Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

 

 

 

 

 

 

 

 

 

2004-2005-2006

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

CUSTOMS TARIFF AMENDMENT
(FUEL TAX REFORM AND OTHER
MEASURES) BILL 2006

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

(C irculated by authority of the

Minister for Justice and Customs

Senator the Honourable Christopher Martin Ellison )

 



 

CUSTOMS TARIFF AMENDMENT (FUEL TAX REFORM AND OTHER MEASURES) BILL 2006

 

 

OUTLINE

 

The purpose of this Bill is to amend the Customs Tariff Act 1995 (the Customs Tariff) to implement changes that are complementary to amendments contained in the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006.  These measures are designed to strengthen Customs control over certain goods that are used in excise manufacture and to ensure that excise equivalent goods (certain alcohol, tobacco and petroleum products) are subject to the same duty, when imported, as is applied under the Excise Tariff Act 1921 for the same products when manufactured or produced in Australia.

The Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Customs Tariff by:

 

a)      reducing customs duty applicable to aviation gasoline and aviation kerosene, in line with alterations to the Excise Tariff Act 1921 ; and

b)      amending Schedules 3, 5 and 6 of the Customs Tariff to ensure uniformity of customs duties with excise rates of duty; and

c)      changing the definition of mead to conform with the definition in the  A New Tax System (Wine Equalisation Tax) Act 1999 ; and

d)      aligning the snuff tobacco rate with the excise rate and imposing a duty on tobacco leaf of $290.74/kg to protect the revenue (noting that this import duty will not be payable when the tobacco leaf is used in excise manufacture); and

e)      repealing items 44 and 67 of Schedule 4 to the Customs Tariff, that currently allow concessionary importation, for excise equivalent goods that are for use in the manufacture of excisable goods; and

f)       reclassifying biodiesel from Chapter 15 to Chapter 38 of the Customs Tariff; and

g)      implementing related and consequential amendments to the Customs Tariff.

 

 

FINANCIAL IMPACT STATEMENT

 

 

Fuel Tax Reform and Other Measures

 

The implementation of the transition of fuel tax relief being delivered through excise and customs duty arrangements to the fuel tax credit system will have the following financial impact:

 



Revenue ($m)

2006-07

2007-08

2008-09

2009-10

Australian Customs Service

Excise equivalent customs duty

250

260

270

280

Australian Taxation Office

Excise duty

240

250

260

270

 

Expenses ($m)

2006-07

2007-08

2008-09

2009-10

Australian Taxation Office

Fuel tax credits

500

510

530

550

 

Impact on fiscal balance ($m)

-10

-10

-10

-10

 

Figures in the above table have been rounded to the nearest $10 million. 

 

Discrepancies between totals and sums of components are due to rounding.

 

The costing reflects the fact that excise duty of 38.143 cents per litre and customs duty at the excise equivalent rate of 38.143 cents per litre are now applicable to all fuels (other than aviation fuels) and relief from the incidence of fuel tax (whether excise or customs duty) is delivered through a fuel tax credit, through the provisions of the Fuel Tax Bill 2006.  The net cost of this measure of $10 million per annum is a reflection of the effective loss of revenue because private households that use burner fuels for heating, such as heating oil for heating residences, no longer bear the incidence of excise of 7.557 cents per litre.  It is estimated that there are 90,000 such households.

 

The net cost is consistent with the net cost of the measures ‘Removal of excise on burner fuels’ and ‘Removal of grants on burner fuels’ published in June 2004 in the energy white paper Securing Australia’s Energy Future .  The costings are done on a different basis as they now separate the effects on customs and excise duty and they reflect the confirmed legislative mechanism.  In addition, the gross excise and customs duty figures reflect increases in volumes of fuel oil utilised by industries such as minerals processing since the original costing .

 

The alignment of the snuff tobacco rate with the excise rate will have the following revenue implications:

 

Revenue ($m)

2006-07

2007-08

2008-09

2009-10

Australian Customs Service

Excise equivalent customs duty

..

..

..

..

 

The remaining amendments in the Bill have no financial impact.

 

 



CUSTOMS TARIFF AMENDMENT (FUEL TAX REFORM AND OTHER MEASURES) BILL 2006
 

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

 

1.         This clause provides for the Act, when enacted, to be cited as the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006 .

 

Clause 2 - Commencement

 

2.         This clause provides that Sections 1 to 3 of the Act will commence on the day on which it receives the Royal Assent. 

 

3.         This clause also provides that Schedule 1 to the Bill is taken to have commenced on 1 November 2005.  This Schedule relates to the reduction of customs duty on aviation fuels.

 

4.         The Customs Tariff Proposal mechanism is used for effecting alterations to the Customs Tariff, particularly when such alterations are required to have effect in a short time frame that cannot be achieved through a Customs Tariff Amendment Bill.  Customs Tariff Proposals are used most commonly for introducing new items, for changing rates of duty and for restructuring items in the Schedules to the Tariff. 

 

5.         Following the introduction of a Customs Tariff Proposal in the House of Representatives, the alterations contained in the Proposal are incorporated in a Customs Tariff Amendment Bill that is introduced into and debated by the Parliament.  The amendments necessarily have the same date of effect as the original Proposal.

 

6.         The clause also provides that Schedule 2 to the Bill commences on 1 July 2006.  This Schedule relates to the Customs Tariff treatment of imported excise-equivalent goods.

 

Clause 3 - Schedule(s)

 

7.         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 that Schedule.  The clause also provides that other items of the Schedules have effect according to their own terms.

 



INTRODUCTORY COMMENTS

 

8.         The Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 is one of four Bills to implement elements of the Government’s fuel tax reform decisions.  The other Bills are the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006.

 

9.         This Explanatory Memorandum applies to amendments to be made to the Customs Tariff Act 1995 (the Customs Tariff) by the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and should be read in conjunction with the Explanatory Memorandums for those Bills.

 

10.       In this Explanatory Memorandum, unless otherwise indicated, duty rates set out in Schedule 3 apply to all sources, except goods covered by the Australia-US Free Trade Agreement or the Thailand-Australia Free Trade Agreement.  Duty rates for these goods are specified in Schedules 5 and 6, respectively, of the Customs Tariff.

 

11.       In this Explanatory Memorandum, the following abbreviations are used:

 

Customs Tariff - Customs Tariff Act 1995

 

Excise Tariff - Excise Tariff Act 1921

 

The WET Act - A New Tax System (Wine Equalisation Tax) Act 1999

 

The WET Regulations - A New Tax System (Wine Equilisation Tax) Regulations 2000

 

The Energy Grants Scheme - Energy Grants (Cleaner Fuels) Scheme Act 2004

 

The Bill - Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006

 

AUSFTA - Australia-US Free Trade Agreement

 

TAFTA - Thailand-Australia Free Trade Agreement

 

ATO - Australian Taxation Office.

 

Schedule 1 - Amendments commencing on 1 November 2005

 

Customs Tariff Act 1995

 

12.       Schedule 1 incorporates, in the Customs Tariff, alterations contained in Customs Tariff Proposal (No. 5) 2005 (relating to the duty rate applicable to aviation fuels).  This Proposal was introduced into the Parliament on 13 October 2005 and took effect from 1 November 2005.

 

13.       Equivalent alterations to the Excise Tariff were made at the same time through Excise Tariff Proposal No. 1 (2005).

