EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0601559
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 aluminium stearates on 29 December 2005.
Instrument
TCO No 0601559 was made on 24 March 2006. It declares that those certain aluminium stearates 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. 0601559 is taken to have come into force on 29 December 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 Australian Parliament, facilitates the imposition of tariff concession orders (TCOs) on certain goods, aiming to address economic challenges by reducing customs duty rates. The Act provides the framework for the CEO of Customs to apply tariff concessions if specific criteria are met, notably the absence of substitutable goods produced in Australia. The Tariff Concession Instrument No. 0601559, made on 24 March 2006, exemplifies this process by applying a zero per cent duty rate to specific aluminium stearates, effective from 29 December 2005, following an application by Orica Australia Pty Ltd. The instrument was introduced without opposition, indicating no public concerns about the concession, and it beneficially impacts importers by allowing them to apply for duty refunds on imports since the concession's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which effectively applies lower rates of customs duty on certain goods. This legislative framework is designed to benefit importers by reducing duty costs on specified goods, provided that these goods are not substitutable by any domestically produced alternatives and meet the core criteria outlined in the Act. The application process requires an assessment by the CEO to determine if the goods in question can be granted a tariff concession, and if they meet the criteria of not having substitutable goods produced in Australia at the time of application. The TCOs extend their application nationally across Australia, impacting all importers of the specified goods by potentially reducing their duty liabilities. Importantly, TCOs do not disadvantage any person by affecting their rights or imposing liabilities for actions taken prior to the registration of the order. The TCO No. 0601559, made in relation to certain aluminium stearates, exemplifies this process by reducing the duty from 5% to 0%, contingent upon the CEO’s satisfaction that no domestic substitutes exist.
Key Provisions
The main operative sections of this legislation, particularly section 269C of the Customs Act 1901, detail the core criteria that must be met for a Tariff Concession Order (TCO) to be granted. According to 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. This provision hinges on definitions provided in sections 269D (goods produced in Australia), 269E (ordinary course of business), and 269F (substitutable goods). If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, they must make a written order declaring that the specified goods are subject to a prescribed rate of duty as outlined in Schedule 4 of the Customs Tariff Act 1995. In this case, TCO No. 0601559 was issued for certain aluminium stearates, reducing their duty rate from 5% to 0%.
The Act imposes several obligations on the parties involved. Section 269F mandates that a person must apply to the CEO for a TCO concerning specific goods. The CEO, in turn, has the obligation to determine whether the application meets the core criteria as defined in section 269C. Furthermore, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be granted. This transparency measure ensures that all relevant stakeholders have an opportunity to voice their concerns. Additionally, section 269S(1) mandates that a TCO is to be taken as coming into force on the date the application was lodged, which in this instance is 29 December 2005.
There are no explicit offences, penalties, or civil/criminal consequences mentioned in the Act for failing to comply with the obligations outlined. However, the issuance of a TCO is contingent upon meeting the specified criteria, and failure to do so would mean the TCO cannot be granted. Any misrepresentation or fraudulent application could potentially lead to administrative penalties or legal consequences under the broader framework of the Customs Act 1901. Nevertheless, the Act primarily focuses on the procedural and substantive criteria for TCOs, ensuring that the duty concession is granted fairly and transparently.