EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606688
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 applied for a TCO in respect of certain pharmaceutical manufacturing plant on 7 April 2006.
Instrument
TCO No 0606688 was made on 30 June 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. 0606688 is taken to have come into force on 7 April 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. 0606688 was enacted in 2006 under the Customs Act 1901 to address the need for tariff concessions on specific goods that were not being produced in Australia. This instrument was introduced to facilitate the importation of particular pharmaceutical manufacturing plant by Sigma Pharmaceuticals, which sought a tariff concession to avoid the standard 5% duty rate, instead benefiting from a zero duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995. The Tariff Concession Order was made by the Chief Executive Officer of Customs, following an application by Sigma Pharmaceuticals and subsequent satisfaction that no substitutable goods were being produced in Australia. The instrument came into effect on the date the application was lodged, which was 7 April 2006, and it ensures that the rights of importers are beneficially affected, allowing them to apply for duty refunds on imports made since that date. The enacting body was the Chief Executive Officer of Customs, operating under the provisions of the Customs Act 1901, with the policy objective of promoting the importation of goods that are not domestically produced, thereby supporting industry needs and economic efficiency.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to provide tariff concessions on specified goods. These orders apply to individuals or entities who apply for and are granted a TCO for goods not produced in Australia, provided the application adheres to the core criteria outlined in section 269C of the Act. The scope of the Act extends to any goods for which a TCO can be applied, effectively reducing the customs duty to zero for those goods, provided they meet the specific conditions regarding substitution and production in Australia. The geographic reach of this legislation is national, as it operates under the purview of the Commonwealth of Australia. The Act does not extend to goods specified in section 269SJ, which are ineligible for TCOs. Furthermore, the Act allows for the CEO to make subordinate instruments that can further define or restrict the application of TCOs, ensuring that the concessions are appropriately targeted and do not undermine the intended fiscal policies.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 0606688, as outlined in the Explanatory Statement, pertain to the Customs Act 1901 (section 269F) and the Customs Tariff Act 1995. According to section 269F, an application can be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. If the CEO determines that the application is valid and not in respect of goods specified in section 269SJ, they must consider whether the application meets the core criteria specified in section 269C. The core criteria, as per section 269C, require that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Substitutable goods, as defined in section 269D, are those produced in Australia that could be used in a manner similar to the goods subject to the TCO application.
The obligations imposed by the Act on the parties involved include the requirement for the CEO to make a written order (TCO) if the application meets the core criteria, as stipulated in section 269P(3). The CEO must also publish a notice in the Gazette inviting any interested parties to submit objections to the TCO, as per section 269K(1). In this case, Sigma Pharmaceuticals applied for a TCO on 7 April 2006, and the CEO was satisfied that the application met the core criteria, leading to the issuance of TCO No. 0606688 on 30 June 2006. The TCO declares that the pharmaceutical manufacturing plant in question are goods to which item 50 of Schedule 4 to the Tariff applies, with a reduced duty rate of free instead of the general rate of 5%.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the Explanatory Statement for breach of the provisions of the Act or the TCO. However, it is implied that any failure to comply with the Act’s requirements could result in legal consequences, as non-compliance with customs regulations can attract penalties under the relevant legislation. The rights of importers will be beneficially affected, as they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person.