EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0713877
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.
Australian Paper Pty Limited applied for a TCO in respect of certain chlorine dioxide manufacturing plant on 28 August 2007.
Instrument
TCO No 0713877 was made on 09 November 2007. It declares that those certain chlorine dioxide manufacturing 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. 0713877 is taken to have come into force on 28 August 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 regulation of customs and excise, among other things. The Act establishes a framework for the administration of customs duties and includes provisions for tariff concession orders (TCOs) to be made by the Chief Executive Officer of Customs. The Tariff Concession Instrument No. 0713877, introduced in 2007, addresses the specific problem of ensuring that Australian businesses have access to necessary goods that are not produced domestically, by allowing for a reduction in customs duty on such goods. This was achieved by the CEO of Customs making a written order following an application from a party such as Australian Paper Pty Limited, who applied for a TCO for certain chlorine dioxide manufacturing plants on 28 August 2007. The TCO was made on 9 November 2007, with no substitutable goods being produced in Australia, resulting in a general rate of duty of 5% being reduced to free for the specified goods. The policy objective is to support Australian businesses by facilitating the importation of goods that are not produced domestically, thereby promoting economic efficiency and competitiveness.
Scope and Application
The Customs Act 1901, under Part XVA, authorises the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) that provide for lower rates of customs duty on certain goods. This legislative framework applies to any person or entity seeking tariff concessions on goods not produced in Australia and for which no substitutable goods are available domestically. The scope of the Act extends nationally across Australia, as it is a Commonwealth Act. A notable exclusion under section 269SJ is that certain goods cannot be subject to a TCO. The CEO’s authority to make TCOs is contingent upon the applicant meeting core criteria, specifically that no substitutable goods are produced in Australia on the date the application is lodged. The Act also allows for the CEO to consider submissions from interested parties, although in this case, no submissions were received. The TCOs are effective from the date the application is lodged, ensuring no retroactive disadvantages or liabilities for entities other than the Commonwealth.
Key Provisions
The primary operative sections of this Tariff Concession Order (TCO) are sections 269C, 269B, 269D, 269E, and 269P of the Customs Act 1901 (the Act). Section 269C outlines the core criteria that must be satisfied for a Tariff Concession Order to be made, requiring that no substitutable goods are produced in Australia in the ordinary course of business on the date the application was lodged. Section 269B defines terms such as "goods produced in Australia", "ordinary course of business", and "substitutable goods" which are critical for determining the eligibility of the goods under the TCO. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. The instrument in question, TCO No. 0713877, declares that certain chlorine dioxide manufacturing plants are subject to a 5% duty rate as specified in item 50 of Schedule 4 to the Tariff, effective from 28 August 2007.
The Act imposes several obligations and requirements on the parties involved. Firstly, applicants such as Australian Paper Pty Limited must ensure their applications meet the core criteria as outlined in section 269C. They must demonstrate that no substitutable goods are produced in Australia in the ordinary course of business. The Chief Executive Officer of Customs (CEO) has the responsibility to assess the validity of these applications and decide whether to proceed with making a TCO. If an application is deemed valid, the CEO is required to make a written order as stipulated in section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as per subsection 269K(1). The CEO’s duty to consult and consider any submissions received is crucial in ensuring that the TCO aligns with the interests of all stakeholders.
The Customs Act 1901 also delineates consequences for breaches of the Act and associated regulations. While the Explanatory Statement does not specify criminal offences or penalties for non-compliance, it does highlight the potential civil consequences. Any person aggrieved by a decision made by the CEO can seek a review under the Administrative Appeals Tribunal Act 1975. Furthermore, the TCO does not affect the rights of persons as at the date of registration in a way that would disadvantage them or impose liabilities for actions taken before the TCO's effective date. This protective measure ensures that the TCO’s implementation does not retroactively impose new obligations or liabilities on any party.