 

14.       Prior to 1 November 2005, the customs and excise duty rates on aviation gasoline (avgas) were $0.03114 per litre and on aviation turbine fuel (aviation kerosene) were $0.03151 per litre.  These rates comprised two elements.  One element was provided to the Civil Aviation Safety Authority and the second element was used to fund the Location Specific Pricing Subsidy provided to Airservices Australia. 

 



15.       The purpose of the Location Specific Pricing Subsidy was to limit the effect of location specific pricing at smaller airports where low traffic volume limits the ability to meet the real cost of air traffic control services. 

 

16.       In the 2004-05 Budget, the Government announced that it would continue the Location Specific Pricing Subsidy until 30 June 2005 to enable Airservices Australia to move towards longer term pricing arrangements for providing terminal navigation services.  The announcement also indicated that the Location Specific Pricing Subsidy would continue to be funded from revenue raised from excise and customs duty on aviation fuels up to 31 October 2005 to ensure full cost recovery. 

 

17.       Consequently, it is proposed to reduce the customs and excise duty rates on avgas and aviation kerosene, with effect from 1 November 2005.  The customs and excise duty rates on avgas are proposed to fall by $0.0026 per litre, and the customs and excise on aviation kerosene are proposed to fall by $0.00297 per litre.  As a result, the customs and excise duty rates on both fuels would be equalised at $0.02854 per litre.

 

18.       These changes took effect on 1 November 2005.

 

Items 1, 4 and 6 - Subheadings 2710.11.61, 2710.91.61 and 2710.99.61 of Schedule 3

 

19.       Subheadings 2710.11.61, 2710.91.61 and 2710.99.61 apply to avgas.  Items 1, 4 and 6 repeal the existing rates of duty and replace them with the rate of $0.02854 per litre.

 

Items 2, 3 and 5 - Subheadings 2710.19.40, 2710.91.40 and 2710.99.40 of Schedule 3

 

20.       Subheadings 2710.19.40, 2710.91.40 and 2710.99.40 apply to aviation kerosene.  Items 2, 3 and 5 repeal the existing rates of duty and replace them with the rate of $0.02854 per litre.

 

Items 7 to 12 - Schedule 5 - Cell at table items 64, 76, 89, 91, 105 and 107, column 3

 

21.       These items amend Schedule 5 to the Customs Tariff.

 

22.       In accordance with the Australia-US Free Trade Agreement (AUSFTA), the Customs Tariff provides a rate of customs duty of Free for US originating goods, unless a rate of customs duty is specified for those goods. 

 

23.       Applicable rates of customs duty for US originating goods, including aviation fuels, are set out in Schedule 5 to the Customs Tariff.

 

24.       Items 7 to 12 repeal the existing rates of duty for aviation fuels in Schedule 5 and replace them with the rate of $0.02854 per litre, that is the rate applied to the same products in Schedule 3 of the Customs Tariff and in the Excise Tariff.

 

25.       These amendments ensure that customs duty applicable to alcohol, tobacco and petroleum products that are US originating goods will continue to be imposed at a rate that is equivalent to the excise duty imposed, under the Excise Tariff, on the same goods when domestically produced, in accordance with the AUSFTA.

 



Items 13 to 18 - Schedule 6 - Cells at table items 68, 85, 103, 105, 124 and 126, column 3

 

26.       These items amend Schedule 6 to the Customs Tariff.

 

27.       In accordance with the Thailand-Australia Free Trade Agreement (TAFTA), the Customs Tariff provides a rate of customs duty of Free for Thai originating goods, unless a rate of customs duty is specified for those goods.  I n accordance with the TAFTA, rates of customs duty for certain alcohol, tobacco and petroleum products continue to be subject to rates of customs duty that are equivalent to the rates of excise duty on those goods if they were locally manufactured.

 

28.       Applicable rates of customs duty for Thai originating goods, including aviation fuels, are set out in Schedule 6 to the Customs Tariff.

 

29.       Items 13 to 18 repeal the existing rates of duty for aviation fuels in Schedule 6 and replace them with the rate of $0.02854 per litre, that is the rate applied to the same products in Schedule 3 of the Customs Tariff and in the Excise Tariff.

 

30.       These amendments ensure that customs duty applicable to alcohol, tobacco and petroleum products that are Thai originating goods will continue to be imposed at a rate that is equivalent to the excise duty imposed, under the Excise Tariff, on the same goods when domestically produced, in accordance with the TAFTA.

 

Item 19 - Application

 

31.       This item provides that the amendments in Schedule 1 of the Bill apply both to goods that are imported into Australia on or after the commencement date of this Schedule (1 November 2005) and also to goods that were imported before that date but on which the time for working out the rate of import duty on those goods had not occurred before that date.  For example, this application provision will apply to goods that were warehoused on importation, and not entered into home consumption until after 1 November 2005.

 

 



Schedule 2 - Amendments commencing on 1 July 2006

 

Customs Tariff Act 1995

 

Item 1 - Subsection 3(1)

 

32.       This item inserts a new definition of the term “excise item” into Subsection 3(1) (Definitions) of the Customs Tariff to reflect the new structure of the Excise Tariff.

 

33.       The definition provides that “excise item” means an item or subitem of the Schedule to the Excise Tariff.

 

Item 2 - Subsection 3(1) (definition of excise tariff item )

 

34.       This item repeals the existing definition of “excise tariff item” in Subsection 3(1) of the Customs Tariff.  This term has been replaced by the term “excise item” (item 1 above refers).

 

Item 3 - Subsection 3(1) (definition of marker )

 

35.       This item repeals the definition of “marker” in Subsection 3(1) of the Customs Tariff. 

 

36.       The Customs and Excise legislation provides that petroleum products entered at concessional rates of duty for use as fuel other than in an internal combustion engine (“burner fuels”) or entered duty free for use other than as a fuel must contain a marker, a chemical additive prescribed in Regulation 5C to the Excise Tariff.  The Fuel Marker Scheme ensured consistency with the Excise and Customs Tariffs.

 

37.       The new arrangements proposed for the treatment of petroleum fuels, in the Excise and Customs Tariffs, particularly the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels, and the requirement to pay this rate of duty at the time of importation or manufacture, obviate the requirement for fuel markers.

 

38.       The definition of “marker” in the Customs Tariff is therefore being repealed.  This is consistent with changes to the Excise Tariff.

 

Item 4 - Subsection 19(1) (table)

 

39.       This item amends the Table to Section 19 of the Customs Tariff.

 

40.       Section 19 allows customs rates of duty for certain alcohol and tobacco products to be adjusted automatically, twice yearly, in line with movements in the Consumer Price Index.  The adjusted rates of duty reflect the rates of duty applicable to similar goods imposed under the Excise Tariff.  For this purpose, the Section 19 Table lists paired customs tariff subheadings and excise items that are subject to the automatic indexation provisions.

 

41.       The amended Table to Section 19 incorporates the updated customs tariff subheadings and the corresponding updated excise tariff items to reflect changes in this Bill and in the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006.

 

 



Item 5 - Schedule 3 (Chapter 15, Additional Note 1)

 

42.       This item amends Additional Note 1 to Chapter 15 to specify that “biodiesel” is not classified in Chapter 15 but in Chapter 38 of the Customs Tariff.

