EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0413696
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.
HPS Technology Pty Ltd applied for a TCO in respect of certain ceramic blocks on 15 December 2004.
Instrument
TCO No 0413696 was made on 11 March 2005. It declares that those certain ceramic blocks 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 3%.
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. 0413696 is taken to have come into force on 15 December 2004.
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 Australian Parliament and is a foundational piece of legislation governing the importation and exportation of goods in Australia. The Act provides a framework for the imposition of customs duty and other charges on goods entering or leaving Australia. One of the mechanisms through which the Act seeks to regulate these duties is via Tariff Concession Orders (TCOs), which allow for the application of lower rates of customs duty on specified goods. The problem or gap that this legislation addresses is the need to provide relief from customs duties on goods for which there are no domestic substitutes, thereby encouraging the import of such goods and potentially benefiting consumers and industries reliant on these imports. The Tariff Concession Instrument No. 0413696, made under the Customs Act 1901, exemplifies this by granting a tariff concession on certain ceramic blocks, reducing their duty rate from the general rate of 5% to 3%. This was achieved following an application by HPS Technology Pty Ltd and subsequent approval by the Chief Executive Officer of Customs, who was satisfied that no substitutable goods were produced in Australia.
Scope and Application
The Customs Act 1901 provides a mechanism for the Chief Executive Officer of Customs to grant tariff concession orders (TCOs) that apply a lower rate of customs duty to certain goods. These orders can be applied for by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. The TCO process involves an assessment by the CEO to determine if the application meets core criteria, specifically if no substitutable goods are produced in Australia at the time of application. If the CEO is satisfied that the application meets these criteria, a TCO is issued, applying a specified rate of duty as outlined in the Customs Tariff Act 1995. This process is intended to benefit importers by reducing the duty on certain goods, as evidenced by the TCO No. 0413696 for certain ceramic blocks, which reduced the duty rate from 5% to 3%. The TCO process includes a requirement for the CEO to publish a notice in the Gazette inviting submissions from interested parties, although no submissions were received for this particular order. The commencement date of a TCO is the date on which the application is lodged, meaning that the TCO No. 0413696 is effective from 15 December 2004. Importantly, the TCO does not affect the rights of any person as at the date of registration to disadvantage them or impose liabilities for actions taken prior to the registration.
Key Provisions
The Customs Act 1901 (the Act) establishes a framework for the application and implementation of Tariff Concession Orders (TCOs) as detailed in sections 269C, 269F, and 269S (269C, 269F, 269S). Under this scheme, a person may apply to the Chief Executive Officer of Customs (the CEO) for a TCO, which, if approved, results in a lower rate of customs duty for the specified goods. To be considered, the goods must not be listed in section 269SJ, which details goods that cannot be subject to a TCO. The CEO must then determine if the application meets the core criteria set out in section 269C, which includes ensuring that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The terms 'substitutable goods' and 'ordinary course of business' are further defined in sections 269D and 269E respectively.
The obligations imposed on parties under this legislation include the requirement for the CEO to make a decision on a TCO application within the confines of the Act's provisions. The CEO must ensure that the application meets the core criteria and, if satisfied, must make a written order specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) applicable to the goods. Additionally, the CEO is mandated to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as stipulated in section 269K(1). The CEO must also consider any submissions received and ensure the rights of third parties are not adversely affected by the TCO.
The Act imposes civil and criminal consequences for non-compliance with the TCO provisions. While the explanatory statement does not explicitly state the penalties, it is reasonable to infer that breaches of the conditions or misrepresentations in the application process could lead to penalties as outlined under the Customs Act and associated regulations. These could include fines or other legal actions against individuals or entities found to be in breach of the TCO requirements. The Act's provisions are designed to ensure that the tariff concessions are granted fairly and in accordance with the legislative intent, thereby maintaining the integrity of the customs duty system.