EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712015
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.
Caltex Australia Petroleum Pty Limited applied for a TCO in respect of a certain sulphur reduction plant on 25 July 2007.
Instrument
TCO No 0712015 was made on 02 October 2007. It declares that those certain sulphur reduction plants 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. 0712015 is taken to have come into force on 25 July 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 Tariff Concession Instrument No. 0712015, introduced under the Customs Act 1901, provides a mechanism for tariff concessions to be granted to specific goods that are not produced in Australia, thereby preventing local production. This instrument was enacted to address the gap where certain imported goods could potentially be produced domestically, which would otherwise not qualify for the lower tariff rate under the scheme established by Part XVA of the Act. The Customs Act 1901 empowers the Chief Executive Officer of Customs to make such concessions if no substitutable goods are produced in Australia. The policy objective, as stated, is to encourage the import of goods that are not domestically produced, thus supporting industries where local production is not viable or competitive. The instrument was introduced without any submissions opposing the tariff concession, indicating broad acceptance of the application's eligibility under the scheme.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) mechanism, provides a framework for reducing customs duty on specific goods that meet certain criteria. The Act applies to any person or entity that wishes to apply for a TCO, provided that the goods in question are not specified in section 269SJ of the Act, which lists items ineligible for tariff concessions. The process requires that no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged, as outlined in section 269C. The scope of the Act is national, given its Commonwealth jurisdiction, and it extends to all entities involved in the importation of goods affected by a TCO. The application of this legislation is not restricted by geographic boundaries within Australia but is limited to goods that meet the specified criteria. The Act allows for the CEO to make subordinate instruments that can further define and extend the application of tariff concessions, ensuring flexibility in addressing specific industry needs. The Explanatory Statement for Tariff Concession Instrument No. 0712015, which concerns a sulphur reduction plant, demonstrates how the Act operates in practice by detailing the application process, the criteria met, and the resultant tariff concession.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0712015 (TCO No. 0712015) under the Customs Act 1901 (section 269P(3)) involve the declaration of certain sulphur reduction plants as goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, with a rate of duty set at free, as opposed to the general rate of 5% (section 269P(3)). The TCO specifies that these sulphur reduction plants are subject to the tariff concession because the Chief Executive Officer (CEO) of Customs was satisfied that no substitutable goods were produced in Australia (section 269C).
The Act imposes several obligations on parties and entities it governs. For instance, the CEO must ensure that an application for a TCO is not in respect of goods specified in section 269SJ, which are ineligible for tariff concessions. If the CEO determines that an application meets the core criteria (section 269C), they must make a written order declaring the goods to which the prescribed tariff item applies (section 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made, to lodge a submission (subsection 269K(1)).
In terms of offences and penalties, the explanatory statement does not explicitly detail specific offences or penalties for breaches related to TCOs. However, the Customs Act 1901 and associated regulations likely encompass general provisions for penalties and enforcement actions for non-compliance with customs and tariff regulations. Importers can apply for a refund of duty on goods imported since the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations. The TCO does not impose any liabilities on any person, ensuring that it does not disadvantage or impose liabilities on persons other than the Commonwealth in relation to actions taken before the TCO’s registration date.