EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516373
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 a certain initiating explosives manufacturing plant on 18 November 2005.
Instrument
TCO No 0516373 was made on 13 February 2006. It declares that the certain initiating explosives manufacturing plant is a good 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. 0516373 is taken to have come into force on 18 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. 0516373, made under the Customs Act 1901, was enacted to address the need for tariff concessions for specific goods that are not produced in Australia. This instrument allows for a lower rate of customs duty to be applied to goods specified in the order, provided certain criteria are met. The Customs Act 1901, enacted by the Australian Parliament, provides the framework for this scheme, allowing the Chief Executive Officer of Customs to make Tariff Concession Orders if the application for such an order meets the core criteria and no substitutable goods are produced in Australia. The policy objective is to support industries by reducing import costs for specific goods that cannot be locally produced, thereby encouraging economic growth and competitiveness.
The instrument was made in response to an application by Orica Australia Pty Ltd for a tariff concession on a certain initiating explosives manufacturing plant. Following the evaluation and satisfaction of the core criteria by the Chief Executive Officer of Customs, a written order was made on 13 February 2006, declaring that the specified plant is subject to a zero rate of customs duty. This concession is effective from the date of the application, 18 November 2005, and does not impose any liabilities on any person, while potentially benefiting importers by allowing them to apply for a refund of duty on goods imported since the effective date.
Scope and Application
The Customs Act 1901, as outlined in the Tariff Concession Instrument No. 0516373, applies to any person or entity seeking tariff concessions for goods imported into Australia. Specifically, the Act pertains to the application process for Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which can lower the rate of customs duty on goods. The application must not involve goods specified in section 269SJ of the Act, which excludes certain items from TCO eligibility. The legislation applies nationally, operating under the Commonwealth's authority, and it does not affect existing rights or impose new liabilities on individuals or entities for actions taken before the TCO's effective date. The CEO is mandated to publish notices in the Gazette inviting submissions on TCO applications, although in this case, no submissions were received. The TCO in question, effective from 18 November 2005, pertains to a certain initiating explosives manufacturing plant, granting it a duty-free status under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0516373 are sections 269C, 269P, and 269S of the Customs Act 1901, which provide the framework for the creation and operation of Tariff Concession Orders (TCOs). Section 269C outlines the core criteria that an application must meet for a TCO to be issued, specifically that no substitutable goods are being produced in Australia. Section 269P mandates that if these criteria are met, the Chief Executive Officer of Customs (CEO) must issue a written order (the TCO) specifying the goods to which the concession applies. Section 269S details the effective date of a TCO, which is the date the application is lodged, and clarifies that the TCO does not affect the rights of persons, except to benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO's effective date.
The obligations imposed by the Customs Act 1901 on parties include the requirement for the CEO to assess whether an application for a TCO meets the core criteria as outlined in section 269C. If the CEO is satisfied that the application is valid and meets the criteria, they must issue a TCO as per section 269P. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made, as per subsection 269K(1). The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on any person except the Commonwealth, in line with subsection 269S(1).
Under the Customs Act 1901, breaches of the provisions regarding TCOs can result in various penalties. While the Act does not specify explicit criminal penalties for non-compliance with TCO requirements, there are potential civil consequences for incorrect claims or misuse of tariff concessions. The Act includes provisions for general penalties under the Commonwealth Crimes Act 1914, which can include fines and imprisonment for serious breaches. For instance, knowingly making a false statement in relation to a TCO application could result in penalties of up to $22,200 for individuals and $111,000 for bodies corporate, as per section 13.2 of the Crimes Act. Additionally, importers who take advantage of the tariff concession without complying with the Act's provisions may face financial penalties or be required to repay any undue duty benefits.