EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706695
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.
Geofabrics Australasia Pty Ltd applied for a TCO in respect of certain high density polyethylene geogrids on 07 May 2007.
Instrument
TCO No 0706695 was made on 23 July 2007. It declares that those certain high density polyethylene geogrids 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. 0706695 is taken to have come into force on 07 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 provide for the administration of customs and excise duties in Australia, ensuring that the government can regulate the import and export of goods. Among its provisions, Part XVA introduces the concept of Tariff Concession Orders (TCOs) to provide relief on customs duties for certain goods. This was introduced to address the problem of imposing undue financial burdens on industries that rely on imported goods, particularly when no suitable local alternatives exist. The relevant policy objective is to facilitate smoother trade practices by allowing the Chief Executive Officer of Customs to reduce or eliminate customs duties on specified goods if no substitutable goods are produced in Australia. Enacted by the Parliament of Australia, this legislative framework aims to balance the need for revenue generation through customs duties with the economic interests of various industries dependent on imported materials.
Scope and Application
The Customs Act 1901, through Part XVA, outlines the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to specific goods and provide for a reduced rate of customs duty for those goods. This process is initiated when a person applies to the CEO for a TCO concerning particular goods, provided that these goods are not those listed in section 269SJ of the Act, which cannot be subject to a TCO. The CEO must then assess whether the application meets the core criteria outlined in section 269C of the Act, which requires that no substitutable goods were produced in Australia at the time the application was lodged. If these criteria are met, the CEO issues a written TCO, specifying the goods to which the concession applies. The TCO for high density polyethylene geogrids, for instance, was implemented following a successful application by Geofabrics Australasia Pty Ltd, setting the duty rate at free instead of the general rate of 5%. The rights of importers are positively impacted as they can apply for duty refunds on imports since the effective date of the TCO, which coincides with the application date. The Act ensures that the TCO does not disadvantage any person other than the Commonwealth or impose new liabilities on such persons.
Key Provisions
The Customs Act 1901 provides a framework for the application of tariff concession orders (TCOs), as outlined in Part XVA. Section 269F (1) allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in relation to specific goods, provided those goods are not prohibited under section 269SJ. If the application does not pertain to goods specified in section 269SJ, the CEO must determine if the application meets the core criteria under section 269C. This involves ensuring that, on the day the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business, as defined by sections 269D, 269E, and 269F of the Act. If these criteria are satisfied, the CEO is required to make a written order, known as a TCO, under subsection 269P(3).
The obligations imposed by the Customs Act 1901 on the CEO include the requirement to publish a notice in the Gazette, inviting submissions from any interested parties regarding the proposed TCO. This process ensures transparency and provides an opportunity for stakeholders to voice any concerns or objections. In the case of TCO No. 0706695, the CEO received no submissions, indicating no opposition to the concession. The TCO is deemed to have come into force on the date the application was lodged, as per subsection 269S(1) of the Act. Importantly, this legislation does not retroactively affect the rights of any person, except the Commonwealth, thus protecting individuals from any disadvantages or liabilities arising from actions taken before the TCO's registration date.
In terms of penalties and consequences, the Customs Act 1901 does not explicitly outline specific criminal or civil penalties for breaches related to TCOs. However, any non-compliance with the Act’s provisions or the misuse of TCOs could potentially lead to broader legal ramifications under other sections of the Act or related legislation. For example, knowingly providing false information in an application could result in fines or other penalties as prescribed by the relevant legal frameworks. Additionally, failure to adhere to the terms of the TCO might lead to the revocation of the concession or other administrative actions by the CEO.