EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0501204
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Orica Australia Pty Ltd applied for a TCO in respect of certain air strippers on 24 January 2005.
Instrument
TCO No 0501204 was made on 8 April 2005. It declares that those certain air strippers are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is 3%.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0501204 is taken to have come into force on 24 January 2005.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Tariff Concession Instrument No. 0501204, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions on certain imported goods, specifically air strippers, by reducing the customs duty rate from 5% to 3%. This measure was enacted by the Chief Executive Officer of Customs, who is mandated under section 269F of the Act to consider applications for tariff concessions where no substitutable goods are produced in Australia. The primary objective of this legislation is to facilitate the importation of goods that are not domestically produced, thereby benefiting importers by lowering their duty obligations and potentially enhancing the competitiveness of the imported goods in the Australian market.
The instrument was brought into force on the date the application was lodged, 24 January 2005, as per subsection 269S(1) of the Act. No submissions were received in opposition to the tariff concession, indicating a lack of contention regarding the application of the concession. Importantly, the legislation ensures that the rights of importers are positively affected, allowing them to apply for a refund of duty on goods imported since the tariff concession came into effect. Furthermore, the enactment of this tariff concession does not impose any liabilities on any person, ensuring that the rights of non-Commonwealth entities are preserved.
Scope and Application
The Customs Act 1901, as amended through Tariff Concession Instrument No. 0501204, provides a mechanism for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to specified goods. This instrument applies to any entity or individual who imports goods that meet the criteria set out in the Act, particularly those who can demonstrate that the goods in question are not substitutable by products manufactured in Australia and thus meet the core criteria for tariff concession. The Act has a national jurisdictional reach across Australia, administered under the Commonwealth. While the Act primarily extends to the reduction of customs duty for specific imported goods, it explicitly excludes goods listed in section 269SJ of the Customs Act 1901, which cannot be subject to a TCO. The TCO in question, effective from 24 January 2005, reduces the duty on certain air strippers from the general rate of 5% to 3%, benefiting importers of these goods while ensuring that no existing rights or liabilities of non-Commonwealth entities are adversely affected prior to the date of the TCO registration.
Key Provisions
The Tariff Concession Instrument No. 0501204 under the Customs Act 1901 (sections 269C, 269F, and 269P) sets out the conditions and process for granting a Tariff Concession Order (TCO). According to section 269F, any person may apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. The CEO must then assess whether the application meets the core criteria outlined in section 269C. This requires that on the day the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business. If these criteria are met, the CEO is mandated to issue a written TCO (section 269P(3)), which specifies the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
Under this Act, the obligations imposed on the CEO and applicants are clearly defined. The CEO must publish a notice in the Gazette inviting any interested party to lodge a submission if they believe there are reasons why the TCO should not be made (subsection 269K(1)). This ensures transparency and provides an opportunity for stakeholders to voice any concerns. The applicant must ensure that their application is valid and meets the specified criteria to qualify for a TCO. For Orica Australia Pty Ltd, this meant demonstrating that no substitutable goods were being produced in Australia in the ordinary course of business for their specific air strippers.
Failure to comply with the provisions of the Customs Act 1901 regarding TCOs can lead to significant consequences. Although the explanatory statement does not explicitly mention offences, penalties, or consequences for breach, it is clear that non-compliance could potentially lead to legal action. Given the structured and regulated nature of the TCO process, breaches might result in the TCO being invalidated, which could then affect the rights and benefits intended for the applicants and their stakeholders. The Act’s emphasis on ensuring that the TCO process is transparent and fair suggests a strong regulatory framework designed to maintain compliance and protect the interests of all parties involved.