 

43.       References to biodiesel were first inserted in the Customs Tariff with effect from 18 September 2003.  At that time, biodiesel derived from animal and vegetable fats and oils through a process of transesterification was considered to be classified in Chapter 15 of the Customs Tariff, in line with international practice.  Since that date, the World Customs Organization has provided a classification opinion that this product is correctly classified in Chapter 38 of the Harmonized Tariff.  In accordance with this advice, a new subheading (3824.90.20) has been created in Chapter 38 for biodiesel (item 29 of Schedule 2 to the Bill refers).

 

44.       The amendment of Additional Note 1 to Chapter 15 will advise users of the Customs Tariff that biodiesel is to be classified in Chapter 38.  This amendment has no impact on the duty rate for biodiesel.

 

45.       This definition is repeated in Chapter 27 for the purposes of blends containing biodiesel and petroleum products.

 

Item 6 - Schedule 3 (Subheadings 1516.10 to 1516.20.90)

 

46.       This item repeals the above subheadings and creates new subheadings 1516.10.00 and 1516.20.00 to remove redundant references to biodiesel.

 

47.       In accordance with the re-classification of biodiesel to Chapter 38 (item 5 above refers), the subheadings created to separately identify biodiesel in Chapter 15 are being repealed.  Other animal and vegetable fats and oils classified in subheadings 1516.10.90 and 1516.20.90 will be reclassified to subheadings 1516.10.00 and 1516.20.00, respectively, and retain their existing duty rate of Free.

 

Item 7 - Schedule 3 (Chapter 22, paragraph (d) of Additional Note 7)

 

48.       This item amends the definition of mead to conform to the definition in the WET Act.

 

49.       Additional Note 7 provides the definition of mead for the purposes of the Customs Tariff.  This Additional Note was inserted into the Customs Tariff on 1 July 2000 and reflected the definition of mead contained in Subdivision 31-A of the WET Act and the WET Regulations.  Under the Excise Tariff, mead, as defined in Subdivision 31-A of the WET Act is not excisable. 

 

50.       A review by the Australian Taxation Office (ATO) concluded that many traditional mead products did not meet the technical definition of mead because they contained substances, including fruit product, which added colour or flavour.  The definition of mead in the WET Regulations was amended on 9 June 2005 to take account of these added substances.

 

51.       Item 7 amends paragraph (d) of this Additional Note to allow the addition of certain substances (herbs, spices, fruit and fruit products) that add flavour or colour to the mead, in the same terms as the definition of mead in the WET Regulations.  Subparagraph 7(d)(iii) provides that these substances are further defined in new Additional Notes 7A and 7B.  The permitted addition of honey to mead is not affected by this change.

 



Item 8 - Schedule 3 (Chapter 22, after Additional Note 7)

 

52.       This item creates new Additional Notes 7A and 7B to further define those substances that may be added to mead.

 

53.       New Additional Note 7A permits the addition of non-fermented fruit or fruit products to mead and specifies the requirements for the addition of these products.

 

54.       New Additional Note 7B specifies that if concentrated fruit or fruit product is added to mead, the proportion of fruit product is to be worked out by assuming that the concentrated fruit or fruit product had been diluted in accordance with the directions of the manufacturer.

 

55.       The amendments in Additional Note 7(d) and the creation of new Notes 7A and 7B will ensure that the definition of mead in the Customs Tariff reflects the definition in the WET Act and the WET Regulations. 

 

Item 9 - Schedule 3 (Chapter 22, at the end of the Additional Notes)

 

56.       This item inserts two new Additional Notes into Chapter 22 to provide a definition of beer.

 

57.       The present duty regime and Customs Tariff provisions relating to beer were introduced into the Customs Tariff from 1 July 2000, with modification on 4 April 2001.  The provisions relating to beer in the Customs Tariff reflect those contained in the Excise Tariff ensuring that imported beer attracts customs duty at the same rate as excise duty on similar locally manufactured product. 

 

58.       The Customs Tariff however does not contain a definition of beer.  The provisions relating to beer are contained in the terms of applicable headings and subheadings of Chapter 22.

 

59.       Item 9 inserts two new Additional Notes (9 and 10) to Chapter 22 that together contain the terms of the Excise Tariff definition of beer.  New Additional Note 9 applies to beer made from malt of heading 2203.  New Additional Note 10 applies to other beer, that is, beer not made from malt, of heading 2206.  The new Additional Notes are cross-referenced to those tariff subheadings that apply to beer.

 

60.       The Excise Tariff definition provides that “beer” is a brewed beverage that is the product of the yeast fermentation of an aqueous extract of malted or unmalted cereals, whether or not containing other sources of carbohydrates, containing hops, or extracts thereof, or other bitters and has not had added to it, at any time, any alcohol from any other source.

                                                                                                                                            

61.       Paragraph (b) of Additional Notes 9 and 10 corrects a minor discrepancy between the Excise and Customs Tariffs definition of beer.  The Excise Tariff specifies that a beverage to be described as beer must contain hops, or extracts thereof, or other bitters.  The corresponding references in the Customs Tariff omit the words “or extracts thereof, or other bitters”.

 

62.       The inclusion of these two Notes in Chapter 22 will not affect the Customs Tariff treatment of beer but will assist users of the Customs Tariff to determine if a particular beverage meets the definition of “beer”.

 



Item 10 - Schedule 3 (subheading 2203.00.3, paragraph (b) of the description of goods in column 2)

 

63.       This item amends the description of goods in paragraph (b) of tariff subheading 2203.00.3.

 

64.       Subheading 2203.00.3 specifies certain beverages that are considered to be beer for the purposes of the Customs Tariff but that do not meet the definition of “beer” in the Excise Tariff.  When manufactured locally, such beer is treated as an “other” excisable beverage for the purposes of the Excise Tariff and is subject to excise rates of duty applicable to spirits.

 

65.       Subheadings 2203.00.3, 2203.00.31 and 2203.00.39 provide the same duty treatment for similar beer, when imported.

 

66.       Item 10 therefore amends paragraph (b) of subheading 2203.00.3 to insert these additional references to fully reflect the definition of beer in the Excise Tariff

 

67.       The amendment of this subheading will not affect the Customs Tariff treatment of beer but will assist users of the Customs Tariff to determine if a particular beverage meets the definition of “beer”.

 

Items 11 and 12 - Schedule 3 (subheadings 2206.00.7 and 2206.00.8, the description of goods in column 2)

 

68.       These items amend the description of goods in tariff subheadings 2206.00.7 and 2206.00.8.

 

69.       These subheadings apply to beer, not made from malt and containing hops.  The text of the subheadings does not include references to beer containing extracts of hops or other bitters and does not therefore reflect the definition of beer in the Excise Tariff.

 

70.       Items 11 and 12 remove the reference to hops from the text of subheading 2206.00.7 and 2206.00.8.  The correct references to hops, extracts of hops, or other bitters are then applied through new Additional Note 10 to Chapter 22 (comments under item 9 above refer).

 

71.       These amendments align the Customs Tariff definition of beer with that in the Excise Tariff. 

 

72.       The amendment of these subheadings will not affect the Customs Tariff treatment of beer but will assist users of the Customs Tariff to determine if a particular beverage meets the definition of “beer”.

