EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0511112
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.
Visy Industrial Plastics Pty Ltd applied for a TCO in respect of polyethylene terephthalate on 22 August 2005.
Instrument
TCO No 0511112 was made on 04 November 2005. It declares that polyethylene terephthalate is a product 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. 0511112 is taken to have come into force on 22 August 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 was enacted to provide for the regulation of customs and excise, including the imposition of customs duty and excise on goods imported into or exported from Australia. It established a framework for the administration of customs and excise, including the ability to grant tariff concession orders (TCO) under certain conditions. The Tariff Concession Instrument No. 0511112 was introduced by the Parliament of Australia to provide a lower rate of customs duty on specific goods, in this case, polyethylene terephthalate, under the Customs Act 1901. The policy objective of this legislation is to promote competitive trade by reducing the cost of imported goods, thereby benefiting importers and potentially consumers.
The instrument was enacted following an application by Visy Industrial Plastics Pty Ltd for a TCO concerning polyethylene terephthalate, a material used in various products. The Chief Executive Officer of Customs assessed the application and determined that no substitutable goods were produced in Australia at the time, thereby meeting the core criteria for a TCO. The instrument declares that polyethylene terephthalate is subject to a free rate of duty rather than the general rate of 5%, effective from the date of the application, 22 August 2005. The CEO published a notice in the Gazette inviting submissions from interested parties, none of which were received. The TCO does not affect the rights of any person as at the date of registration and does not impose any liabilities. Importers of the affected goods can apply for a refund of duty paid on imports since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework for Tariff Concession Orders (TCOs) under which the Chief Executive Officer of Customs can provide reduced rates of customs duty on certain goods. This Act applies to any person who may apply to the CEO for a TCO for goods, provided the goods do not fall under the categories specified in section 269SJ of the Act, which are ineligible for TCOs. The scope of the legislation includes goods for which no substitutable products are produced in Australia in the ordinary course of business, as defined by sections 269C, 269D, and 269E. If the CEO determines that an application meets the core criteria, a written TCO is issued, specifying the goods and the applicable lower duty rate. This process was exemplified in Tariff Concession Instrument No. 0511112, where polyethylene terephthalate was granted a duty-free concession following a successful application by Visy Industrial Plastics Pty Ltd. The CEO must also publish a notice in the Gazette inviting objections to the TCO, though in this instance, no submissions were received. The TCO has retroactive effect from the date of application, providing benefits such as duty refunds to importers without imposing new liabilities.
Key Provisions
The primary operative sections of the Customs Act 1901, relevant to Tariff Concession Orders (TCOs), include sections 269F, 269C, and 269P (subsection 269P(3)). Section 269F allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning specific goods. If the application is valid and does not involve goods that are prohibited under section 269SJ, the CEO must assess whether it meets the core criteria outlined in section 269C. If the application fulfils these criteria, the CEO is required to issue a written order, or TCO, specifying the reduced customs duty on the goods as per section 269P(3).
The Act imposes certain obligations on both applicants and the CEO. For applicants, the main obligation is to ensure their application meets the core criteria, which primarily involves demonstrating that no substitutable goods were produced in Australia on the day the application was lodged. The CEO's obligations include assessing the validity of the application, publishing a notice in the Gazette inviting any objections, and deciding whether to make the TCO based on the core criteria. Furthermore, the CEO must ensure that the TCO does not disadvantage any person or impose liabilities for actions taken before the TCO's effective date.
The Customs Act 1901 includes potential civil and administrative consequences for non-compliance with the requirements set out for TCOs. While specific offences and penalties are not detailed in the explanatory statement, general penalties for breaches of the Customs Act could include fines and imprisonment. The maximum penalties would depend on the nature and severity of the breach, as outlined in other parts of the Act. For instance, individuals or entities found to be misleading or providing false information in their TCO applications could face significant penalties. Additionally, any person who fails to comply with the terms of a TCO may be subject to enforcement actions, which could include fines or other financial penalties.