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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)
Page 1 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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.
Page 2 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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'.
Page 3 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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
-1.5 -3.0 -3.0 -3.0 -3.0
automotive prototypes
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.
Page 4 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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
Page 5 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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.
Page 6 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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 Free
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
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.
Page 7 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 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 Free
the following:
(a) bending;
(b) assembling;
(c) drilling;
(d) morticing;
(e) splitting;
(f) slicing;
(g) paring
8465.20.80 ---Machining centres that perform 2 or more of 5%
the following:
(a) sawing;
(b) planing;
(c) milling;
(d) moulding (by cutting);
(e) grinding;
(f) sanding;
(g) polishing
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.
Page 8 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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 Free
not further prepared
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.
Page 9 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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.
Page 10 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 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.
Page 11 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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.
Page 12 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017
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.
Page 13 Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017