 

Item 13 - Schedule 3 (subheading 2401.10.00, the rate of duty in column 3)

 

73.       This item imposes a customs duty of $290.74/kg on tobacco, not stemmed/stripped (tobacco leaf) of subheading 2401.10.00.

 

74.       Presently, if imported, tobacco leaf is not subject to customs duty.  This product is normally further manufactured by a licensed excise manufacturer, to form finished tobacco and tobacco products on which excise duties are payable under the Excise Tariff.

 

75.       The duty of $290.74/kg is equivalent to the duty presently imposed on imported smoking tobacco and similar products.  The only legitimate use for tobacco leaf is to manufacture cigarettes, cigars or other tobacco products.  When imported leaf is manufactured into an excisable tobacco product, the import duty will be extinguished under the provisions contained in the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006. 



            The imposition of a customs duty on goods of 2401.10.00 will enable Customs to recover that amount of duty if imported tobacco leaf is unable to be accounted for before being manufactured into excisable products by a licensed excise manufacturer.

 

76.       This is consistent with the Excise arrangements for these goods.

 

Item 14 - Schedule 3 (subheading 2403.99.20)

 

77.       This item repeals subheading 2403.99.20 - snuff.

 

78.       The rate of customs and excise duty on snuff is $2.36 per kilogram.  The repeal of customs tariff subheading 2403.99.20 reclassifies snuff to subheading 2403.99.80, (other tobacco products).  The rate of customs duty for this subheading is $290.74/kg.  This rate will now also apply to snuff.

 

79.       For tax policy reasons, it is desirable that there be no differentiation in the rates for snuff tobacco and ordinary tobacco.  From a compliance perspective, given the current large disparity in rates, the continuation of the low rate of duty applied to snuff poses a risk to the revenue because of the potential for incorrect description of imported tobacco products.

 

80.       This is consistent with the Excise Tariff treatment of these goods.

 

Item 15 - Schedule 3 (Chapter 27, Subheading Note 3)

 

81.       This item amends Chapter 27 Subheading Note 3 to replace references to subheadings 2707.20 and 2707.30 with 2707.20.00 and 2707.30.00, respectively.

 

82.       This Subheading Note provides, inter alia , a definition of “toluol” and “xylol”, of subheadings 2707.20 and 2707.30, for the purposes of the Customs Tariff.  The amendment to these subheading numbers reflects the restructure of Chapter 27, and in particular, heading 2707, contained in item 19 of Schedule 2 to the Bill.

 

Item 16 - Schedule 3 (Chapter 27, Additional Note 1)

 

83.       This item amends Chapter 27 Additional Note 1 to replace references to subheadings 2710.19.50, 2710.91.50 and 2710.99.50 with 2710.19.53, 2710.91.53 and 2710.99.53, respectively.

 

84.       This Additional Note provides a definition of “fuel oil”, being petroleum oil with characteristics specified in the Additional Note.  The current Note makes reference to tariff subheadings 2710.19.50, 2710.91.50 and 2710.99.50, where fuel oil is classified in the Customs Tariff.  This definition reflects the definition of fuel oil contained in the Excise Tariff.  The amendment to the above subheading numbers reflects the restructure of Chapter 27, and in particular, heading 2710, contained in items 23, 24 and 25 of Schedule 2 to the Bill - reflecting the Excise Tariff amendments.

 

Item 17 - Schedule 3 (Chapter 27, Additional Note 2)

 

85.       This item repeals Additional Note 2 to Chapter 27.

 

86.       This Additional Note specifies that references to “marker” in headings 2707, 2709 and 2710 of Chapter 27 mean the marker prescribed under Regulation 5C to the Excise Tariff.

 



87.       The Customs and Excise legislation provides that petroleum products entered at concessional rates of duty for use as fuel otherwise than in an internal combustion engine (“burner fuels”) or entered duty free for use other than as a fuel must contain a marker except when in containers of less than 210 litres.

 

88.       The new arrangements for the treatment of petroleum fuels, in the Excise and Customs Tariffs, particularly the imposition of a uniform rate of 38.143 cents per litre on most petroleum-based fuels do not require the use of fuel markers.  Therefore, the references to “marker” in Additional Note 2 are being repealed.

 

Item 18 - Schedule 3 (Chapter 27, Additional Note 3)

 

89.       This item amends Chapter 27 Additional Note 3 to incorporate a revised definition of “biodiesel”.

 

90.       The current definition of “biodiesel” was introduced into the Customs and Excise Tariffs on 18 September 2003.  Biodiesel was defined as fuel for use in an internal combustion engine being fuel that was manufactured by chemically altering vegetable oils or animal fats (including recycled oils from these sources) to form mono-alkyl esters.

 

91.       The revised definition removes the requirement that “biodiesel” must be fuel for use in an internal combustion engine and reflects the definition of “biodiesel” in the Excise Tariff. 

 

Item 19 - Schedule 3 (subheadings 2707.20 to 2707.30.89)

 

92.       This item repeals the above subheadings and inserts two new subheadings, 2707.20.00 and 2707.30.00, each with a rate of customs duty of 38.143 cents per litre.

 

93.       Subheadings 2707.20 and 2707.30 apply to petroleum products containing more than 50% of toluene or xylenes, (referred to as “toluol” and “xylol”), respectively.  The definition of these goods is contained in Chapter 27 Subheading Note 3 (item 15 of Schedule 2 to the Bill refers).

 

94.       The present structure of the Customs Tariff provides a free rate of duty for the above products when imported in packages not exceeding 210 litres or when containing the marker specified in Chapter 27 Additional Note 2.

 

95.       The new arrangements for the treatment of petroleum fuels, in the Customs and Excise Tariffs, include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers and of goods in containers of less than 210 litres in the Customs Tariff.

 

96.       The new Customs Tariff structure for the above subheadings removes this differentiation and imposes the rate of 38.143 cents per litre on each of new subheadings 2707.20.00 and 2707.30.00.  This is the same rate that is applied under the Excise Tariff for the same products when domestically manufactured.

 

Item 20 - Schedule 3 (subheadings 2707.50 to 2707.50.89)

 

97.       This item repeals the above subheadings and inserts new subheading 2707.50.00 with a rate of customs duty of 38.143 cents per litre.

 



98.       Subheading 2707.50 applies to certain aromatic hydrocarbon mixtures of which 65% or more by volume (including losses) distils at 250 ÂșC by the ASTM D86 method.

 

99.       The present structure of the Customs Tariff provides a free rate of duty for the above products when imported in packages not exceeding 210 litres or when containing the marker specified in Chapter 27 Additional Note 2.

 

100.     The new arrangements for the treatment of petroleum fuels, in the Customs and Excise Tariffs, include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers and of goods in containers of less than 210 litres in the Customs Tariff.

 

101.     The new tariff structure removes this differentiation and imposes the rate of 38.143 cents per litre on new subheading 2707.50.00.  This is the same rate that is applied under the Excise Tariff for the same products when domestically manufactured.

 

Item 21 - Schedule 3 (subheadings 2709.00.8 to 2709.00.88)

 

102.     This item repeals the above subheadings and inserts new subheading 2709.00.90 with a rate of customs duty of 38.143 cents per litre.

