EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0506581
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.
Major Projects Victoria applied for a TCO in respect of certain Synchrotron Parts on 2 June 2005.
Instrument
TCO No 0506581 was made on 21 October 2005. It declares that those certain Synchrotron Parts 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 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. 0506581 is taken to have come into force on 2 June 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 enacted to provide a framework for managing customs duties and related matters in Australia, including the establishment of a scheme under which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs. The Act aims to facilitate trade by reducing customs duties on specific goods under certain conditions. The Tariff Concession Instrument No. 0506581, made in 2005, is an example of such an order, addressing the need to provide tariff concessions on specific goods that are not produced in Australia, thereby encouraging imports of these goods by eliminating customs duty. The instrument was introduced to support economic activities by reducing the cost of importing necessary goods, and it aligns with the policy objective of promoting trade efficiency and economic growth by reducing unnecessary barriers to the import of non-domestically produced goods.
Scope and Application
The Customs Act 1901, specifically Part XVA, pertains to the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities seeking a reduction in customs duty on specific goods by applying for a TCO. The application process involves satisfying the core criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO determines that the application meets these criteria, a TCO is issued, resulting in a lower rate of duty for the specified goods. The scope of the Act is national, as it applies throughout Australia, and its application is extended through subordinate instruments, such as the Customs Tariff Act 1995. The TCO does not disadvantage any person or impose liabilities on any person other than the Commonwealth and does not affect any rights as at the date of registration. The Act excludes goods specified in section 269SJ from being subject to a TCO.
Key Provisions
The Customs Act 1901, under Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (s 269F). When an applicant submits a request for a TCO, the CEO must determine if the application is valid and if it pertains to goods that cannot be subject to a TCO (s 269SJ). If the application is valid, the CEO must then assess whether it meets the core criteria, specifically whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (ss 269C, 269D, 269E). If these criteria are met, the CEO is obligated to issue a TCO, which will apply a lower rate of customs duty to the specified goods (s 269P(3)).
For entities or individuals seeking a TCO, the key requirement is to ensure that the goods in question are not substitutable by Australian-produced goods. This involves demonstrating that no equivalent goods are being produced domestically in the ordinary course of business. The application process also requires the applicant to provide sufficient evidence to satisfy the CEO that the core criteria are met. Furthermore, as stipulated in subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed. This notice period allows for any opposition to be aired and considered.
Breaching the provisions of the Customs Act 1901 or making false statements in a TCO application could result in significant legal consequences. Under the Customs Act, false declarations or misleading information could be considered an offence, potentially leading to criminal charges. The penalties for such offences could include fines or imprisonment, depending on the severity of the breach. Additionally, any party that fails to comply with the obligations set out by the Act or the conditions of a TCO could face civil penalties, including financial penalties or orders for restitution.
The Tariff Concession Order No. 0506581, which was issued on 21 October 2005, provides a practical example of the Act's provisions in action. This order applies to certain Synchrotron Parts and declares that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of 0%. This rate is significantly lower than the general rate of 5% for these goods, demonstrating the potential benefit of a TCO. The CEO's decision to issue this order was based on the absence of substitutable goods produced in Australia, aligning with the statutory criteria. The order came into effect on the date of application, 2 June 2005, and provides relief to importers who can now apply for duty refunds for goods imported since that date.