EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706654
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.
Dyno Nobel Moranbah Pty Ltd applied for a TCO in respect of certain ammonium nitrate plant on 4 May 2007.
Instrument
TCO No 0706654 was made on 13 July 2007. It declares that those certain ammonium nitrate plant 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. 0706654 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, enacted by the Australian Parliament, provides the framework for the regulation of customs and excise duties. To address the need for tariff concessions that can stimulate economic activity by reducing the cost of imported goods, Part XVA of the Act allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The Tariff Concession Instrument No. 0706654, issued on 13 July 2007, is an example of such an order. This particular instrument was made in response to an application by Dyno Nobel Moranbah Pty Ltd for a TCO on certain ammonium nitrate plant, resulting in a reduction of the duty rate from 5% to 0%. The policy objective here is to facilitate the importation of specific goods by lowering the duty burden, thereby potentially increasing their availability and affordability within Australia. The instrument was subject to public consultation as mandated by the Act, though no submissions were received. The TCO came into effect on 4 May 2007, the date the application was lodged, and it ensures that the rights of importers are positively affected, allowing them to apply for duty refunds on goods imported since the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 0706654, under the Customs Act 1901, pertains to the application of Tariff Concession Orders (TCOs) for certain ammonium nitrate plants. This legislation applies to any entity or person seeking a concession on customs duty for specified goods, provided these goods are not listed in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The Act applies to the Commonwealth and affects the rights of importers by potentially lowering their duty rates. The scope of this legislation is national, as it falls under the Customs Act 1901, which has jurisdiction across Australia. The CEO of Customs is responsible for determining whether an application for a TCO meets the core criteria set out in the Act, such as ensuring no substitutable goods are produced in Australia. The TCO in question became effective on the date of application, 4 May 2007, and no submissions were received in opposition to the order. Additionally, the TCO does not retroactively affect the rights of any person or impose any new liabilities.
Key Provisions
The Tariff Concession Instrument No. 0706654 (the Instrument) under the Customs Act 1901, outlines the provisions for a Tariff Concession Order (TCO) concerning certain ammonium nitrate plants. Section 269F of the Act allows for applications for a TCO, which is processed by the Chief Executive Officer of Customs (CEO). If the CEO determines that the application meets the core criteria as outlined in section 269C, a TCO is issued. For this specific case, section 269P(3) of the Act mandates that the CEO make a written order (the TCO) if satisfied that no substitutable goods are produced in Australia. The TCO, effective from the date the application was lodged (section 269S(1)), declares that the ammonium nitrate plant will have a 0% duty rate, down from the general rate of 5%.
The obligations imposed by the Act require that the CEO must publish a notice in the Gazette inviting submissions against the TCO application (subsection 269K(1)). In this case, no submissions were received. Additionally, section 269SJ specifies that certain goods are ineligible for a TCO, and the CEO must ensure that the application does not pertain to these goods. The CEO's decision-making process is also guided by definitions in sections 269D and 269E, which clarify terms like 'goods produced in Australia' and 'ordinary course of business'.
Failure to comply with the Act's provisions could lead to various consequences. Although specific offences and penalties are not detailed in the explanatory statement, breaches of the Customs Act 1901 can generally result in substantial fines and imprisonment. For instance, knowingly making a false statement to obtain a TCO could lead to penalties under section 269CA of the Act, which might include fines up to 10,000 penalty units or imprisonment for five years, or both, depending on the severity of the breach. The Act also provides for civil penalties, including fines, for non-compliance. The rights of importers are protected, and they can apply for duty refunds under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on persons other than the Commonwealth and does not affect pre-existing rights adversely.