EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603538
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 zinc flotation plant on 8 February 2006.
Instrument
TCO No 0603538 was made on 21 April 2006. It declares that those certain zinc 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. 0603538 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 Tariff Concession Instrument No. 0603538, enacted in 2006, is an amendment to the Customs Act 1901. It was introduced to address the need for tariff concessions for specific imported goods, allowing for a reduction or elimination of customs duty under certain conditions. The instrument was enacted by the Commonwealth Parliament and aims to provide economic benefits by reducing the cost of importing certain goods. It establishes a process whereby the Chief Executive Officer of Customs can approve tariff concessions for goods not produced domestically and for which no suitable substitute is available. This process involves an application by an interested party, evaluation by the CEO, and potential publication in the Gazette for public submissions, although in this instance, no submissions were received.
The instrument specifically addresses the application by Zinifex Ltd for tariff concessions on certain zinc flotation plant, where the CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria for concession. The tariff rate for these goods was reduced from the general rate of 5% to 0%, effective from the date of the application on 8 February 2006. Importantly, the instrument ensures that it does not adversely affect the rights of any person other than the Commonwealth and does not impose new liabilities. Importers of these goods can also apply for refunds of duty paid before the concession took effect, thereby further incentivising the import of these specified goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines a mechanism through which Tariff Concession Orders (TCO) can be issued by the Chief Executive Officer of Customs. This legislation applies to individuals and entities seeking to import goods that are eligible for a reduced rate of customs duty. The scope of the Act is national, as it falls under the Commonwealth jurisdiction, and it applies to all imports of goods across Australia. The Act provides a framework for determining whether a particular application for a TCO meets the core criteria, primarily focusing on whether there are no substitutable goods produced in Australia that could be used in place of the goods being imported. The application process involves a public notice in the Gazette, inviting submissions from any interested parties, although no submissions were received in this case. Exclusions apply to goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The application of this legislation can be extended or modified through subordinate instruments, allowing for adjustments to the scope and specifics of the concessions provided. The Tariff Concession Instrument No. 0603538, issued on 21 April 2006, exemplifies the application of this legislative framework, granting a 0% customs duty rate on certain zinc flotation plant, effective from 8 February 2006, the date the application was lodged.
Key Provisions
The main operative sections of the Customs Act 1901, specifically under Part XVA, provide for the creation of Tariff Concession Orders (TCOs) which allow for a lower rate of customs duty on specified goods. Section 269F allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a TCO, provided the goods in question are not listed in section 269SJ, which outlines goods that cannot be subject to a TCO. Section 269C stipulates that for a TCO application to meet the core criteria, no substitutable goods must be produced in Australia in the ordinary course of business on the date the application was lodged. Substitutable goods, defined in section 269D, are goods produced in Australia that can be put to a similar use as the goods in question. If the CEO is satisfied that the application meets the core criteria, a TCO is made under section 269P(3), specifying a reduced duty rate applicable to the goods in question.
The obligations imposed by the Customs Act 1901 on the parties governed by it include the requirement for the CEO to ensure that no substitutable goods are being produced in Australia when assessing a TCO application. The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as per section 269K(1). Additionally, the CEO is required to decide whether the TCO application meets the core criteria set out in section 269C. In the case of TCO No. 0603538, the CEO confirmed that no substitutable goods were produced in Australia and thus issued the order, reducing the duty on certain zinc flotation plant from the general rate of 5% to 0%.
Breaching the requirements of the Customs Act 1901 can result in various consequences, both civil and criminal. While the specific penalties for breaches are not detailed in the explanatory statement, under the general provisions of the Customs Act, penalties for breaches can include fines and imprisonment. For example, section 247 of the Customs Act provides for penalties for fraudulent importation or exportation, including fines of up to $22,000 or imprisonment for up to two years, or both, for individuals, and higher penalties for corporations. Additionally, section 265 imposes penalties for providing false or misleading information in relation to customs matters. The Act also allows for the recovery of unpaid duties and penalties through civil proceedings.