EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1123262
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.
Grace Australia applied for a TCO in respect of certain copolymer on 13 July 2011.
Instrument
TCO No 1123262 was made on 19 September 2011. It declares that those certain copolymer 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. 1123262 is taken to have come into force on 13 July 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, enacted by the Parliament of Australia, establishes a framework for the regulation of imports and exports, including the imposition of customs duties. Part XVA of the Act introduces a scheme where Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, allowing for lower rates of customs duty on specified goods. The Act was introduced to address the need for a flexible mechanism to reduce customs duty on goods that are not produced domestically or where domestic alternatives do not exist. Grace Australia's application for a TCO concerning certain copolymers exemplifies the application of this scheme. Following the CEO's determination that no substitutable goods were produced in Australia, TCO No. 1123262 was issued on 19 September 2011, granting free duty on these copolymers, which otherwise attract a general rate of duty of 5%. The policy objective of this instrument is to facilitate the import of goods that are not domestically produced, thereby supporting the efficient operation of businesses reliant on such imports.
Scope and Application
The Tariff Concession Instrument No. 1123262, under the Customs Act 1901, applies to specific goods for which a Tariff Concession Order (TCO) is sought, particularly in the context of customs duty concessions. The act primarily pertains to entities or individuals who wish to import goods that qualify for reduced customs duty rates, provided these goods are not of a type specified in section 269SJ of the Act, which outlines the goods ineligible for a TCO. The scope of the Act extends nationally, impacting the importation processes across Australia, governed by the provisions of the Customs Act and the Customs Tariff Act 1995. The application for a TCO must meet core criteria, including the absence of substitutable goods produced in Australia, as defined under sections 269C, 269D, 269E, and 269F of the Act. Once a TCO is issued, it applies retroactively to the date of the application, thereby potentially affecting the duty liability of importers for goods imported since the application date. The process ensures that no existing rights or liabilities of non-Commonwealth persons are adversely affected by the issuance of a TCO.
Key Provisions
The main operative sections of this Tariff Concession Order, referenced as Instrument TCO No. 1123262, provide for the granting of tariff concessions on certain copolymer, effectively reducing the customs duty on these goods from the general rate of 5% to a rate of zero. This is pursuant to the provisions of section 269C of the Customs Act 1901, which requires that the Chief Executive Officer (CEO) of Customs must be satisfied that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged, as outlined in section 269P(3) of the Act. The application, made by Grace Australia on 13 July 2011, was processed and the TCO was made on 19 September 2011.
The obligations imposed by the Act on the parties include the requirement for Grace Australia to submit an application to the CEO for a Tariff Concession Order, ensuring that the application complies with the core criteria stipulated in the Act. The CEO is required to assess the application and, if satisfied, make a written order declaring the goods to which the concession applies. The CEO is also mandated to publish a notice in the Gazette, inviting any interested parties to submit objections or submissions within a specified period, although no submissions were received in this instance.
Breaching the conditions set out by the Act could lead to significant consequences. Although the Act does not explicitly outline offences or penalties for failing to comply with the provisions of the TCO, it is important to note that non-compliance with the Customs Act 1901 could result in both civil and criminal penalties. Civil penalties could include fines and the forfeiture of goods, while criminal penalties might encompass imprisonment, reflecting the seriousness with which the Australian Government treats breaches of customs regulations. The exact penalties would depend on the nature and severity of the breach, but they can be substantial, underscoring the importance of adhering to the legislative requirements.