EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716255
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.
Gea Process Engineering Australia Pty Ltd applied for a TCO in respect of certain pharmaceutical manufacturing process line on 25 September 2007.
Instrument
TCO No 0716255 was made on 14 December 2007. It declares that those certain pharmaceutical manufacturing process lines 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. 0716255 is taken to have come into force on 25 September 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 for the imposition of customs duty on imported goods, with a particular focus on encouraging domestic production and ensuring fair trade practices. The Act facilitates the application for Tariff Concession Orders (TCOs) through which lower rates of customs duty can be applied to specific goods, provided certain criteria are met. Specifically, a TCO can be applied for under section 269F of the Act, and it will be granted if the Chief Executive Officer of Customs (CEO) is satisfied that no substitutable goods are produced in Australia at the time of the application. This mechanism aims to protect Australian industries by ensuring that certain goods are not subjected to foreign competition unless it can be demonstrated that they are not produced domestically. The Tariff Concession Instrument No. 0716255, issued in 2007, is an example of this process in action, where a TCO was granted for specific pharmaceutical manufacturing process lines, setting their duty rate at zero, contingent on the absence of domestic production of substitutable goods.
Scope and Application
The Tariff Concession Instrument No. 0716255, made under Part XVA of the Customs Act 1901, applies to entities seeking tariff concessions for specific pharmaceutical manufacturing process lines. This legislative instrument was enacted to provide a lower rate of customs duty on goods that meet certain criteria, namely those that are not substitutable by goods produced in Australia in the ordinary course of business. The instrument specifically targets pharmaceutical manufacturing process lines, reducing the customs duty from the general rate of 5% to free, effective from the date the application was lodged, which was 25 September 2007. This legislation operates at the Commonwealth level and its application is not restricted by geographic boundaries within Australia. The Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs under this instrument does not disadvantage any person by affecting their rights as at the date of registration nor does it impose any liabilities on any person. The TCO was made after a formal application by Gea Process Engineering Australia Pty Ltd and no objections were received following a Gazette notice inviting public submissions. The scope of the TCO can be extended or modified through subordinate instruments, though this particular TCO does not currently impose any liabilities or affect the rights of any party adversely.
Key Provisions
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs (CEO) to create Tariff Concession Orders (TCOs) that apply reduced rates of customs duty to specific goods. Section 269F allows for applications to be made by interested parties, such as Gea Process Engineering Australia Pty Ltd, who seek a TCO for particular goods. When an application is deemed valid and not concerning goods listed in section 269SJ, the CEO must then determine if it meets the core criteria outlined in section 269C. This involves assessing whether any substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269D and 269E, and whether these substitute goods could serve a similar use to the goods in question.
The obligations imposed on the CEO under the Act include publishing a notice in the Gazette after accepting a TCO application as valid, as per subsection 269K(1), inviting any interested party to submit reasons why the TCO should not proceed. In the case of TCO No. 0716255, no such submissions were received. Once the CEO is satisfied that the application meets the core criteria, a written TCO must be issued under subsection 269P(3), specifying the reduced rate of duty applicable to the goods.
Failure to comply with the requirements of the Customs Act 1901 or the Tariff Concession Orders can lead to significant consequences. While the Explanatory Statement does not detail specific offences or penalties for breaches related to TCOs, general provisions of the Act and associated regulations could apply. These may include civil or criminal penalties for non-compliance, misrepresentation, or fraudulent activities, which could potentially result in fines or imprisonment depending on the severity and intent behind the breach. It is crucial for parties to adhere to the legislative requirements to avoid any adverse legal repercussions.