 

103.     Subheading 2709.00.8 applies to crude petroleum oil for use otherwise than as a petroleum refinery feedstock.

 

104.     The present structure of the Customs Tariff provides a rate of duty of 7.557 cents per litre (burner fuel rate) when the above product is used as a fuel otherwise than in an internal combustion engine and contains the prescribed fuel marker.  Otherwise, rates of 38.143 or 40.143 cents per litre depending on sulphur content apply to crude petroleum oil.

 

105.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers.

 

106.     The new tariff structure provides a single tariff subheading 2709.00.90 for this product.  The subheading imposes a rate of duty of 38.143 cents per litre for these goods.  This is the same rate that is applied under the Excise Tariff for the same products when domestically produced.

 

107.     Existing subheading 2709.00.10 (crude petroleum oil for use as a petroleum refinery feedstock at a factory specified in a licence granted pursuant to Part IV of the Excise Act 1901 ) is not affected by this change and will continue to provide a Free rate of customs duty for these goods.

 

Item 22 - Schedule 3 (subheadings 2710.1 to 2710.11.82)

 

108.     This item restructures the Customs Tariff in respect of the above subheadings.

 

109.     Subheading 2710.1 applies to petroleum oils (other than crude oil) and preparations containing 70% or more by weight of petroleum oils.  Subheading 2710.11 applies to these products when they are defined as “light oils”.

 



110.     Within subheading 2710.11, the Customs Tariff presently separately identifies gasoline (for use in aircraft, containing lead and other), other refined or partly refined petroleum products and blends of petroleum products containing biodiesel.  This tariff structure has enabled the imposition of the same rates of customs duty on these products, when imported, as are imposed by the Excise Tariff on the same products, when domestically produced.

 

111.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers and of goods in containers of less than 210 litres, in the Customs Tariff.

 

112.     Item 22 repeals the above subheadings and replaces them with new subheadings 2710.11.6, 2710.11.70 and 2710.11.80. 

 

113.     Subheading 2710.11.6 applies to gasoline.  The subheading is further subdivided to separately identify aviation gasoline (2710.11.61), on which the rate of duty of 2.854 cents per litre effective from 1 November 2005 imposed in Schedule 1 of the Bill continues to apply, and other gasoline (2710.11.69) dutiable at 38.143 cents per litre.

 

114.     New subheading 2710.11.70 applies to other refined or partly refined petroleum products that are classifiable in subheading 2710.11, but with no differentiation of goods based on package size, whether or not containing markers or whether for use as a burner fuel.  These goods are dutiable at a rate of 38.143 cents per litre.

 

115.     N ew subheading 2710.11.80 separately identifies blends of biodiesel and other substances (such as petroleum diesel).  This subheading replaces existing subheadings 2710.11.8, 2710.11.81 and 2710.11.82 that applied to blends containing biodiesel.  The new subheading 2710.11.80 does not exclude blends of biodiesel and gasoline as currently applies.  There is no differentiation based on sulphur content.

 

116.     Subheading 2710.11.80 provides that the duty rate applicable to blends containing biodiesel is the sum of the duty rates applicable to the individual components in the blend, in each case, 38.143 cents per litre.  This will enable the quantity of biodiesel in a blend to be identified for statistical purposes and for importers to claim rebates for biodiesel under the Energy Grants Scheme .  

 

117.     The restructure of the Customs Tariff in respect of these subheadings will provide the same duty outcome for these petroleum products as for the same products when manufactured domestically and subject to the Excise Tariff.

 

Item 23 - Schedule 3 (subheadings 2710.19 to 2710.19.82)

 

118.     This item restructures the Customs Tariff in respect of the above subheadings.

 

119.     Subheading 2710.1 applies to petroleum oils (other than crude oil) and preparations containing 70% or more by weight of petroleum oils.  Subheading 2710.19 applies to these products when they are not defined as “light oils”.

 



120.     Within subheading 2710.19, the Customs Tariff presently separately identifies topped or enriched crudes, various diesel oils, kerosenes, including kerosene for use in aircraft, fuel oil, other refined or partly refined petroleum products and blends of petroleum products containing biodiesel.  Further subdivision is provided, as required, to separately identify products based on sulphur content, package size, whether or not containing markers and whether or not for use in an internal combustion engine.  This tariff structure has enabled the imposition of the same rates of customs duty on these products, when imported, as are imposed by the Excise Tariff on the same products when domestically produced. 

 

121.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers, goods in containers less than 210 litres, whether or not for use in an internal combustion engine and based on sulphur content, in the Customs Tariff.

 

122.     Item 23 repeals the above subheadings and replaces them with new subheadings 2710.19.1, 2710.19.20, 2710.19.40, 2710.19.5, 2710.19.70 and 2710.19.80. 

 

123.     Subheading 2710.19.1 applies to topped or enriched crudes.  The subheading is further subdivided to separately identify these goods when used as a petroleum refinery feedstock at a factory specified in a licence granted pursuant to Part IV of the Excise Act 1901 (2710.19.14 - Free) and other (2710.19.16 - dutiable at 38.143 cents per litre).  The existing Customs Tariff structure provides that all enriched crudes are free of customs duty.  On implementation of these amendments, enriched crude will only be duty free if it is for use as a petroleum refinery feedstock.  Otherwise, the rate of 38.143 cents per litre will apply, reflecting the provisions of the Excise Tariff for these goods.

 

124.     New subheading 2710.19.20 applies to diesel, other than blends containing biodiesel.  The subheading replaces the existing 2710.19.2, and includes automotive diesel oil, industrial diesel fuel and marine diesel fuel , but with no differentiation based on sulphur content.  Diesel is dutiable at a rate of 38.143 cents per litre.

 

125.     Subheading 2710.19.40 continues to apply to kerosene for use in aircraft and the rate of duty of 2.854 cents per litre, effective from 1 November 2005 imposed in Schedule 1 to the Bill, continues to apply.

 

126.     New subheading 2710.19.5 applies to heating oil, kerosene (other than aviation kerosene) and f uel oil having the characteristics as defined in Additional Note 1 to Chapter 27 (refer item 16 of Schedule 2 of the Bill) .  The subheading replaces a number of existing subheadings and is further subdivided to separately identify heating oil (2710.19.51), kerosene (other than aviation kerosene) (2710.19.52) and f uel oil (2710.19.53).  There is no further differentiation based on sulphur content, package size, whether or not containing markers and whether or not for use in an internal combustion engine.  All products are dutiable at a rate of 38.143 cents per litre.

 

127.     New subheading 2710.19.70 applies to other refined or partly refined petroleum products (other than lubricants) that are classifiable in subheading 2710.19, but with no differentiation of goods based on package size, whether or not containing markers or whether for use as a burner fuel.  These goods are dutiable at a rate of 38.143 cents per litre.

 



128.     N ew subheading 2710.19.80 separately identifies blends of biodiesel and other substances (such as petroleum diesel).  This subheading replaces existing subheadings 2710.19.8, 2710.19.81 and 2710.19.82 that applied to blends containing biodiesel.  The new subheading 2710.19.80 does not exclude blends of biodiesel and gasoline as currently applies.  There is no differentiation based on sulphur content.

 

129.     Subheading 2710.19.80 provides that the duty rate applicable to blends containing biodiesel is the sum of the duty rates applicable to the individual components in the blend, in each case, 38.143 cents per litre.  This will enable the quantity of biodiesel in a blend to be identified for statistical purposes and for importers to claim rebates for biodiesel under the Energy Grants Scheme .  

