EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704717
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.
Polychem Pty Ltd applied for a TCO in respect of certain thermoplastic recyclers on 29 March 2007.
Instrument
TCO No 0704717 was made on 15 June 2007. It declares that those certain thermoplastic recyclers 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. 0704717 is taken to have come into force on 29 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 was enacted to provide for the administration of customs and excise duties in Australia and to regulate the importation and exportation of goods. To address specific needs and facilitate trade, Part XVA of the Act introduces a scheme for Tariff Concession Orders (TCOs). This scheme allows the Chief Executive Officer of Customs to reduce the rate of customs duty on certain goods if specific criteria are met. Tariff Concession Instrument No. 0704717, made in 2007, exemplifies this process. Polychem Pty Ltd applied for a TCO concerning certain thermoplastic recyclers, and following a determination by the CEO that no substitutable goods were produced in Australia, the CEO issued TCO No. 0704717, effectively reducing the duty on these goods from 5% to 0%. The objective is to support Australian businesses by lowering import costs, thus encouraging trade and economic growth without imposing any liabilities on third parties.
Scope and Application
The Tariff Concession Instrument No. 0704717 under the Customs Act 1901 applies to persons who are seeking tariff concessions for specific goods, in this case, certain thermoplastic recyclers. The application process is directed at the Chief Executive Officer of Customs (CEO), who is the authority responsible for making Tariff Concession Orders (TCOs). The application is subject to meeting certain criteria, such as ensuring that the goods in question are not substitutes for products that are already produced in Australia. The TCO scheme itself applies nationally across Australia, governed by the Commonwealth. Any exclusions or limitations are explicitly defined within the Customs Act 1901, particularly under sections 269SJ and 269F, which outline what goods are ineligible for tariff concessions and the general application process, respectively. The CEO's decision to issue a TCO is informed by these statutory provisions, ensuring that the concessions do not disadvantage any existing rights or impose new liabilities on individuals or entities, except as explicitly provided under the Customs Act and its subordinate regulations.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0704717, which relates to the Customs Act 1901, involve the creation of a Tariff Concession Order (TCO) for certain thermoplastic recyclers (sections 269C, 269P(3), 269S). This instrument was made under section 269F of the Act, which allows for applications to the Chief Executive Officer of Customs (CEO) for a TCO. If the CEO determines that the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia on the day the application was lodged (section 269C), they must issue a written order (section 269P(3)). This order, known as a TCO, specifies that the goods in question are subject to a reduced rate of customs duty, in this case, reducing the duty from the general rate of 5% to 0%.
The obligations and requirements imposed by the Act on the parties involved primarily concern the CEO and applicants for a TCO. For the CEO, the obligations include accepting valid applications for TCOs, ensuring that the core criteria are met, and publishing a notice in the Gazette to invite any submissions from interested parties (subsection 269K(1)). If no submissions are received, the CEO proceeds to issue the TCO. For applicants, such as Polychem Pty Ltd in this case, the requirements involve submitting a valid application to the CEO, providing sufficient information to demonstrate that no substitutable goods were produced in Australia on the application date, and adhering to any additional conditions specified by the CEO. The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on anyone for actions taken before the TCO's effective date (subsection 269S(1)).
In terms of potential offences, penalties, or consequences for breach, the Act does not explicitly outline specific penalties for failing to comply with the TCO provisions. However, general legal principles under Australian law would apply. For instance, if an entity were to fraudulently apply for a TCO by providing false information, they could face criminal charges for fraud, which carries significant penalties under the Criminal Code Act 1995, including imprisonment for up to 10 years. Similarly, if an entity fails to comply with the conditions of a TCO, they could face civil or administrative penalties. Importers who have already paid duty on goods before the effective date of the TCO may be eligible for a refund under the Customs Act and Regulations, but there are no stated penalties for failure to apply for such refunds within the prescribed period.
Overall, the Tariff Concession Instrument No. 0704717 and the relevant sections of the Customs Act 1901 provide a structured process for granting tariff concessions on specific goods, ensuring that the requirements and obligations are clear and that there are mechanisms in place to prevent abuse of the system. The consequences for non-compliance, while not explicitly detailed in the Act, are potentially severe under broader legal frameworks.