EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705192
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.
Interchem Pty Ltd applied for a TCO in respect of certain gelling agents on 11 April 2007.
Instrument
TCO No 0705192 was made on 29 June 2007. It declares that those certain gelling agents 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. 0705192 is taken to have come into force on 11 April 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 Commonwealth Parliament, facilitates the application of tariff concession orders (TCOs) to provide duty-free entry for certain goods, thereby addressing the issue of potential economic barriers caused by high customs duties. This Act allows the Chief Executive Officer of Customs to make TCOs, reducing customs duty rates for specified goods if they meet the core criteria outlined in the Act, specifically where no substitutable goods are produced in Australia. The policy objective behind this legislation is to support Australian industries by lowering import costs for goods that cannot be readily produced domestically, thus encouraging trade and economic growth. The explanatory statement outlines the process of applying for a TCO and the subsequent decision-making criteria, including public consultation and the commencement of the concession. The enactment ensures that the rights of importers are protected, allowing them to apply for duty refunds for goods imported since the effective date of the TCO.
Scope and Application
The Tariff Concession Instrument No. 0705192 applies to the customs duty rates on certain gelling agents as specified in the instrument. It was made under section 269F of the Customs Act 1901, which allows for the Chief Executive Officer of Customs to create Tariff Concession Orders (TCOs) that lower the rate of customs duty on specific goods, provided certain criteria are met. The legislation is applicable to any person or entity involved in the importation of these gelling agents, impacting their duty obligations. The geographic scope of the Act extends across Australia, as it is a Commonwealth legislation. The TCO specifies that the gelling agents are to be treated under item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, as opposed to the general rate of 5%. The application of this TCO does not retroactively affect the rights of any person other than the Commonwealth, ensuring that there are no adverse effects on duties already paid before the TCO was lodged. Any importer of these goods can apply for a refund of the duty paid since the TCO's effective date.
Key Provisions
The Customs Act 1901 (the Act) includes provisions for Tariff Concession Orders (TCOs) that can lower customs duty rates on certain goods. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO. The CEO must then determine whether the application meets the core criteria under section 269C, which involves confirming that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must also ensure that the goods are not prohibited from receiving a TCO under section 269SJ. If the application meets these criteria, the CEO is required to issue a TCO under section 269P(3), specifying the lower duty rate for the goods in question.
The obligations imposed by the Act on the parties involved are quite specific. The CEO must review applications to ensure they comply with the conditions outlined in sections 269C and 269SJ. Once an application is deemed valid, the CEO must issue a TCO, specifying the new duty rate. The applicant must ensure their application is comprehensive and provides all necessary information to meet the core criteria. Additionally, the CEO is obligated to publish a notice in the Gazette inviting public submissions regarding the proposed TCO, although no submissions need to be considered if none are received.
Breaching the provisions of the Customs Act 1901 can result in various penalties and consequences. If a person fails to comply with the requirements of a TCO, they may face civil or criminal penalties. For example, under section 276 of the Act, a person who knowingly or recklessly contravenes any provision of the Act is liable for a penalty. The maximum penalty for individuals is typically a fine of up to $22,200 or imprisonment for up to two years, or both. For corporations, the maximum penalty can be significantly higher, reaching up to $1,110,000. These penalties underscore the importance of adhering to the legislative requirements set forth in the Act.