EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619949
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.
Alphapharm Pty Ltd applied for a TCO in respect of certain pharmaceutical mill parts on 18 December 2006.
Instrument
TCO No 0619949 was made on 9 March 2007. It declares that those certain pharmaceutical mill parts 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. 0619949 is taken to have come into force on 18 December 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. 0619949, enacted under the Customs Act 1901, addresses the issue of reducing customs duty on specific goods where there are no suitable alternatives produced in Australia. This instrument was established to streamline the process by which businesses can apply for tariff concessions, thereby encouraging trade and potentially reducing costs for importers. The instrument was introduced by the Chief Executive Officer of Customs, who, upon satisfying certain core criteria, can grant a Tariff Concession Order (TCO) that lowers the duty on specified goods. The policy objective here is to foster economic efficiency by ensuring that businesses can access necessary goods at a reduced cost, which in turn may enhance their competitiveness and ability to import.
The process involves an application being made to the CEO, followed by a public notice in the Gazette inviting objections, which in this case, none were received. The TCO is considered effective from the date of the application, providing immediate benefit to importers who can claim duty refunds for goods imported since the effective date. This legislative mechanism ensures that the rights and interests of all parties, including the Commonwealth and importers, are protected and that no one is disadvantaged by the application of the concession.
Scope and Application
The Tariff Concession Instrument No. 0619949, under the Customs Act 1901, applies to the specific case of Alphapharm Pty Ltd’s application for a Tariff Concession Order (TCO) concerning certain pharmaceutical mill parts. The Act allows the Chief Executive Officer of Customs to establish TCOs, which provide a lower rate of customs duty on eligible goods. The instrument applies to the goods specified in the application, which in this instance are certain pharmaceutical mill parts, and the geographic reach of this legislation is national, as it pertains to the Customs Act 1901 which is a Commonwealth Act. The instrument does not apply to goods specified in section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO. The Act includes provisions for the CEO to consider applications and make decisions based on whether the goods in question are substitutable by Australian-produced goods. This particular TCO was made effective from 18 December 2006, the date the application was lodged, and it does not impose any new liabilities or disadvantage any person in relation to actions taken prior to its registration.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0619949, under the Customs Act 1901, concern the making of Tariff Concession Orders (TCOs) and the subsequent application of reduced customs duties to specified goods. Section 269F of the Act allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO for goods. This process is subject to the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. If the CEO is satisfied that the application meets these criteria, they must issue a written order (section 269P(3)) declaring that the goods are subject to a prescribed rate of duty, in this case, zero percent.
The obligations imposed by the Act on the parties involved are primarily directed towards the CEO of Customs. Upon receiving a valid TCO application, the CEO must determine whether it meets the core criteria as specified in sections 269C and 269F. If the criteria are met, the CEO must make a written TCO order as stipulated in section 269P(3). Furthermore, under subsection 269K(1), 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. In this instance, no submissions were received in response to the notice.
The Act also outlines the consequences for any breaches of its provisions. While the explanatory statement does not explicitly detail offences, penalties, or civil/criminal consequences, it is reasonable to infer that any failure to comply with the requirements of the TCO process could potentially lead to disputes or challenges in court. These could involve claims of improper application of the tariff concessions or disputes over the classification of goods. The penalties for non-compliance with customs regulations can be severe and may include fines, imprisonment, or both, depending on the nature and severity of the breach. It is important to note that the exact penalties would be determined by the relevant sections of the Customs Act 1901 and any applicable regulations.