EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0509753
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 Washers and/or Dryers on 22 July 2005.
Instrument
TCO No 0509753 was made on 30 September 2005. It declares that those certain Pharmaceutical Washers and/or Dryers 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. 0509753 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, as amended, provides a framework for the imposition of customs duties and the granting of tariff concession orders (TCOs) by the Chief Executive Officer of Customs. Enacted by the Commonwealth Parliament, this Act aims to facilitate international trade by providing mechanisms for tariff reductions on specific goods, thereby promoting economic efficiency and competitiveness. The Act was introduced to address the need for flexible tariff structures that can adapt to changes in the production and trade environment, particularly in relation to goods that are not locally produced. The policy objective is to support industries that rely on imported goods by reducing the cost of customs duties, thereby enhancing their competitiveness and encouraging investment. TCO No. 0509753, made under this legislative framework on 30 September 2005, provides a tariff concession for certain Pharmaceutical Washers and/or Dryers, reducing the duty rate from 5% to 0% on the basis that no substitutable goods were produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 0509753, made under Part XVA of the Customs Act 1901, applies to the specific case of Pharmaceutical Washers and/or Dryers as submitted by Lipa Pharmaceuticals Ltd. The Act allows the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that lower the customs duty rate on goods provided certain criteria are met, including the absence of substitutable goods produced in Australia. In this instance, the CEO determined that no such substitutable goods existed and thus granted the concession, reducing the duty on the specified Pharmaceutical Washers and/or Dryers from 5% to 0%. This concession applies nationally and affects the importation of these goods, providing a benefit to importers by potentially enabling them to claim refunds for duties paid prior to the concession's effective date, 22 July 2005. The legislation does not disadvantage any person other than the Commonwealth and does not impose new liabilities on individuals or entities. The scope of the TCO is limited to the goods specified in the order and does not extend to other goods or industries, ensuring the targeted relief as per the application.
Key Provisions
The primary sections of this legislation (F2005L03065) include section 269F, which outlines the process for applying for a Tariff Concession Order (TCO); section 269C, which sets the criteria that an application must meet; and section 269P, which mandates that if these criteria are satisfied, a TCO must be issued. Under section 269F, an application for a TCO can be made to the Chief Executive Officer of Customs (CEO) by any person. If the CEO determines that the application is not for goods specified in section 269SJ, which are ineligible for a TCO, they must then assess whether the application meets the core criteria outlined in section 269C. These criteria require that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) then requires the CEO to make a TCO if the criteria are met.
The obligations imposed by this Act are primarily on the CEO, who must ensure that applications for a TCO are assessed against the criteria in section 269C. Once an application meets these criteria, the CEO is required to make a TCO under section 269P(3). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions on the application as soon as practicable after accepting it as a valid application. In this case, no submissions were received, but the requirement remains. This publication requirement ensures transparency and allows interested parties to voice any objections to the concession being granted.
Breaching the requirements of this Act can have various consequences. While the Act itself does not specify penalties for non-compliance by the CEO or applicants, failure to adhere to the legislative criteria for issuing a TCO could result in the order being subject to review or being overturned by a court. For the CEO, not following the mandatory steps outlined in sections 269F, 269C, and 269P(3) could lead to legal challenges or administrative penalties. For applicants, providing false information in an application could potentially lead to civil or criminal penalties under other applicable laws, such as fraud or misleading conduct. The precise penalties would depend on the nature of the breach and the applicable law.