EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603536
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.
Zinifex Ltd applied for a TCO in respect of certain lead flotation plant on 8 February 2006.
Instrument
TCO No 0603536 was made on 21 April 2006. It declares that those certain lead flotation 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 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. 0603536 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, enacted by the Commonwealth Parliament, provides a framework for the regulation of customs duties and tariffs in Australia. One of its key features is the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) to grant lower customs duty rates on certain goods. This mechanism aims to support Australian industries by reducing the cost of imported goods that have no local alternatives. The Act's section 269F allows for applications to be made for such concessions, with core criteria outlined in sections 269C, 269B, and 269D, ensuring that only goods for which no substitutable Australian-produced goods exist can benefit from reduced tariffs. This legislative approach is designed to promote competitive markets while providing relief to industries facing significant import competition.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the framework for Tariff Concession Orders (TCOs) which can be issued by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty to certain goods. An application for a TCO can be submitted by any person, provided that the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The CEO must then determine if the application meets the core criteria, particularly if no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged. If the application meets these criteria, the CEO must issue a written order that specifies the lower duty rate applicable to the goods, as prescribed in Schedule 4 to the Customs Tariff Act 1995. This legislative process is designed to facilitate the importation of goods that are not domestically produced, thereby encouraging trade and potentially benefiting importers by reducing the duty on these goods. The TCO does not affect any pre-existing rights of individuals or entities and does not impose new liabilities; instead, it provides a pathway for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0603536 (TCO No. 0603536) include sections 269C, 269B, 269E, 269P(3), and 269SJ of the Customs Act 1901. These sections outline the process for applying for and granting tariff concession orders (TCOs), which allow for a lower rate of customs duty on certain goods. Under section 269C, the Chief Executive Officer of Customs (CEO) must determine if an application for a TCO meets the core criteria, which require that no substitutable goods are produced in Australia on the date the application is lodged (section 269F). If the CEO is satisfied that the application meets the criteria, they must make a written order declaring the goods to which the TCO applies (section 269P(3)). The CEO must also ensure that the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The instrument declares that certain lead flotation plant, subject to the application, are goods to which a 0% duty rate applies, rather than the general 5% rate.
The Customs Act 1901 imposes certain obligations and requirements on the parties involved in the TCO process. For applicants, the primary obligation is to ensure their application meets the core criteria, which includes proving that no substitutable goods are produced in Australia on the date of the application. The CEO has the obligation to review the application, determine if it meets the core criteria, and if so, make a written order declaring the goods to which the TCO applies. The CEO must also publish a notice in the Gazette inviting any person who may have objections to the TCO to lodge a submission. In this case, no objections were received. Importers of the goods affected by the TCO also have the benefit of being able to apply for a refund of duty on goods imported since the TCO is deemed to have come into force on the date of the application (section 269S(1)).
In terms of offences and penalties, the Customs Act 1901 does not explicitly detail offences or penalties specific to TCOs. However, any breach of the Act or Regulations, including fraudulent applications or incorrect claims for duty refunds, may result in criminal charges under sections such as 236 and 237 of the Act, which pertain to offences related to customs and excise. Penalties for these offences can include substantial fines and, in some cases, imprisonment. For instance, section 236 of the Act provides for fines of up to 120 penalty units and imprisonment for six months for offences related to providing false or misleading information. Additionally, under section 237, an offence involving fraud can incur a fine of up to 210 penalty units and imprisonment for two years. It is important to note that the exact penalties can depend on the nature and severity of the offence, as well as any precedents set by previous cases.