EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706571
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 styrenic copolymer resin on 4 May 2007.
Instrument
TCO No 0706571 was made on 6 July 2007. It declares that those certain styrenic copolymer resin 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. 0706571 is taken to have come into force on 4 May 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 establish a framework for the administration of customs and excise, including the regulation of imports and exports. One of its provisions allows for the creation of Tariff Concession Orders (TCOs) to apply lower rates of customs duty on certain goods. The Tariff Concession Instrument No. 0706571, introduced in 2007, addresses the problem of ensuring that tariff concessions are appropriately granted to importers of goods that do not have substitutable alternatives produced within Australia. This legislative instrument was created by the Chief Executive Officer of Customs, following an application by BASF Australia Ltd for tariff concessions on specific styrenic copolymer resin. The objective of this instrument is to facilitate the importation of these goods at a reduced duty rate, thereby benefiting importers and potentially stimulating economic activity by lowering the cost of these materials.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). The Act applies to any person or entity that wishes to apply for a TCO in respect of goods, provided that these goods do not fall under the categories specified in section 269SJ of the Act, which are ineligible for tariff concessions. The application process involves ensuring that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business, as defined by sections 269D, 269E and 269F of the Act. Once the CEO determines that the core criteria are met, a TCO is issued, granting a lower rate of customs duty on the specified goods. The geographic reach of the Act is national, as it applies across Australia under the Commonwealth's customs jurisdiction. The CEO is also required to publish a notice in the Gazette inviting any interested parties to submit objections to the proposed TCO, although no submissions were received for TCO No. 0706571. The TCO does not retroactively affect any rights or impose any liabilities on persons other than the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 0706571, made under the Customs Act 1901 (the Act), establishes a lower rate of customs duty for certain styrenic copolymer resin (sections 269F, 269P(3)). Specifically, section 269F allows an individual or entity to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO). If the application is deemed valid and meets the core criteria set out in section 269C, the CEO is required to make a TCO that specifies the goods and the applicable reduced tariff rate. In this instance, the TCO No. 0706571, effective from 4 May 2007, declares that the particular styrenic copolymer resin are subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes certain obligations on applicants for a TCO. Firstly, the applicant must ensure that their application is not for goods specified in section 269SJ, which are ineligible for tariff concessions. Secondly, the applicant must demonstrate that the goods for which the concession is sought are not substitutable by goods produced in Australia, as defined by sections 269D and 269E. The CEO is required to consider these factors and publish a notice in the Gazette inviting public submissions if the application is accepted as valid, as outlined in subsection 269K(1). In the case of TCO No. 0706571, no submissions were received.
Section 269S(1) of the Act specifies that a TCO is considered to come into effect on the date the application is lodged, which in this case was 4 May 2007. The TCO ensures that the rights of persons, other than the Commonwealth, are not adversely affected by its implementation. Importers of the specified goods will benefit from the tariff reduction and may apply for a refund of duty paid on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations. The TCO does not impose any liabilities on any person.
Failure to comply with the provisions of the Customs Act 1901 and the related TCOs could result in various civil or criminal consequences. Section 236A of the Act provides for a maximum penalty of 5,000 penalty units or imprisonment for five years, or both, for serious breaches. For less serious breaches, the maximum penalty is 1,000 penalty units or imprisonment for six months, or both. These penalties underscore the importance of adhering to the legislative requirements and the potential repercussions for non-compliance.