Bills Digest No. 100, 2012–13

11 April 2013

Customs Tariff Amendment (Incorporation of Proposals) Bill 2013

Jaan Murphy and Monica Biddington
Law and Bills Digest Section

Date introduced: 20 March 2013

House: House of Representatives

Portfolio: Home Affairs

Commencement: Sections 1 to 3 on Royal Assent. Schedule 1 will commence from 1 March 2013.[1] This Bill retrospectively confirms the operation of the measures contained in Customs Tariff Proposal (No. 1) 2013 (the Proposal). The commencement date of Schedule 1 reflects when the measures contained in the Proposal commenced, in accordance with convention regarding the tabling of Tariff Proposals.[2]

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose of the Bill

The purpose of the Customs Tariff Amendment (Incorporation of Proposals) Bill 2013 (the Bill) is to amend the Customs Tariff Act 1995[3] (the Act) to incorporate the measures contained in the Proposal which took effect on 1 March 2013. The Bill revises certain items in Schedule 4 of the Act by replacing them with clearer definitions, and correcting typographical errors.[4] The Bill also streamlines the assessment of concessional duties in relation to goods imported for industrial processing and subsequent export.

Background

As part of the tariff concession rationalisation process, a ‘Better Regulation Ministerial Partnership’ was established in 2010 between the Ministers for Finance and Deregulation; Innovation, Industry, Science and Research; and Home Affairs. The Partnership reviewed Schedule 4 of the Act, which provides tariff concessions for a range of imported goods under different circumstances.[5]

A scoping-paper seeking industry input for the rewriting of Schedule 4 was released by the Department of Finance and Deregulation on 19 March 2010.[6]

The Customs Tariff Amendment (Schedule 4) Act 2012 (CTA Act) inserted a new Schedule 4 into the Act which reclassified related goods and descriptor headings to assist users in the identification of the concession applicable to their goods. The CTA Act also extended the South Pacific Regional Trade and Economic Cooperation Agreement (Textile, Clothing and Footwear Provisions) (SPARTECA – TCF) Scheme to 31 December 2014.[7] The CTA Act was assented to on 25 September 2012 and commenced on 1 March 2013.

The introduction of the Bill followed the tabling of the Proposal in the House of Representatives on 14 February 2013.[8] The measures contained in the Proposal commenced on 1 March 2013.

The moving of a customs tariff proposal by the Minister is normally treated as a formal procedure which initiates the collection of the duty.[9] The proposal effects alterations to the relevant Customs Tariff in a short time frame that cannot be achieved through an amendment Bill. The usual practice regarding customs tariff proposals is for

the debate to be adjourned by an opposition Member and for all tariff proposals to be listed together on the Notice Paper under the one order of the day. Debate on a customs tariff proposal may be resumed on a later day, but this is rare. Collection of the duties provided by the relevant customs tariff proposal thus commences on the date specified in the relevant customs tariff proposal on the authority of an unresolved motion. This has been accepted as a convention.[10]

This means that when a Bill is introduced to give permanent legislative effect to the measures contained in a customs tariff proposal, parts of the Bill will have a retrospective commencement date, reflecting the commencement date of the relevant customs tariff proposal being consolidated by the Bill into the relevant Act.

Committee consideration

The Senate Selection of Bills Committee has deferred consideration of the Bill to its next meeting.[11]

Policy position of non-government parties/independents

At the date of publication, there has not been a statement by non-government parties or independents supporting or opposing this Bill.

Financial implications

The Explanatory Memorandum notes that this Bill has no financial impact on the Commonwealth’s fiscal balance.[12]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible as it does not raise any human rights issues.[13]

Key provisions

Item 1 of Schedule 1 of the Bill amends item 20(a) of Schedule 4 of the Act. The amendment clarifies that items exported for batch repair are eligible for a concessional rate of duty by specifically introducing the phrase ‘batch repair process’ and otherwise simplifying the provision. The Explanatory Memorandum notes that a ‘batch repair process’ is where:

·         goods are exported from Australia for repair or renovation and

·         those goods are replaced with goods that have already been repaired or renovated (rather than waiting for the exported goods to be repaired and returned) but

·         that the repaired or renovated goods are not new or upgraded versions of the defective exported goods, and

·         are not replacing goods that have reached the end of their effective operational life.[14]

Item 2 of Schedule 1 of the Bill amends item 21 of Schedule 4 of the Act. The amendment removes goods that are imported for industrial processing and subsequent export from Australia. Item 21A of Schedule 4 of the Act provides that goods specified in a Tradex order under the Tradex Scheme Act 1999 are eligible for a concessional rate of duty. The Tradex Scheme allows importers to gain up-front exemptions from customs duty and GST on eligible imported goods that are intended for export.[15]

As a result of the amendment, goods that are imported for industrial processing will only be eligible for a concessional rate of duty if they are imported under the Tradex Scheme, as provided for by item 21A of Schedule 4 of the Act. The amendment removes duplication by consolidating two previously separate concessional measures for goods imported for industrial processing and subsequent export into one.

