EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602198
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.
Arkema Pty Ltd applied for a TCO in respect of certain ethylene butyl acrylate copolymer on 12 January 2006.
Instrument
TCO No 0602198 was made on 24 March 2006. It declares that those certain ethylene butyl acrylate copolymer 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. 0602198 is taken to have come into force on 12 January 2006.
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 was amended with the introduction of the Tariff Concession Instrument No. 0602198 in 2006. This legislative instrument was enacted to address the issue of providing tariff concessions for specific goods that are not produced domestically, thereby ensuring a level playing field for Australian businesses that import these goods. The instrument was established under the authority of the Customs Act 1901, which is administered by the Commonwealth Parliament. The overarching policy objective of this measure is to facilitate trade by reducing the cost burden on importers of certain goods, specifically those for which no substitutable domestic products exist. This reduction in customs duty aims to enhance the competitiveness of Australian businesses that rely on these imports.
The Tariff Concession Instrument No. 0602198 was introduced following an application by Arkema Pty Ltd for tariff concessions on certain ethylene butyl acrylate copolymer. After evaluating the application, the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thereby meeting the core criteria for a tariff concession order. Consequently, the instrument declares that the specified copolymer is subject to a zero percent duty rate, as opposed to the general rate of 5%. The instrument came into effect on the date of the application, 12 January 2006, and no submissions were received in opposition to the concession.
Scope and Application
The Tariff Concession Instrument No. 0602198 applies to specific goods—in this case, certain ethylene butyl acrylate copolymer—and pertains to the concessions on customs duty as provided under the Customs Act 1901. The instrument facilitates a lower rate of customs duty for these goods, which were subject to a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. This order was made in response to an application from Arkema Pty Ltd, and the goods now enjoy a duty-free status under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 12 January 2006. The Act allows for the CEO to make such orders if no substitutable goods are produced in Australia, which was the case for these particular goods. The application process involves publishing a notice in the Gazette to invite any submissions opposing the TCO, though in this instance, no such submissions were received. The TCO does not adversely affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person.
Key Provisions
The main operative sections of this legislation concern the creation and application of Tariff Concession Orders (TCOs) under the Customs Act 1901. Specifically, section 269F allows for the application of a TCO by any person to the Chief Executive Officer of Customs (CEO), subject to the conditions outlined in section 269SJ which specifies goods that cannot be subject to a TCO. If the application is deemed to meet the core criteria outlined in sections 269C and 269P, the CEO must make a written order (TCO) as per section 269P(3). In this case, the TCO No. 0602198 was issued for certain ethylene butyl acrylate copolymer, specifying that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free rate.
The obligations imposed by the Customs Act 1901 on the parties it governs include ensuring that applications for TCOs are made in accordance with the legislative criteria. The CEO is obligated to review applications to determine whether they meet the core criteria and must publish notices in the Gazette inviting submissions from interested parties if an application is accepted as valid. The CEO also has the duty to make a TCO if the application is deemed to meet the criteria. Additionally, once a TCO is issued, the CEO must ensure that it is correctly implemented, which includes providing for the refund of duty to importers under the Regulations as per section 126(1)(r).
Any breaches of the provisions set out in the Customs Act 1901 can result in both civil and criminal consequences. For instance, making a false or misleading statement in an application for a TCO could result in fines and imprisonment under section 273 of the Act. The maximum penalties for such offences can be substantial, with fines up to $22,200 for individuals and $111,000 for bodies corporate, as well as imprisonment terms that can extend up to two years. It is crucial for applicants and other stakeholders to comply with the legislative requirements to avoid these penalties.