods in the RCR. The accredited client is then required to provide, for a particular month, one or more periodic declarations containing more detailed but less time-sensitive information on all of the goods entered for home consumption on RCRs during that month.

92. The ability of accredited clients to provide a single aggregate report on all goods imported in a month, as opposed to a report for every consignment of goods imported in that month, may significantly reduce the transaction costs for the accredited client associated with the importation of the goods.

93. Similar to the import processing charge imposed on the making of a normal import entry, an RCR processing charge and periodic declaration processing charge are imposed on the making of an RCR and periodic declaration respectively.

The proposed amendments

94. The purpose of the proposed amendments to Subdivision C is to implement a scheme for the payment of duty and processing charges in relation to the ACP.

95. Under this scheme, an accredited client is required to pay, on the 15th day of a particular month (Month 1), an accredited client monthly duty estimate that is approximately equal to the total duty payable on the goods that have been and are expected to be imported and cleared for home consumption on RCRs for Month 1.

96. On the 15th day of the following month (Month 2), based on the full details reported in the periodic declaration(s) covering all goods entered for home consumption on RCRs during Month 1, the accredited client will pay:

96.1.
the actual import duty payable on the goods that have been imported and cleared for home consumption on RCRs in Month 1 (reduced by the duty estimate paid in Month 1); and
96.2.
the RCR and periodic declaration processing charges with respect to those goods.

97. Special provisions apply where the accredited client monthly duty estimate paid is greater than the actual import duty payable. This duty payment scheme ensures that the duty collection component of the ACP does not affect the Budget.

98. On the 15th day of Month 2, accredited client monthly duty estimate for goods entered, or intended to be entered, for home consumption on RCRs during Month 2 will also be payable. The actual duty (reduced by the duty estimate already paid) and RCR and periodic declaration processing charges in respect of goods entered for home consumption on RCRs for Month 2 will be payable on the 15th day of Month 3.

99. A diagram illustrating the ACP with the duty payment scheme is attached as Attachment A to this Memorandum.

100. The amendments are explained in further detail below.

Items 1 and 2 Subsection 4(1) definitions

101. Subsection 4(1) of the Customs Act sets out the definitions of certain words or phrases that are used in the Customs Act. Item 1 inserts a new definition of "accredited client" into subsection 4(1) to mean a person who has entered into an import information contract.

102. Item 2 inserts a new definition of "accredited client payment day" to mean, for a particular month, the 15th day of that month. All payments relating to the ACP will be payable on the accredited client payment day. These include payments of duty (see new section 71DGB), accredited client monthly duty estimate (see new section 71DGA), RCR processing charge (see section 71DC as amended) and periodic declaration processing charge (see section 71DG as amended).

Item 3 Paragraph 71DB(3)(a)

103. Section 71DB of the Customs Act currently relates to the making of an RCR by "a person who has entered into an import information contract". Such a person is an "accredited client" under the new definition inserted in Item 1 of this Schedule. An RCR can also be made on behalf of an accredited client by a broker nominated for such a purpose in the relevant import information contract.

104. Item 3 inserts in paragraph 71DB(3)(a) the words "an accredited client" in parentheses after the reference to "a person who has entered into an import information contract" in that paragraph. This reproduces, at the beginning of Subdivision C, the new definition of "an accredited client" in subsection 4(1), which makes it easier to follow the rest of Subdivision C as amended by the following items.

Item 4 Subsection 71DC(1)

105. Section 71DC of the Customs Act relates to the liability to pay RCR processing charge in respect of an RCR sent to Customs. Item 4 amends subsection 71DC(1) to substitute "an accredited client" for the description "a person who has entered into an import information contract" and to make other technical changes as a result of that substitution.

106. Under amended subsection 71DC(1), an accredited client becomes liable to pay RCR processing charge when an RCR is sent to Customs by or on behalf of that accredited client.

Item 5 Subsection 71DC(2)

107. Under current subsection 71DC(2), the RCR processing charge in respect of an RCR is payable at the time the periodic declaration in respect of the particular goods to which the RCR relates is taken to have been sent to Customs.

