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2004-2005-2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS AMENDMENT (2007 HARMONIZED
SYSTEM CHANGES) BILL 2006
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Justice and Customs,
Senator the Honourable Christopher Martin Ellison)
CUSTOMS AMENDMENT (2007 HARMONIZED SYSTEM CHANGES) BILL 2006
OUTLINE
The purpose of this Bill is to amend the Customs Act 1901 to enable the Chief
Executive Officer of Customs (the CEO) to revoke approximately 700 Tariff
Concession Orders (TCOs) that will be affected by amendments to the Customs
Tariff Act 1995 by the Customs Tariff Amendment (2007 Harmonized System
Changes) Bill 2006, and to replace them with approximately 1200 new TCOs.
FINANCIAL IMPACT STATEMENT
The amendments in this Bill have no financial impact.
Page 2 Customs Amendment (2007 Harmonized System Changes) Bill 2006
CUSTOMS AMENDMENT (2007 HARMONIZED SYSTEM CHANGES) BILL 2006
NOTES ON CLAUSES
Clause 1 Short title
This clause provides for the Bill, when enacted, to be cited as the Customs
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Amendment (2007 Harmonized System Changes) Act 2006.
Clause 2 Commencement
Clause 2 provides that this Act commences on the day on which it receives the
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Royal Assent. This will mean that the new power to revoke current TCOs and make
new TCOs can be exercised as soon as the Act receives the Royal Assent.
Clause 3 Schedule(s)
This clause is the formal enabling provision for the Schedule to the Bill, providing
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that each Act specified in a Schedule is amended in accordance with the applicable
items of the Schedule. In this Bill, the Customs Act is being amended.
The clause also provides that the other items of the Schedule have effect according
3.
to their terms. This is a standard enabling clause for transitional, savings and
application items in amending legislation.
Customs Amendment (2007 Harmonized System Changes) Bill 2006 Page 3
SCHEDULE 1 - Amendments
Customs Act 1901
Item 1 After subsection 269SD(2)
This item amends the Customs Act 1901 (the Customs Act) by inserting new
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subsection 269SD(2A).
New subsection 269SD(2A) provides that if, because of an amendment of a
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Customs Tariff, the CEO is satisfied that the tariff classification that is stated in a
TCO to apply to goods the subject of the TCO will not apply to those goods from a
particular day, the CEO may:
5.1. make an order revoking the TCO with effect from that day; and
5.2. make a new TCO in respect of the goods with effect from that day.
As stated previously, these new powers are required to revoke approximately 700
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TCOs that will be affected by amendments to the Customs Tariff Act 1995 (the
Customs Tariff) by the Customs Tariff Amendment (2007 Harmonized System
Changes) Bill 2006 and replace them with approximately 1200 new TCOs.
The amendments to the Customs Tariff by the Customs Tariff Amendment (2007
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Harmonized System Changes) Bill 2006 will implement changes resulting from the
third review of the Harmonized Commodity Description and Coding System,
commonly referred to as the Harmonized System (HS). The HS forms the basis of
the Customs Tariff.
The HS provides a hierarchical system of headings and subheadings in the form
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of a numerical classification based on six digits and set out in Chapters to uniquely
identify all traded goods and commodities. The Customs Tariff is an eight-digit
classification, with the six digit international classification supplemented by two digits
for domestic tariff purposes.
The HS has been developed and maintained by the World Customs Organization
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and is subject to periodic review. The third review has focused on deleting those
headings and subheadings where there are low levels of international trade,
amending the system to reflect changes in industry practices and technological
developments and providing new subheadings, to allow signatory parties to
separately identify new products such as certain narcotic substances. As a signatory
to the International Convention on the Harmonized Commodity Description and
Coding System, Australia and other signatory countries are required to implement
the changes arising from the present review, from 1 January 2007.
As a result of the third review, there are approximately 600 changes at the six-digit
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level of the HS which translates to some 1200 changes to the Customs Tariff.
TCOs are written orders made by the Chief Executive Officer of Customs (the CEO)
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under the Customs Act that grant a "Free" rate of customs duty on imported goods
that are subject to the order. Under section 269P of the Customs Act, a TCO must
Page 4 Customs Amendment (2007 Harmonized System Changes) Bill 2006
contain a description of the goods the subject of the order, including a reference to
the Customs tariff classification that applies to the goods.
As a result of the changes to the Customs Tariff from the third review of the HS
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outlined above, the tariff classifications in approximately 700 TCOs will no longer be
correct. Therefore, it will be necessary to repeal these TCOs and make new TCOS
that include the correct Customs tariff classification that applies to the goods the
subject of the order.
At present, the CEO can only revoke a TCO, and make a replacement TCO, as a
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result of a tariff classification change after the tariff classification change has taken
effect. This means that the CEO could only exercise this power after
1 January 2007. Therefore, in order to ensure the seamless application of TCOs to
goods before and after 1 January 2007, and to avoid any uncertainty as to the
application of TCOs to goods, it is proposed to amend the Customs Act to give the
CEO the power to revoke a TCO, and make a replacement TCO, as a result of a
tariff classification change prior to the tariff classification change taking effect.
Current TCOs would be revoked with effect from 1 January 2007 and the new TCOs
would also take effect from that day.
Due to the changes to subheadings of the Customs Tariff, and in particular the
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creation of new subheadings to separately identify products, approximately 1200
new TCOs will be required to replace the 700 current TCOs that will need to be
revoked.
Item 2 Subsection 269SE(2)
This item amends the Customs Act by inserting a reference to new subsection
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269SD(2A) into subsection 269SE(2).
Section 269SE sets out notification requirements for various decisions related to
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TCOs. By including a reference to new subsection 269SD(2A) in subsection
269SE(2), the CEO will be required inform all interested parties, by notice published
in the Gazette, of the decision to make orders under new subsection 269SD(2A).
Item 3 Paragraph 273GA(1)(s)
This item amends the Customs Act by inserting a reference to new subsection
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269SD(2A) into paragraph 273GA(1)(s).
Subsection 273GA(1) sets out those decisions under the Customs Act that are
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subject to review by the Administrative Appeals Tribunal (the AAT). By including a
reference to new subsection 269SD(2A) in paragraph 273GA(1)(s), the jurisdiction of
the AAT will extend to the decisions of the CEO under new subsection 269SD(2A).
Customs Amendment (2007 Harmonized System Changes) Bill 2006 Page 5
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