EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705878
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.
Basf Australia Ltd applied for a TCO in respect of certain polyoxymethylene copolymer resins on 23 April 2007.
Instrument
TCO No 0705878 was made on 6 July 2007. It declares that those certain polyoxymethylene copolymer resins 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. 0705878 is taken to have come into force on 23 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, establishes a framework for the administration of customs duties and related activities in Australia. The Act was amended to introduce Tariff Concession Orders (TCOs) under Part XVA, a mechanism to provide tariff concessions on specific goods that are not produced in Australia. The introduction of TCOs aimed to address the gap in the duty structure by allowing for a reduction in customs duty rates for certain imported goods, provided they are not substitutable by domestic production. The objective of the TCOs is to support industries by making imported goods more competitive, thereby potentially encouraging the use of these goods in Australian businesses. The Tariff Concession Instrument No. 0705878 was enacted to apply these provisions to certain polyoxymethylene copolymer resins, effectively reducing their duty rate from 5% to 0%.
Scope and Application
The Tariff Concession Instrument No. 0705878 under the Customs Act 1901 applies to the specific goods—certain polyoxymethylene copolymer resins—that are subject to the application submitted by Basf Australia Ltd. The Act allows for the Chief Executive Officer of Customs to grant tariff concessions to these goods if certain criteria are met, particularly if no substitutable goods are produced in Australia. The geographic reach of this legislation is national, affecting the importation and duty rates of these specified goods across Australia. However, it is explicitly stated that the TCO does not affect the rights of any person, other than the Commonwealth, in a manner that would disadvantage them or impose liabilities for actions taken prior to the TCO’s effective date. This legislation provides a streamlined process for importers of the specified resins to apply for a refund of duty paid on imports since the date the TCO is deemed to have come into force.
Key Provisions
The main operative sections of the Customs Act 1901, as applied in Tariff Concession Instrument No. 0705878, pertain to the process by which Tariff Concession Orders (TCOs) can be applied for and granted. Specifically, section 269F of the Act allows for applications to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. If the CEO is satisfied that the application does not concern goods specified in section 269SJ, which cannot be subject to a TCO, the CEO must then determine whether the application meets the core criteria outlined in section 269C. This involves verifying that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. If the core criteria are met, the CEO must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a lower rate of customs duty.
The Act imposes specific obligations on the parties involved in the TCO process. The CEO is obligated to assess the validity of the application and ensure it complies with the criteria specified in section 269C. This includes verifying that no substitutable goods were produced in Australia. Once satisfied, the CEO must publish a notice in the Gazette, inviting any interested parties to lodge submissions against the proposed TCO, as per section 269K(1). The CEO must also consider any submissions received and decide whether to proceed with the TCO. Additionally, section 269P(3) mandates that if the core criteria are met, the CEO must issue a written TCO specifying the goods and the applicable tariff item.
Failing to comply with the provisions of the Customs Act 1901 or the terms of a TCO can result in various consequences. While the explanatory statement does not detail specific offences under the Act, it is implied that breaches could lead to legal actions, including potential fines or penalties. For instance, incorrect or fraudulent applications for TCOs might be subject to scrutiny and penalties under the Customs Act. The Act's provisions regarding duty refunds, outlined in paragraph 126(1)(r) of the Regulations, also imply that improper claims for duty refunds could be subject to civil or criminal penalties. The exact penalties for breaches would be determined by the relevant laws and regulations governing customs duties and tariffs in Australia.