EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703306
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.
Huntsman Corporation Australia applied for a TCO in respect of certain monobutyl diethylene glycol ethers on 2 March 2007.
Instrument
TCO No 0703306 was made on 25 May 2007. It declares that those certain monobutyl diethylene glycol ethers 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. 0703306 is taken to have come into force on 2 March 2007.
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, provides a framework for the administration of customs and excise in Australia. The Act includes provisions for the creation of Tariff Concession Orders (TCOs) under Part XVA, enabling the Chief Executive Officer of Customs to grant tariff concessions for specified goods. This mechanism was introduced to address the need for flexible tariff arrangements that could respond to particular market conditions or protect Australian industries from competitive disadvantages. TCO No. 0703306, issued on 25 May 2007, exemplifies this process by granting a tariff concession for certain monobutyl diethylene glycol ethers, reducing the duty from 5% to 0% for the applicant, Huntsman Corporation Australia, based on the absence of substitutable goods produced in Australia. The policy objective, as outlined in the Act, is to facilitate trade by providing tariff relief where appropriate, thereby supporting economic efficiency and competitiveness without imposing any additional liabilities on non-Commonwealth entities.
Scope and Application
The Customs Act 1901, under Part XVA, provides a mechanism for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to reduce customs duties on specific goods. This legislation applies to any person or entity seeking a concession on customs duty for particular goods, ensuring that no substitutable goods are produced in Australia. The TCOs apply nationally and the concessions are effective from the date the application is lodged. Notably, the Act does not allow TCOs for goods specified in section 269SJ, which lists those ineligible for tariff concessions. Any subordinate instruments or regulations made under the Customs Act 1901 can further detail or modify the application of TCOs, although the primary act itself outlines the fundamental criteria and processes. The specific TCO No. 0703306, effective from 2 March 2007, reduces the duty on certain monobutyl diethylene glycol ethers to 0% from the general rate of 5%, as no substitutable goods were produced in Australia at the time of application.
Key Provisions
The Customs Act 1901 (the Act) sets out a framework for Tariff Concession Orders (TCOs) which allow for a lower rate of customs duty on specified goods (s 269F). For an applicant to be considered for a TCO, they must apply to the Chief Executive Officer (CEO) of Customs, who then assesses the application against core criteria (s 269C). The CEO must determine if the application meets the core criteria, which requires, among other things, that no substitutable goods are produced in Australia at the time of the application (s 269C, 269P(3)). Substitutable goods are defined in the Act as those that can be used for the same purpose as the goods in question (s 269B, 269D, 269E). Once the CEO is satisfied that the application meets the core criteria, they must issue a TCO (s 269P(3)). This process was followed in the case of Huntsman Corporation Australia’s application for TCO No 0703306 concerning certain monobutyl diethylene glycol ethers.
The obligations imposed by the Act on the CEO include accepting a valid application, determining if it meets the core criteria, making a TCO if the criteria are met, and publishing a notice in the Gazette inviting any interested parties to lodge submissions against the making of the TCO (s 269K(1)). The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on them in respect of actions taken before the TCO came into force (s 269S(1)). In this case, the CEO did not receive any submissions against the TCO and the rights of importers will be beneficially affected by being able to apply for a refund of duty paid on these goods since the TCO came into force.
Failure to comply with the provisions of the Customs Act 1901 can result in both civil and criminal penalties. While the specific penalties for breach of a TCO are not detailed in the provided text, the general penalties for breaches of the Customs Act can include fines and imprisonment. The maximum penalties can vary depending on the seriousness of the offence and the specific provisions of the Act that have been breached. It is important for parties subject to the Act to understand and comply with its requirements to avoid any potential legal consequences.