EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1029910
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.
Lynas Corporation Limited applied for a TCO in respect of certain minerals separation flotation cells on 02 July 2010.
Instrument
TCO No 1029910 was made on 29 September 2010. It declares that those certain minerals separation flotation cells 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. 1029910 is taken to have come into force on 02 July 2010.
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 Commonwealth Parliament, provides a framework for the regulation of customs and excise in Australia. Specifically, Part XVA of this Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislative instrument aims to address the problem of potentially higher customs duties on certain goods by providing a mechanism through which importers can apply for tariff concessions, thereby reducing the duty rates on specified goods. The Explanatory Statement for Tariff Concession Instrument No. 1029910 details the process and decision-making criteria for such concessions. In this instance, the CEO determined that certain minerals separation flotation cells were eligible for a tariff concession, as no substitutable goods were being produced in Australia. This decision resulted in the concession of a lower rate of duty, specifically free of charge, as opposed to the general rate of 5%. The instrument was introduced without public submissions and came into force on the date the application was lodged, with no retroactive effect on existing rights or liabilities.
Scope and Application
The Customs Act 1901, as amended, provides a framework through which the Chief Executive Officer of Customs may issue Tariff Concession Orders (TCOs) to grant concessions on customs duties for specific goods. These concessions apply to goods that are not substitutable with any produced in Australia and where the application for a concession meets the core criteria set out in the Act. The Act applies to any person or entity that wishes to import goods into Australia and seeks a concession on the applicable customs duty. The scope of the Act is national, as it falls under the Commonwealth jurisdiction, impacting all states and territories within Australia. The Act does not specify exclusions explicitly but implicitly excludes goods that are substitutable with Australian-produced goods or those specified in section 269SJ of the Act, which cannot be subject to a TCO. The application of the Act may be extended or restricted via subordinate instruments, although the primary legislation outlines the core criteria and conditions under which a TCO can be issued.
Key Provisions
The key operative sections of this legislation, specifically section 269F, 269C, and 269P(3) of the Customs Act 1901, establish the process by which Tariff Concession Orders (TCOs) can be applied for and granted. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C outlines the core criteria that the CEO must be satisfied with before a TCO can be made, namely that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. If the CEO is satisfied that these criteria are met, they must then make a written order under section 269P(3) declaring that the goods in question are subject to a prescribed tariff item in Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties involved. The CEO of Customs must, upon receiving a valid TCO application, assess whether the application meets the core criteria as outlined in section 269C. If the CEO is satisfied, they must make a written order as specified in section 269P(3). Furthermore, as per section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, although in this case, no submissions were received. Additionally, section 269S(1) requires that a TCO is deemed to have come into force on the day the application is lodged, meaning that for TCO No. 1029910, this date is 2 July 2010.
Any breach of the conditions outlined in the Customs Act 1901, including the provisions for making TCOs, may lead to various civil and criminal consequences. While the explanatory statement does not detail specific offences or penalties for non-compliance with TCOs, breaches of the Customs Act generally can result in significant penalties. For example, under section 248 of the Act, a person who knowingly or recklessly makes a false statement in an application for a TCO can be subject to criminal penalties, including fines up to the statutory maximum of $22,200 or imprisonment for up to two years, or both. Civil penalties may also apply, and these can include financial penalties or other remedies as determined by a court. Additionally, failure to comply with the conditions of a TCO can lead to the imposition of customs duties at the standard rate, potentially resulting in financial loss to the importer.