EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800253
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.
BASF Australia Ltd applied for a TCO in respect of certain unfilled polyamide resins on 04 January 2008.
Instrument
TCO No 0800253 was made on 14 March 2008. It declares that those certain unfilled polyamide resins 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. 0800253 is taken to have come into force on 04 January 2008.
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 a framework for the regulation of customs and excise duties. Among its provisions, Part XVA introduces a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on specific goods. This legislative mechanism was introduced to address gaps in the duty structure that could potentially disadvantage importers and local industries by imposing higher duties on imported goods where no suitable domestic alternatives exist. The policy objective is to ensure that the application of customs duties does not unduly hinder the import of goods that are not produced domestically. The explanatory statement details how BASF Australia Ltd successfully applied for a TCO concerning certain unfilled polyamide resins, resulting in Instrument TCO No. 0800253, which reduced the duty on these goods from 5% to free, effective from 4 January 2008. This concession is aimed at benefiting importers by potentially allowing them to claim refunds on duties paid before the effective date of the TCO, without imposing any new liabilities.
Scope and Application
The Customs Act 1901, under its Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, enabling the application of a lower rate of customs duty on specified goods. This legislation applies to any person who may apply for a TCO in respect of goods, provided that such goods are not those specifically excluded under section 269SJ of the Act, which includes goods such as those that are subject to restrictive trade practices or are considered harmful to Australian industries. The scope of the Act extends nationally, as it is a Commonwealth Act, and its application is not limited by state or territory boundaries. The Act does not impose any liabilities or disadvantage any person other than the Commonwealth, and the rights of importers will be beneficially affected by any TCO made under its authority. The Act may be further extended or specified through subordinate instruments, such as regulations or orders, which can provide additional details or exceptions not covered in the primary legislation.
Key Provisions
The main operative sections of this legislation revolve around the making of Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901. Section 269C sets out the core criteria that a TCO application must meet, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are met, the Chief Executive Officer of Customs (CEO) must make a written order declaring that the goods in question are subject to a prescribed tariff item (section 269P(3)). This particular instrument, TCO No. 0800253, applies to certain unfilled polyamide resins, reducing their duty rate from 5% to free under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by this Act primarily concern the CEO of Customs. Upon receiving a valid TCO application, the CEO must assess whether the application meets the core criteria outlined in section 269C. This involves verifying that no substitutable goods were produced in Australia on the application date. If the criteria are met, the CEO must issue a TCO. Additionally, as per subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections to the proposed TCO. In this case, no submissions were received, facilitating the issuance of the TCO.
Failure to comply with the provisions of this Act can result in various consequences. Although the explanatory statement does not explicitly detail offences or penalties, non-compliance with the core criteria for issuing a TCO could lead to the TCO being challenged or overturned. Importers who benefit from a TCO may also face scrutiny if they do not meet the conditions for duty refunds or other tariff benefits. While specific penalties are not mentioned, any failure to adhere to the Act's requirements could have legal ramifications, including potential financial penalties or legal action against those who improperly benefit from tariff concessions.