Part 1
Amendments to Customs and Excise Act 1996
Clause 3 states that Part 1 amends the Customs and Excise Act 1996 (the principal Act in this Part). It is intended that the Bill be divided at the committee of the whole House stage into 2 separate amendment Bills, with Part 1 becoming a Customs and Excise Amendment Bill.
Use of future technology
Clause 4 amends the definition of Customs-approved secure exports scheme and the definition of Customs seal in section 2. The amendments have the effect of allowing for future technology to be used instead of the traditional seal that was envisaged at the time those definitions were drafted. Future technology may include “smart” packages that are able to detect interference with their contents (for example, through changes in temperature). Consequential changes to allow for such technology elsewhere in the Act are made in Part 1 of Schedule 1.
Authorised persons
Clause 5 amends section 6, which relates to authorised persons, by repealing subsection (4), and substituting a new subsection (4). This amendment, along with the related consequential amendments in Part 2 of Schedule 1, makes it clear that an authorised person may be authorised by the chief executive to perform or exercise any function or power that may be performed or exercised by a Customs officer under the principal Act. As amended by clause 5 and Part 2 of Schedule 1, a reference in a provision of the principal Act (other than section 2, new section 6(4), and sections 7, 38P, and 175) to a Customs officer or officer will include a reference to an authorised person who—
is performing or exercising a function or power in accordance with that person's authorisation; and
is therefore required by new section 6(4) to be treated for the purposes of that provision as a Customs officer.
This extension will not apply to an enactment (for example, regulation 3 of the United Nations Sanctions (Kimberley Process) Regulations 2004) that is not all or a portion of the principal Act, but uses the definition of Customs officer in section 2(1) of that Act.
Exportation of goods, and revocation of permission to export
Clause 6(1) amends section 49(1), which requires goods that are exported or that are to be exported to be entered by the exporter in the prescribed form and manner and within any prescribed time or such further time as the chief executive may allow. Doubt has arisen as to whether the “time” prescribed is a deadline (for example, “not less than 48 hours before goods are shipped for export”) or a period (for example, “not more than 96, and not less than 48, hours before goods are shipped for export”). Doubt has also arisen as to whether the chief executive's discretion is to allow entries earlier or later than the prescribed time (deadline or period). New section 49(1)(b) therefore makes it clear that—
the prescribed time (if any) is a deadline, not a period; and
the chief executive may allow entries before a deadline later than any prescribed deadline.
The Customs and Excise Regulations 1996 are consequentially amended; a new regulation 28 is substituted.
Clause 6(3) inserts a new section 49(6). New section 49(6) provides that the chief executive may revoke the permission to export goods that have already been passed if he or she has reasonable cause to suspect the goods are a danger or threat to border security; New Zealand's trade interests or international obligations; people's lives, health, or safety; or the safety of the craft that will carry the goods or the safety of other goods on that craft. Clause 6(4) consequentially amends section 210 so that contraventions of new section 49(6) are an offence punishable by a fine not exceeding $5,000.
Exemption for alcohol manufactured for personal use
Clause 7(1) inserts a new section 68B. New section 68B creates an exemption from the requirement in section 68 to manufacture alcohol in a licensed manufacturing area. The exemption applies to alcohol manufactured for personal use (and not for sale or other disposition) in a private house or dwelling place. Currently, the equivalent exemption is provided for in delegated legislation. Related consequential amendments are made in clause 7(2) to (4).
This amendment mirrors the amendment relating to tobacco made in the Customs and Excise Amendment Act (No 3) 2008. That amendment was made to bring the tobacco exemption out of delegated legislation (where it then existed) and include it in the Act. The policy relating to that amendment was that all offences, and their related exemptions, punishable by a term of imprisonment should be contained in primary legislation rather than delegated legislation. The amendment in clause 7(1) removes the inconsistency in the treatment of the 2 exemptions.
Excise duty on certain goods manufactured outside manufacturing area
Clause 8(1) replaces section 76, with a change to address the illegal situation of manufacturing excisable goods (except in certain permitted cases) outside a licensed manufacturing area. The change means that duty on such goods is due to the Crown immediately on their manufacture. Currently, the duty is due on such goods' removal from the unlicensed area (by analogy with the situation for removal of goods from a licensed area, an analogy required by section 74(1)). This current position is potentially difficult to enforce, and so the change is seen as desirable to prevent the evasion of excise duty and applicable penalties. A consequential amendment is made in clause 8(2).