 

130.     The restructure of the Customs Tariff in respect of these subheadings will provide the same duty outcome for these petroleum products as for the same products when manufactured domestically and subject to the Excise Tariff.

 

131.     Goods of the present subheading 2710.19.9 (including lubricating oils and greases) are not affected by these amendments.

 

Item 24 - Schedule 3 (subheadings 2710.9 to 2710.91.82)

 

132.     This item restructures the Customs Tariff in respect of the above subheadings.

 

133.     Subheading 2710.9 applies to the petroleum products of subheading 2710.1, when these goods are defined as “waste oils”, that is, used petroleum oils, petroleum oils contaminated with water or high concentrations of additives etc.  Such petroleum products may not be suitable for use as primary products but are, for the purposes of the Customs Tariff, identifiable as the products of subheading 2710.1.  The subheadings of 2710.9 therefore apply the same duty regime to “waste” petroleum products as to primary petroleum products.

 

134.     Subheading 2710.91 applies to these products when they contain polychlorinated biphenyls (PCBs), polychlorinated terphenyls (PCTs) or polybrominated biphenyls (PBBs).

 

135.     Within subheading 2710.91, the Customs Tariff presently separately identifies topped or enriched crudes, various diesel oils, kerosenes, including kerosene for use in aircraft, fuel oil, other refined or partly refined petroleum products and blends of petroleum products containing biodiesel.  Further subdivision is provided, as required, to separately identify products based on sulphur content, package size, whether or not containing markers and whether or not for use in an internal combustion engine.

 

136.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers, goods in containers less than 210 litres, whether or not for use in an internal combustion engine and based on sulphur content, in the Customs Tariff.

 

137.     Item 24 repeals the above subheadings and replaces them with new subheadings 2710.91.1, 2710.91.20, 2710.91.40, 2710.91.5, 2710.91.6, 2710.91.70 and 2710.91.80. 

 



138.     Subheading 2710.91.1 applies to topped or enriched crudes.  The subheading is further subdivided to separately identify these goods when used as a petroleum refinery feedstock at a factory specified in a licence granted pursuant to Part IV of the Excise Act 1901 (2710.91.14 - Free) and other (2710.91.16 - dutiable at 38.143 cents per litre).  The existing Customs Tariff structure provides that all enriched crudes are free of customs duty.  On implementation of these amendments, enriched crude will only be duty free if it is for use as a petroleum refinery feedstock.  Otherwise, the rate of 38.143 cents per litre will apply, reflecting the provisions of the Excise Tariff for these goods.

 

139.     New subheading 2710.91.20 applies to diesel, other than blends containing biodiesel.  The subheading replaces the existing 2710.91.2, and includes automotive diesel oil, industrial diesel fuel and marine diesel fuel , but with no differentiation based on sulphur content.  Diesel is dutiable at a rate of 38.143 cents per litre.

 

140.     Subheading 2710.91.40 continues to apply to kerosene for use in aircraft and the rate of duty of 2.854 cents per litre, effective from 1 November 2005 imposed in Schedule 1 of the Bill, continues to apply.

 

141.     New subheading 2710.91.5 applies to heating oil, kerosene (other than aviation kerosene) and f uel oil having the characteristics as defined in Additional Note 1 to Chapter 27 (item 16 of Schedule 2 of the Bill refers) .  The subheading replaces a number of existing subheadings and is further subdivided to separately identify heating oil (2710.91.51), kerosene (other than aviation kerosene) (2710.91.52) and f uel oil (2710.91.53).  There is no further differentiation based on sulphur content, package size, whether or not containing markers and whether or not for use in an internal combustion engine.  All products are dutiable at a rate of 38.143 cents per litre.

 

142.     Subheading 2710.91.6 applies to gasoline.  The subheading is further subdivided to separately identify aviation gasoline (2710.91.61), on which the rate of duty of 2.854 cents per litre effective from 1 November 2005 imposed in Schedule 1 of the Bill continues to apply and other gasoline (2710.91.69) dutiable at 38.143 cents per litre.

 

143.     New subheading 2710.91.70 applies to other refined or partly refined petroleum products (other than lubricants) that are classifiable in subheading 2710.91, but with no differentiation of goods based on package size, whether or not containing markers or whether for use as a burner fuel.  These goods are dutiable at a rate of 38.143 cents per litre.

 

144.     N ew subheading 2710.91.80 separately identifies blends of biodiesel and other substances (such as petroleum diesel).  This subheading replaces existing subheadings 2710.91.8, 2710.91.81 and 2710.91.82 that applied to blends containing biodiesel.  The new subheading 2710.91.80 does not exclude blends of biodiesel and gasoline as currently applies.  There is no differentiation based on sulphur content.

 

145.     Subheading 2710.91.80 provides that the duty rate applicable to blends containing biodiesel is the sum of the duty rates applicable to the individual components in the blend, in each case, 38.143 cents per litre.  This will enable the quantity of biodiesel in a blend to be identified for statistical purposes and for importers to claim biodiesel rebates under the Energy Grants Scheme .  

 

 



146.     The restructure of the Customs Tariff in respect of these subheadings will provide the same duty outcome for these petroleum products as for the same products when manufactured domestically and subject to the Excise Tariff.

 

147.     Goods of the present subheading 2710.91.9 (including lubricating oils and greases) are not affected by these amendments.

 

Item 25 - Schedule 3 (subheadings 2710.99 to 2710.99.82)

 

148.     This item restructures the Customs Tariff in respect of the above subheadings.

 

149.     Subheading 2710.99 applies to other “waste” petroleum products of subheading 2710.1, that is, used petroleum oils, petroleum oils contaminated with water or high concentrations of additives etc.

 

150.     Within subheading 2710.99, the Customs Tariff presently separately identifies topped or enriched crudes, various diesel oils, kerosenes, including kerosene for use in aircraft, fuel oil, other refined or partly refined petroleum products and blends of petroleum products containing biodiesel.  Further subdivision is provided, as required, to separately identify products based on sulphur content, package size, whether or not containing fuel markers and whether or not for use in an internal combustion engine.

 

151.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods containing fuel markers, of goods in containers of less than 210 litres, whether or not for use in an internal combustion engine and based on sulphur content, in the Customs Tariff.

 

152.     Item 25 repeals the above subheadings and replaces them with new subheadings 2710.99.1, 2710.99.20, 2710.99.40, 2710.99.5, 2710.99.6, 2710.99.70 and 2710.99.80. 

 

153.     Subheading 2710.99.1 will apply to topped or enriched crudes.  The subheading is further subdivided to separately identify these goods when used as a petroleum refinery feedstock at a factory specified in a licence granted pursuant to Part IV of the Excise Act 1901 (2710.99.14 - Free) and other (2710.99.16 - dutiable at 38.143 cents per litre).  The existing Customs Tariff structure provides that all enriched crudes are free of customs duty.  On implementation of these amendments, enriched crude will only be duty free if it is for use as a petroleum refinery feedstock.  Otherwise, the rate of 38.143 cents per litre will apply, reflecting the provisions of the Excise Tariff for these goods.

