EXPLANATORY STATEMENT
Tariff Concession Instrument No.0502229
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.
Merial Australia Pty Ltd applied for a TCO in respect of certain insecticides on 17 February 2005.
Instrument
TCO No 0502229 was made on 29 April 2005. It declares that those certain insecticides 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. 0502229 is taken to have come into force on 17 February 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 Customs Act 1901 was enacted by the Commonwealth Parliament and serves to regulate the importation and exportation of goods in Australia. The Act establishes a framework for the imposition of customs duties and provides for the granting of tariff concessions. The Tariff Concession Instrument No.0502229, enacted in 2005, addresses the gap in providing relief from customs duties for specific goods that are not produced in Australia and for which there are no substitutable goods available domestically. This legislative instrument was introduced to facilitate smoother trade practices by offering lower duty rates to importers of certain goods, thereby encouraging the importation of these goods and potentially stimulating domestic demand for non-locally produced items. The policy objective behind this instrument is to ensure that the Australian market has access to a diverse range of goods, while also considering the economic implications for local industries and consumers.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), providing for a lower rate of customs duty on specified goods. This legislative mechanism allows individuals or entities to apply for a TCO if they can demonstrate that no substitutable goods are produced in Australia, effectively ensuring that local industries are not undercut by imported products. The application process mandates that the CEO consider the core criteria set out in sections 269C and 269SJ, ensuring that the concession does not apply to goods specified as ineligible under section 269SJ. Once an application is approved, a TCO is issued, applying a reduced duty rate to the specified goods, as illustrated in the case of Merial Australia Pty Ltd's application for certain insecticides. The application of a TCO, such as TCO No 0502229, does not affect the rights of persons other than the Commonwealth in relation to actions taken prior to the issuance of the order, ensuring that no existing rights are adversely affected.
Key Provisions
The Tariff Concession Instrument No. 0502229 under the Customs Act 1901, specifically section 269F, pertains to the process for obtaining a Tariff Concession Order (TCO). When a person applies to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods, the CEO evaluates whether the application meets the core criteria outlined in section 269C. For instance, the CEO must determine if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in section 269D and 269E. If these criteria are satisfied, the CEO must issue a written TCO, which specifies the goods and the reduced rate of customs duty that applies to them, as per section 269P(3). For example, Merial Australia Pty Ltd successfully applied for a TCO for certain insecticides, resulting in a lower duty rate of 3% instead of the general rate of 5%.
The obligations imposed by this legislation include the CEO's requirement to publish a notice in the Gazette (section 269K(1)) inviting any interested parties to submit objections or reasons why the TCO should not be made. In this case, no submissions were received. Furthermore, the TCO must be taken to have come into force on the day the application was lodged, as stipulated in section 269S(1). This means that the TCO for the insecticides was effective from 17 February 2005. Additionally, the TCO does not affect the rights of any person other than the Commonwealth in a way that would disadvantage them or impose liabilities for actions taken before the TCO's registration. Importers, however, stand to benefit from this concession, as they can apply for a refund of duty on goods imported since the TCO's effective date.
Under the Customs Act 1901, any failure to comply with the provisions governing TCOs could potentially lead to various civil or criminal consequences. While the explanatory statement does not explicitly detail specific offences or penalties, breaches of customs laws generally carry severe penalties. These may include fines, imprisonment, or both, depending on the nature and severity of the breach. For example, section 269 of the Customs Act 1901 might impose penalties for providing false or misleading information in a TCO application, while other sections could address broader breaches of customs regulations. The exact penalties would be determined based on the specific provisions of the Act and the circumstances of the breach.