EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703745
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.
B.F. Machinery Pty. Limited applied for a TCO in respect of certain waste plastic extruders on 08 March 2007.
Instrument
TCO No 0703745 was made on 04 June 2007. It declares that those certain waste plastic extruders 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. 0703745 is taken to have come into force on 08 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 Australian Parliament, introduced a scheme under which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs to apply a lower rate of customs duty on certain goods. This was designed to address the problem of ensuring that Australian businesses could import specific goods without being unduly burdened by high customs duties, particularly when no suitable Australian-made alternatives were available. The objective was to support Australian businesses by facilitating the import of necessary goods that could not be produced domestically, thereby fostering economic efficiency and competitiveness. The Tariff Concession Instrument No. 0703745, made in 2007, exemplifies this scheme by granting a tariff concession on certain waste plastic extruders, allowing them to be imported duty-free.
Scope and Application
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. These orders apply to goods that are subject to a TCO, thereby granting them a lower rate of customs duty. Applications for TCOs can be made by any person to the CEO, provided the goods in question are not those specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. If the CEO determines that the application meets the core criteria, such as the absence of substitutable goods produced in Australia at the time of application, a TCO will be issued. The TCO will then apply to the specified goods, altering their duty rate according to the prescribed item in Schedule 4 to the Customs Tariff Act 1995. Notably, the TCO does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person other than the Commonwealth.
Key Provisions
The main operative sections of this legislation are found in Part XVA of the Customs Act 1901, which provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Section 269F allows a person to apply to the CEO for a TCO in respect of goods, and section 269C sets out the core criteria that the application must meet, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (subsection 269P(3)). If the CEO is satisfied that these criteria are met, they must make a written TCO (subsection 269P(3)). This particular TCO, No. 0703745, applies to certain waste plastic extruders and declares that they are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of free, as opposed to the general rate of 5%.
The Act imposes several obligations on the parties it governs. Firstly, the CEO is required to ensure that any TCO application is not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Once the CEO determines that the application meets the core criteria in section 269C, they must make a TCO. Additionally, subsection 269K(1) mandates that the CEO must publish a notice in the Gazette inviting any person to lodge a submission if they believe the TCO should not be made. This was done for TCO No. 0703745, but no submissions were received.
Regarding offences and penalties, the Act does not explicitly state any offences related to the making of TCOs. However, it does outline the consequences of breaching the terms of a TCO. Should a breach occur, it could potentially lead to civil or criminal penalties depending on the nature and severity of the breach. For example, fraudulent claims for tariff concessions could lead to criminal charges under other sections of the Customs Act 1901 or related legislation. While specific maximum penalties for breaches are not detailed within this explanatory statement, they would generally align with those applicable to similar offences under the Customs Act 1901. Importers, however, can benefit from applying for a refund of duty on goods imported since the TCO is taken to have come into force, as outlined in paragraph 126(1)(r) of the Regulations.