EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603530
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.
Sigma Pharmaceuticals Pty Ltd applied for a TCO in respect of certain pharmaceutical manufacturing plant on 8 February 2006.
Instrument
TCO No 0603530 was made on 18 April 2006. It declares that those certain pharmaceutical manufacturing plant 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. 0603530 is taken to have come into force on 8 February 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 enacted to provide a comprehensive framework for the regulation of customs and excise in Australia. This Act was introduced to address the need for streamlined processes in the importation and exportation of goods, and to establish a system of duties and taxes on imported goods to protect local industries and generate revenue for the federal government. One of the key mechanisms under the Customs Act 1901 is the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) which can reduce the rate of customs duty on certain goods, provided specific criteria are met. The policy objective behind these concessions is to support industries by making imported goods more affordable and competitive, thereby facilitating trade and economic growth. This legislative approach allows for targeted relief for industries that might otherwise be at a disadvantage due to high import duties.
Scope and Application
The Customs Act 1901, under its Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can result in a reduced rate of customs duty for specified goods. This legislative provision applies to any person or entity who can demonstrate that the goods they seek to import do not have substitutable alternatives produced within Australia, thus meeting the core criteria stipulated in section 269C. The TCO mechanism is designed to benefit industries that rely on importing specialised equipment or materials where no domestic production exists, thereby facilitating competitive and efficient trade practices. Geographically, the Act operates on a national level, with the application of TCOs extending across all states and territories within Australia. Notably, the Act excludes certain goods from eligibility for a TCO, as detailed in section 269SJ, ensuring that the concessions do not undermine domestic industries. The scope of the Act can be further extended or clarified through subordinate instruments, although the primary focus remains on facilitating trade by reducing customs duties for specified goods.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Instrument No. 0603530, detail the procedure and criteria for the creation of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269C). Section 269C requires that a TCO application meets core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269E). This instrument allows the Chief Executive Officer of Customs (the CEO) to make a TCO if they are satisfied that the application complies with these criteria. If satisfied, the CEO must make a written order 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 applies (section 269P(3)). For instance, in this case, certain pharmaceutical manufacturing plant are declared to be subject to a free rate of duty, rather than the general 5% rate (item 50 of Schedule 4 to the Tariff).
The obligations imposed by the Act on the parties involved are primarily on the CEO of Customs. The CEO must ensure that any TCO application that is not in respect of goods specified in section 269SJ of the Act is assessed against the core criteria outlined in section 269C. If the CEO is satisfied that the application meets these criteria, they must make a TCO as specified (section 269P(3)). Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid. This notice must include an invitation for any person who believes there are reasons why the TCO should not be made to lodge a submission with the CEO. In this case, no submissions were received.
Any breaches of the provisions in the Customs Act 1901, including failure to comply with the requirements for making a TCO, can result in civil or criminal consequences. The specific offences and penalties are not detailed in this explanatory statement, but generally, the Act provides for penalties for non-compliance with its provisions. These could include fines and, in more serious cases, imprisonment. The exact penalties would depend on the specific breach and relevant sections of the Customs Act 1901. The TCO itself, however, does not impose any liabilities on any person, and it 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 in respect of anything done or omitted to be done before the date of registration.