Federal Register of Legislation - Australian Government

Primary content

A Bill for an Act to amend the Customs Tariff Act 1995, and for related purposes
Administered by: Immigration and Border Protection
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Registered 22 Jun 2017
Introduced HR 21 Jun 2017

2016-2017

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSAL AND OTHER MEASURES) BILL 2017

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by authority of the Assistant Minister for Immigration and Border Protection
the Honourable Alex Hawke MP)


CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSAL AND OTHER MEASURES) BILL 2017

OUTLINE

The purpose of the Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017 (the Amendment Bill) is to make a number of amendments to the Customs Tariff Act 1995 (the Customs Tariff Act).

Incorporation of Customs Tariff Proposal (No. 1) 2017

On 15 February 2017, Customs Tariff Proposal (No. 1) 2017 (the Proposal) was tabled in the Parliament. The Proposal corrected the customs duty rate that applies to certain mosaic tiles classified under tariff subheading 6907.30.10, from 5% to ‘Free’.

The Customs Tariff Amendment (2017 Harmonized System Changes) Act 2016 (the 2017 Harmonized System Changes Act), created tariff subheading 6907.30.10 and mistakenly assigned it the customs duty rate of 5%. This new subheading commenced on 1 January 2017.

The Proposal and, prior to this, the Notice of Intention to Propose Customs Tariff Alterations published on 14 December 2016, ensured that Australian businesses were not adversely effected by this error.

The amendments included in this Bill will correct the customs duty rate assigned to 6907.30.10 to ‘Free’, with effect from 1 January 2017

Classification of machining centres

The 2017 Harmonized System Changes Act created a new classification rule for machining centres classified under tariff subheading 8465.20. From 1 January 2017, only apparatus that carry out different types of machining operations (sawing, drilling, bending etc.) by automatic tool change are classified to tariff subheading 8465.20.

To accommodate the new rule, several new domestic tariff subheadings were created, each tariff subheading focused on a single machining operation. Feedback received from industry is that the composite nature of these goods made classifying them within the new domestic subheadings difficult.

The Amendment Bill repeals the domestic subheadings created by the 2017 Harmonized Systems Changes Act and significantly rationalises the number of subheadings, so that multiple machine operations are covered by each new tariff subheading. These changes are revenue neutral.

Classification of Paraquat Dichloride

Paraquat dichloride is a chemical commonly used as a herbicide. The highly toxic nature of this product means that, for safety reasons, it is commonly dyed blue and contains an added emetic agent to induce vomiting if ingested.

A recent decision by the World Customs Organization has caused the Australian classification of paraquat dichloride containing an added emetic to become misaligned with international practice.

The Amendment Bill will repeal an Additional Note and creates a new tariff subheading to realign Australia’s classification with international practice. These changes are revenue neutral.

Extending concessional arrangements for motor vehicle prototypes and components

Australia’s automotive industry has been in transition following the announcements by Ford, Holden and Toyota to close their manufacturing operations. All three companies have announced plans to continue other automotive industry activities such as sales and distribution and design and product development.

The 2017‑18 Budget included an extension of concessional arrangements for importing automotive prototype and components to automotive service providers to promote research and development. This benefit will apply to relevant goods imported on or after 1 January 2017 and goods imported into Australia before 1 January 2017, where the time for working out the rate of customs duty on the goods had not occurred before 1 January 2017.

Item 39 in Schedule 4 of the Customs Tariff Act provides a customs duty exemption for motor vehicle producers, within the meaning of the Automotive Transformation Scheme Act 2009, to import automotive prototype and components.

The Amendment Bill will amend Item 39 in Schedule 4 to extend this concession to automotive service providers.

Removal of $12,000 special customs duty on certain used and second-hand motor vehicles

The Customs Tariff Act applies customs duty of $12,000, plus ad valorem component of 5% where applicable, to used and second-hand motor vehicles imported from most countries.

In practice, the $12,000 customs duty is rarely applied as importers are able to claim an exemption if they obtain a Vehicle Import Approval issued by the Vehicle Safety Standards Regulator.

