EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0620219
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.
All Rubber Pty Ltd applied for a TCO in respect of certain compounded polychloroprene rubber on 28 December 2006.
Instrument
TCO No 0620219 was made on 23 March 2007. It declares that those certain compounded polychloroprene rubbers 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. 0620219 is taken to have come into force on 28 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 Customs Act 1901, enacted by the Parliament of Australia, establishes a framework for the regulation of customs and excise duties, and it includes provisions for tariff concession orders (TCOs) as outlined in Part XVA. This legislative instrument, Tariff Concession Instrument No. 0620219, was introduced to address the specific issue of granting tariff concessions on compounded polychloroprene rubber. The problem it aimed to solve was providing tariff relief on goods that are not produced domestically, ensuring that Australian consumers and businesses have access to competitively priced imported goods while supporting the broader economic policy objective of fostering fair trade and economic efficiency. The instrument was developed to ensure that the tariff concessions do not disadvantage any person other than the Commonwealth and to allow for the refund of duties paid on goods imported since the TCO was taken to have come into force.
Scope and Application
The Tariff Concession Instrument No. 0620219 applies to specific compounded polychloroprene rubbers and was enacted under Part XVA of the Customs Act 1901, which facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This particular instrument was made in response to an application by All Rubber Pty Ltd on 28 December 2006, and it became effective from that date. The instrument's application is confined to the goods specified in the TCO, which, as of 23 March 2007, are exempt from the general 5% customs duty rate, instead being subject to a free rate under item 50 of Schedule 4 to the Customs Tariff Act 1995. The instrument extends to any entity or individual importing the specified goods, thereby directly impacting the importation process for these items within Australia. The instrument’s jurisdiction is national, aligning with the overarching provisions of the Customs Act 1901. Importantly, the instrument does not apply to goods specified in section 269SJ of the Customs Act 1901, which are ineligible for TCOs. Additionally, it does not disadvantage any person, including importers, as it does not impose liabilities or affect rights accrued before its registration, while providing the opportunity for duty refunds under the Regulations.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0620219, under the Customs Act 1901, pertain to the establishment and conditions for Tariff Concession Orders (TCOs) (sections 269C, 269F, and 269P). Section 269F allows for applications to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application is not for goods listed in section 269SJ, the CEO must assess whether it meets the core criteria outlined in section 269C. These criteria require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) stipulates that if the application meets these criteria, the CEO must issue a written TCO. This specific TCO, No. 0620219, pertains to certain compounded polychloroprene rubber and applies item 50 of Schedule 4 to the Customs Tariff Act 1995, effectively reducing the duty on these goods from 5% to free.
The obligations imposed by the Act on parties and entities are primarily directed at the CEO, who must ensure that TCO applications are assessed against the core criteria and that TCOs are issued if those criteria are met. Additionally, the CEO is mandated to publish a notice in the Gazette, inviting submissions from any interested parties who believe a TCO should not be made (subsection 269K(1)). In this case, no submissions were received. The Act also ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any new liabilities on any person (subsection 269S(1)).
Breach of the provisions of the Customs Act 1901, including those related to TCOs, may lead to various civil and criminal consequences. The Act does not specify penalties for non-compliance with TCOs directly, but breaches of the Customs Act more generally can result in substantial penalties. For instance, under section 234, a person can be fined up to 10,000 penalty units or imprisonment for five years, or both, for serious breaches such as fraudulent behaviour or smuggling. Additionally, administrative penalties may apply for incorrect declarations or other procedural errors related to customs duties and TCOs. The TCO itself does not impose any liabilities on any person, but failure to comply with related customs laws could result in penalties under the broader Customs Act.