CUSTOMS TARIFF PROPOSAL (No. 1) 2013

________________________________________________________________________________

Alterations to the Customs Tariff Act 1995

Schedule 4

Introduction

This Customs Tariff Proposal places before Parliament redrafted items 20, 21, 27, 30, and 35 for insertion into Schedule 4 to the Customs Tariff Act 1995 (the Customs Tariff).

Schedule 4

Schedule 4 of the Customs Tariff provides for concessional items covering a range of goods and user categories in respect of which concessional rates of import duty have been granted. Schedule 4 delivers a range of policy objectives, including industry assistance and the implementation of tariff concessions arising from international treaties.

The Customs Tariff Amendment (Schedule 4) Act 2012(the Schedule 4 Act) will amend Schedule 4 of the Customs Tariff with effect from 1 March 2013. The Schedule 4 Act is the result of a review conducted by the Better Regulation Ministerial Partnership (the Partnership) between the Minister for Finance and Deregulation, the then Minister for Innovation, Industry, Science and Research, and the Minister for Home Affairs, to simplify the existing tariff concession regime.

The amendments in this Customs Tariff Proposal will provide for minor corrections and clarification of items 20, 21, 27, 30, and 35 in the new Schedule 4 from the time the Schedule 4 Act commences.

Schedule 4 – item 20

Item 20 of the new Schedule 4 combines previous items 20A and 20B. Currently, these items apply to goods exported for repair or renovation, subject to certain conditions. Item 20B applies specifically to goods subject to a batch repair process.

A batch repair process provides for goods to be exported for repair or renovation, that are then replaced with goods already repaired or renovated, rather than waiting for the same exported goods to be repaired and then returned. This concession is subject to the repaired or renovated goods not being new or upgraded versions of the defective exported goods, and not replacing goods that have reached the end of their effective operational life.

However, the new item 20 does not expressly refer to batch repair. This omission has the potential to create confusion as to whether goods subject to a batch repair process have been included in the new Schedule 4. The amendments in the Customs Tariff Proposal would restore the term “batch repair process” to the application of item 20 in the new Schedule 4, to clarify any unintentional ambiguity.

Schedule 4 – item 21

Item 21 applies to goods that are imported for repair, alteration or industrial processing that are to be exported having undergone one or more of these processes. Item 21 has not been renumbered in the Schedule 4 Act, but minor changes have been made to clarify the wording of the item.

However, following consultation with the Department of Industry, Innovation, Science, Research and Tertiary Education, this Proposal will remove the reference to “industrial processing” from item 21. This amendment will better reflect Australian Government policy that encourages all goods imported for industrial processing and subsequent exportation, to use the Tradex Goods Scheme under item 21A. Goods specified in a Tradex Order under the Tradex Scheme Act 1999 can then be better recorded and monitored for industry assistance purposes.

The amendment to item 21 in the Customs Tariff Proposal will provide a better regulated pathway for those goods imported for industrial processing and subsequent exportation under item 21A, while still maintaining the integrity of and accessibility to item 21 for goods imported for repair or renovation and subsequent exportation.

Schedule 4 – item 27

Item 27 of the new Schedule 4 will apply to representative samples of goods to be sold in Australia and will replace previous item 33B.

As set out in the Schedule 4 Act, item 27 states: “Samples, as prescribed by by-law, whose value is less than the amount prescribed by by-law.”

However, the sheer scale of possible samples makes it administratively problematic to prescribe a numerical amount for each sample. Further, a subjective “negligible value” is unnecessarily ambiguous.

As a result, the Customs Tariff Proposal will amend new item 27 to remove all references to “value” and “amount” from the item. Such an amendment would then allow the nature of representative sample goods that have access to this concession to be defined more clearly in the associated by-law(s).

Schedule 4 – item 30

Item 30 of the new Schedule 4 replaces existing item 58, components or materials for use in the manufacture of invalid carriages. The text of item 30 was amended in the Schedule 4 Act to replace the reference to “invalid carriages” with “wheelchairs”.

However, this change has had the unintended consequence of reducing the application of the item to only wheelchairs and not other forms of invalid carriages, such as mobility scooters.

The Customs Tariff Proposal amends item 30 to its original scope and application.

Schedule 4 – item 35

New item 35 replaces item 42, parts and materials for use in the construction, modification or repair of vessels exceeding 150 gross construction tons. The Customs Tariff calculates duty paid on vessels in accordance with the measurement “gross construction tons”.

However, a typographical error was made in the drafting of new item 35 which changed gross construction “tons” to gross construction “tonnes”.

The Customs Tariff Proposal will amend item 35 to reflect the current Customs Tariff terminology, ‘gross construction tons’.