EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616501
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.
Pacific Lining Solutions Pty Limited applied for a TCO in respect of certain polyurethane resin on 01 September 2006.
Instrument
TCO No 0616501 was made on 01 December 2006. It declares that those certain polyurethane resins 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. 0616501 is taken to have come into force on 01 September 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. 0616501, enacted under the Customs Act 1901, addresses the problem of ensuring that the Australian market remains competitive by allowing the importation of certain goods that are not produced domestically at a reduced customs duty rate. This instrument was created by the Chief Executive Officer of Customs and is designed to provide relief for importers who would otherwise face higher duties on goods that have no local substitutes. The underlying policy objective is to facilitate the import of goods that are crucial for domestic industries but are not manufactured within Australia, thereby encouraging trade and economic growth without placing undue burden on local producers.
This instrument was introduced to streamline the process of applying for tariff concessions, ensuring that the criteria for such concessions are met transparently and efficiently. By allowing for a lower duty rate on specific polyurethane resins, the instrument aims to benefit importers by reducing their costs, which can then be passed on to consumers or reinvested into the business. This, in turn, supports the broader economic objective of maintaining a competitive and efficient marketplace.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the application of tariff concession orders (TCO) to certain goods through a process initiated by an application to the Chief Executive Officer of Customs (CEO). This legislation applies to any person or entity seeking a reduction in customs duty for specified goods, provided that such goods are not those explicitly prohibited by section 269SJ of the Act. The application must meet the core criteria established in section 269C, which involves the absence of substitutable goods being produced in Australia. The scope of the Act is national, with the CEO having the authority to issue TCOs under the Customs Act, impacting the customs duties on specific imported goods as outlined in Schedule 4 to the Customs Tariff Act 1995. Notably, the application of the Act is not retrospective, ensuring that the rights and obligations of parties are not adversely affected by the issuance of a TCO after the application date. The instrument TCO No. 0616501, which was issued in response to an application by Pacific Lining Solutions Pty Limited for polyurethane resins, exemplifies the application of this legislative framework.
Key Provisions
The main operative sections of this legislation are sections 269C, 269B, 269E and 269P of the Customs Act 1901. Section 269C (1) outlines the core criteria that an application for a Tariff Concession Order (TCO) must meet, including the requirement that no substitutable goods are produced in Australia in the ordinary course of business. Section 269B (1) provides the definition of goods produced in Australia, while section 269E (1) defines ordinary course of business. Section 269P (3) states that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods subject to the application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. The tariff concessions granted under a TCO reduce the customs duty on the specified goods from the general rate of duty to a lower, often free, rate.
The Customs Act 1901 imposes several obligations on the parties it governs. Any person may apply to the CEO for a TCO in respect of goods under section 269F (1). Upon receiving a valid application, the CEO must determine whether the application meets the core criteria set out in section 269C (1). If satisfied, the CEO is required to make a TCO under section 269P (3). Furthermore, the CEO must publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to lodge a submission under subsection 269K (1). The Act ensures that a TCO does not affect the rights of a person as at the date of registration to disadvantage that person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration under section 269S (3).
The Customs Act 1901 provides for civil and criminal consequences in the event of a breach of its provisions. Under section 311, the maximum penalty for contravening the Act includes a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for an individual, and up to 50,000 penalty units for a body corporate. Additionally, section 312 outlines the various penalties for knowingly making a false or misleading statement to an officer of Customs, which includes fines of up to 10,000 penalty units or imprisonment for up to five years, or both, for an individual, and up to 50,000 penalty units for a body corporate. These provisions ensure compliance with the Act and the enforcement of tariff concession orders.
The Customs Tariff Act 1995 complements the Customs Act 1901 by providing the schedule of duties applicable to goods imported into Australia. Schedule 4 to the Act lists the various tariff items, including item 50, which applies to the polyurethane resins specified in TCO No 0616501. The TCO reduces the customs duty on these goods from the general rate of duty to a lower, often free, rate. This reduction in duty benefits importers by reducing their costs and potentially increasing their competitiveness in the market. The interplay between these two Acts ensures that the tariff concessions are effectively implemented and enforced, providing a streamlined process for businesses to access reduced duty rates on specified goods.