Item 3 of Schedule 1 of the Bill amends item 27 of Schedule 4 of the Act. Item 27 of Schedule 4 of the Act provides that prescribed ‘samples’ whose values are less than a prescribed amount are eligible for a concessional rate of duty. The amendment removes references to ‘value’ and ‘amount’. As a result, what constitutes a ‘sample’ for the purposes of the concessional rate of duty will be defined in the associated by-laws, which will no longer need to set out a maximum amount.

Item 4 of Schedule 1 of the Bill amends item 30 of Schedule 4 of the Act. The amendment replaces references to ‘wheelchairs’ with ‘invalid carriages’, a term with a broader scope. As a result, concessional duty will be available to a broader range of items (such as mobility scooters), as was the case prior to the introduction of the CTA Act.[16]

Item 5 of Schedule 1 of the Bill corrects a typographical error in the relevant provision in Schedule 4 of the Act.

Item 6 of Schedule 1 of the Bill applies the amendments made by items 1 to 5 of Schedule 1 to goods imported into Australia on or after the commencement of Schedule 1 of the Bill. In addition, the amendments made by items 1 to 5 of Schedule 1 of the Bill will also apply to goods imported before the commencement of Schedule 1 of the Bill where the time for working out the rate of import duty on those goods had not yet occurred, including where:

·         goods are imported before the commencement of Schedule 1, but have not entered for home consumption until after the commencement of Schedule 1 and

·         goods are imported and have entered into warehouse before the commencement of Schedule 1 and have not entered for home consumption until after commencement of Schedule 1.[17]

As discussed earlier, it is convention that Bills consolidating a customs tariff proposal into the relevant Act contain items with a commencement date that reflects the commencement of the relevant preceding customs tariff proposal, and hence will be retroactive in relation to the commencement of other items in the Bill. This ensures the uninterrupted operation of the measures introduced by the relevant customs tariff proposal.

As a result, in certain situations goods that have already imported into Australia prior to 1 March 2013 will be subject to the new provisions (for example, where the goods are yet to have had the applicable rate of duty calculated). Whilst the provisions largely extend duty concessions to a wider range of goods (for example, Item 4), as noted above item 3 of the Bill removes one pathway for obtaining concessional duties on goods imported for industrial processing for subsequent export.

This means that if goods were imported prior to 1 March 2013 for industrial processing and subsequent export, but have not been imported under the Tradex Scheme, they may become subject to duty as they would not be eligible for the concession previously provided by item 21 of Schedule 4 of the Act.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2784.

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ISSN 1328-8091

[1].              Customs Tariff Amendment (Schedule 4) Act 2012 section 2, available at http://www.comlaw.gov.au/Details/C2012A00138

[2].              House of Representatives, ‘About tariff proposals: customs and excise tariff proposals’, Australian Parliament House website, viewed 2 April 2013, http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Tariff_Proposals/About_Tariff_Proposals

[3].              The Customs Tariff Act 1995 is available at http://www.comlaw.gov.au/Details/C2013C00072

[4].              Schedule 4 of the Customs Tariff Act lists a number of items in respect of which concessional rates of import duty have been granted.

[5].              Department of Finance and Deregulation, ‘Tariff concession rationalisation and simplification’, viewed 26 March 2013, http://www.finance.gov.au/deregulation/tarriff-concession-rationalisation.html

[6].              Department of Finance and Deregulation, ‘Scoping paper: tariff concession rationalisation and simplification’, viewed 26 March 2013, http://www.finance.gov.au/deregulation/docs/Scoping_Paper_Tarriff_Concessions.pdf

[7].              The Scheme permits the duty free and unrestricted entry of certain textile, clothing and footwear that originate in and are imported from prescribed Pacific Island Forum countries: Australia, the Cook Islands, the Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. See Pacific Islands Forum Secretariat, ‘Member Countries’, viewed 26 March 2013, http://www.forumsec.org/pages.cfm/about-us/member-countries/

[8].              Customs Tariff Proposal (No.1) 2013, viewed 26 March 2013, http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Tariff_Proposals/Result?tpId=legislation%2ftariffs%2ftariffs_5cdc03b7-9bd4-4a5e-b71a-798c84bf7b38

[9].              House of Representatives, ‘About tariff proposals: customs and excise tariff proposals’, op. cit.

[10].              Ibid.

[11].              Senate Selection of Bills Committee, Report No. 4 of 2013, 21 March 2013, paragraph 4, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=selectionbills_ctte/reports/2013/rep0413.htm

[12].              Explanatory Memorandum, Customs Tariff Amendment (Incorporation of Proposals) Bill 2013, p. 3, viewed 26 March 2013, p. 2, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4987_ems_1d1f9ad1-067d-495f-979b-97aca63e548f%22

[13].              The Statement of Compatibility with Human Rights can be found at page 3 of the Explanatory Memorandum to the Bill.

[14].              Explanatory Memorandum, op. cit., p. 6.

[15].              AusIndustry, ‘Tradex Scheme’, AusIndustry website, viewed 27 March 2013, http://www.ausindustry.gov.au/programs/import-export/tradex/Pages/default.aspx

[16].              Explanatory Memorandum, op. cit., p. 7.

[17].              Explanatory Memorandum, op. cit. p. 7.