EXPLANATORY STATEMENT
Tariff Concession Instrument No.0503523
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.
Australian Paper applied for a TCO in respect of certain water jet edge trimmers on 23 March 2005.
Instrument
TCO No 0503523 was made on 30 May 2005. It declares that those certain water jet edge trimmers 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. 0503523 is taken to have come into force on 23 March 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, enacted by the Australian Parliament, provides a framework for the administration of customs and excise duties, including the ability to grant tariff concessions through Tariff Concession Orders (TCOs). The purpose of the TCO mechanism is to lower the customs duty on specified goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. This mechanism aims to promote the competitiveness of Australian industries by allowing for reduced tariffs on imported goods that do not have local equivalents. The Tariff Concession Instrument No. 0503523, issued on 30 May 2005, exemplifies this process by applying to certain water jet edge trimmers, reducing their duty rate from 5% to free. This order was made following an application by Australian Paper and after no objections were raised during the consultation period. The policy objective of such instruments is to facilitate trade by making imported goods more affordable while ensuring that local industries are not unduly disadvantaged.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to specific goods for which an application has been submitted, provided the goods are not specified in section 269SJ and the application meets the core criteria set out in section 269C. The Act applies to any individual or entity that applies for a TCO and imports the specified goods into Australia. The geographic reach of this legislation is national, affecting customs duty rates on goods entering Australia. The Act does not impose liabilities on persons other than the Commonwealth and does not disadvantage them regarding actions taken before the TCO's registration. The rights of importers are beneficially affected as they may apply for a refund of duty on goods imported since the TCO's effective date. Subordinate instruments may extend or further define the application of this Act.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for the application and implementation of Tariff Concession Orders (TCOs) as outlined in Part XVA of the Act (s 269F). Section 269F allows an individual to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specified goods. The CEO must determine if the application meets the core criteria set out in sections 269C and 269SJ of the Act. If the CEO is satisfied that the application does not pertain to goods that are ineligible for a TCO and that the core criteria are met, they must issue a written order (TCO) applying a lower rate of customs duty to the goods in question (s 269C, s 269SJ).
For a TCO application to meet the core criteria, the CEO must be satisfied that, on the day the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business (s 269C). Definitions for these terms are provided in sections 269D, 269E, and 269F of the Act. A TCO application for certain water jet edge trimmers was submitted by Australian Paper on 23 March 2005. The CEO was satisfied that no substitutable goods were produced in Australia, and TCO No. 0503523 was issued on 30 May 2005. This TCO applies item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a zero rate of duty on these goods, as opposed to the general rate of 5% (s 269P(3)).
The Act imposes several obligations on the CEO in relation to TCO applications. Upon receiving an application, the CEO must ensure that it meets the core criteria (s 269C). If satisfied, they must issue a written order (TCO) (s 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s 269K(1)). This ensures transparency and the opportunity for stakeholders to voice their concerns. In this case, the CEO did not receive any submissions in response to the published notice.
Failure to comply with the provisions of the Act could result in civil or criminal consequences. Although the explanatory statement does not specify penalties for breach, the Act generally provides for penalties for offences related to customs and excise. For example, section 234 of the Act prescribes a maximum penalty of 50 penalty units (approximately AUD 5,500) for offences involving false or misleading statements. Additionally, section 238 provides for criminal penalties for serious breaches, including fines of up to 10,000 penalty units (approximately AUD 1,100,000) and/or imprisonment for up to 10 years.