The Amendment Bill will repeal the $12,000 duty component for used and second-hand motor vehicles imported under various domestic tariff subheadings under tariff heading 8703, with effect from 1 January 2018. For goods imported under the general rate, they will have a customs duty rate of 5%. For goods imported under preference schemes, including the free trade agreements, will have a customs duty rate of ‘Free’.


FINANCIAL IMPACT STATEMENT

Extending the concessional arrangements for automotive prototypes and components to automotive service providers is estimated to reduce customs duty revenue by $13.5 million over the forward estimates.

Removing the $12,000 duty from used and second-hand motor vehicles is expected to have negligible cost to revenue over the forward estimates.

Revenue ($m)

2016-17

2017-18

2018-19

2019-20

2020-21

Extending concessions for automotive prototypes

-1.5

-3.0

-3.0

-3.0

-3.0

Removing the $12,000 special duty on used and second-hand motor vehicles

-

-

..

..

..

.. Not zero, but rounded to zero

The other amendments in this Bill have no financial impact.


Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSAL AND OTHER MEASURES) BILL 2017

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Bill

 

The Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017 (the Amendment Bill) amends the Customs Tariff Act 1995 (the Customs Tariff Act) to:

·         incorporate Customs Tariff Proposal (No. 1) 2017 to correct the customs duty rate assigned to tariff subheading 6907.30.10 in relation to mosaic tiles;

·         simplify the classification of machining centres able to perform two or more machining operations with an automatic tool change;

·         reclassify paraquat dichloride to realign the Australian classification with international practice;

·         extend the concession for automotive prototype and components, provided by Item 39 in Schedule 4, to automotive service providers;

·         removing the $12,000 special customs duty on used and second-hand motor vehicles.

 

Human rights implication

 

The Amendment Bill does not have any human rights implications.

 

Conclusion

 

The Amendment Bill is compatible with human rights.

 

ASSISTANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION,

THE HONOURABLE ALEX HAWKE MP


CUSTOMS TARIFF AMENDMENT (incorporation OF proposal and other measues) BILL 2017

NOTES ON CLAUSES

Clause 1 – Short title

1.         This clause provides for the Amendment Bill, when enacted, to be cited as the Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Act 2017.

Clause 2 – Commencement

2.         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, on the day or at the time specified in column 2 of the table.  This subclause also provides that any other statement in column 2 of the table has effect according to its terms.

3.         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. 

4.         Item 2 of the table provides that Schedule 1 will commence immediately after the commencement of Schedule 1 to the Customs Tariff Amendment (2017 Harmonized Systems Changes) Act 2016.

5.         Item 3 of the table provides that Parts 1 and 2 of Schedule 2 will commence on the 28th day after this Act receives the Royal Assent.

6.         Item 4 of the table provides that Part 3 of Schedule 2 will be taken to have commenced on 1 January 2017.

7.         Item 5 of the table provides that Part 4 of Schedule 2 will commence on 1 January 2018.

8.         Item 6 of the table provides that Part 5 of Schedule 2 will commence on the 28th day after this Act receives the Royal Assent.

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

Clause 3 – Schedules

10.       This clause is the formal enabling provision for the Schedules to the Amendment 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 Tariff Act 1995 (the Customs Tariff Act) is being amended.

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


Schedule 1 Incorporation of proposal

Customs Tariff Act 1995

Item 1 – Schedule 3 (subheading 6907.30.10)

12.       Item 1 repeals tariff subheading 6907.30.10 and replaces it with the following:

6907.30.10

‑‑‑Tiles, cubes and similar articles, whether or not rectangular, the largest surface area of which is capable of being enclosed in a square the side of which is less than 7 cm

Free

13.       This amendment corrects the customs duty rate that applies to certain mosaic tiles classified under tariff subheading 6907.30.10, from 5% to ‘Free’.

Item 2 – Application provision

14.       This item provides that the amendments made by this Schedule apply in relation to:

a.         goods imported into Australia on or after 1 January 2017; and

b.         goods imported into Australia before 1 January 2017, where the time for working out the rate of import duty on the goods had not occurred before 1 January 2017.


