EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0508910
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 Dipropylene Glycol Monomethyl Ether on 11 July 2005.
Instrument
TCO No 0508910 was made on 23 September 2005. It declares that those certain Dipropylene Glycol Monomethyl Ether 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 0%.
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. 0508910 is taken to have come into force on 11 July 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, establishes a framework for the administration of customs and excise, including the application of tariffs and duties on imported goods. One of the mechanisms within this framework is the Tariff Concession Order (TCO), which allows for the reduction of customs duty on specific goods under certain conditions. The Tariff Concession Instrument No. 0508910, issued in 2005, addresses the problem of ensuring that Australian industries are not unduly burdened by high customs duties on imported goods for which no suitable domestic alternatives exist. The policy objective is to provide relief to industries that rely on importing specific goods essential for their operations, thereby promoting economic efficiency and competitiveness. This instrument ensures that such goods can be imported at a reduced duty rate, provided that no substitutable goods are produced in Australia in the ordinary course of business.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a mechanism for the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) which reduce the customs duty on certain goods. The Act applies to individuals or entities who wish to import goods that are eligible for tariff concessions, provided that the goods in question are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. To qualify for a TCO, the goods must meet the core criteria outlined in section 269C, specifically that no substitutable goods are produced in Australia in the ordinary course of business. The TCO mechanism operates on a national level and is applicable to all jurisdictions within Australia. While the Act itself provides the primary framework, it may be extended or clarified through subordinate instruments, such as the Customs Tariff Act 1995, which sets out the specific tariff rates and concessions applicable to the goods in question. Notably, the rights of importers are positively affected by a TCO, potentially allowing for duty refunds on goods imported since the effective date of the order, without imposing any new liabilities on individuals or entities.
Key Provisions
The Tariff Concession Instrument No. 0508910 (referred to as TCO No. 0508910) is a regulation made under section 269F of the Customs Act 1901 (section 269F). It provides for a tariff concession on certain Dipropylene Glycol Monomethyl Ether, reducing the customs duty rate from the general rate of 5% to 0%. This concession is effective from the date the application was lodged, 11 July 2005 (subsection 269S(1)). The instrument declares that these specific chemicals are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
In applying for a TCO, the applicant must meet the core criteria set out in section 269C of the Customs Act 1901. For the CEO to grant the TCO, it must be established that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The definitions of terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269F of the Act respectively. Once the CEO is satisfied that the application meets the core criteria, they are required to make a written order declaring that the goods in question are subject to the specified tariff concession (subsection 269P(3)).
The obligations imposed on the parties governed by this Act include the requirement for any person applying for a TCO to ensure that their application meets the core criteria as specified in section 269C of the Customs Act 1901. The CEO must then assess the application against these criteria and, if satisfied, issue a written order as a TCO. Additionally, as per subsection 269K(1) of the Act, the CEO must publish a notice in the Gazette, inviting any interested parties to submit objections to the proposed TCO within a specified timeframe. In this instance, no submissions were received in response to the notice.
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO may result in civil or criminal penalties. While the explanatory statement does not detail specific offences or penalties related to TCOs, breaches of the Customs Act 1901 can attract significant penalties. For example, under section 236 of the Act, a person who contravenes the Act may be liable to a penalty of up to 10,000 penalty units for an individual and 50,000 penalty units for a body corporate. Additionally, criminal proceedings may be initiated for serious or repeated breaches, potentially leading to imprisonment. The specific penalties and consequences for breaches of the TCO or the Customs Act 1901 would be determined by the courts based on the nature and severity of the offence.