EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0607959
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.
Australian Vinyls Corporation applied for a TCO in respect of certain epoxidised soybean oil on 5 May 2006.
Instrument
TCO No 0607959 was made on 21 July 2006. It declares that those certain epoxidised soybean oil 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. 0607959 is taken to have come into force on 5 May 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. 0607959, enacted in 2006, serves to amend the Customs Act 1901 by introducing a specific mechanism for tariff concessions, enabling the Chief Executive Officer of Customs to provide reduced customs duty rates for certain goods. This legislative instrument was introduced to address the need for flexibility in tariff regulations to support economic activities, particularly for goods that are not produced domestically. The instrument provides a pathway for entities like the Australian Vinyls Corporation to apply for and receive tariff concessions, thereby facilitating lower import costs and potentially enhancing competitiveness in the market. The policy objective, as indicated by the explanatory statement, is to ensure that tariff concessions are granted in a manner that does not disadvantage existing rights or impose new liabilities on parties other than the Commonwealth. The process includes public consultation, as mandated by the Act, although in this instance, no submissions were received in response to the notice published in the Gazette.
Scope and Application
The Customs Act 1901, under its Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (the CEO). This Act applies to individuals or entities seeking tariff concessions on specific goods that are not already specified in section 269SJ of the Act as ineligible for such concessions. A TCO can be applied for by any person in respect of goods, provided that the goods do not fall under the prohibited category outlined in section 269SJ. The application must meet the core criteria specified in section 269C, which necessitates that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The TCO’s geographic reach is national, as the Act operates under the Commonwealth jurisdiction, affecting entities and individuals across Australia. Once a TCO is issued, it comes into force on the date the application was lodged, as stipulated in subsection 269S(1) of the Act. It is noteworthy that the TCO does not retroactively affect the rights of any person other than the Commonwealth nor impose any liabilities on individuals or entities for actions taken before the TCO's registration. Additionally, the CEO is mandated to publish a notice in the Gazette, inviting submissions from any interested parties who may oppose the TCO, although no submissions were received for this particular TCO.
Key Provisions
The main operative sections of this Tariff Concession Instrument (TCO No. 0607959) include section 269C, which sets out the core criteria for approving a Tariff Concession Order (TCO), and section 269P(3), which requires the Chief Executive Officer (CEO) of Customs to make a written order if the application meets these criteria. Section 269C states that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) mandates that if the CEO is satisfied that a TCO application meets these criteria, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. This particular TCO No. 0607959, made on 21 July 2006, declares that certain epoxidised soybean oil is subject to item 50 of Schedule 4, resulting in a 0% duty rate for these goods.
The Act imposes several obligations on the CEO of Customs, primarily ensuring that any TCO application is thoroughly assessed against the criteria outlined in section 269C. If the CEO determines that no substitutable goods were produced in Australia at the time of application, they are mandated to make the TCO as specified in section 269P(3). Furthermore, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. This ensures transparency and provides an opportunity for stakeholders to voice their concerns. In this case, the CEO published a notice following the acceptance of the TCO application but did not receive any submissions in response.
Failure to comply with the provisions of the Customs Act 1901 and the requirements of a TCO may result in various legal consequences. The Act does not specify particular offences or penalties for breaching TCO provisions, but general contraventions of the Customs Act can lead to substantial penalties. For example, under section 260 of the Customs Act, a person who knowingly or recklessly contravenes the Act may be liable for a penalty of up to $22,200 for an individual offence, or in the case of a corporation, up to $111,000. Additionally, persistent or serious breaches could lead to criminal charges, resulting in fines or imprisonment. The Act also allows for civil actions for damages for any loss or damage caused by a breach of its provisions.