EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1050322
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 Material Science Pty Ltd applied for a TCO in respect of certain polycarbonate film on 15 November 2010.
Instrument
TCO No 1050322 was made on 07 February 2011. It declares that those certain polycarbonate films 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. 1050322 is taken to have come into force on 15 November 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 Parliament of Australia, provides for the imposition of customs duty on imported goods. It also allows for the creation of Tariff Concession Orders (TCOs) under Part XVA, which can reduce the duty on certain goods if specific criteria are met. One such criterion is that the goods in question must not have substitutable products produced in Australia. The Tariff Concession Instrument No. 1050322, made on 7 February 2011, is an example of such an order. In this case, Bayer Material Science Pty Ltd applied for a TCO on polycarbonate film, and the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia. Consequently, the TCO granted a tariff concession, setting the duty rate for these polycarbonate films at zero, down from the general rate of 5%. The instrument was designed to ensure that the rights of existing parties were not adversely affected, while providing a benefit to importers of the specified goods, who can apply for refunds of duties paid prior to the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 1050322 applies to certain polycarbonate films, specifically those identified in the instrument, and is made under the authority of the Customs Act 1901. This legislation governs the application and approval process for Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, allowing for reduced customs duty rates on specified goods. The scope of the Act encompasses any individual or entity that imports or intends to import the specified goods into Australia, effectively reducing their duty burden from the general rate to a free rate as specified in the instrument. The Act operates on a national level across Australia, providing a streamlined process for obtaining tariff concessions that can benefit importers of these particular goods. Exclusions are noted in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The application process includes a mandatory consultation period as per section 269K(1) of the Act, though in this instance, no submissions were received against the application. The TCO does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth, ensuring that only future transactions are impacted.
Key Provisions
The main operative sections of the Tariff Concession Order No. 1050322 (referred to as TCO No. 1050322) under the Customs Act 1901 establish the conditions under which the Chief Executive Officer of Customs (CEO) may grant a tariff concession. Specifically, section 269F allows an application for a tariff concession order, while section 269C stipulates that such an order can be made if no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets these criteria, a written order declaring the goods eligible for a tariff concession must be made. In this case, the CEO granted Bayer Material Science Pty Ltd’s application for a tariff concession on polycarbonate film, declaring that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free rather than the general rate of 5%.
The Act imposes several obligations on the CEO when considering an application for a tariff concession order. Firstly, the CEO must ensure that the application is not in respect of goods specified in section 269SJ, which are ineligible for a tariff concession. Secondly, the CEO must verify that the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties, as per subsection 269K(1). In this instance, the CEO did not receive any submissions, indicating that no objections were raised regarding the tariff concession.
The Customs Act 1901 also outlines consequences for non-compliance with the provisions of the Act. Although the explanatory statement does not detail specific offences or penalties related to the failure to comply with the tariff concession order, general provisions within the Customs Act may apply. Typically, breaches of the Customs Act can result in substantial penalties, both civil and criminal. Civil penalties can include fines up to several thousand dollars, depending on the severity and intent of the breach. Criminal penalties may include imprisonment for up to five years, reflecting the seriousness with which the Act regards non-compliance. The exact penalties would be determined based on the specific circumstances of the breach and the provisions of the Customs Act and related legislation.