EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1048256
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.
Univar Australia applied for a TCO in respect of certain methyl acetate or acetic acid methyl ether on 29 October 2010.
Instrument
TCO No 1048256 was made on 17 January 2011. It declares that those certain methyl acetate or acetic acid methyl ether 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. 1048256 is taken to have come into force on 29 0ctober 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 Tariff Concession Instrument No. 1048256 was enacted in 2011 under the Customs Act 1901 to provide tariff concessions for specific goods. The Act was introduced to address the need for a streamlined process to lower customs duties on goods where no suitable domestic substitutes are produced, thereby promoting the efficient use of resources and supporting specific sectors of the economy. The Tariff Concession Orders (TCOs) scheme was established to allow the Chief Executive Officer of Customs to grant tariff concessions on application, provided certain criteria are met, including the absence of substitutable goods produced in Australia. The policy objective is to reduce the customs duty on specified goods, benefiting importers by potentially reducing their costs and improving the competitiveness of imported goods in the market.
The instrument was introduced by the Parliament of Australia and the specific TCO No. 1048256 pertains to certain methyl acetate or acetic acid methyl ether, which are now subject to a free rate of duty instead of the general rate of 5%. The instrument came into effect on 29 October 2010, the date the application was lodged, and does not impose any new liabilities on individuals or entities, nor does it disadvantage existing rights as of the registration date. The CEO of Customs published a notice in the Gazette inviting public submissions, none of which were received, leading to the issuance of the TCO.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes the framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders provide for lower rates of customs duty on goods specified within them. Any person can apply to the CEO for a TCO in relation to certain goods, provided those goods are not specified in section 269SJ of the Act, which lists items ineligible for tariff concessions. The CEO must then assess whether the application meets the core criteria outlined in sections 269C, 269D, 269E, and 269F. If satisfied, the CEO is required to issue a written TCO. For example, Univar Australia successfully applied for a TCO for certain methyl acetate or acetic acid methyl ether, resulting in Instrument TCO No. 1048256. This order, which came into force on 29 October 2010, grants a tariff concession for these goods, reducing their duty rate from 5% to free. The TCO does not retroactively affect the rights of any person other than the Commonwealth and does not impose new liabilities on anyone. Instead, it potentially benefits importers by allowing them to apply for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 1048256, made under section 269F of the Customs Act 1901, addresses the process and criteria for Tariff Concession Orders (TCOs) concerning certain methyl acetate or acetic acid methyl ether. According to section 269C, for a TCO application to meet the core criteria, it must be lodged on a day when no substitutable goods are being produced in Australia in the ordinary course of business. The term "substitutable goods" is defined in section 269D, where it means goods produced in Australia that can be used in a manner corresponding to the goods subject of the TCO application. The Chief Executive Officer of Customs (CEO) is required to make a written order if satisfied that the application meets these criteria, as outlined in section 269P(3).
Entities such as Univar Australia are required to submit an application to the CEO, who must then determine whether the application meets the core criteria before issuing a TCO. This process is further clarified by section 269K(1), which mandates that the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed. In the case of TCO No. 1048256, no submissions were received, allowing the TCO to proceed. The TCO came into effect on the date the application was lodged, as specified in subsection 269S(1) of the Act.
In terms of obligations, the CEO must ensure that the application is valid and meets the core criteria before issuing a TCO. The applicant must provide sufficient information to satisfy the CEO that no substitutable goods are produced in Australia. Once the TCO is issued, the goods specified in the order are subject to the reduced duty rate, in this case, free duty instead of the general rate of 5%. Importers of these goods can apply for a refund of any duty paid prior to the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901, including the proper application and issuance of TCOs, may result in civil or criminal penalties. The specific penalties for breaches are not detailed in the explanatory statement, but generally, breaches of the Customs Act can lead to fines and other sanctions as prescribed by law. The Act provides for enforcement mechanisms to ensure compliance and maintain the integrity of the customs duty regime.