108. Item 5 amends subsection 71DC(2) such that the charge is payable on the accredited client payment day for the month following the month during which the goods are taken, under section 71DB, to have been entered for home consumption.

109. Section 71DB sets outs when goods, in respect of which an RCR is made, are taken to have been entered for home consumption. Under subsection 71DB(7), if an RCR is sent, or taken to be sent, in respect of goods after the goods have been imported or brought to the first port or airport in Australia at which any goods are to be discharged, the goods are taken to have been entered for home consumption at the time the RCR is sent or taken to be sent (as the case may be).

110. Under subsection 71DB(8), if the RCR is sent, or taken to be sent, before the goods are brought to the first port or airport in Australia at which any goods are to be discharged, the goods are taken to have been entered for home consumption when they are brought to that port or airport.

111. The import duty (see new section 71DGB) and periodic declaration processing charge(s) (see section 71DG as amended) in respect of the goods are payable on the same day as the RCR processing charge(s).

Item 6 Subsection 71DD(1)

112. Section 71DD relates to the making of import information contracts. Subsection 71DD(1) currently provides that the CEO of Customs may enter into an import information contract for the purpose of enabling RCRs to be made by, or on behalf of, that person.

113. Item 6 amends subsection 71DD(1) to insert an additional purpose in relation to the making of import information contract. Amended subsection 71DD(1) provides that the CEO may enter into an import information contract for the additional purpose of enabling the payment of amounts of import duty, accredited client monthly duty estimate, RCR processing charge and periodic declaration processing charge to be made on accredited client payment days.

114. This amendment makes it clear that the proposed payment scheme is an integral part of the ACP.

Item 7 At the end of subsection 71DD(4)

115. Subsection 71DD(4) sets out certain matters that the provisions of an import information contract are to include. Item 7 amends subsection 71DD(4) such that the provisions of an import information contract are to also include how amounts of accredited client monthly duty estimate payable under new section 71DGA are to be determined.

Item 8 After subsection 71DD(4)

116. Item 8 inserts new subsection (4A) into section 71DD. Under new subsection (4A), an import information contract must provide a method of working out the amounts of accredited client monthly duty estimate payable that results in the estimate payable by an accredited client for a particular month being approximately equal to the total amount of import duty that the accredited client will be liable to pay in respect of goods covered by the import information contract and taken, under section 71DB, to have been entered for home consumption during the month.

117. For example, for accredited clients who are high volume importers of retail goods, it is anticipated that the amounts of accredited client monthly duty estimate for these clients would be worked out on the basis of the trend in their importation of the relevant goods in recent years, subject to adjustments arising from significant one-off events.

Item 9 Section 71DF

118. Section 71DF relates to the sending of periodic declarations by accredited clients who make RCRs in respect of goods.

119. Item 9 repeals and substitutes section 71DF. Under new subsection 71DF(1), if an RCR in respect of goods is sent by or on behalf of an accredited client, and the goods are taken to have been entered into home consumption under section 71DB, the accredited client must send electronically to Customs one or more periodic declarations containing such information on the goods as is set out in an approved statement. The periodic declaration(s) may also be sent on behalf of the accredited client by a broker nominated for such a purpose in the relevant import information contract.

120. New subsection 71DF(2) requires that a periodic declaration in respect of goods required to be sent under subsection (1) be sent to Customs on or before:

120.1.
the first day of the month following the month during which the goods are taken to have been entered for home consumption under section 71DB (the following month); or
120.2.
such other day of the following month as is prescribed.

121. It is intended to make regulations prescribing the 7th day of the following month for the purposes of new subsection 71DF(2) and for such regulations to commence at the same time as this item.

Item 10 Subsection 71DG(1)

122. Section 71DG of the Customs Act relates to the liability to pay a periodic declaration processing charge in respect of a periodic declaration sent to Customs. Item 10 amends subsection 71DG(1) to substitute "an accredited client" for the description "a person who has entered into an import information contract" and to make other technical changes as a result of that substitution.

