House of Representatives

Customs Tariff Amendment Bill (No. 3) 2000

Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Amanda Vanstone)

Notes on clauses

A Bill for an Act to amend the Customs Tariff Act 1995 , and for related purposes.

Clause 1 - Short Title - Customs Tariff Amendment Act (No. 3) 2000.

Clause 2 - Commencement

Subclause 1 - Clauses 1, 2 and 3 commence on the day on which this Act receives the Royal Assent.

Subclause 2 - Schedule 1 is taken to have commenced on 15 December 1999.

Subclause 3 - Schedule 2 is taken to have commenced on 10 March 2000.

Subclause 4 - Schedule 3 commences seven days after the day on which this Act receives the Royal Assent.

Clause 3 - Schedules

This clause is the formal enabling provision for the Schedules to the Bill, providing that each Act specified in the Schedules is amended in accordance with the applicable items of the Schedules. The clause also provides that the other items of the Schedules have effect according to their own terms.

Schedule 1 - The amendment in this Schedule is taken to have effect from 15 December 1999.

The amendments contained in this Schedule were tabled in the House of Representatives in Customs Tariff Proposal No. 7 (1999) on 8 December 1999.

Covers :-

On 19 September 1999, the Minister for Industry, Science and Resources announced that the Government would remove the customs rate of duty on 'nuisance tariffs'. Items 1 to 44 of this Schedule implement that decision.

'Nuisance tariffs' can generally be described as tariff subheadings on which minimal customs duty is collected and which therefore provide little tariff assistance for Australian manufacturers. The removal of these tariff rates will provide lower input costs for local industry and cheaper retail prices for Australian consumers.

The decision was implemented by introducing free rates of duty for 268 tariff subheadings. For most of the subheadings the current duty rate was repealed and replaced with a free rate of duty. About another forty subheadings were amalgamated with subheadings which were already free, to provide new composite subheadings. This amalgamation is in accordance with the Government's policy of tariff simplification.

Item 46 of this Schedule inserts Additional Note 2 in Chapter 57 of Schedule 3 to the Customs Tariff to direct importers that hand tufted carpets are classified in tariff heading 5703. This action flows from a decision of the Administrative Appeals Tribunal.

The amendment ensures that the classification of hand tufted carpets is consistent with the Harmonized Commodity Description and Coding System, the international convention for classifying goods

Schedule 2 - The amendment in this Schedule is taken to have effect from 10 March 2000.

The amendments contained in this Schedule were tabled in the House of Representatives in Customs Tariff Proposal No. 1 (2000) on 9 March 2000.

Covers :-

In January 1998, the Government introduced the fuel

substitution minimisation legislation to combat the loss of revenue resulting from fuel substitution. This occurs when fuel which is subject to a duty free or concessional rate of duty is used as a transport fuel. Further amendments to the legislation were made in November 1999 and have been successful in controlling most fuel substitution activities.

However, it became apparent that fuel substitution activities were occurring using toluene, a product of the petroleum refining industry, commonly used as a solvent in the chemical and paint industries. This was made possible because of the different treatment of toluene in the Excise Tariff and the Customs Tariff. When manufactured locally, toluene is covered by the Excise Tariff and subject to excise duties. However, when the same product was imported, it was not subject to excise equivalent rates of duty through the Customs Tariff.

The amendments contained in this Schedule redress the anomaly. Items 2 to 5 impose excise equivalent rates of duty on toluene, benzene and xylenes of Chapter 29 of the Customs Tariff and mixed alkylbenzenes of Chapter 38. While there was no evidence of fuel substitution using products other than toluene, the other products are chemically similar to toluene and could potentially be used for fuel substitution purposes. They are also covered by the terms of the Excise Tariff.

Regulations and administrative measures have been implemented to ensure that legitimate users of these imported chemicals are not disadvantaged. The regulations were enacted on 8 March 2000, operative from 10 March 2000, the date of operation of these tariff amendments.

Item 1 of this Schedule updates the Table to section 19(1) of the Customs Tariff. This Table provides a link between customable and excisable goods (alcoholic beverages, tobacco and petroleum products) and permits customs rates of duty to be adjusted in line with movements in the excise rate of duty, as a result of indexation.

Schedule 3 - The amendment in this Schedule commences seven days after the day on which this Act receives the Royal Assent

Covers :-

The Customs Tariff Amendment (ACIS Implementation) Act 1999 (Act No. 141 of 1999) implemented the Government's decision in relation to the post-2005 level of industry assistance for the passenger motor vehicle industry. The Act inserted, from 1 January 2005, a 10% general rate of duty for all goods the subject of the Motor Vehicle Manufacturing Plan.

One tariff subheading, 9031.89.11, covering automatic voltage regulators of a kind used in passenger motor vehicles, was erroneously excluded from the list of tariff subheadings. This amendment inserts the 1 January 2005 phasing rate of duty for this subheading.

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