EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0601572
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 petroleum based oils on 29 December 2005.
Instrument
TCO No 0601572 was made on 24 March 2006. It declares that those certain petroleum based oils 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 $0.05449/L. 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. 0601572 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 Tariff Concession Instrument No. 0601572, enacted in 2006, is a legislative tool under the Customs Act 1901 designed to address specific tariff concessions for particular goods. The Act provides for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which grant lower rates of customs duty on specified goods, provided they meet certain criteria such as the absence of substitutable goods produced in Australia. The problem this instrument aims to solve is the potential economic disadvantage faced by businesses that rely on importing specific goods without locally produced alternatives. The enacting body is the Australian Parliament, with the policy objective being to foster a competitive business environment by reducing the cost of importing critical goods for businesses.
The instrument came into effect on 29 December 2005, the date the application for the TCO was lodged, and it does not affect the rights of any person as at the date of registration, ensuring no disadvantage or imposition of liabilities on individuals or entities other than the Commonwealth. This particular TCO, which applies to certain petroleum-based oils, was made in response to an application by Orica Australia Pty Ltd, and it sets a duty rate of 0% for these goods, significantly lowering the tariff from the general rate of $0.05449 per litre. The implementation of this concession is expected to benefit importers by potentially allowing them to claim refunds for duties paid on these goods imported since the effective date of the TCO.
Scope and Application
The Tariff Concession Instrument No. 0601572 under the Customs Act 1901 applies to goods that are subject to a Tariff Concession Order (TCO), specifically certain petroleum-based oils, for which Orica Australia Pty Ltd applied on 29 December 2005. The Act permits the Chief Executive Officer of Customs to grant tariff concessions to goods that meet specific criteria, including the absence of substitutable goods produced in Australia. This concession effectively reduces the customs duty on these specified petroleum-based oils from the general rate of $0.05449 per litre to 0%. The application of the TCO is governed by the Act and its subsidiary legislation, which ensures that the rights of entities other than the Commonwealth are not adversely affected by the concession, and no new liabilities are imposed on any person as a result of the TCO. The TCO does not extend to goods specified under section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions.
Key Provisions
The main operative sections of this legislation (Tariff Concession Instrument No. 0601572) involve the creation of a Tariff Concession Order (TCO) by the Chief Executive Officer of Customs (CEO) under section 269F of the Customs Act 1901 (the Act) (subsection 269P(3)). This instrument is made when the CEO is satisfied that the application for the TCO meets the core criteria as outlined in section 269C of the Act, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. If these criteria are met, the CEO must make a written order, declaring that the goods subject to the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) applies. In this instance, the CEO has declared that certain petroleum-based oils are goods to which item 50 of Schedule 4 to the Tariff applies.
The obligations and requirements imposed by this Act on the parties or entities it governs are primarily on the CEO of Customs. The CEO must accept and process valid applications for TCOs, assess whether the core criteria for the TCO are met, and if satisfied, issue a written order in the form of a TCO. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties if they believe the TCO should not be made. In this case, the CEO did not receive any submissions in response to the published notice. The Act also requires that the TCO does not affect the rights of any person as at the date of registration so as to disadvantage that person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration.
Any offences, penalties, or civil/criminal consequences for breach of the Act are not explicitly stated in the text. However, it is implied that failure to comply with the obligations and requirements outlined in the Act could lead to legal action against the CEO for not fulfilling their duty to process TCO applications properly and fairly. Additionally, if the CEO issues a TCO without meeting the core criteria, it could result in the TCO being challenged and potentially overturned in a court of law. The maximum penalties for any potential breaches would depend on the specific nature of the breach and would be determined by the relevant court or tribunal.