EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0509751
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 capsule tumble polishers on 22 July 2005.
Instrument
TCO No 0509751 was made on 07 October 2005. It declares that those certain pharmaceutical capsule tumble polishers 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. 0509751 is taken to have come into force on 22 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, established a framework for the administration of customs and excise duties. It provides mechanisms for tariff concession orders (TCO) which can be applied for by individuals or entities to secure a lower rate of customs duty for specified goods. This legislation was designed to address gaps in duty concessions for imported goods that could not be adequately replaced by domestically produced alternatives, thereby facilitating trade and economic activities. The Tariff Concession Instrument No. 0509751, made in 2005 under this Act, aimed to provide a tariff concession for certain pharmaceutical capsule tumble polishers, ensuring that no substitutable goods were produced in Australia at the time of the application. The policy objective of this specific instrument was to allow the free import of these particular goods, thereby reducing costs for importers and potentially increasing the availability of these goods in the Australian market.
Scope and Application
The Customs Act 1901, as amended and applied through Tariff Concession Orders (TCOs), provides a framework under which certain goods may benefit from reduced or eliminated customs duty rates. Specifically, the Act allows the Chief Executive Officer of Customs to grant a TCO if an application is made and if the application meets the core criteria outlined in section 269C of the Act. This means that the goods in question must not have substitutable alternatives produced in Australia, as defined by sections 269D, 269E, and 269F. The TCO scheme applies to any person or entity that imports the specified goods and is intended to benefit importers by potentially reducing their duty costs. The application of a TCO is national in scope, applying across all jurisdictions within Australia. The Act does not specify any exclusions or exemptions apart from those outlined in section 269SJ, which lists goods that cannot be subject to a TCO. The scope of the TCO may be further refined or extended through subordinate instruments, but these must still adhere to the core criteria and provisions of the Customs Act 1901.
Key Provisions
Section 269F of the Customs Act 1901 allows for the application for a Tariff Concession Order (TCO) by a person seeking a lower rate of customs duty for specified goods. If the Chief Executive Officer (CEO) of Customs is satisfied that the application is valid and pertains to goods not excluded by section 269SJ, they must evaluate whether it meets the core criteria outlined in section 269C. A TCO application meets these core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act.
The obligations under this Act primarily rest with the applicant and the CEO of Customs. The applicant must ensure that their TCO application is valid and pertains to goods that meet the criteria for tariff concessions. The CEO, upon receiving a valid application, is obligated to make a decision based on the criteria and publish a notice in the Gazette inviting submissions from interested parties. In this case, the CEO for Lipa Pharmaceuticals Ltd. made TCO No. 0509751 on 07 October 2005, declaring that the pharmaceutical capsule tumble polishers were subject to a zero-rate duty under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Breaching the requirements or misleading the CEO in an application can lead to civil or criminal consequences. Although the explanatory statement does not specify the exact penalties, breaches of the Customs Act generally incur substantial penalties under Australian law. For example, knowingly making a false statement in a customs declaration can result in fines of up to $11,000 or imprisonment for up to two years, or both, under section 236A of the Customs Act. Similarly, failing to comply with a TCO or misrepresenting the nature of goods could lead to penalties for incorrect duty payments or legal action for misrepresentation. The CEO also retains the right to cancel a TCO if it is found to have been granted based on false information or if the conditions of the concession are not met.