EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514783
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.
Arkema Ltd applied for a TCO in respect of certain Diacetone Alcohol on 21 October 2005.
Instrument
TCO No 0514783 was made on 9 January 2006. It declares that those certain Diacetone Alcohol 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. 0514783 is taken to have come into force on 21 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 Customs Act 1901 was enacted by the Parliament of Australia to provide for the administration of customs and excise, and includes provisions for the establishment of tariff concession orders (TCOs). The Tariff Concession Instrument No. 0514783, made in 2006, addresses the need for a streamlined process to grant tariff concessions on specific goods. This particular instrument was introduced in response to an application by Arkema Ltd for a tariff concession on certain Diacetone Alcohol, where it was determined that no substitutable goods were produced in Australia. The policy objective is to ensure that the application of lower rates of customs duty aligns with the economic rationale of supporting industries where local production does not occur, thereby potentially benefiting importers through duty refunds. The instrument was published in the Gazette, inviting any interested parties to submit objections, although none were received. The tariff concession came into effect on the date the application was lodged, ensuring that the rights of importers are protected and no new liabilities are imposed.
Scope and Application
The Customs Act 1901, under Part XVA, authorises the Chief Executive Officer of Customs to make Tariff Concession Orders (TCO) which reduce the customs duty on specified goods. A TCO can be applied for by any person, and once the application meets the core criteria, it must be processed by the CEO. The core criteria require that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is lodged. The Act defines 'substitutable goods' as those produced in Australia that could serve the same purpose as the goods in question. If the CEO determines that the application meets these criteria, a TCO is issued, effective from the date the application was lodged. This particular TCO, number 0514783, pertains to certain Diacetone Alcohol, where the duty rate has been reduced from 5% to 0% as no substitutable goods were found to be produced in Australia. This concession does not retroactively affect any pre-existing rights or impose new liabilities on any party other than the Commonwealth, and it allows for duty refunds to importers of the affected goods since the TCO's effective date.
Key Provisions
The main sections of the Customs Act 1901 that govern the making of Tariff Concession Orders (TCO) are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ. These sections provide the criteria that an applicant must meet to apply for a TCO and the process through which the Chief Executive Officer of Customs (CEO) must assess and make the order. Under section 269F, a person can apply to the CEO for a TCO concerning goods if certain conditions are met. If the CEO determines that the application meets the core criteria set out in section 269C, the CEO must make a written order declaring the goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies, as per section 269P(3).
The Act imposes several obligations and requirements on the parties involved. For instance, under section 269C, a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of key terms such as ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are provided in sections 269D, 269E, and the relevant parts of the Act. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe there are reasons why the TCO should not be made. This ensures transparency and allows for any objections to be considered before the order is made.
The Act outlines various consequences for non-compliance with its provisions. While specific offences and penalties are not detailed in the explanatory statement, breaches of the Customs Act 1901 generally may result in civil or criminal penalties. For example, section 188 of the Act provides that any person who contravenes an order made under the Act may be liable for a penalty of up to 10,000 penalty units for a corporation and 2,000 penalty units for an individual, or imprisonment for up to five years, or both, depending on the nature and seriousness of the offence. The Tariff Concession Instrument No. 0514783 does not specify additional penalties but implies that failure to adhere to the terms of the TCO could lead to legal repercussions under the broader Customs Act 1901 framework.
The Act ensures that the rights of individuals and entities other than the Commonwealth are protected, meaning that the TCO does not disadvantage anyone or impose liabilities for actions taken before the order's effective date. Importers, however, are specifically noted to benefit from the TCO by potentially applying for a refund of duty on goods imported since the order came into effect, as per paragraph 126(1)(r) of the Regulations. This provision highlights the Act's intent to balance the interests of various stakeholders while facilitating the concession process for eligible goods.