EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1117264
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.
BP Australia Pty Ltd applied for a TCO in respect of certain bitumen oxidation plant on 31 May 2011.
Instrument
TCO No 1117264 was made on 22 August 2011. It declares that those certain bitumen oxidation plant 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. 1117264 is taken to have come into force on 31 May 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, as amended, introduced a scheme whereby Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs (CEO) to reduce the rate of customs duty on certain goods. This scheme was introduced to address the problem of applying a preferential rate of duty on goods not produced in Australia, ensuring that Australian industries are not unduly disadvantaged by international competition. Enacted by the Australian Parliament, the policy objective behind the Act is to promote fair trade practices while encouraging the import of goods that are not locally produced. In a specific instance, Tariff Concession Instrument No. 1117264 was introduced on 22 August 2011, following an application by BP Australia Pty Ltd for a TCO in respect of certain bitumen oxidation plant, effective from 31 May 2011. This order declared that these specific goods would have a duty rate of free, down from the general rate of 5%, as no substitutable goods were being produced in Australia at the time of application.
Scope and Application
The Customs Act 1901 applies to individuals and entities seeking tariff concession orders (TCOs) for goods imported into Australia, with the primary application made through the CEO of Customs. The Act is of national scope, applicable across all states and territories, and is facilitated through the Tariff Concession Orders mechanism under Part XVA. The act allows for a lower rate of customs duty on specified goods provided that no substitutable goods are produced in Australia and the core criteria are met. The application process includes a mandatory publication in the Gazette, inviting public submissions, though in this instance, none were received. TCO No. 1117264, made under this legislation, applies specifically to certain bitumen oxidation plant, with the duty rate changing from the general 5% to free, effective from 31 May 2011. The TCO ensures that no existing rights are adversely affected and allows for the possibility of duty refunds for importers of the specified goods. The scope of the legislation is further extended by subordinate instruments, which may include regulations and further explanatory guidelines.
Key Provisions
The main operative sections of the Customs Act 1901 as it pertains to Tariff Concession Orders (TCOs) include section 269C, which outlines the core criteria that an application for a TCO must meet (section 269C). The application must satisfy the condition that, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). This requirement is further defined by sections 269D and 269E, which provide the meanings of 'goods produced in Australia' and 'ordinary course of business', respectively. Section 269P(3) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, they must issue a written order (section 269P(3)). In the case of BP Australia Pty Ltd, Tariff Concession Order No. 1117264 was made on 22 August 2011, declaring that certain bitumen oxidation plant are subject to a duty rate of zero percent, as per item 50 of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. Firstly, section 269F allows any person to apply to the CEO for a TCO in respect of goods, provided that the goods are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. The CEO must then assess whether the application meets the core criteria specified in section 269C. If the CEO determines that the application is valid, they are required to issue a written TCO. Section 269K(1) further mandates that the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO. In this case, no submissions were received in response to the notice published for TCO No. 1117264.
Any breach of the provisions under the Customs Act 1901 may result in civil and criminal consequences. Section 269S(1) specifies that a TCO is taken to have come into force on the day on which the application for the TCO was lodged, meaning that any non-compliance with the terms of the TCO from that date could lead to penalties. While the explanatory statement does not detail specific offences or maximum penalties, the Act generally provides for fines and imprisonment for breaches related to customs duties and regulations. Importers may also face financial repercussions if they fail to correctly apply for refunds of duty as stipulated in the Regulations under paragraph 126(1)(r). It is crucial for all parties to adhere to the provisions and requirements of the Act to avoid any legal or financial penalties.