EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603539
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 processing zinc and lead plant on 8 February 2006.
Instrument
TCO No 0603539 was made on 5 May 2006. It declares that those certain processing zinc and lead 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. 0603539 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 Australian Parliament, provides for the administration of customs and excise in Australia. This legislation, through its Part XVA, established a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders allow for reduced rates of customs duty on specified goods, provided certain criteria are met. The problem the Act aimed to address was the facilitation of the import of specific goods without imposing undue financial burdens, thereby supporting trade and economic activities. The policy objective, as stated in the explanatory statement, is to ensure that such tariff concessions are granted only where no substitutable goods are produced in Australia, thereby avoiding the detriment to domestic producers. The instrument, Tariff Concession Instrument No. 0603539, exemplifies this policy by granting a zero percent duty rate on certain processing zinc and lead plant, following an application by Zinifex Ltd and the CEO’s determination that no equivalent goods were produced domestically.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the implementation of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO). This Act applies to any person or entity that wishes to apply for a TCO in respect of goods, ensuring that the goods in question are not specified in section 269SJ as those that cannot be subject to a TCO. The application process requires that the goods for which the concession is sought are not substitutable by goods produced in Australia in the ordinary course of business, as defined by the Act. The TCO mechanism is jurisdictional at the Commonwealth level, with the CEO having the authority to declare certain goods as eligible for a reduced rate of customs duty under the Customs Tariff Act 1995. For instance, in the case of Zinifex Ltd's application for processing zinc and lead plant, the CEO determined that no substitutable goods were produced in Australia and subsequently issued TCO No. 0603539, setting the duty rate at 0% for these goods. The TCO's commencement is effective from the date of the application, providing immediate benefit to importers who may apply for duty refunds for imports made since that date. The CEO is required to publish notices in the Gazette to invite submissions from interested parties, although in this instance, no submissions were received. The TCO does not affect pre-existing rights or impose liabilities on any person, ensuring that its application is forward-looking and beneficial only to importers of the specified goods.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269K, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. The CEO must then determine whether the application meets the core criteria specified in section 269C. If the application satisfies these criteria, the CEO must issue a written order declaring the goods subject to a prescribed rate of duty, as outlined in Schedule 4 to the Customs Tariff Act 1995. Section 269K requires the CEO to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO, while section 269S addresses the commencement of the TCO.
The Act imposes several obligations on parties applying for a TCO. Firstly, applicants must ensure their application is not for goods specified in section 269SJ of the Act, which lists goods ineligible for a TCO. Applicants must also demonstrate that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. The CEO has a duty to consider these factors and decide whether to proceed with issuing the TCO. Furthermore, the CEO must publish a notice in the Gazette under section 269K, inviting objections to the TCO, and wait for any submissions before proceeding.
Failing to comply with the requirements of the Customs Act 1901 can result in both civil and criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs laws can generally lead to fines and imprisonment. For instance, under section 233 of the Act, contravening any provision of the Act can result in a penalty of up to five times the value of the dutiable goods, plus any applicable duty and goods and services tax (GST). Additionally, under section 234, an offence involving serious fraud or deceit can attract a penalty of up to ten times the value of the dutiable goods, plus any applicable duty and GST. For individuals, penalties may include imprisonment for up to five years, while corporate penalties can be significantly higher, depending on the severity of the breach.