EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516046
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.
Orica Australia Pty Ltd applied for a TCO in respect of certain Paint Manufacturing Plant on 16 November 2005.
Instrument
TCO No 0516046 was made on 16 February 2006. It declares that those certain Paint Manufacturing Plant 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. 0516046 is taken to have come into force on 16 November 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. 0516046 was enacted in 2006 under the Customs Act 1901, with the objective of addressing the need for tariff concessions for specific imported goods. This legislation was introduced to provide relief from customs duties for certain goods where no substitutable Australian-made alternatives exist, thus supporting import-reliant industries by reducing their costs. The Customs Act 1901, as amended, allows the Chief Executive Officer of Customs to grant tariff concessions, provided the application meets the criteria outlined in the Act, such as the absence of substitutable goods produced in Australia. In this instance, Orica Australia Pty Ltd applied for a tariff concession for certain Paint Manufacturing Plant, and the CEO was satisfied that the application met the necessary criteria, leading to the concession of a 0% duty rate on these goods as per item 50 of Schedule 4 to the Customs Tariff Act 1995. The instrument took effect from the date of the application, 16 November 2005, and no submissions opposing the concession were received during the consultation period.
Scope and Application
The Customs Act 1901, under its Part XVA, provides a mechanism for the Chief Executive Officer (CEO) of Customs to make Tariff Concession Orders (TCO) which reduce the customs duty on specified goods. This Act applies to individuals and entities who wish to import goods and seek tariff concessions, thereby benefiting from a lower rate of customs duty. The CEO assesses applications for TCOs based on criteria outlined in the Act, such as whether substitutable goods are produced in Australia. The scope of the Act includes the geographic reach of the Commonwealth, affecting all importers across Australia. Importantly, goods specified in section 269SJ of the Act, which typically include those that are sensitive or critical to domestic production, are excluded from the concessions. The Act may extend its application through subordinate instruments, such as regulations or notifications, which further define terms and procedures for the concession process. In the case of TCO No. 0516046, it specifically applies to certain Paint Manufacturing Plant, reducing their duty rate to zero from the general rate of 5%.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for Tariff Concession Orders (TCOs) under section 269F. Section 269C outlines the core criteria that must be satisfied for a TCO to be granted: on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Additionally, section 269B clarifies that 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods' are defined elsewhere in the Act. If the Chief Executive Officer of Customs (the CEO) is satisfied that these criteria are met, they must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff), with a specified duty rate.
Entities or individuals applying for a TCO must ensure their application meets the core criteria specified in section 269C. They must provide evidence that no substitutable goods were produced in Australia on the day the application was lodged. This involves demonstrating the absence of any goods in Australia that could serve the same purpose or function as the goods for which the TCO is sought. The CEO has the discretion to request additional information or clarification to determine if the application meets these criteria.
Failure to comply with the provisions of the Act, including providing false or misleading information in an application for a TCO, may result in civil or criminal penalties. Under section 269V, a person who contravenes the Act may be subject to a penalty of up to $11,100 for an individual or $55,500 for a body corporate, depending on the nature and extent of the contravention. In cases of fraudulent or deliberate non-compliance, the CEO may also refer the matter to law enforcement agencies for further investigation and potential criminal prosecution.
In the case of Orica Australia Pty Ltd, the CEO determined that the application for a TCO for certain Paint Manufacturing Plant met the core criteria as no substitutable goods were produced in Australia. Consequently, TCO No. 0516046 was issued, declaring that the specified goods are subject to item 50 of Schedule 4 to the Tariff, with a duty rate of 0%. This TCO came into force on 16 November 2005, the date the application was lodged, and it does not impose any liabilities on any person nor affect the rights of persons as at the date of registration. Importers of these goods can apply for a refund of duty on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.