EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800982
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 high viscosity polyamide 6 on 17 January 2008.
Instrument
TCO No 0800982 was made on 04 April 2008. It declares that those certain high viscosity polyamide 6 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. 0800982 is taken to have come into force on 17 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. Part XVA of this Act establishes a scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) to reduce the rate of customs duty on certain goods. This mechanism was introduced to address the need for tariff concessions in cases where substitutable goods are not produced in Australia, thereby potentially benefiting businesses and consumers by lowering import costs. BASF Australia Ltd's application for a TCO concerning certain high viscosity polyamide 6, which was accepted and published in the Gazette, exemplifies the process outlined in the Act. The CEO's decision to issue TCO No. 0800982 on 4 April 2008, following BASF's application on 17 January 2008, aimed to grant tariff relief by setting the duty rate at zero, down from the general rate of 5%. This legislative measure ensures that no person other than the Commonwealth is disadvantaged or incurs new liabilities due to the concession.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders are applicable to goods specified in the application, provided the application does not relate to goods excluded under section 269SJ of the Act. The TCO mechanism is designed to apply a lower rate of customs duty to goods specified in a TCO, subject to the core criteria outlined in sections 269C, 269D, and 269E of the Act. This means that a TCO can only be granted if no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The scope of the Act extends to any person or entity that applies for a TCO in respect of goods that meet these criteria, with the process ensuring that the application does not disadvantage any person or impose liabilities on anyone except the Commonwealth. The geographic reach of this legislation is national, as it is a Commonwealth Act, and it applies across Australia. The Act allows for the application of TCOs through subordinate instruments, which further detail the process and criteria for making such concessions.
Key Provisions
The main operative sections of this legislation revolve around Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269F). This provision allows for the application of a lower rate of customs duty on specified goods, provided certain criteria are met. If an application is made for a TCO (section 269C), the Chief Executive Officer of Customs (CEO) must assess whether the application complies with the core criteria. These criteria include, importantly, that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged (section 269P(3)). If these conditions are satisfied, the CEO must make a TCO (section 269P(3)), effectively granting a tariff concession.
The obligations imposed by this legislation primarily fall on the CEO and the applicants for TCOs. The CEO is required to assess applications and ensure they meet the stipulated core criteria before making a TCO. This includes verifying that no substitutable goods are produced in Australia in the ordinary course of business on the application date (section 269C). Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting an application as valid, inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). In the case of TCO No. 0800982, BASF Australia Ltd applied for a TCO for certain high viscosity polyamide 6, and upon meeting the criteria, the CEO issued the order on 4 April 2008.
In terms of consequences for non-compliance or breach, the Act does not explicitly detail offences or penalties for failing to comply with the requirements of a TCO. However, any breach of the Customs Act 1901 or associated regulations could result in civil or criminal penalties, depending on the nature and severity of the breach. For instance, fraudulent applications or misrepresentations could lead to fines or imprisonment under the relevant sections of the Customs Act 1901 or other associated legislation. The maximum penalties for such offences can vary, but they typically include significant fines and/or imprisonment, depending on the seriousness of the offence.