EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0508477
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.
Lipa Pharmaceuticals Ltd applied for a TCO in respect of certain pharmaceutical plants on 30 June 2005.
Instrument
TCO No 0508477 was made on 07 October 2005. It declares that those certain pharmaceutical plants 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 free.
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. 0508477 is taken to have come into force on 30 June 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, enacted by the Parliament of Australia, includes a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. The purpose of these concessions is to provide a lower rate of customs duty on certain goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. The problem or gap this scheme addresses is the potential for economic disadvantage to Australian producers and industries where equivalent goods are not produced domestically, thereby encouraging the importation of goods that could be produced locally. This legislative framework aims to strike a balance by providing tariff relief on specific goods while ensuring that local industries are not unfairly disadvantaged. The policy objective is to promote fair competition and support economic growth by facilitating access to necessary goods at reduced costs.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to specific goods, allowing for a lower rate of customs duty, provided certain criteria are met. The application process requires that the goods in question are not prohibited under section 269SJ and that no substitutable goods are produced in Australia on the date the application is lodged, as outlined in sections 269C and 269D of the Act. The CEO must consider the application and make a decision based on these criteria. Once a TCO is issued, it applies retroactively from the date the application was lodged, without affecting any pre-existing rights or imposing new liabilities. This legislative framework ensures that importers can benefit from reduced duty rates on eligible goods, subject to the specified conditions and the absence of any objections from interested parties.
Key Provisions
The primary operative sections of this legislation pertain to the creation and effects of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows for applications to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specific goods. If the CEO determines that the application meets the core criteria outlined in section 269C, they are required to make a TCO, as per section 269P(3). The TCO will specify that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which in this case is item 50, with a rate of duty of free instead of the general 5%.
The Act imposes several obligations and requirements on the parties involved. For instance, applicants must ensure their applications are valid and meet the criteria set out in the Act, particularly the core criteria in section 269C. The CEO is obligated to review applications and make a decision based on whether the goods in question are substitutable by Australian-produced goods. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed, as per section 269K(1). If no objections are received, the CEO must proceed to issue the TCO.
Failure to comply with the requirements set out in the Customs Act 1901 or the Tariff Concession Orders can lead to civil or criminal consequences. While the explanatory statement does not specify maximum penalties, breaches of the Customs Act 1901 generally attract fines and, in some cases, imprisonment. The specific penalties would depend on the nature and severity of the breach, as well as any additional relevant legislation. Importers, however, benefit from the ability to apply for a refund of duty on goods imported since the TCO came into force, as outlined in the Regulations under paragraph 126(1)(r).
This legislation ensures that the rights of importers are positively affected by the TCO, allowing them to potentially reclaim duties paid on imported goods. The TCO itself does not disadvantage any person or impose liabilities on anyone other than the Commonwealth, ensuring a fair and balanced approach to tariff concessions.