Schedule 2 Other amendments

Part 1 – Machining centres

Customs Tariff Act 1995

Item 1 – Schedule 3 (subheadings 8465.20.10 to 8465.20.60)

15.       Tariff subheadings 8465.20.10 to 8465.20.60 apply to machining centres that are able to perform multiple machining operations with an automatic tool change. This structure is problematic as the composite nature of these goods means they are able to perform two or more of the machining operations listed.

16.       To simplify the classification of these goods, Item 1 repeals tariff subheadings 8465.20.10 to 8465.20.60 and replaces them with the following:

8465.20.70

‑‑‑Machining centres that perform 2 or more of the following:

     (a)    bending;

     (b)    assembling;

     (c)    drilling;

     (d)    morticing;

     (e)    splitting;

      (f)    slicing;

     (g)    paring

Free

8465.20.80

‑‑‑Machining centres that perform 2 or more of the following:

     (a)    sawing;

     (b)    planing;

     (c)    milling;

     (d)    moulding (by cutting);

     (e)    grinding;

      (f)    sanding;

     (g)    polishing

5%

17.       These amendments result in the goods previously classified to tariff subheadings 8465.20.10, 8465.20.20 and 8465.20.30 being reclassified to 8465.20.80 and goods previously classified to tariff subheadings 8465.20.40, 8465.20.50 and 8465.20.60 being reclassified to 8465.20.70. These amendments will be revenue neutral.

Item 2 – Application provision

18.       This item provides that the amendments made by Part 1 apply in relation to:

a.         goods imported into Australia on or after the commencement of this Part; and

b.         goods imported into Australia before the commencement of this Part, where the time for working out the rate of import duty on the goods had not occurred before the commencement of this Part.

Part 2 – paraquat dichloride

Customs Tariff Act 1995

Items 3 and 4 – Schedule 3 (Chapter 29, the title “Additional Notes” and Additional Note 2)

19.       The World Customs Organization has recently ruled that paraquat dichloride with an added emetic is more appropriately classified under tariff subheading 3808.93 which covers herbicides, anti-sprouting products and plant-growth regulators.

20.       Item 3 repeals the title “Additional Notes” in Chapter 29 and substitutes with new title “Additional Note”.

21.       Item 4 repeals Additional Note 2, which directs that paraquat dichloride with an added emetic be classified to tariff subheading 2933.39.00 where a ‘Free’ rate of customs duty is applied.

22.       Repealing Additional Note 2 of Chapter 29 will realign Australia’s classification with international practice.

Item 5 – Schedule 3 (subheading 3808.93.00)

23.       Item 5 repeals tariff subheading 3808.93.00 which covers herbicides, anti-sprouting products and plant-growth regulators and has a customs duty rate of 5%. Item 5 also substitutes two new subheadings as outlined below:

3808.93

‑‑Herbicides, anti‑sprouting products and plant‑growth regulators:

 

3808.93.10

‑‑‑Paraquat dichloride with added emetic but not further prepared

Free

3808.93.90

‑‑‑Other

5%

24.       Paraquat dichloride with an added emetic currently classified to 2933.39.00 is reclassified to newly created tariff subheading 3808.93.10 and goods currently classified to tariff subheading 3808.93.00 are reclassified to newly created tariff subheading 3808.93.90.

25.       The amendments made by Item 5 ensure that paraquat dichloride with an added emetic will be subject to consistent customs duty treatment before and after the goods are reclassified, that is a ‘Free’ rate of customs duty.

Item 6 – Application provision

26.       This item provides that the amendments made by Part 2 apply in relation to:

a.         goods imported into Australia on or after the commencement of this Part; and

b.         goods imported into Australia before the commencement of this Part, where the time for working out the rate of import duty on the goods had not occurred before the commencement of this Part.

                                                                                              

Part 3 – Automotive service providers

Customs Tariff Act 1995

Items 7 – Schedule 4 (table item 39, column headed “Description of goods”, paragraph (b))

27.       Item 7 amends paragraph (b) of Item 39 to include a reference to ‘automotive service providers’.

28.       This amendment will allow automotive service providers to import automotive prototypes and components subject to a ‘Free’ rate of customs duty. This concession is currently only available to motor vehicle manufactures.

