EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1111087
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 plant steam drums on 01 April 2011.
Instrument
TCO No 1111087 was made on 20 June 2011. It declares that those certain nitric acid plant steam drums 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. 1111087 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 Customs Act 1901 was enacted by the Commonwealth Parliament to regulate the import and export of goods across Australia's borders. Part XVA of the Act provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, allowing for reduced customs duty on certain goods. This mechanism is designed to address the problem of ensuring that Australian businesses can compete fairly in the global market by granting duty concessions on imported goods for which no suitable domestic alternatives exist. In line with this objective, TCO No. 1111087 was introduced to provide a zero percent duty rate on specific nitric acid plant steam drums, effective from the date of application on 1 April 2011, recognising that no substitutable goods were produced in Australia at the time. This initiative aligns with the policy goal of supporting Australian industries by making imported goods more cost-competitive without disadvantaging existing rights or imposing new liabilities on importers.
Scope and Application
The Tariff Concession Instrument No. 1111087, issued under the Customs Act 1901, applies to goods specified in the instrument, namely certain nitric acid plant steam drums, which are granted tariff concessions by way of a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. This instrument provides a lower rate of customs duty for these goods, effectively making it free of duty. The TCO is applicable to any entity or person importing these specific goods into Australia, thereby reducing their customs duty liability. The geographic scope of this legislation is national, as it pertains to imports into Australia under the Customs Act 1901, which is a Commonwealth Act. There are exclusions to the application of the TCO, specifically goods that are listed in section 269SJ of the Customs Act 1901, which cannot be subject to a TCO. The application process for a TCO includes a public notification requirement, although in this case, no submissions were received in response to the published notice. The TCO's effective date aligns with the date of the application, which was 01 April 2011, and it does not retroactively affect any pre-existing rights or impose any new liabilities on importers or other entities.
Key Provisions
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) through which certain goods may benefit from reduced or waived customs duty. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO, provided the goods do not fall under the restricted list specified in section 269SJ. For the CEO to consider the application, it must meet the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The definitions of key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are detailed in sections 269D, 269E, and 269F respectively. Once the CEO determines that the application meets these criteria, a written order (TCO) must be issued under section 269P(3), specifying the reduced duty rate applicable to the goods in question.
Entities or individuals seeking a TCO must ensure their application adheres to the stipulations in sections 269C and 269F of the Customs Act 1901. The CEO is obligated to review the application and publish a notice in the Gazette as per subsection 269K(1), inviting any interested parties to submit objections. If no objections are received, the CEO is required to make the TCO. Additionally, the CEO must ensure that the TCO does not negatively impact any pre-existing rights of persons, as per the provisions in subsection 269S(1). Importers of the affected goods may apply for a refund of any duty paid since the effective date of the TCO, as outlined in paragraph 126(1)(r) of the Regulations.
Failure to comply with the requirements set forth in the Customs Act 1901 regarding TCOs could result in various consequences. While the Act does not explicitly detail specific penalties for non-compliance with TCO provisions, breaches of other sections within the Customs Act may lead to civil or criminal penalties. For example, knowingly making a false statement in an application or providing misleading information could result in substantial fines or imprisonment, depending on the severity and intent of the breach. Importers found to be improperly claiming refunds or engaging in fraudulent activities related to TCOs could face similar penalties under relevant sections of the Act and Regulations.