Excise and Excise-equivalent Duties Table replaces Schedule 3
Clauses 9 to 11 provide for a similar change to the change in clauses 28 to 31. Clauses 9 to 11 make the document maintained by the chief executive of the New Zealand Customs Service that sets out the excise and excise-equivalent duties into the Excise and Excise-equivalent Duties Table, which will have legal force and replace Schedule 3. The changes in relation to excise and excise-equivalent duties are related to and predicated on the changes in clauses 28 to 31 relating to the Working Tariff Document and the reasons for those changes are more fully described below in relation to clauses 28 to 31.
Excise and excise-equivalent duties on motor spirits increased by 3 cents per litre on 1 October 2010
Clause 12, which comes into force on 1 October 2010, amends the Excise and Excise-equivalent Duties Table (see the analysis above of clauses 9 to 11) to increase excise and excise-equivalent duties on motor spirits by 3 cents per litre.
Definition of financial year in section 79A(2)
Clause 13 amends section 79A, which ensures an Order in Council changing rates of excise duty and excise-equivalent duty on motor spirits may be made only during the second financial year, or the third financial year, that follows the financial year in which the current rates came into force. Section 79A(2) currently defines a financial year for the purposes of that section as the 12 months ending on the close of 30 June or any other date determined for the entity by the Minister of Finance. The amendment ensures any such determination by the Minister of Finance need not be “for the entity”, but must be notified in the Gazette.
Amendment consequential on Land Transport Management Amendment Act 2008
Clause 14 substitutes a new section 80(4), which relates to the effect of repealing an Act that, pursuant to section 80(1A), expressly confirms certain orders. The amendment is consequential on section 80(1) and (1A) as substituted on 1 August 2008 by section 49(3) of the Land Transport Management Amendment Act 2008. It corrects an erroneous cross-reference. It also re-enacts section 80(4) in a form that is more up-to-date and consistent with section 80(1A).
Due date for payment of duty
Clause 15 amends section 90, which currently provides that duty under certain provisions is due 20 working days after the date of written notice from the chief executive. The amendment provides that if the chief executive has reasonable cause to believe that a person will be unable to pay the duty by that date, the chief executive may, by notice in writing, require that person to pay the duty by an earlier date. This is to cater for situations where the chief executive becomes aware, perhaps through Customs' auditors, that a person may be unable to pay duty by the due date (for example, because the person may be going into liquidation).
Administrative penalties
Clause 16 amends section 128, which relates to administrative penalties. The amendment extends the administrative penalty regime in Part 10 to entries other than entries of imported goods. An entry is broadly defined. For example, in relation to any goods or class of goods deemed by regulations made under section 50(b) to have been entered for export under section 49(1), an entry includes a document that, under those regulations, the chief executive requires to be lodged with the Customs before the goods or class of goods will be deemed to be entered. Export or other entries that are materially incorrect will be able to be the subject of an administrative penalty. An entry that is not an entry of imported goods will be materially incorrect if it contains a material error or omission in relation to a matter that the entry is required by or under the principal Act to address.
Customs computerised entry processing systems
Clause 17 amends section 135, which empowers the chief executive, on grounds that include failing to comply with conditions of registration or being convicted of a crime involving dishonesty, to cancel the registration of a registered user of a Customs computerised entry processing system. New subsection (1A) enables the chief executive, by written notice to a registered user (which must state grounds for the suspension) to suspend that user's registration until a date or event specified in the notice if satisfied that the user's registration should not be cancelled, but should instead be suspended until that date or event, because the user—
has failed to comply with a condition imposed by the chief executive under section 132(3) or section 133(3) (which relate to conditions imposed on the granting of an application for registration, and to conditions imposed by written notice and about use and security of unique user identifiers); or
has failed to comply with a condition imposed by the chief executive under section 134A(1) within the time frame specified in that section (which relates to other conditions imposed by written notice).
New subsection (1B) makes it clear that the date or event specified in the suspension notice may, but need not, be the user's compliance with a condition imposed by the chief executive under section 132(3), 133(3), or 134A(1).
A consequential amendment to section 135(2) ensures that the person whose registration is suspended may, if dissatisfied with the chief executive's decision to suspend the person's registration, appeal to a Customs Appeal Authority against that decision.
Searching vehicles
Clause 18 amends section 144, which relates to searching vehicles. New subsection (5) makes it clear that the powers given by another subsection of section 144 apply even if the vehicle need not be stopped because it is not moving, and whether or not it is attended, and include the power to use reasonable force, if necessary, to stop, detain, enter in or on, and search the vehicle (or for any of those purposes) as authorised by that other subsection.
