EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1054427
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 applied for a TCO in respect of certain ammonia production plant parts on 13 December 2010.
Instrument
TCO No 1054427 was made on 7 March 2011. It declares that those certain ammonia production plant parts 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. 1054427 is taken to have come into force on 13 December 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 was enacted to provide a comprehensive framework for the regulation of customs and excise in Australia, including the imposition and collection of duties and taxes. The Act was introduced to address the need for a cohesive legislative structure governing the importation and exportation of goods, as well as the regulation of customs and excise. The Tariff Concession Instrument No. 1054427, enacted in 2011, is a specific instrument under the Customs Act 1901 designed to provide relief from customs duties for certain goods under specific conditions. This instrument was introduced to address the gap in providing tariff concessions to applicants whose goods are not being produced domestically and thus cannot be substituted with locally sourced alternatives. The Tariff Concession Instrument No. 1054427 was enacted by the Chief Executive Officer of Customs, pursuant to the authority granted under section 269F of the Customs Act 1901. The policy objective of this instrument is to support economic efficiency and competitiveness by allowing the importation of specific goods without incurring customs duties, provided that no substitutable goods are produced in Australia.
Scope and Application
The Customs Act 1901 applies to the regulation of imports and exports in Australia, and specifically, the Tariff Concession Orders (TCOs) outlined in Part XVA provide a mechanism for reducing customs duty on certain goods. This legislation applies to individuals and entities that seek to import goods that are not produced domestically and for which a TCO can be granted by the Chief Executive Officer of Customs. The geographic reach of this legislation is national, as it pertains to the import and export activities across Australia. The Act does not specify exclusions or exemptions beyond those listed in section 269SJ, which includes goods such as those that are environmentally harmful or those that involve national security concerns. The Act’s application may be extended through subordinate instruments, such as regulations and tariff schedules, which provide further detail on the types of goods eligible for TCOs and the specific duty rates. In the case of Orica Australia's application for a TCO on certain ammonia production plant parts, the instrument came into force on the date the application was lodged, providing immediate benefit to the importer by eliminating the duty on these specified goods.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1054427 under the Customs Act 1901 (section 269F) allow the Chief Executive Officer (CEO) of Customs to make Tariff Concession Orders (TCOs) in respect of goods. Section 269C specifies that a TCO application meets the core criteria 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 the core criteria, a written order must be made, declaring that the goods are subject to a prescribed rate of duty. This particular TCO, No. 1054427, made on 7 March 2011, concerns certain ammonia production plant parts and declares them to be subject to a free rate of duty, rather than the general rate of 5%.
The obligations and requirements imposed by the Act on the parties governed by it include the necessity for applicants to ensure that their applications meet the core criteria, specifically that no substitutable goods were produced in Australia on the application date. The CEO of Customs must then review the application, publish a notice in the Gazette inviting submissions, and make a decision based on the criteria. In this case, the CEO did not receive any submissions in response to the notice published, and hence proceeded to make the TCO.
Breach of the requirements set out in the Customs Act 1901 may lead to civil or criminal consequences. However, the Explanatory Statement does not specify particular offences, penalties, or consequences for non-compliance with the TCO provisions. The TCO itself does not impose any liabilities on any person, and it does not affect the rights of persons other than the Commonwealth as at the date of registration, ensuring that no one is disadvantaged or incurs liabilities for actions taken prior to the TCO coming into force.