 

154.     New subheading 2710.99.20 applies to diesel, other than blends containing biodiesel.  The subheading replaces the existing 2710.99.2, and includes automotive diesel oil, industrial diesel fuel and marine diesel fuel , but with no differentiation based on sulphur content.  Diesel is dutiable at a rate of 38.143 cents per litre.

 

155.     Subheading 2710.99.40 continues to apply to kerosene for use in aircraft and the rate of duty of 2.854 cents per litre, effective from 1 November 2005 imposed in Schedule 1 of the Bill, continues to apply.

 

 



156.     New subheading 2710.99.5 applies to heating oil, kerosene (other than aviation kerosene) and f uel oil having the characteristics as defined in Additional Note 1 to Chapter 27 (item 16 of Schedule 2 refers) .  The subheading replaces a number of existing subheadings and is further subdivided to separately identify heating oil (2710.99.51), kerosene (other than aviation kerosene) (2710.99.52) and f uel oil (2710.99.53).  There is no further differentiation based on sulphur content, package size, whether or not containing markers and whether or not for use in an internal combustion engine.  All products are dutiable at a rate of 38.143 cents per litre.

 

157.     Subheading 2710.99.6 applies to gasoline.  The subheading is further subdivided to separately identify aviation gasoline (2710.99.61), on which the rate of duty of 2.854 cents per litre effective from 1 November 2005 imposed in Schedule 1 of the Bill continues to apply and other gasoline (2710.99.69), dutiable at 38.143 cents per litre.

 

158.     New subheading 2710.99.70 applies to other refined or partly refined petroleum products (other than lubricants) that are classifiable in subheading 2710.99, but with no differentiation of goods based on package size, whether or not containing markers or whether for use as a burner fuel.  These goods are dutiable at a rate of 38.143 cents per litre.

 

159.     N ew subheading 2710.99.80 separately identifies blends of biodiesel and other substances (such as petroleum diesel).  This subheading replaces existing subheadings 2710.99.8, 2710.99.81 and 2710.99.82 that applied to blends containing biodiesel.  The new subheading 2710.99.80 does not exclude blends of biodiesel and gasoline as previously.  There is no differentiation based on sulphur content.

 

160.     Subheading 2710.99.80 provides that the duty rate applicable to blends containing biodiesel is the sum of the duty rates applicable to the individual components in the blend, in each case, 38.143 cents per litre.  This will enable the quantity of biodiesel in a blend to be identified for statistical purposes and for importers to claim rebates for biodiesel under the Energy Grants Scheme .  

 

161.     The restructure of the Customs Tariff in respect of these subheadings will provide the same duty outcome for these petroleum products as for the same products when manufactured domestically and subject to the Excise Tariff.

 

162.     Goods of the present subheading 2710.99.9 (including lubricating oils and greases) are not affected by these amendments.

 

Item 26 - Schedule 3 (subheadings 2902.20 to 2902.44.90)

 

163.     This item repeals the above subheadings and inserts new subheadings, 2902.20.00, 2902.30.00, 2902.41.00, 2902.42.00, 2902.43.00 and 2902.44.00, each with a rate of customs duty of 38.143 cents per litre.

 

164.     Subheadings 2902.20, 2902.30 and 2902.4 apply to benzene, toluene and xylenes, respectively.

 

165.     The present structure of the Customs Tariff provides a free rate of duty for the above products when imported in packages not exceeding 210 litres for use otherwise than as a fuel.

 



166.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods in containers of less than 210 litres, in the Customs Tariff.

 

167.     The new tariff structure provides only subheadings 2902.20.00, 2902.30.00, 2902.41.00, 2902.42.00, 2902.43.00 and 2902.44.00 and imposes the rate of 38.143 cents per litre in each case.  This is the same rate that is applied under the Excise Tariff for the same products when domestically manufactured.

 

Item 27 - Schedule 3 (Chapter 38, Additional Note 1)

 

168.     This item amends Chapter 38 Additional Note 1 to incorporate a revised definition of “biodiesel”.

 

169.     The current definition of “biodiesel” was introduced into the Customs and Excise Tariffs on 18 September 2003.  Biodiesel was defined as fuel for use in an internal combustion engine being fuel that was manufactured by chemically altering vegetable oils or animal fats (including recycled oils from these sources) to form mono-alkyl esters.

 

170.     The revised definition removes the requirement that “biodiesel” must be fuel for use in an internal combustion engine.

 

171.     This definition matches the definition of “biodiesel” in the Excise Tariff. 

 

Item 28 - Schedule 3 (subheadings 3817.00.1 to 3817.00.19)

 

172.     This item repeals the above subheadings and inserts new subheading 3817.00.10 with a rate of customs duty of 38.143 cents per litre (and 5% ad valorem duty where applicable).

 

173.     Subheading 3817.00.1 applies to mixed alkylbenzenes, products chemically similar to toluene.  The present structure of the Customs Tariff provides a free rate of duty for the above goods when imported in packages not exceeding 210 litres, for use otherwise than as a fuel.

 

174.     The new arrangements for the treatment of petroleum fuels in the Customs and Excise Tariffs include the imposition of a uniform rate of 38.143 cents per litre on most petroleum based fuels.  This obviates the requirement for separate identification of goods in containers of less than 210 litres, in the Customs Tariff.

 

175.     The new tariff structure requires only subheading 3817.00.10 and imposes the rate of 38.143 cents per litre (and 5% ad valorem duty, as previously).  The rate of 38.143 cents per litre is the same rate that is applied under the Excise Tariff for the same products when domestically manufactured.

 

Item 29 - Schedule 3 (subheadings 3824.90.2 to 3824.90.22)

 

176.     This item repeals the above subheadings and inserts new subheadings 3824.90.20 and 3824.90.30.

 

 



177.    When the references to biodiesel in the Customs Tariff were introduced on 18 September 2003, this product was classified in Chapter 15, in line with international practice at that time.  Since that date, the World Customs Organization has provided a classification decision that biodiesel is correctly classified in Chapter 38 of the Harmonized Tariff.  In accordance with this advice, the subheadings created to separately identify biodiesel in Chapter 15 have been repealed (item 5 of Schedule 2 of the Bill refers). 

 

178.     New subheading 3824.90.20 has been created to cover “pure” biodiesel, that is biodiesel that is not incorporated in a blend with other products.  A rate of duty of 38.143 cents per litre is imposed.  This is the same rate that is applied under the Excise Tariff for biodiesel when domestically manufactured.

 

179.     N ew subheading 3824.90.30 has also been inserted to identify blends of biodiesel and other substances (such as petroleum diesel) that contain less than 70 per cent by weight of petroleum products.  Such products do not meet the terms of heading 2710 that includes other blends containing biodiesel and petroleum products.

 

180.     New subheading 3824.90.30 replaces existing subheadings 3824.90.2, 3824.90.21 and 3824.90.22 that previously applied to blends containing biodiesel.  There is no differentiation based on sulphur content.

 

181.     Subheading 3824.90.30 provides that the duty rate applicable to blends containing biodiesel is the sum of the duty rates applicable to the individual components in the blend, in each case, 38.143 cents per litre.  This will enable the quantity of biodiesel in a blend to be identified for statistical purposes and for importers to claim rebates for biodiesel under the Energy Grants Scheme. 

 

182.     The application of these duty rates provides the same duty outcome for imported biodiesel and blends containing biodiesel as for the same products when manufactured domestically and subject to the Excise Tariff .

