EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0604033
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.
Plastral Pty Ltd applied for a TCO in respect of certain starch based polymers on 20 February 2006.
Instrument
TCO No 0604033 was made on 28 April 2006. It declares that those certain starch based polymers 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. 0604033 is taken to have come into force on 20 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. 0604033, enacted in 2006 under the Customs Act 1901, aims to address the gap in tariff concessions by establishing a framework through which the Chief Executive Officer of Customs can grant tariff concessions to specific goods, thereby reducing customs duty rates. This legislation was introduced by the Parliament of Australia and seeks to ensure that tariff concession orders can be applied to goods that are not produced domestically and are not listed as exempt in the Act. The policy objective is to encourage the importation of goods that are not locally manufactured, thus benefiting importers by reducing their duty liabilities on certain goods. The instrument in question, concerning starch-based polymers, was made following an application by Plastral Pty Ltd, with no objections received during the consultation process. The concession came into effect from the date the application was lodged, with no retroactive impact on existing duties or liabilities.
Scope and Application
The Tariff Concession Instrument No. 0604033, under the Customs Act 1901, applies to any person or entity seeking tariff concessions for specific goods entering Australia. This Act is applicable nationally across the Commonwealth of Australia and concerns the importation of starch-based polymers. The application process involves an applicant submitting a request to the Chief Executive Officer of Customs, who evaluates whether the application meets the core criteria, specifically if no substitutable goods are produced in Australia. If the application is approved, a Tariff Concession Order (TCO) is issued, effectively reducing the customs duty on the specified goods from the general rate to zero. The legislation allows for public consultation on the proposed tariff concessions, though in this case, no submissions were received. The TCO's effective date is aligned with the date the application was lodged, and it does not retroactively affect any rights or liabilities of persons other than the Commonwealth, ensuring that importers can apply for duty refunds for imports since the TCO's effective date.
Key Provisions
The main operative sections of this legislation pertain to Tariff Concession Orders (TCOs) under the Customs Act 1901. Specifically, section 269C outlines the core criteria that must be met for a TCO application to be considered valid. This includes the requirement that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (subsection 269C). The term 'substitutable goods' is defined in section 269D, which specifies goods produced in Australia that can be put to a use that corresponds with a use to which the goods the subject of the application can be put (subsection 269E). If the Chief Executive Officer of Customs (CEO) is satisfied that these criteria are met, they must make a written order declaring that the goods are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995 (subsection 269P(3)). For instance, TCO No. 0604033 applies to certain starch-based polymers, which are now subject to a duty rate of 0% instead of the general rate of 5%.
The Act imposes several obligations on the parties it governs. Firstly, any person seeking to apply for a TCO must ensure that their application complies with the core criteria as set out in section 269C. This involves demonstrating that no substitutable goods were produced in Australia at the time the application was lodged. Furthermore, the CEO is obligated to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). Additionally, the CEO must decide whether the application meets the core criteria and, if satisfied, issue a written TCO (subsection 269P(3)).
Should any party fail to comply with the obligations imposed by the Act, various consequences may ensue. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally attract civil and criminal penalties under the Customs Act 1901. Civil penalties can include financial penalties up to a significant amount, depending on the severity of the breach. Criminal penalties can result in fines and, in severe cases, imprisonment. Given the nature of customs duty and tariff concessions, non-compliance could also lead to additional administrative actions such as the seizure of goods or further investigations by customs authorities.