EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0507511
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.
Solcor (Australia) Pty Ltd applied for a TCO in respect of certain windscreen repair kits on 17 June 2005.
Instrument
TCO No 0507511 was made on 07 October 2005. It declares that those certain windscreen repair kits 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. 0507511 is taken to have come into force on 17 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, enacted by the Australian Parliament, establishes a framework under which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) to reduce customs duty on certain goods. This legislative instrument was introduced to address the issue of ensuring that Australian businesses have access to affordable inputs necessary for their operations, particularly in cases where no domestic substitute exists. The Tariff Concession Instrument No. 0507511, issued on 7 October 2005, is an example of this mechanism in action, applying to specific windscreen repair kits that Solcor (Australia) Pty Ltd applied for, effectively reducing the duty rate from 5% to free. The policy objective is to facilitate the import of necessary goods without imposing a burden on Australian businesses and consumers, thereby supporting competitive markets and economic efficiency.
Scope and Application
The Customs Act 1901, under Part XVA, governs the creation of Tariff Concession Orders (TCOs) which allow for a lower rate of customs duty on specified goods. This Act applies to any person or entity that applies for a TCO in respect of goods, and it is administered by the Chief Executive Officer of Customs (CEO). The CEO must determine whether an application meets the core criteria, primarily that no substitutable goods were produced in Australia at the time of the application. This instrument is applicable on a national level within Australia, with the scope of the concession extending to the specific goods listed in the TCO, in this case, windscreen repair kits. The CEO is mandated to make a written order if the application is deemed valid, as per the core criteria. Any exclusions from the application of a TCO are specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The Act allows for the application to be extended or restricted through subordinate instruments, though in this instance, no such extensions or restrictions have been noted. The commencement of the TCO is effective from the date the application was lodged, and it does not retroactively affect the rights of any person or impose liabilities for actions prior to its registration.
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) (sections 269C, 269F, 269P). A TCO provides a lower rate of customs duty on specific goods, contingent on meeting certain criteria. An application for a TCO can be made by any person, but it must not be for goods specified in section 269SJ of the Act, which are ineligible for such concessions (section 269SJ). If the CEO is satisfied that the application meets the core criteria, notably that no substitutable goods are produced in Australia (section 269C), they must issue a written TCO. This was the case for Solcor (Australia) Pty Ltd's application for certain windscreen repair kits, which was granted on 7 October 2005, as item 50 of Schedule 4 to the Customs Tariff Act 1995 applies to these goods, resulting in a duty-free rate (section 269P(3)).
The obligations imposed by the Customs Act 1901 on parties applying for a TCO include ensuring that the goods in question are not specified in section 269SJ and that the application meets the core criteria of section 269C. Once an application is accepted as valid, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). While Solcor's application did not receive any submissions, the act mandates this procedural transparency to allow for public input. The TCO itself, once granted, does not affect any pre-existing rights of individuals or entities other than the Commonwealth and does not impose any new liabilities (subsection 269S(1)).
Breaching the provisions of the Customs Act 1901 can result in various civil and criminal consequences. For instance, making a false statement in an application for a TCO could result in a penalty, as outlined in section 236 of the Act, which prescribes penalties for misleading or deceptive conduct. The maximum penalties for such offences can vary, with higher penalties for corporations as opposed to individuals. Additionally, failure to comply with the terms of a TCO or attempting to evade the duties could lead to prosecution under sections related to customs fraud, which could result in fines and imprisonment, depending on the severity of the offence.
In summary, the Customs Act 1901 facilitates the creation of TCOs that provide tariff concessions on certain goods, subject to stringent criteria and procedural requirements. The act outlines clear obligations for applicants and ensures that the rights of third parties are protected. Non-compliance with the act's provisions can lead to significant penalties, underscoring the importance of adherence to the specified guidelines and obligations.