Arrest of suspected offenders
Clause 19 amends section 174, which relates to the arrest of suspected offenders, by repealing subsections (1) and (2), and substituting new subsections (1), (1A), and (2). The amendments rationalise and extend Customs officers' and constables' powers under section 174(1) and (2) to arrest without warrant suspected offenders.
New subsection (1) empowers a Customs officer who has reasonable cause to suspect that a person has committed, is committing, or is attempting to commit, or is otherwise concerned in the commission of an offence against the principal Act that is punishable by imprisonment, or an offence against section 209, to arrest that person without warrant while that cause to suspect continues and before the end of the seventh day after the date on which it arose. A Customs officer has power to arrest without warrant in respect of offences of that kind under section 174(2)(a), but only in respect of a person found on a craft, and only if and when the Customs officer believes on reasonable grounds that the person has committed, is committing, or is concerned in the commission of an offence of that kind. New subsection (1) will enable a Customs officer to arrest without warrant a person suspected of committing any offence specified in section 174(1).
New subsection (1A) re-enacts a Customs officer's power under section 174(2)(b) to arrest without warrant a person who the Customs officer has reasonable cause to suspect has carried some other person into New Zealand on a craft, in contravention of section 98C(1) (which makes it an offence to smuggle unauthorised migrants) of the Crimes Act 1961. New subsection (1A) also extends that power of warrantless arrest, however, so that it is exercisable—
not only when, but also after, the suspected migrant smuggler is found on that craft; and
not only when that cause to suspect arises, but also while it continues and at any later time before the end of the seventh day after the date on which it arose.
New subsection (2) re-enacts a constable's power under section 174(1) to arrest without warrant a person who the constable has reasonable cause to suspect has committed, is committing, or is attempting to commit, or is otherwise concerned in the commission of, an offence against section 176, 188A, 209, or 211 of the principal Act. As under section 174(1), this re-enacted power of arrest is exercisable while that cause to suspect continues and before the end of the seventh day after the date on which it arose.
Section 168 is consequentially amended; a new subsection (3C) is substituted.
False allegation or report to Customs officer
Clause 20 inserts a new section 177A, which is a new offence provision. The new offence penalises people who, with false intent, allege to the Customs that an offence has been committed or that the safety of people or goods is jeopardised. This new offence is based on section 24 of the Summary Offences Act 1981, which relates to the Police.
The new offence is seen as required because it is not unusual for the Customs to receive false information that identified individuals are involved in unlawful activity, such as smuggling drugs. The resulting enforcement activity is not only inconvenient and embarrassing to the affected traveller, but consumes the Customs’ time and resources.
Laying of information
Clause 21 substitutes a new section 221. The amendment enables an information under the Summary Proceedings Act 1957 for any offence against the principal Act (other than one for an offence against section 216) to be laid by any person who is not a Customs officer but is an agent or employee of the Customs nominated by the chief executive. (Informations for offences against section 216, in relation to a Customs Appeal Authority, will continue to be required to be laid by the Registrar of the Customs Appeal Authority.)
Automated electronic systems
Clause 22 inserts new sections 274A to 274D, which relate to use of automated electronic systems (such as the proposed “Smartgate”
entry or departure systems) by the Customs to make decisions, exercise powers, comply with obligations, and take related actions. New sections 274A and 274C are in certain respects similar to—
section 125AB(5) (inserted in 2004) of the Immigration Act 1987 (a section similar in certain respects to clauses 27 and 28 of the Immigration Bill (132—2)); and
sections 495A and 495B (inserted in 2001) of the Migration Act 1958 (Australia); and
section 48 of the Australian Citizenship Act 2007 (Australia).
New section 274A provides for the chief executive to arrange for the use, under the chief executive's control, of automated electronic systems for any purposes for which the chief executive, the Customs, or a Customs officer may, or must, under the designated border processing law,—
make a decision; or
exercise a power, or comply with an obligation; or
do anything else related to making a decision, exercising a power, or complying with an obligation.
An arrangement under new section 274A may, but need not, involve use of an automated electronic system to make a decision by analysing the information (if any) about a person that is held by the chief executive, or to which the chief executive has access, using criteria predetermined by the chief executive.
The chief executive must not under new section 274A arrange for use of an automated electronic system in relation to a decision, power, obligation, or related action unless satisfied that the system has the capacity with reasonable reliability to make the decision, exercise the power, perform the obligation, or take the related action. Before concluding for the first time, varying significantly, or revoking and replacing an arrangement for use of an automated electronic system, the chief executive must consult with the Privacy Commissioner.
