EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705519
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.
APC Socotherm Pty Limited applied for a TCO in respect of certain polyethylene resin adhesives on 03 April 2007.
Instrument
TCO No 0705519 was made on 22 June 2007. It declares that those certain polyethylene resin adhesives 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. 0705519 is taken to have come into force on 03 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 was enacted to provide for the imposition and collection of customs duties, and to establish a regulatory framework for the administration of customs and related matters. A specific issue addressed by the Act is the potential for tariff concessions to be granted for goods that are not produced domestically, thereby encouraging import and supporting specific industries. This legislation allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) to lower the customs duty on certain imported goods if they are not being produced in Australia and there are no substitutable domestic goods. The Tariff Concession Instrument No. 0705519, made in 2007, exemplifies this process by providing a tariff concession for certain polyethylene resin adhesives, reducing their duty from 5% to free, effective from the date of the application. The policy objective here is to support the importation of goods that are not domestically produced, thereby benefiting importers and potentially lowering costs for consumers and businesses that utilise these goods.
Scope and Application
The Customs Act 1901, as augmented by the Tariff Concession Instrument No. 0705519, applies to any person or entity seeking a tariff concession order (TCO) for specific goods, effectively lowering their customs duty rate. This applies to importers and manufacturers who wish to benefit from a tariff reduction, provided that no substitutable goods are produced in Australia and the goods meet the criteria set out in the Act. The geographic reach of the Act is national, as it pertains to goods entering Australia and the application process managed by the Commonwealth through the CEO of Customs. The Act excludes certain goods as per section 269SJ, and the CEO must ensure that the application does not pertain to these excluded items. Additionally, the Act allows for the extension or restriction of application through subordinate instruments, which are subject to further regulations and guidelines. The TCO in question became effective from the date of application, which was 3 April 2007, and it ensures that no existing rights or liabilities are adversely affected by its enactment.
Key Provisions
The Customs Act 1901, under Part XVA, outlines a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. Section 269F allows for an application to be made by a person seeking a TCO for certain goods. For such an application to be considered, it must not relate to goods specified in section 269SJ, which are ineligible for TCOs. The CEO then assesses whether the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269B respectively. If the CEO determines that the application meets these criteria, a TCO is issued under section 269P(3), declaring that the specified goods are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995.
Entities or individuals applying for a TCO must ensure their application is made in accordance with the stipulations of the Customs Act. The CEO has an obligation to review the application and assess it against the core criteria. This includes considering whether the goods in question are substitutable by any goods produced in Australia in the ordinary course of business. The CEO must also publish a notice in the Gazette once an application is accepted as valid, inviting any interested party to lodge a submission if they believe the TCO should not proceed. Once the CEO has made a decision to issue a TCO, the order is deemed to have come into force on the date the application was lodged, as per section 269S(1) of the Act.
Under the Customs Act, there are no explicit offences or penalties outlined for breaches related to the application or issuance of TCOs. However, the Act does stipulate that the rights of any person, other than the Commonwealth, are not adversely affected by the issuance of a TCO. Any liabilities imposed by the TCO do not extend to persons other than the Commonwealth. Importers of the goods covered by a TCO may be able to apply for a refund of duty paid on goods imported from the date the TCO is deemed to have come into force, pursuant to paragraph 126(1)(r) of the Regulations. Therefore, the primary consequence of non-compliance would be the denial of tariff concessions, with no specific criminal or civil penalties prescribed for failing to adhere to the requirements of the Act in this context.