EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0942021
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.
Orica Australia Pty Ltd applied for a TCO in respect of certain detonating caps on 6 November 2009.
Instrument
TCO No 0942021 was made on 29 January 2010. It declares that those certain detonating caps 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. 0942021 is taken to have come into force on 6 November 2009.
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 was enacted to provide a comprehensive framework for the regulation of customs and excise in Australia. Part XVA of this Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This scheme was introduced to address the need for concessional tariff rates on certain imported goods to support Australian industries and promote economic efficiency. The Tariff Concession Instrument No. 0942021, made under this Act on 29 January 2010, exemplifies this scheme in action, providing a tariff concession for certain detonating caps applied for by Orica Australia Pty Ltd. The policy objective is to ensure that such concessions are granted only when no substitutable goods are produced in Australia, thereby encouraging local production where possible and providing relief where it is not.
Scope and Application
The Tariff Concession Instrument No. 0942021, pursuant to Part XVA of the Customs Act 1901, applies to any individual or entity seeking tariff concessions on specific goods, particularly those that are not produced in Australia and for which no substitutable goods are manufactured domestically. This instrument is relevant to industries involved in the importation of these specified goods, thereby impacting the customs duty they incur. The instrument's geographic and jurisdictional reach extends under the Commonwealth of Australia, as it operates within the legislative framework established by the Customs Act 1901. The application of this Act is not restricted to any particular state or territory but is uniformly applicable across Australia. There are specific exclusions, such as goods listed in section 269SJ of the Act, which are ineligible for tariff concessions. The application and scope of the Act can be further extended or refined through subordinate instruments, as permitted under the Customs Act 1901, ensuring that the process for granting tariff concessions remains adaptable to changing economic and trade conditions.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) pertinent to Tariff Concession Orders (TCOs) include sections 269F, 269C, and 269P. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO concerning specified goods. If the application is not in relation to goods excluded by section 269SJ, the CEO must determine whether it meets the core criteria outlined in section 269C. This section stipulates that an application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. Once the CEO is satisfied that the application meets these criteria, section 269P mandates the CEO to issue a written TCO, declaring that the goods in question are subject to a specific item of Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties it governs. Firstly, any person seeking to apply for a TCO must ensure that their application complies with the conditions set out in section 269F. The CEO, upon receiving a valid application, is obligated to publish a notice in the Gazette, inviting any interested parties to submit objections if they believe the TCO should not be made (subsection 269K(1)). The CEO must consider these submissions before making a decision. Additionally, once a TCO is issued, it must be consistent with the criteria outlined in the Act, ensuring that no substitutable goods were produced in Australia as per section 269C.
Breach of the conditions set out in the Customs Act 1901 can result in civil or criminal consequences. While the specific offences and penalties are not detailed in the explanatory statement, the Act generally provides for penalties under section 286, which can include fines and imprisonment for contraventions of the Act or Regulations. For instance, section 286(1) states that a person who contravenes the Act or Regulations can be fined up to 10,000 penalty units or imprisoned for up to five years, or both. These penalties reflect the seriousness with which the Australian government treats compliance with customs legislation.