A decision made, power exercised, obligation complied with, or related action taken using an automated electronic system in accordance with an arrangement under new section 274A must for all purposes be treated as a decision made, power exercised, obligation complied with, or related action taken by the chief executive, the Customs, or a Customs officer (as the case may be) who or that is authorised by the designated border processing law to make that decision, exercise that power, comply with that obligation, or take that related action.
For the purposes of new sections 274A to 274C, the following provisions (and any regulations made under them, or made under the principal Act and made for their purposes) are the designated border processing law:
Parts 3 (arrival and departure of goods, persons, and craft) and 3A (border-crossing goods, persons, and craft):
Part 12 (powers of Customs officers):
Parts 13 to 15 and 17 (offences, forfeiture and seizure, evidence, and miscellaneous provisions):
any other provisions of the principal Act that are declared by regulations to be for those purposes part of the designated border processing law.
New section 274B requires the chief executive to ensure prompt publication (in the Gazette, and so far as practicable on an Internet site that is publicly available free of charge) of details of—
arrangements under new section 274A for use of automated electronic systems; and
variations to, revocations of, or revocations and replacements of, arrangements of that kind.
New section 274C applies to a decision—
that, under the designated border processing law, may or must be made by the chief executive, the Customs, or a Customs officer (as the case may be); and
that is made by an automated electronic system in accordance with an arrangement under new section 274A.
New section 274C enables the chief executive, the Customs, or a Customs officer (as the case may be), despite new section 274A or any other law to the contrary, to—
vary or add to terms or conditions of, or imposed in or in relation to, the decision; or
substitute a decision (the substituted decision) for the decision (the initial decision) if satisfied that the substituted decision could have been made under the same provision of the designated border processing law as the initial decision and that the substituted decision is more favourable to the person affected.
New section 274D ensures that new sections 274A to 274C do not limit or affect any rights to appeal against, or to apply, in accordance with law, for administrative or judicial review of, any arrangement, decision (initial or substituted), power, obligation, or other action under or specified in those new sections.
Incorporation of provisions contained in, or prepared under, international trade agreements by reference in Customs and Excise Regulations
Clause 23 inserts new sections 287A to 287F into the principal Act to allow provisions contained in, or prepared under, international trade agreements to be incorporated by reference in regulations made under the Act. This means that instead of repeating the provisions, the regulations can simply refer to them. The provisions would be given legal force by the regulations but would not be set out in the regulations themselves. The provisions would be available on the Internet. Hard copy versions of the provisions would be available for inspection, free of charge, and would be able to be purchased at a reasonable price at specified places. This change has the advantage of avoiding discrepancies between the regulations and the provisions, and prevents duplication of effort. In addition, it is desirable in the interests of international uniformity to adopt verbatim the rules in these types of international agreements. The rules concerned are both detailed and technical.
In recent years, regulations implementing free trade agreements have had to set out voluminous schedules of requirements based on the Tariff. The schedules are of limited value to general users of the Statutory Regulations (SR) series, and people who need to consult the schedules will be better served by consulting a searchable electronic document. Although free trade agreements have not been common for New Zealand (occurring on average about every 3 years over the last 13 years), they will become increasingly common in the current global environment. New Zealand can expect at least 2 or 3 a year for the foreseeable future.
The changes in new sections 287A to 287F will enable the faster implementation by New Zealand of amendments giving effect to the preferential rates agreed in a free trade agreement. Faster implementation of free trade agreement preferential rates is also achieved by the changes to the Tariff Act 1988 made in clauses 26 and 27.
Updating of terms relating to Police
Clause 24 and Part 4 of Schedule 1 amend the principal Act to update terms relating to the Police. References in the principal Act to members of the Police are, in accordance with section 116(a) of the Policing Act 2008, replaced with references to constables.
Part 2
Amendments to Tariff Act 1988
Clause 25 states that this Part amends the Tariff Act 1988 (called the principal Act in this Part). It is intended that the Bill be divided at the committee of the whole House stage into 2 separate amendment Bills, with Part 2 becoming a Tariff Amendment Bill.
Incorporation of provisions contained in, or prepared under, international trade agreements by reference in Tariff Amendment Orders
Clause 26 inserts new sections 7C to 7H to allow provisions contained in, or prepared under, international trade agreements to be incorporated by reference in regulations made under the Act. This mirrors the changes to the Customs and Excise Act 1996 made in clause 23, and is seen as desirable for the same reasons. Regulations under the Tariff Act 1988 set the rates agreed under international trade agreements, and it would be inconsistent and anomalous if the rules about the rates (that is, regulations under the Customs and Excise Act 1996) were able to incorporate provisions contained in, or prepared under, international trade agreements by reference, but regulations setting the rates could not.
