EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618827
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 Pty Ltd applied for a TCO in respect of certain pharmaceutical capsule trolleys on 23 November 2006.
Instrument
TCO No 0618827 was made on 02 March 2007. It declares that those certain pharmaceutical capsule trolleys 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. 0618827 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 Australian Parliament, provides a framework for the imposition of customs duties and includes provisions for Tariff Concession Orders (TCOs) that can reduce the duty payable on certain goods. The Act was amended to introduce these concessions to support industries by reducing the cost of imported goods that do not have domestic alternatives, thereby encouraging competitiveness and economic growth. In the case of Tariff Concession Instrument No. 0618827, the instrument was introduced to provide a tariff concession for specific pharmaceutical capsule trolleys, ensuring that these goods, which are not produced domestically, are subject to a reduced customs duty rate of zero, as opposed to the general rate of 5%. This specific measure was intended to benefit importers of these goods by potentially lowering their costs and enhancing their ability to compete in the market.
Scope and Application
The Tariff Concession Instrument No. 0618827 applies to specific pharmaceutical capsule trolleys as identified in the Customs Act 1901. The Act facilitates the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which allows for a reduced rate of customs duty on certain goods, provided they meet the core criteria set out in the legislation. The application of this instrument is directed towards entities such as Lipa Pharmaceuticals Pty Ltd, which applied for the concession on 23 November 2006. The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia and operates under the provisions of the Customs Act 1901 and the Customs Tariff Act 1995. The Act excludes goods specified in section 269SJ of the Customs Act 1901, which cannot be subject to a TCO. The application of the Act can be extended or restricted through subordinate instruments, such as regulations or further orders made by the CEO under the authority granted by the Customs Act 1901.
Key Provisions
The Customs Act 1901, particularly Part XVA, introduces a scheme where Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (s 269F). An application for a TCO can be made by a person for goods that are not listed in section 269SJ of the Act, which specifies goods that cannot be subject to a TCO (s 269F). If the CEO is satisfied that the application meets the core criteria, they must issue a TCO. The core criteria are outlined in section 269C, which stipulates that the application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B respectively.
Entities and individuals who apply for a TCO must ensure that their applications are made in compliance with the core criteria set out in section 269C. They must provide sufficient evidence that no substitutable goods were produced in Australia on the day the application was lodged. Additionally, the CEO has a responsibility to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s 269K(1)). The CEO must act on any valid submissions received in a timely manner. Once a TCO is issued, it becomes effective from the date the application was lodged, as specified in subsection 269S(1). The TCO does not impact the rights of any person, other than the Commonwealth, in respect of actions taken before the date of registration.
In the case of TCO No. 0618827, issued on 2 March 2007 for certain pharmaceutical capsule trolleys, the CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria. As a result, the TCO declares that these trolleys are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a reduced duty rate from 5% to free. The TCO does not impose any liabilities on any person and does not disadvantage anyone's rights as per subsection 269S(3) of the Customs Act. Importers of these goods can apply for a refund of duty paid on imports since the TCO came into effect on 23 November 2006 under paragraph 126(1)(r) of the Regulations.
Breaches of the conditions set out in the Customs Act 1901 or its Regulations can lead to various consequences. The Act does not explicitly state the penalties for non-compliance; however, general penalties for breaches of Commonwealth Acts can be found in the Acts Interpretation Act 1901. For civil penalties, the maximum fine is generally 100 penalty units ($11,000) for individuals and 500 penalty units ($55,000) for corporations, as outlined in section 12AD of the Acts Interpretation Act. Criminal penalties may include imprisonment, fines, or both, depending on the severity of the breach and as prescribed in relevant legislation. It is imperative for applicants and the CEO to adhere to the statutory requirements to avoid any adverse legal repercussions.