EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602224
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 pellet plant on 11 January 2006.
Instrument
TCO No 0602224 was made on 24 March 2006. It declares that those certain pellet plant and 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. 0602224 is taken to have come into force on 11 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, as supplemented by Tariff Concession Instrument No. 0602224 enacted in 2006, introduces a mechanism for tariff concessions to facilitate the importation of goods that are not domestically produced. The instrument was enacted by the Parliament of Australia to address the gap in tariff concessions for goods that are not produced within Australia, thereby promoting economic efficiency and supporting industries that rely on imported components. The objective of the instrument, as stated in the explanatory statement, is to reduce the duty on specific goods, in this case certain pellet plants, to zero percent, provided that no substitutable goods are produced in Australia. The Tariff Concession Order No. 0602224 was made by the Chief Executive Officer of Customs following an application by Orica Australia Pty Ltd, and it came into effect on the date the application was lodged, 11 January 2006. The order was published in the Gazette with an invitation for public submissions, none of which were received. The order ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0602224 applies to goods specified in the instrument, in this case certain pellet plant, and is enacted under the Customs Act 1901. The Act applies to any person or entity that imports goods into Australia and seeks a tariff concession for those goods. The instrument reduces the customs duty on the specified goods from the general rate of 5% to 0%, effective from the date the application for the tariff concession order (TCO) was lodged, which was 11 January 2006. The geographic reach of the Act and the TCO is national, as it applies across Australia. The Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ of the Act, which includes goods that are specified as prohibited or restricted under other legislation. The instrument does not affect any existing rights or impose liabilities on any person, except for the Commonwealth, in respect of actions taken before the registration of the TCO. The application of the Act can be extended or restricted through subordinate instruments, which may provide further details on the eligibility criteria for tariff concessions or specify additional categories of goods that are exempt from concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0602224 under the Customs Act 1901 (section 269F) require that an application for a Tariff Concession Order (TCO) can be made by a person to the Chief Executive Officer (CEO) of Customs. Section 269C mandates that 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. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995, which in this case is item 50 with a duty rate of 0% (section 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions from any interested parties (section 269K(1)).
The obligations imposed by the Act on the parties involved include the requirement for applicants to ensure their applications are not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO must then assess whether the application meets the core criteria as outlined in section 269C. Additionally, the CEO has a duty to publish a notice in the Gazette, inviting any interested parties to submit objections if they believe the TCO should not be made (section 269K(1)). For the TCO to be effective, it must be lodged on a date that satisfies the criteria and the goods must not have substitutable equivalents produced in Australia.
Breaching the provisions of the Customs Act 1901 can lead to various civil and criminal consequences. Under section 164 of the Act, any person who makes a false statement or provides false information in an application for a TCO may be subject to a fine of up to 10,000 penalty units or imprisonment for up to two years, or both. Further, under section 167, any person who contravenes a provision of the Act, including the provisions relating to TCOs, may be liable to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, if the contravention is a serious offence. The Act also provides for lesser penalties for non-serious offences, which may include fines of up to 5,000 penalty units or imprisonment for up to 12 months, or both. The maximum penalties underscore the seriousness with which the law treats the integrity of the application process for TCOs.