EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0503662
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.
Hydrodynamic Australia Pty Ltd applied for a TCO in respect of certain personal flotation devices on 31 March 2005.
Instrument
TCO No 0503662 was made on 3 June 2005. It declares that those certain personal flotation devices 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 is7.5%. The rate of duty for the goods subject to the TCO is 0%.
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. 0503662 is taken to have come into force on 31 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 Tariff Concession Instrument No. 0503662, enacted in 2005 under the Customs Act 1901, addresses the issue of applying lower rates of customs duty to certain goods not produced in Australia, thereby supporting import competition and consumer choice. This instrument was introduced to facilitate tariff concessions for specific goods where no suitable Australian-made alternatives exist, encouraging the importation of these goods and potentially lowering their cost for consumers. The Customs Act 1901 allows the Chief Executive Officer of Customs to make Tariff Concession Orders, subject to specific criteria being met, such as the absence of substitutable goods produced in Australia. The instrument was implemented following an application by Hydrodynamic Australia Pty Ltd for tariff concessions on certain personal flotation devices, resulting in a duty reduction from 7.5% to 0%. The legislation aims to streamline the process for obtaining tariff concessions, thereby benefiting importers and ensuring that the rights of all parties are protected without imposing new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0503662 under the Customs Act 1901 applies to any entity or person who imports specified goods, in this instance certain personal flotation devices, into Australia. The instrument was issued by the Chief Executive Officer of Customs (CEO) following an application by Hydrodynamic Australia Pty Ltd, who sought a tariff concession for these goods. The instrument reduces the customs duty on these goods from the general rate of 7.5% to 0%. The geographic reach of this Act is nationwide, impacting all importers within Australia. The application of the Act is restricted to goods that are not listed in section 269SJ of the Customs Act 1901, which specifies goods that cannot be subject to a tariff concession order (TCO). The TCO does not disadvantage any person or impose liabilities on any person for actions taken before the registration date, and it does not affect the rights of any person other than the Commonwealth. Furthermore, the Act allows for the extension or restriction of its application through subordinate instruments, though no such instruments are noted in this specific instance.
Key Provisions
The main operative sections of the Customs Act 1901, as outlined in Tariff Concession Instrument No. 0503662, pertain to the granting of Tariff Concession Orders (TCOs) to lower the customs duty on specific goods. Section 269F allows an individual to apply to the Chief Executive Officer (CEO) of Customs for a TCO. If the CEO is satisfied that the application meets certain criteria, a TCO is issued (section 269P(3)). The core criteria, as defined in section 269C, require that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269D clarifies the term "goods produced in Australia," section 269E defines "ordinary course of business," and section 269B provides the meaning of "substitutable goods." Once the CEO issues a TCO, the specified goods are subject to the duty rate prescribed in Schedule 4 of the Customs Tariff Act 1995, with the TCO taking effect from the date of the application (subsection 269S(1)).
The obligations imposed by the Customs Act 1901 on the parties or entities it governs include the requirement for the CEO to carefully consider whether a TCO application meets the core criteria. If an application is deemed valid, the CEO must issue a written TCO that specifies the goods and the applicable tariff rate. Additionally, the CEO is obligated to publish a notice in the Gazette inviting submissions from any interested parties who may have concerns about the proposed TCO. This ensures transparency and provides an opportunity for stakeholders to voice any objections. Hydrodynamic Australia Pty Ltd fulfilled their obligation by applying for a TCO on 31 March 2005, and the CEO issued TCO No. 0503662 on 3 June 2005, confirming the concession.
The Customs Act 1901 also delineates the consequences of breaching the provisions set out in the Act. While the explanatory statement does not specify any particular offences or penalties for non-compliance with the TCO provisions, it is implicit that failure to adhere to the prescribed processes or acting in contravention of the TCO could result in legal repercussions. The Act’s broader framework suggests that penalties for non-compliance with customs regulations can be severe, including fines and potential imprisonment for criminal offences. The maximum penalties, however, would be determined by the specific nature of the breach and the relevant sections of the Act or subsidiary legislation. In this context, any misuse of the TCO or fraudulent claims for tariff concessions could attract significant penalties under the customs legislation.