EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516048
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 vermiculite manufacturing plant on 15 November 2005.
Instrument
TCO No 0516048 was made on 3 April 2006. It declares that those certain vermiculite 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. One submission objecting to the TCO application was received from Abon Engineering Pty Ltd.
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. 0516048 is taken to have come into force on 15 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, enacted by the Parliament of Australia, provides a framework for the imposition and collection of customs duties on goods imported into Australia. One of the mechanisms within this Act is the Tariff Concession Order (TCO), which allows for a reduction or waiver of customs duty on certain goods. This is designed to address economic and policy objectives by facilitating the import of goods that are not produced domestically or for which there are no suitable domestic substitutes. TCO No. 0516048, made on 3 April 2006, is an example of such a concession applied to specific vermiculite manufacturing plant, lowering the duty rate from the general 5% to 0%. This legislative instrument was introduced to provide economic benefits by reducing the cost of importing these particular goods, thereby potentially lowering the costs for businesses and consumers and enhancing competitiveness within the industry.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), enabling a lower rate of customs duty for goods specified in these orders. A TCO can be applied for by any person in respect of goods, provided that the application is not for goods specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. The CEO must determine if the application meets the core criteria, which include the absence of substitutable goods produced in Australia in the ordinary course of business at the time of application. If the CEO is satisfied that the application meets these criteria, they must issue a written order, effectively applying the prescribed tariff concession. The application process also requires the CEO to publish a notice in the Gazette inviting submissions from interested parties, as seen in the case of TCO No. 0516048 for vermiculite manufacturing plant, where an objection was lodged by Abon Engineering Pty Ltd. The commencement of a TCO is effective from the day the application is lodged, without retroactively affecting the rights of any person other than the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 0516048 under the Customs Act 1901 (section 269F) establishes a tariff concession order (TCO) for certain vermiculite manufacturing plant, reducing the customs duty from 5% to 0%. This concession applies to goods specified in item 50 of Schedule 4 to the Customs Tariff Act 1995. The concession became effective on 15 November 2005, the date the application was lodged (subsection 269S(1)). The concession was granted after the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia on the application date (section 269C).
The obligations imposed by the Act on parties such as Orica Australia Pty Ltd, who applied for the TCO, include ensuring their application meets the core criteria, which involves proving that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons the TCO should not be made (subsection 269K(1)). In this instance, Abon Engineering Pty Ltd lodged an objection, which the CEO considered in making the decision. The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on them for actions taken before the TCO was registered (subsection 269S(1)).
Failure to comply with the provisions of the Customs Act 1901 could result in various civil or criminal consequences. For example, if an entity misrepresents information in an application for a TCO, they may face penalties under section 237 of the Act, which can include fines and imprisonment. The maximum penalties for breaches involving fraudulent conduct or serious breaches can be substantial, reflecting the seriousness of the offence. For instance, section 282 of the Act prescribes penalties for fraudulent behaviour, which can include fines of up to $22,000 or imprisonment for up to five years, or both. Additionally, subsection 269R(2) of the Act notes that the CEO may cancel a TCO if it was made in error or if circumstances change such that the concession is no longer appropriate. This underscores the importance of adhering to the statutory requirements when applying for or managing a TCO.