As with the changes made in clause 23, the changes in new sections 7C to 7H will enable the faster implementation by New Zealand of amendments giving effect to the preferential rates agreed in an international trade agreement.
Clause 27 consequentially amends section 7 so that preferential rates may be specified in a agreement or document incorporated into an Order in Council in reliance on new section 7C.
Working Tariff Document replaces Schedule 1
Clause 28 changes the definition of Tariff and adds in a new definition of 2010 Tariff Document and Working Tariff Document so that the Working Tariff Document published by the Customs becomes the legal Tariff as at 1 January 2010. That document then replaces Schedule 1. These changes contrast with the current position, which is that the legal Tariff currently in force reflects the effects of a large number of separate (and non-compiled) amendment Acts and Orders in Council (often 3 or more each year) passed or made since the Tariff was enacted in 1988. The Working Tariff Document has therefore been provided by the Customs in order that interested people can access all the rates, including amended rates, and other up-to-date information, in 1 place.
Clause 29 inserts new section 9A, and clause 30 inserts new section 9B to 9G.
New section 9A requires the chief executive of the Ministry of Economic Development to certify a copy of the Working Tariff Document as being the Working Tariff Document in existence on 1 January 2010. Before doing so, the chief executive must be satisfied that the copy is or includes a full and accurate copy of the current contents of Schedule 1.
New section 9B requires the certified document, which will henceforth be the Tariff, along with any subsequent amendments made under section 9 or 10, to be available to the public via the Internet and in hard copy (new section 9B(1)). The amendment Orders must also be published in order that the public can see the nature of any amendments. Each new version of the new legal Tariff must indicate that it is the Tariff as in force at a stated date (new section 9B(3)(a)). It must include a list of all legislation amending or modifying it (new section 9B(3)(b)). New section 9B(4) provides that nothing in the new provisions prevents other information from being published or made available with the Tariff, provided it is clear that the other information does not form part of the Tariff or have legal effect.
New section 9C provides that Orders in Council amending or modifying the Tariff are disallowable by the House of Representatives and are not required to be published in the SR series.
New sections 9D and 9E mirror, in relation to the new legal Tariff, the rules about evidential status and judicial notice relating to the publication of Acts and regulations under the Acts and Regulations Publication Act 1989.
New section 9F provides that the new legal Tariff may be amended by Act or regulations.
Clause 31(1) consequentially repeals Schedule 1, which is the current legal Tariff. Clause 31(2) consequentially repeals and replaces section 3. Clause 31(3), (4), (5), and (6) and Schedule 3 make other consequential amendments. Some other references in other enactments will be amended indirectly. That is because those other enactments refer to “the Tariff” and define that term by reference to the Tariff Act 1988. Examples include the following enactments:
section 3(1) of the Dumping and Countervailing Duties Act 1988:
section 2 of the Heavy Engineering Research Levy Act 1978:
regulation 3 of the Climate Change (Liquid Fossil Fuels) Regulations 2008:
section 2 of the Temporary Safeguard Authorities Act 1987.
References to the Standard Tariff will be similarly indirectly amended. The Standard Tariff is referred to in provisions including—
the definitions in section 2 of the principal Act of the terms statistical key, Tariff heading or heading, and Tariff subheading or subheading; and
paragraph (b) of the definition of rough diamonds in regulation 3 of the United Nations Sanctions (Kimberley Process) Regulations 2004.
The separate publication of the Tariff outside the SR series is seen as appropriate because it is technical and relevant to a particular group. It does not impose obligations that are of general application or interest to the public. Publication in the SR series is undesirable because of the size and complexity of the material and the fact that it has not been compiled for 21 years and that compilation is not technically possible at this time. In addition, it is not technically possible to have the SR series version of the Tariff or of amendments to the Tariff on the Internet with other New Zealand legislation at www.legislation.govt.nz.
The benefits of separate publication are seen as outweighing any disadvantages. The changes provide that the material is available to the public on the Internet and in hard copy, and is in a form that is more accessible than it would be if published in the SR series. In relation to free trade agreements, tools such as the “Tariff finder”
will be available through www.mfat.govt.nz in addition to the agreement itself, and the applicable preferential rates will be set out in the fully searchable Tariff available on the Internet via www.customs.govt.nz.