EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1000123
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.
Bayer Australia Pty Ltd applied for a TCO in respect of certain animal insecticides on 31 December 2009.
Instrument
TCO No 1000123 was made on 10 May 2010. It declares that those certain animal insecticides 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. 1000123 is taken to have come into force on 31 December 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 by the Parliament of Australia and provides the legislative framework for customs and excise matters in Australia. A notable addition to this Act is Part XVA, which introduces a scheme for Tariff Concession Orders (TCOs). These orders, made by the Chief Executive Officer of Customs, allow for a lower rate of customs duty on specified goods, provided certain criteria are met. The introduction of TCOs addresses the need for flexibility in tariff regulations to support economic activities and ensure competitiveness of Australian industries by reducing the duty on goods that are not produced domestically. The policy objective is to foster a conducive environment for businesses by easing the financial burden of customs duties on imported goods that are critical but not locally produced. TCO No. 1000123, for instance, was issued following an application by Bayer Australia Pty Ltd for certain animal insecticides, reflecting the application of this scheme in practice.
Scope and Application
The Tariff Concession Instrument No. 1000123, under the Customs Act 1901, applies to the goods specified in the instrument, which in this instance are certain animal insecticides. This Act pertains to the process of granting tariff concessions on imported goods, which are subject to a lower rate of customs duty if a Tariff Concession Order (TCO) is issued by the Chief Executive Officer of Customs. The instrument specifically applies to Bayer Australia Pty Ltd, which applied for the concession on these particular goods. The geographic reach of this Act is national, as it involves the Customs Act 1901, which is a Commonwealth Act. However, the instrument itself focuses on the importation aspect, which inherently involves interstate trade and commerce. There are exclusions as outlined in section 269SJ of the Act, which details goods that cannot be subject to a TCO. The Act does not specify any explicit thresholds but requires the CEO to be satisfied that the application meets the core criteria, particularly that no substitutable goods were produced in Australia. The application of the Act may be extended or restricted through subordinate instruments, but in this specific case, the instrument directly addresses the application made by Bayer Australia Pty Ltd.
Key Provisions
The main sections of Tariff Concession Instrument No. 1000123 under the Customs Act 1901 (section 269P(3)) declare that certain animal insecticides are subject to a free rate of duty instead of the general rate of 5%. This concession applies because the Chief Executive Officer of Customs (section 269C) was satisfied that no substitutable goods were produced in Australia on the day the application was lodged, as per the core criteria outlined in section 269B and section 269C of the Act. This means that the goods Bayer Australia Pty Ltd applied for are now exempt from the usual customs duty, provided they meet the specified conditions.
The Act imposes several obligations on parties involved in the process of applying for and implementing a Tariff Concession Order (TCO). Firstly, any person wishing to apply for a TCO must ensure their application is not for goods specified in section 269SJ, which lists those ineligible for tariff concessions. The CEO is then required to assess the application against the core criteria, specifically checking if substitutable goods were produced in Australia on the application date. If satisfied, the CEO must make a written order declaring the goods subject to the TCO and publish a notice in the Gazette inviting submissions (section 269K(1)). Importers of the goods subject to the TCO are entitled to apply for a refund of duty on goods imported since the TCO is deemed to have come into force on the date of application (section 126(1)(r) of the Regulations).
Under the Customs Act 1901, breaches or non-compliance with the provisions regarding TCOs can lead to both civil and criminal consequences. For instance, if an entity falsely claims that substitutable goods were not produced in Australia to obtain a tariff concession, this could constitute an offence. The maximum penalties for such offences can be substantial, involving fines up to a certain amount as well as potential imprisonment terms. Additionally, any person found to be intentionally or negligently providing false information in the application process may face similar penalties, reinforcing the importance of adhering to the statutory requirements set forth in the Act.