EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0802073
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 Pharmaceutical Partners Pty Ltd applied for a TCO in respect of certain vials on 5 February 2008.
Instrument
TCO No 0802073 was made on 13 June 2008. It declares that those certain vials 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. One submission objecting to the TCO application was received from Ultra-Plas Pty Ltd.
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. 0802073 is taken to have come into force on 5 February 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 Tariff Concession Instrument No. 0802073, enacted in 2008, is an instrument under the Customs Act 1901 designed to address the need for concessional tariffs on specific imported goods when no suitable Australian-made alternatives exist. This instrument was introduced by the Chief Executive Officer of Customs (CEO) in response to an application from Australian Pharmaceutical Partners Pty Ltd for tariff concessions on certain vials, which were determined to have no substitutable goods produced in Australia. The policy objective is to ensure that Australian consumers and businesses have access to competitively priced imported goods where no local production exists, thereby promoting trade and economic efficiency. The instrument came into effect on the date the application was lodged, 5 February 2008, and provides a zero-rate duty on the specified vials, which contrasts with the general rate of 5% as per the Customs Tariff Act 1995. The process involved public consultation, as mandated by the Customs Act, allowing interested parties to object to the tariff concession, though no such objections were upheld in this case.
Scope and Application
The Tariff Concession Instrument No. 0802073, pursuant to the Customs Act 1901, applies to entities seeking tariff concessions for specific goods, such as Australian Pharmaceutical Partners Pty Ltd's application for certain vials. The Act allows for a lower rate of customs duty on goods that are the subject of a Tariff Concession Order (TCO) if certain criteria are met, namely that no substitutable goods are produced in Australia. The CEO of Customs is responsible for deciding whether an application meets these core criteria. If satisfied, the CEO issues a written TCO. In this case, Instrument TCO No. 0802073 was made on 13 June 2008, applying a free rate of duty on the specified vials, effective from the date the application was lodged, 5 February 2008. The instrument does not disadvantage any person and does not impose new liabilities; instead, it benefits importers by allowing them to apply for refunds on duties paid before the TCO was registered. The geographic reach of this Act is national, applying throughout Australia, and it extends to any entity or individual involved in the importation of goods subject to a TCO.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) under consideration here are sections 269C, 269F, 269P, and 269S. Section 269F allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO). Section 269C outlines the core criteria that must be satisfied for an application to be approved, which includes the absence of substitutable goods produced in Australia. Section 269P mandates that if these criteria are met, the CEO must make a written TCO. Finally, section 269S addresses the effective date of the TCO, which is deemed to be the date on which the application was lodged.
The Act imposes several obligations on parties applying for a TCO. Firstly, the applicant must ensure that their application is not for goods specified in section 269SJ, which lists goods ineligible for a TCO. The CEO has a duty to publish a notice in the Gazette inviting submissions on the application, as per section 269K(1). The CEO must then assess whether the application meets the core criteria under section 269C, specifically verifying that no substitutable goods were produced in Australia at the time of application. If the CEO is satisfied that these criteria are met, they must issue a written TCO as per section 269P.
Breach of the obligations imposed by the Act can result in various consequences. If a TCO is issued improperly, it may be subject to legal challenge and could potentially be overturned by a court. There are no specific offences or penalties mentioned within the text for breach of the Act’s provisions related to TCOs, but general legal principles would apply, including the potential for judicial review. The Act ensures that the rights of third parties are protected, and it does not impose any new liabilities on persons other than the Commonwealth.
The explanatory statement clarifies that the TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration, ensuring that no existing rights are adversely impacted. The TCO benefits importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO came into effect, under paragraph 126(1)(r) of the Regulations. Therefore, while there are no specific penalties for breach, the Act is designed to ensure compliance through its structured process for granting TCOs and the protection it affords to third-party rights.