EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0827077
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.
Qenos Pty Ltd applied for a TCO in respect of certain polyethylene resins on 19 August 2008.
Instrument
TCO No 0827077 was made on 14 November 2008. It declares that those certain polyethylene 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. 0827077 is taken to have come into force on 19 August 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, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders apply a reduced rate of customs duty to specific goods, facilitating trade by lowering costs for importers. The legislation aims to streamline the process of applying for and granting tariff concessions, ensuring that only goods for which no substitutable Australian-made products exist can benefit from such concessions. This approach supports economic efficiency and competitiveness in the market by providing a mechanism for the CEO to evaluate applications against established criteria and make informed decisions that align with broader trade policy objectives. The TCO No. 0827077, for example, was introduced to address the specific need of Qenos Pty Ltd for reduced customs duties on certain polyethylene resins, effectively removing the 5% duty and providing a zero-rate concession based on the absence of locally produced substitutable goods.
Scope and Application
The Customs Act 1901 applies to any person or entity seeking tariff concession orders (TCOs) for imported goods, as well as the Chief Executive Officer of Customs who is responsible for assessing and making TCOs. The scope of the Act encompasses the process of applying for a TCO, the criteria that must be met for the CEO to grant such a concession, and the implementation of TCOs for specific goods. The Act has a Commonwealth reach, governing how customs duties are applied at the national level. Excluded from TCOs are goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The Act may also extend or restrict its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the rates of duty. The explanatory statement details a specific case where Qenos Pty Ltd applied for and was granted a TCO for certain polyethylene resins, resulting in a reduction of customs duty from 5% to free.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for the creation of Tariff Concession Orders (TCOs), which can be applied for by individuals or entities seeking a lower rate of customs duty on certain goods. Section 269F of the Act allows for applications to be made to the Chief Executive Officer of Customs (the CEO) for a TCO. The CEO must assess whether the application meets the core criteria outlined in section 269C, which is fulfilled if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269D and 269E). If these criteria are met, the CEO is required to make a written order (a TCO) under section 269P(3), specifying the applicable tariff item for the goods in question.
Entities and individuals must comply with the provisions of the Act when applying for a TCO. They must ensure that their application is made in accordance with the requirements set out in section 269F and that the goods in question meet the criteria specified in section 269C. If the CEO is satisfied that the application meets the core criteria, they must make a TCO under section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as per section 269K(1).
In the case of TCO No. 0827077, Qenos Pty Ltd applied for a TCO in respect of certain polyethylene resins on 19 August 2008. The CEO was satisfied that the application met the core criteria, as no substitutable goods were produced in Australia, and made the TCO on 14 November 2008. The TCO was taken to have come into force on the date the application was lodged, 19 August 2008, as per section 269S(1) of the Act. The rights of importers will be beneficially affected under paragraph 126(1)(r) of the Regulations, which allows for a refund of duty on goods imported since the day the TCO came into force.
There are no specific offences or penalties mentioned in the explanatory statement for breaches of the Customs Act 1901 in relation to TCOs. However, any breach of the Act or its Regulations may result in civil or criminal consequences as per the general provisions of the Act. The maximum penalties for contraventions of the Act and Regulations can vary depending on the nature and severity of the offence, and are outlined in the relevant sections of the Act and Regulations. It is important for entities and individuals to adhere to the requirements of the Act to avoid any potential consequences.