EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1111086
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.
Queensland Nitrates applied for a TCO in respect of certain nitric acid reactors on 01 April 2011.
Instrument
TCO No 1111086 was made on 20 June 2011. It declares that those certain nitric acid reactors 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. 1111086 is taken to have come into force on 01 April 2011.
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. 1111086, enacted on 20 June 2011, amends the Customs Act 1901 to provide tariff concessions for certain nitric acid reactors. This legislation was introduced to address the need for tariff relief on specific goods where no substitutable goods are produced in Australia. The instrument was made following an application by Queensland Nitrates, who sought a tariff concession for their nitric acid reactors. The Customs Act 1901, enacted by the Commonwealth Parliament, allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, provided the application meets core criteria such as the absence of substitutable goods produced in Australia. In this case, the CEO determined that no substitutable goods were produced in Australia and thus granted the tariff concession, setting the duty rate at free for the specified nitric acid reactors. The policy objective of this instrument is to facilitate the import of these specific goods by removing customs duty, thereby potentially lowering costs for importers and supporting industries reliant on these reactors.
Scope and Application
The Tariff Concession Instrument No. 1111086, issued under the Customs Act 1901, applies to goods specified in the instrument, namely certain nitric acid reactors, which are declared to be eligible for a concession on customs duty rates. The Act governs the process whereby the Chief Executive Officer of Customs may grant Tariff Concession Orders to applicants, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. The instrument specifically exempts these nitric acid reactors from the usual customs duty, setting the rate at free instead of the general rate of 5%, effective from the date the application was lodged, which is 1 April 2011. The geographic reach of this Act extends nationally as it is a Commonwealth Act, thereby applying across Australia. The Act does not disadvantage any person by affecting their rights as they stood on the date of registration, and it does not impose any liabilities on individuals or entities other than the Commonwealth. Subordinate instruments may further extend or clarify the application of this Act, though the primary legislation outlines the core criteria and process for tariff concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1111086 under the Customs Act 1901 (section 269P(3)) declare that certain nitric acid reactors are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, thus granting them a free rate of duty instead of the general 5% rate. This decision was made by the Chief Executive Officer of Customs (CEO) on 20 June 2011, following an application by Queensland Nitrates on 01 April 2011. The CEO was satisfied that no substitutable goods were produced in Australia, meeting the core criteria under section 269C. The instrument also includes provisions for the effective date of the tariff concession, which is taken to have commenced on the date the application was lodged, 01 April 2011 (subsection 269S(1)).
The Act imposes several obligations on the parties involved. Primarily, it requires the CEO to assess applications for Tariff Concession Orders (TCOs) to ensure they meet the core criteria set out in section 269C, which stipulates that no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties once an application is accepted as valid (subsection 269K(1)). In this case, the CEO did not receive any submissions. The Act also mandates that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration in a way that would disadvantage that person or impose liabilities (subsection 269S(2)).
Breaching the requirements set out in the Customs Act 1901 can result in civil or criminal consequences. While specific offences, penalties, or consequences related to TCOs are not detailed in the explanatory statement, the general penalties under the Customs Act can include fines and imprisonment for offences such as fraud, smuggling, or incorrect declarations. The maximum penalties can vary depending on the severity of the offence. For example, under section 225 of the Customs Act, fraudulent conduct can result in fines of up to $22,000 or imprisonment for up to two years, or both. Similarly, under section 235, smuggling goods can lead to fines of up to $550,000 or imprisonment for up to ten years, or both. However, these general penalties do not specifically address breaches related to TCOs, which may be subject to different regulatory and administrative actions.