EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0501208
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.
K Mart Australia Ltd applied for a TCO in respect of certain roll cages on 28 January 2005.
Instrument
TCO No 0501208 was made on 8 April 2005. It declares that those certain roll cages 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. 0501208 is taken to have come into force on 28 January 2005.
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 amended to introduce Tariff Concession Orders (TCOs) through Part XVA, allowing the Chief Executive Officer of Customs to apply lower customs duty rates on certain goods, thereby addressing the need for tariff adjustments to support Australian industries and consumers. Enacted by the Australian Parliament, this legislation provides a mechanism for applications to be made for tariff concessions where no substitutable goods are produced in Australia, ensuring that imported goods are not subject to higher duties than necessary when no local alternatives exist. The policy objective is to facilitate fair trade practices by providing tariff relief where appropriate, promoting economic efficiency and competitiveness. The explanatory statement outlines the process for making a TCO, including the requirement for the CEO to determine if the application meets the core criteria and the subsequent publication of the application in the Gazette for public comment. The Tariff Concession Instrument No. 0501208 exemplifies this process, where the CEO granted a concession for certain roll cages, reducing the duty rate from 5% to 3%.
Scope and Application
The Tariff Concession Instrument No. 0501208, made under the Customs Act 1901, applies to specific goods that are the subject of a Tariff Concession Order (TCO) as applied to certain roll cages. The Act applies to any person or entity that imports goods and seeks a concession on the rate of customs duty payable on those goods. The instrument is a Commonwealth instrument and operates nationally. The application for a TCO is made to the Chief Executive Officer of Customs, who must assess whether the application meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are satisfied, the CEO must issue a TCO, which in this case, resulted in the roll cages being subject to a lower rate of duty. The TCO does not retroactively affect the rights of any person but benefits importers by allowing them to apply for a refund of duty paid on the goods since the TCO's effective date. The application of the TCO may be further defined or extended by subordinate instruments, although the primary focus remains on the specific goods as identified in the TCO.
Key Provisions
The main operative sections of the Tariff Concession Order No. 0501208 under the Customs Act 1901 (section 269P(3)) establish the process and criteria for the Chief Executive Officer of Customs (CEO) to make a Tariff Concession Order (TCO). When the CEO is satisfied that an application for a TCO meets the core criteria, which include the absence of substitutable goods produced in Australia (section 269C), they must make a written order declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (section 269P(3)). This TCO No. 0501208 specifically declares certain roll cages to be subject to a reduced duty rate of 3% instead of the general rate of 5% (section 269P(3)). The TCO also includes a provision for the application of the order from the date the application was lodged, which is 28 January 2005 (section 269S(1)).
The obligations imposed on parties by this TCO include the requirement for K Mart Australia Ltd, or any other applicant, to meet the core criteria before a TCO can be made. This means ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The CEO must also publish a notice in the Gazette inviting any person to submit reasons why the TCO should not be made (subsection 269K(1)). If no submissions are received, the CEO is obligated to proceed with making the TCO. The TCO does not affect the rights of any person as at the date of registration, ensuring that no one is disadvantaged or imposed with liabilities in respect of actions taken before the TCO's effective date (subsection 269S(2)).
Breaches of the provisions under the Customs Act 1901 may lead to various civil or criminal consequences. While the explanatory statement does not specify the exact penalties for non-compliance with the TCO provisions, under the Customs Act, breaches can lead to significant penalties. For example, under section 246 of the Customs Act, engaging in fraudulent activities related to customs duties can result in fines and imprisonment. Additionally, providing false information in an application for a TCO could be considered a misleading or deceptive conduct under the Australian Consumer Law, potentially leading to civil penalties. It is important to note that specific penalties for breaches of the TCO provisions are not detailed in the explanatory statement, but they can be severe under the broader customs legislation.