EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514730
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.
CSL Ltd applied for a TCO in respect of certain Cell Culture Bioreactor on 18 October 2005.
Instrument
TCO No 0514730 was made on 9 January 2006. It declares that those certain Cell Culture Bioreactor 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. 0514730 is taken to have come into force on 18 October 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. 0514730 was enacted under the Customs Act 1901 to address the issue of tariff concessions for specific goods. The instrument was introduced by the Chief Executive Officer of Customs in response to an application from CSL Ltd for a Tariff Concession Order (TCO) regarding certain Cell Culture Bioreactors. The problem it sought to address was the imposition of a lower rate of customs duty on goods that were not being produced in Australia in the ordinary course of business and for which no substitutable goods were available domestically. The policy objective is to support industries that rely on importing specific goods for their operations, ensuring they are not at a competitive disadvantage due to higher customs duty rates.
The instrument was developed following the legislative framework outlined in Part XVA of the Customs Act 1901, which allows for the creation of TCOs to provide tariff relief. The CEO assessed CSL Ltd's application against the core criteria stipulated in section 269C of the Act, which requires that no substitutable goods be produced in Australia on the day the application was lodged. After satisfying these conditions, the CEO issued TCO No. 0514730, declaring that the specified Cell Culture Bioreactors are subject to a 0% duty rate, down from the general rate of 5%. This decision was made in accordance with subsection 269P(3) of the Act, which mandates that a written order be made when the CEO is satisfied that the application meets the core criteria.
Scope and Application
The Tariff Concession Instrument No. 0514730 under the Customs Act 1901 applies to any person or entity seeking a tariff concession on goods imported into Australia, provided the goods meet the criteria set out in the Act. Specifically, the Act applies to the Chief Executive Officer of Customs (CEO) who is responsible for deciding whether an application for a Tariff Concession Order (TCO) meets the core criteria and subsequently making a TCO. This instrument sets out the conditions under which the CEO must make a written order declaring certain goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, thereby granting them a lower rate of customs duty. The application of this Act extends across the Commonwealth of Australia, affecting all entities importing goods that qualify for a tariff concession under the prescribed conditions.
The Act excludes goods specified in section 269SJ, which are those that cannot be subject to a TCO, and applies to goods for which no substitutable goods are produced in Australia in the ordinary course of business as per section 269C. The application of the TCO does not disadvantage any person or impose any liabilities on any person in respect of actions taken before the TCO's registration date, ensuring that only the rights of importers are beneficially affected. The commencement date of the TCO is the day on which the application was lodged, ensuring that the concessions apply retroactively from that date, allowing for potential duty refunds for importers as per the Customs Regulations.
Key Provisions
The Customs Act 1901 (section 269F) facilitates the application for Tariff Concession Orders (TCOs) by any person seeking to reduce customs duty rates on specific goods. This is contingent upon the goods not being specified in section 269SJ, which lists items ineligible for TCOs. Once an application is deemed valid, the Chief Executive Officer of Customs (CEO) evaluates whether it meets the core criteria, primarily by confirming that no substitutable goods are produced in Australia on the application date (section 269C). If satisfied, the CEO issues a written TCO (section 269P(3)), as seen in TCO No. 0514730, which applies to certain Cell Culture Bioreactors. This TCO reduced the duty rate from the general 5% to 0%.
The Act imposes several obligations on the CEO, including the mandatory publication of a notice in the Gazette once an application is accepted as valid (section 269K(1)). This notice invites any interested party to submit objections to the TCO, although no such submissions were made for TCO No. 0514730. The TCO itself comes into effect on the date the application is lodged (subsection 269S(1)), thus providing immediate benefits to importers who can apply for duty refunds on imports made since the TCO's effective date (Regulations, paragraph 126(1)(r)).
The legislation ensures that TCOs do not adversely affect the rights of any person as of the registration date, nor do they impose liabilities on individuals for actions taken prior to the TCO's effective date (subsection 269S(1)). This protective measure is in place to safeguard non-Commonwealth entities from retroactive disadvantages or liabilities.
Non-compliance with the provisions of the Customs Act 1901 regarding TCOs could result in various penalties. The specifics of these penalties are not detailed in the provided text, but generally, breaches of customs regulations can lead to civil or criminal penalties. Civil penalties may include fines, while criminal penalties could involve imprisonment, depending on the severity and intent behind the breach. The maximum penalties, however, are not specified in the explanatory statement provided.