123. Under amended subsection 71DG(1), an accredited client becomes liable to pay periodic declaration processing charge when a periodic declaration is sent to Customs by or on behalf of that accredited client.

Item 11 Subsection 71DG(2)

124. Section 71DG(2) currently provides that periodic declaration processing charge for a periodic declaration in respect of particular goods is payable at the time the periodic declaration is taken to have been sent to Customs.

125. Item 11 amends section 71DG(2) such that the charge is payable on the accredited client payment day for the month following the month during which the goods are taken, under section 71DB, to have been entered for home consumption.

126. The import duty (see new section 71DGB)) and RCR processing charge(s) (see section 71DC as amended) in relation to the goods are payable on the same day as the periodic declaration processing charge(s).

Item 12 At the end of Subdivision C of Division 4 of Part IV

127. Item 12 inserts new sections 71DGA and 71DGB into the Customs Act.

New section 71DGA

128. New section 71DGA relates to the liability of an accredited to pay the accredited client monthly duty estimate in respect of goods.

129. New subsection 71DGA(1) imposes a liability on an accredited client to pay accredited client monthly duty estimate for a month in respect of goods that are taken, or expected to be taken, to have been entered for home consumption on an RCR during that month. Such goods must be covered by the import information contract entered into by the accredited client.

130. New subsection 71DGA(2) provides that the accredited client monthly duty estimate for a month is payable on the accredited client payment day for that month (that is, the 15th day of that month).

131. Under new subsection 71DGA(3), the amount of accredited client monthly duty estimate payable by an accredited client for a particular month in respect of goods is to be worked out in accordance with the import information contract entered into by the accredited client that covers those goods. Under amended subsection 71DD(4), the provisions of the import information contract must include how amounts of accredited client monthly duty estimate payable are to be determined.

132. Further, new subsection 71DD(4A) ensures that, as much as possible, the estimate, worked out for a particular month in accordance with the provisions of the relevant import information contract, would approximately equal the total amount of import duty the accredited client is liable to pay on goods that are entered for home consumption on an RCR during that month.

New 71DGB

133. New section 71DGB relates to the payment of import duty on goods:

133.1.
that are covered by an import information contract that is entered into by an accredited client; and
133.2.
that have been imported and entered for home consumption by or on behalf of that accredited client on an RCR.

134. Under new subsection 71DGB(1), the import duty on such goods is payable on the accredited client payment day for the month following the month during which the goods were taken, under section 71DB, to have been entered for home consumption (where an entry for home consumption is made in respect of goods by sending an RCR, section 71DB sets out the time these goods are taken to have been entered for home consumption).

135. Subsection 71DGB(2) then provides for the reconciliation of the accredited client monthly duty estimate paid and the import duty payable in respect of such goods. Under this subsection, the import duty payable on the goods is reduced by the amount of accredited client monthly duty estimate already paid by the accredited client.

136. Subsection 71DGB(3) deals with the situation where the accredited client monthly duty estimate paid is greater than the import duty payable on the goods. In this case, the excess amount is to be dealt with by Customs as agreed in writing with the accredited client. For example, Customs and the accredited client may agree that the excess amount be used to pay the RCR and periodic declaration processing charges on the goods.

Item 13 Subsection 132AA(4) (before table item 2)

137. Section 132AA sets out when import duty on imported goods must be paid. Subsection 132AA(1), which sets out the general rule, has effect subject to the provisions listed in column 2 of the table in subsection 132AA(4).

138. New subsection 71DGB(1), which relates to the payment of import duty on goods entered for home consumption on an RCR, does not follow the general rule in subsection 132AA(1).

139. Item 13 inserts subsection 71DGB(1), as a new item 1A, into column 2 of the table in subsection 132AA(4). This ensures that subsection 71DGB(1) operates as an exception to the general rule in subsection 132AA(1) in respect of the payment of import duty on goods entered for home consumption on an RCR.

Schedule 6 - protection from criminal responsibility

Customs Act 1901

Item 1 Subsections 233(3A) and (3B)

140. This item repeals subsections 233(3A) and (3B) of the Customs Act, as a consequence of new section 233BABA.

Item 2 Subsection 233(6)

141. This item amends subsection 233(6) to omit the reference to "subsection (3A)" and substitute a reference to "subsection 233BABA(1)", as a consequence of new section 233BABA.