 

Item 30 - Schedule 4 (item 44)

 

183.     This item repeals item 44 in Schedule 4 to the Customs Tariff .

 

184.     Item 44 to Schedule 4 to the Customs Tariff provides the current mechanism to remit customs duty to importers on excise equivalent goods used in excise manufacture.  These goods are currently released from Customs control prior to a process of excise manufacture. 

 

185.     In these circumstances, item 44 is used to remit the Customs duties (except the ad valorem component payable on certain spiritous beverages and some fuel products), that would otherwise be payable on these goods if they were not subject to excise manufacture and were entered for home consumption.  The current administrative mechanism effectively transfers the responsibility for monitoring the revenue liability from Customs to ATO control.  Item 44 is widely used by Customs clients for many excisable tobacco, alcohol and petroleum products. 

 

186.     There are some revenue risks associated with the use of concessional item 44. For example, petroleum importers and manufacturers are currently allowed to enter their goods for home consumption quoting item 44.  This means that the goods may potentially leave Customs control before they have become excisable products, thereby posing a potential threat to the revenue.



187.     Under the new arrangements proposed under the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the manufacture of excisable goods using excise equivalent goods will occur at premises that are licensed both by Customs and the ATO.

 

188.     Customs control of excise equivalent goods for excise manufacture will be maintained up to the manufacture of the goods into excisable products, or until the goods are dealt with as customable goods (that is entered for home consumption on the payment of customs duty) or are exported.

 

189.     Owners of excise equivalent goods at the time they are used in excise manufacture will be required to provide a return to Customs.  In addition, the owner of the goods will also be required to pay any ad valorem duty on the goods.  This is particularly relevant for certain alcoholic beverages that are subject to an ad valorem rate of duty of 5%, in addition to excise equivalent customs duty.  With this mechanism in place, item 44 is not required and is being repealed.

 

Items 31 and 32 - Schedule 4 (item 50(1) and item 50(1A))

 

190.     These items amend item 50(1) in Schedule 4 to the Customs Tariff and create a new item 50(1A).

 

191.     Item 50 of Schedule 4 to the Customs Tariff provides concessional rates of duty for goods that are subject to a Tariff Concession Order (TCO).  TCOs are issued for imported goods where there are no substitutable domestically produced goods .

 

192.     Item 50(1) of Schedule 4 provides a Free rate of duty for goods subject to a TCO, except goods classified in heading 3819.00.00 of Schedule 3.  Item 31 of the Bill amends the text of this item to also exclude goods of 3817.00.10.

 

193.     New item 50(1A) is created by item 32 of the Bill and will apply to the goods of subheading 3817.00.10 (mixed alkylbenzenes) and will provide a rate of 38.143 cents per litre for these goods, including Thai and US originating goods (refer also to comments under item 28 of Schedule 2 of the Bill).

 

194.     Items 31 and 32 of the Bill are designed to ensure uniform treatment of excisable petroleum products throughout the Customs Tariff.  The amendment to item 50(1) will prevent the entry into home consumption of alkylbenzenes subject to a TCO without payment of the excise equivalent rate of duty of 38.143 cents per litre.  New item 50(1A) will provide the mechanism for the continued use of TCOs for these goods, but imposes the rate of 38.143 cents per litre.  These amendments do not affect the current arrangements for other goods subject to a TCO.

 

Item 33 - Schedule 4 (item 67)

 

195.     This item repeals item 67 in Schedule 4 to the Customs Tariff.

 

196.     Item 67 provides a similar concession to item 44 (refer to comments under items 31 and 32 above) but item 67 provides a Free rate of duty for eligible tobacco products.  It is a requirement of item 67 that goods be intended for use in the manufacture of excisable tobacco products. 

 

.



197.     Under the new arrangements, the manufacture of excisable goods using excise equivalent goods will occur at premises that are licensed both by Customs and the ATO.  This is currently the case for tobacco manufacturers.

 

198.     Customs control of excise equivalent goods for excise manufacture will be maintained up to the manufacture of the goods into excisable products, or until the goods are dealt with as customable goods (that is entered for home consumption on the payment of customs duty) or are exported.

 

199.     Owners of excise equivalent goods at the time they are used in excise manufacture will be required to provide a return to Customs. 

 

200.     With this mechanism in place, item 67 is not required and is being repealed.

 

Items 34 to 39 - Schedule 5

 

201.     These items amend Schedule 5 to the Customs Tariff.

 

202.     In accordance with the Australia-US Free Trade Agreement (AUSFTA), the Customs Tariff provides a rate of customs duty of Free for US originating goods, unless a rate of customs duty is specified for those goods.  I n accordance with Article 1.2 (General Definitions) paragraph 4(a) of the AUSFTA, rates of customs duty for certain alcohol, tobacco and petroleum products continue to be subject to rates of customs duty that are equivalent to the rates of excise duty on those goods when produced in Australia.

 

203.     Applicable rates of customs duty for US originating goods, including alcohol, tobacco and petroleum products are set out in Schedule 5 to the Customs Tariff.

 

204.     The amendments to items 34 to 39 of the Bill ensure that:

 

(1)  references to headings and subheadings in Schedule 5 reflect the amendments to Schedule 3 made by the Bill; and

 

(2) duty rates applicable to the subheadings specified in Schedule 5 reflect amended duty rates applicable to those subheadings in Schedule 3.

 

205.     These amendments ensure that customs duty applicable to alcohol, tobacco and petroleum products that are US originating goods will continue to be imposed at a rate that is equivalent to the excise duty imposed, under the Excise Tariff, on the same goods when produced in Australia, in accordance with the AUSFTA.

 

Items 40 to 45 - Schedule 6

 

206.     These items amend Schedule 6 to the Customs Tariff.

 

207.     In accordance with the Thailand-Australia Free Trade Agreement (TAFTA), the Customs Tariff provides a rate of customs duty of Free for Thai originating goods, unless a rate of customs duty is specified for those goods.  I n accordance with the TAFTA, rates of customs duty for certain alcohol, tobacco and petroleum products continue to be subject to rates of customs duty that are equivalent to the rates of excise duty on those goods if they were manufactured in Australia.

 



 

208.     Applicable rates of customs duty for Thai originating goods, including alcohol, tobacco and petroleum products are set out in Schedule 6 to the Customs Tariff.

 

209.     The amendments to items 40 to 45 of the Bill ensure that:

 

(1)  references to headings and subheadings of Schedule 6 reflect the amendments to Schedule 3 made by the Bill; and

 

(2)  duty rates applicable to the subheadings specified in Schedule 6 reflect amended duty rates applicable to those subheadings in Schedule 3.

 

210.     These amendments ensure that customs duty applicable to alcohol, tobacco and petroleum products that are Thai originating goods will continue to be imposed at a rate that is equivalent to the excise duty imposed, under the Excise Tariff, on the same goods when produced in Australia, in accordance with the TAFTA.

 

Item 46 - Application

 

211.     This item provides that the amendments contained in items 5 to 45 in Schedule 2 of the Bill will apply both to goods that are imported into Australia on or after the commencement date of this Schedule (1 July 2006) and also to goods that are imported before that date but on which the time for working out the rate of import duty on those goods had not occurred before that date.  For example, this application provision will apply to goods that were warehoused on importation, and not entered into home consumption until after 1 July 2006.