EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516047
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 mobile manufacturing units on 16 November 2005.
Instrument
TCO No 0516047 was made on 06 February 2006. It declares that those certain mobile manufacturing units 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 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. 0516047 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 Customs Act 1901, amended by the Tariff Concession Instrument No. 0516047 enacted in 2006, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce customs duty rates on specified goods. This instrument was introduced to address the need for tariff concessions that encourage imports by lowering duty rates on goods that are not produced domestically, thereby fostering economic efficiency and competitiveness. The Tariff Concession Instrument No. 0516047 specifically addresses an application by Orica Australia Pty Ltd for tariff concessions on certain mobile manufacturing units, which was approved as no substitutable goods were being produced in Australia at the time of the application. The instrument ensures that the rights of importers are protected and allows for duty refunds on imports since the effective date of the concession, without imposing any new liabilities on non-Commonwealth entities.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at providing reduced customs duty rates on specific goods. This legislative provision applies to any person or entity that submits an application for a TCO concerning goods that are not specified in section 269SJ of the Act. The application process requires that the goods in question are not substitutable and are not produced in Australia in the ordinary course of business, as per the criteria outlined in sections 269C, 269D, and 269E. If these conditions are met, the CEO is mandated to issue a TCO, which was the case with Orica Australia Pty Ltd's application for certain mobile manufacturing units, resulting in Instrument TCO No. 0516047. This instrument, effective from 16 November 2005, granted these units a zero duty rate, down from the general rate of 5%. The application of this Act extends across the Commonwealth of Australia, and while it provides a streamlined process for tariff concessions, it also includes provisions to ensure that the rights of existing parties are not adversely affected by the implementation of a new TCO.
Key Provisions
The Customs Act 1901 allows the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) under section 269F, which provide a lower rate of customs duty on certain goods. A TCO can only be issued if the CEO determines that the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged (section 269B). Once the CEO is satisfied that the application meets these criteria, they must issue a written order (section 269P(3)). For instance, TCO No. 0516047, issued on 6 February 2006, declared that certain mobile manufacturing units are subject to a free rate of duty as no substitutable goods were produced in Australia at the time of application.
Under the Customs Act, the CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid (subsection 269K(1)). This notice invites any person who believes there are reasons why the TCO should not be made to lodge a submission with the CEO. If no submissions are received, the CEO can proceed to issue the TCO. In the case of TCO No. 0516047, no submissions were received, allowing the CEO to issue the order. A TCO is considered to have come into force on the day the application was lodged (subsection 269S(1)). This means that TCO No. 0516047 is effective as of 16 November 2005, the date on which the application was lodged.
The Act imposes specific obligations on the CEO regarding the issuance of TCOs. The CEO must ensure that the application meets the core criteria and that no substitutable goods were produced in Australia at the time of application. They must also publish a notice in the Gazette and consider any submissions received. In the case of TCO No. 0516047, the CEO verified that no substitutable goods were produced in Australia, published the notice, and issued the order without any submissions. The rights of importers will be positively affected, as they can apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person.
There are no explicit offences, penalties, or consequences for breach mentioned in the Act in relation to the issuance of TCOs. However, any failure by the CEO to adhere to the requirements and procedures outlined in the Act could potentially lead to legal challenges or administrative reviews. The precise consequences would depend on the specific circumstances and any applicable administrative or judicial processes.