EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0508491
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.
Eco Tech Holdings Australia Pty Ltd applied for a TCO in respect of a biodiesel (methylester) production plant on 30 June 2005.
Instrument
TCO No 0508491 was made on 16 September 2005. It declares that the certain biodiesel (methylester) production plant is a unit 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. 0508491 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 Tariff Concession Instrument No. 0508491 was enacted in 2005 under the Customs Act 1901 to address the specific need for tariff concessions on certain biodiesel production plant equipment. The Customs Act 1901, enacted by the Australian Parliament, provides a framework for the regulation of customs duties, and Part XVA allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs (CEO) when certain criteria are met. The policy objective behind this instrument was to facilitate the importation of the biodiesel production plant by Eco Tech Holdings Australia Pty Ltd without incurring customs duty, thus supporting the development of the biodiesel industry in Australia. The instrument was created following an application by Eco Tech Holdings Australia Pty Ltd, and the CEO determined that the application met the core criteria as no substitutable goods were being produced in Australia at the time. Consequently, a TCO was issued, effective from the date of the application, which provides for a zero rate of duty on the specified biodiesel production plant equipment.
Scope and Application
The Customs Act 1901, as amended, provides a framework under which Tariff Concession Orders (TCOs) can be made to lower customs duty rates for specified goods. These concessions apply to the goods outlined in the order once the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business. This process is applicable to entities or individuals who apply for such concessions in respect of specific goods, provided those goods do not fall under the categories specified in section 269SJ of the Act which are ineligible for TCOs. The application of these concessions is nationwide, affecting all jurisdictions under Commonwealth law. However, the Act does not extend to goods specified in section 269SJ. The CEO's decision to grant a TCO is final unless challenged, though no such challenges arose from the public consultation process for TCO No. 0508491. This particular TCO, effective from 30 June 2005, benefits importers of the specified biodiesel production plant by allowing them to apply for a refund of duty, while not imposing any liabilities on any person under the Act.
Key Provisions
The primary operative sections of this legislation, specifically Tariff Concession Order No. 0508491, declare certain biodiesel (methylester) production plants as goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a duty-free status for these goods (section 269P(3)). This concession was granted following an application by Eco Tech Holdings Australia Pty Ltd on 30 June 2005, and it was effective from that date (section 269S(1)). The decision to grant this concession was based on the Chief Executive Officer of Customs' determination that no substitutable goods were produced in Australia at the time the application was lodged (section 269C).
The Act imposes certain obligations on the parties involved, including the requirement for an applicant to ensure their application is not in respect of goods specified in section 269SJ of the Customs Act 1901, which lists goods that cannot be subject to a Tariff Concession Order (section 269F). Additionally, the Chief Executive Officer of Customs must decide whether an application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, although in this case, no submissions were received (subsection 269K(1)).
In terms of consequences for breach, the Act does not explicitly outline criminal or civil penalties for non-compliance with the tariff concession scheme. However, any misuse of the concession, such as importing goods not eligible for the tariff reduction or providing false information in an application, could potentially lead to investigations by customs authorities and possible revocation of the concession. The Act ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the registration of a TCO, and it does not impose any new liabilities on any person (subsection 269S(2)).
The instrument, TCO No. 0508491, ensures that the rights of importers are beneficially affected, and they can apply for a refund of duty on goods imported since the day the TCO came into force under the Customs Act 1901 (paragraph 126(1)(r) of the Regulations). This refund process does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the date of the TCO's registration. The tariff concession aims to encourage the production and importation of biodiesel in Australia by reducing the financial burden on businesses, without imposing any new liabilities or disadvantaging existing stakeholders.