Item 3 After section 233BAB

142. This item inserts new section 233BABA into the Customs Act.

143. New subsection 233BABA(1) provides that an officer of Customs who, in the course of duty, possesses or conveys, or facilitates the conveyance of, prohibited imports, prohibited exports or smuggled goods is not criminally responsible for an offence against a law of the Commonwealth or of a State or Territory relating to the possession, conveyance or facilitation of the conveyance of such goods.

144. New subsection 233BABA(2) provides that a person who possesses or conveys, or facilitates the conveyance of, prohibited imports, prohibited exports or smuggled goods and, in doing so, is acting in accordance with written instructions referring to this section issued by an officer of Customs acting in the course of duty, is not criminally responsible for an offence against a law of the Commonwealth or of a State or Territory relating to the possession, conveyance or facilitation of the conveyance of such goods.

145. These statutory protections from criminal responsibility are currently in section 233 of the Customs Act but do not, under subsection 233(5), currently apply to, or in relation to, narcotic goods. Customs officers have regular contact with narcotics goods in the course of their duties, especially as part of the drug detector dog training programs, and there is increasing concern that the current statutory protections do not extend to narcotic goods.

146. New section 233BABA will ensure that the statutory protections apply in relation to all prohibited imports and prohibited exports, including narcotic goods.

Schedule 7 - Issue of seizure warrant

Customs Act 1901

Item 1 After paragraph 203(3)(d)

147. Item 1 is a technical amendment to the Customs Act.

148. Section 203 of the Customs Act relates to when seizure warrants to seize forfeited goods can be issued. Subsection 203(3) sets out the factors a judicial officer may have regard to in considering whether an authorised officer has demonstrated the necessity, in all the circumstances, for the seizure of particular goods.

149. Item 2 of Schedule 3 to the Customs Legislation Amendment Act (No. 1) 2003 (the CLA Act (No.1) 2003) purported to amend subsection 203(3) to insert an additional factor that a judicial officer may have regard to for the purposes of subsection 203(3). However, the amendment in item 2 was misdescribed and did not occur.

150. Item 1 remakes the amendment that should have been made by item 2 of Schedule 3 of the CLA Act (No.1) 2003 Act. Item 1 inserts new paragraph 203(3)(e) after paragraph 203(3)(d):

(e)
whether action might be taken under Division 5 of Part XIII in connection with any such offence;

151. Division 5 of Part XIII deals with the imposition of penalties in lieu of prosecution for specified offences.

Item 2 Application

152. Item 2 is an application provision that gives new paragraph 203(3)(e) a prospective application only. New paragraph 203(3) will only apply in relation to applications for a seizure warrant after the commencement of this Schedule; and applications that were made before the commencement of this Schedule but are being considered by a judicial officer after that commencement.

Customs Legislation Amendment Act (No. 1) 2003

Items 3 and 4 Items 2 and 3 of Schedule 3

153. Items 3 and 4 repeal items 2 and 3 of Schedule 3 to the CLA Act (No.1) 2003. Item 3 of that Schedule is the application provision for the misdescribed amendment purported to be made by item 2. This will avoid any confusion on the face of the Customs Act following the remaking of the amendment and the application provision in items 1 and 2 of this Schedule.

154. By virtue of item 8 of the table in subclause 2(1) of this Bill, items 3 and 4 are taken to have commenced retrospectively on the commencement of item 2 of Schedule 3 to the CLA Act (No.1) 2003 on 4 December 2003. As outlined above, these items merely correct a drafting error in the CLA Act (No.1) 2003 and do not substantively alter the law.

ATTACHMENT A EXPLANATORY MEMORANDUM TO THE CUSTOMS LEGISLATION AMENDMENT (BORDER COMPLIANCE AND OTHER MEASURES) BILL 2006 [SCHEDULE 5 - ACCREDITED CLIENTS]

Accredited Client Payment Structure


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