29.       The amendment made by Item 7 confers a benefit to automotive service providers that would otherwise not be able to utilise this concessional arrangement.  Without this amendment, the importation of such prototypes and components by these providers would be subject to the full rate of customs duty.

Item 8 – Application provision

30.       This item provides that the amendments made by Part 3 apply in relation to:

a.         goods imported into Australia on or after 1 January 2017; and

b.         goods imported into Australia before 1 January 2017, where the time for working out the rate of import duty on the goods had not occurred before 1 January 2017.

 
Part 4 – Used and second-hand motor vehicles

Customs Tariff Act 1995

Items 9 to 34

31.       Items 9 to 34 amend the following tariff subheadings to which used and second-hand motor vehicles are classified:

a.         8703.21.11

b.         8703.22.11

c.         8703.23.11

d.         8703.24.11

e.         8703.31.11

f.          8703.32.11

g.         8703.33.11

h.         8703.40.11

i.           8703.50.11

j.           8703.60.11

k.         8703.70.11

l.           8703.80.11

m.       8703.90.11

32.       These subheadings apply customs duty of $12,000, plus ad valorem component of 5% where applicable, to used and second-hand motor vehicles imported into Australia from most countries.

33.       For each of the subheadings listed above, Items 9 to 34 replaced the term ‘secondhand’ with ‘second-hand’ and repeal the rates of customs duty as outlined in column three and substitute the following:

5%
CA:Free

34.       As a result of these amendments, used and second-hand motor vehicles imported from a Forum Island Country, a Least Developed Country, a Developing Country or Canada will be subject to a ‘Free’ rate of customs duty, and those imported using the non‑preferential general customs duty rate will be subject to a 5% customs duty rate.


Items 35 – Schedule 5 (table items 935, 937, 939, 941, 943, 945, 947 and 948A to 949)

35.       Schedule 5 sets out the preferential rates of customs duty negotiated under the Australia-United States Free Trade Agreement.  Table items 935, 937, 941, 943, 945, 947 and 984A to 949 refer to the same tariff subheadings in Items 9 to 21 as outlined above. The used and second-hand motor vehicles imported under these table items are subject to the $12,000 special duty unless an exemption is granted.

36.       Item 22 repeals these table items, meaning used and second-hand motor vehicles imported from the United States are subject to a ‘Free’ rate of customs duty.

Items 36 – Schedule 11 (table items 620, 624, 627, 628, 632, 636, 640 and 642A to 643)

37.       Schedule 11 sets out the preferential rates of customs duty negotiated under the Japan-Australia Economic Partnership Agreement. Table items 620, 624, 627, 628, 632, 636, 640 and 642A to 643 refer to the same tariff subheadings in Items 9 to 21 as outlined above. The used and second-hand motor vehicles imported under these table items are subject to the $12,000 special duty unless an exemption is granted.

38.       Item 23 repeals these table items, meaning used and second-hand motor vehicles imported from Japan are subject to a ‘Free’ rate of customs duty.

Item 37 – Application provision

39.       This item provides that the amendments made by Part 4 apply in relation to:

a.         goods imported into Australia on or after 1 January 2018; and

b.         goods imported into Australia before 1 January 2018, where the time for working out the rate of import duty on the goods had not occurred before 1 January 2018.


Part 5 – technical amendments

Customs Tariff Act 1995

Item 38 – Schedule 3 (subheading 4105.30.00, the description of goods in column 2)

40.       Item 25 repeals the description of tariff subheading 4105.30.00 and substitutes with the following:

-In the dry state (crust)

41.       This amendment will correct the number of dashes that appear before the description.

Item 39 – Schedule 3 (subheading 5212.2, the description of goods in column 2)

42.       Item 26 repeals the description of tariff subheading 5212.2 and substitutes with the following:

-Weighing more than 200 g/m2

43.       This amendment will correct the number of dashes that appear before the description.