EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618826
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.
Lipa Pharmaceuticals Ltd applied for a TCO in respect of certain pharmaceutical encapsulation line dehumidifiers on 23 November 2006.
Instrument
TCO No 0618826 was made on 02 March 2007. It declares that those certain pharmaceutical encapsulation line dehumidifiers 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. 0618826 is taken to have come into force on 23 November 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 Parliament of Australia, establishes a framework for the administration of customs and excise in Australia, including provisions for tariff concessions. The Tariff Concession Instrument No. 0618826, issued under this Act, aims to address the problem of ensuring that Australian importers have access to competitively priced goods, particularly when no suitable Australian-made alternatives are available. This instrument was introduced to facilitate the application process for tariff concessions, which provide reduced or free customs duty on specific imported goods, thereby potentially lowering costs for businesses and consumers. The policy objective of this legislation is to promote fair trade practices and economic efficiency by ensuring that imported goods are subject to appropriate tariff rates, which are contingent on the availability of substitutable goods within Australia.
Scope and Application
The Tariff Concession Instrument No. 0618826 under the Customs Act 1901 applies to Lipa Pharmaceuticals Ltd's application for tariff concessions on certain pharmaceutical encapsulation line dehumidifiers. The instrument is concerned with the application of a lower rate of customs duty on specified goods, as per the scheme outlined in Part XVA of the Act. The geographic and jurisdictional reach of this Act is national, applying across Australia as it pertains to the Customs Act 1901, which is a Commonwealth Act. The instrument specifies that no substitutable goods were produced in Australia on the date the application was lodged, satisfying the core criteria for tariff concession. The Act allows the Chief Executive Officer of Customs to 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, with the general rate of duty being reduced from 5% to free. The instrument does not impose any liabilities or disadvantage any person other than the Commonwealth and allows for the rights of importers to be beneficially affected by the tariff concession.
Key Provisions
The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) under Part XVA, which provide for a lower rate of customs duty on specific goods (s 269F). When Lipa Pharmaceuticals Ltd applied for a TCO for certain pharmaceutical encapsulation line dehumidifiers on 23 November 2006, the Chief Executive Officer of Customs (CEO) was required to determine whether the application met the core criteria (s 269C). After verifying that no substitutable goods were produced in Australia in the ordinary course of business, the CEO issued TCO No. 0618826 on 02 March 2007, which declared that the specified dehumidifiers were subject to item 50 of Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)). This resulted in a change from a 5% duty rate to a duty-free status for these goods.
The Act imposes several obligations on the parties involved. Firstly, it requires the CEO to assess the validity of any TCO application against the core criteria, ensuring that no substitutable goods are produced in Australia (s 269C). Secondly, the CEO must publish a notice in the Gazette inviting submissions from any person who might oppose the TCO, although in this instance, no submissions were received (s 269K(1)). Lastly, the TCO does not retroactively affect the rights of any person or impose new liabilities for actions taken before the TCO’s effective date (s 269S(1)).
For those who breach the provisions of the Act or the terms of a TCO, the Act provides for both civil and criminal penalties. While the specific penalties are not detailed in the explanatory statement, it is known that serious breaches can result in substantial fines or imprisonment. The exact penalties would be determined by the courts based on the nature and severity of the breach. It is essential for importers and other stakeholders to comply with the terms of the TCO to avoid any legal repercussions.