EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721746
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.
KBS Passive Fire Pty Limited applied for a TCO in respect of certain thermoplastic resin coatings on 17 December 2007.
Instrument
TCO No 0721746 was made on 28 March 2008. It declares that those certain thermoplastic resin coatings 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. 0721746 is taken to have come into force on 17 December 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. 0721746 was enacted in 2008 under the Customs Act 1901, with the aim of providing a mechanism for the Chief Executive Officer of Customs to offer tariff concessions on certain goods. This was introduced to address the need for a streamlined process through which businesses could apply for lower customs duties on specific goods that are not produced domestically and for which no suitable substitute is available. The enacting body was the Parliament of Australia, which established this legislative framework to facilitate trade and reduce the cost of imported goods for businesses.
The policy objective of this instrument is to encourage the import of goods that are not manufactured in Australia, thereby fostering economic efficiency and benefiting consumers by potentially lowering the cost of these goods. This is achieved by allowing the CEO to issue a Tariff Concession Order (TCO) if certain criteria are met, such as the absence of substitutable goods produced in Australia. The TCO in question applies to specific thermoplastic resin coatings, setting their customs duty rate to free, which was the general rate of 5% before the concession.
Scope and Application
The Customs Act 1901, under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs, applies to any person or entity that seeks to import goods subject to a TCO to benefit from a reduced rate of customs duty. This Act, specifically Part XVA, allows for the application of a lower customs duty rate for certain goods, provided that the application meets the core criteria set out in the Act. These criteria include the condition that no substitutable goods were produced in Australia on the day the application was lodged. The geographic and jurisdictional reach of this Act is national, as it applies across Australia and is administered by the Commonwealth. The Act allows for the exclusion of certain goods from the TCO scheme, as outlined in section 269SJ. The application of this Act can be extended or restricted through subordinate instruments, although the primary focus remains on ensuring that the concessions are granted under the specified conditions. The Tariff Concession Instrument No. 0721746, for instance, was made to provide free duty on certain thermoplastic resin coatings based on the determination that no substitutable goods were produced in Australia.
Key Provisions
The main operative sections of this Tariff Concession Instrument, No. 0721746, under the Customs Act 1901, establish the parameters for the concession applied to certain thermoplastic resin coatings. Section 269C requires that for a Tariff Concession Order (TCO) application to meet the core criteria, no substitutable goods must have been produced in Australia on the day the application was lodged (s 269F). If the Chief Executive Officer (CEO) is satisfied that these criteria are met, a TCO can be made (s 269P(3)). This instrument declares that certain thermoplastic resin coatings are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a duty rate of free, as opposed to the general rate of 5% (s 269S(1)).
The obligations imposed by this legislation primarily concern the CEO, who must evaluate TCO applications against the criteria outlined in section 269C. The CEO must ensure that no substitutable goods are produced in Australia at the time of the application and, if satisfied with the application, issue a written TCO (s 269F, s 269P(3)). The CEO also has the duty to publish a notice in the Gazette inviting submissions from any interested parties, although this did not occur for TCO No. 0721746 (s 269K(1)). Additionally, the CEO must ensure that the TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO's registration date (s 269S(1)).
In terms of breaches and penalties, the legislation does not explicitly detail civil or criminal penalties for non-compliance with the TCO provisions. However, it is important to note that the TCO does not affect the rights of any person as at the date of registration, and it does not impose any liabilities on any person (s 269S(1)). Importers of the goods subject to the TCO can apply for a refund of duty on goods imported since the TCO is taken to have come into force, which is beneficially regulated under paragraph 126(1)(r) of the Regulations. This suggests that while the primary focus is on ensuring that the concession is correctly applied without retroactive disadvantages, any failure to adhere to the outlined procedures may be subject to review or challenge in relevant legal forums.