EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0508475
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 Welding Supplies Pty Ltd applied for a TCO in respect of certain Respiratory Filters on 29 June 2005.
Instrument
TCO No 0508475 was made on 9 September 2005. It declares that those certain Respiratory Filters 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. 0508475 is taken to have come into force on 29 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 Parliament of Australia, established a framework through which the Chief Executive Officer of Customs could issue Tariff Concession Orders (TCOs). These orders allow for reduced customs duty rates on specified goods, provided certain criteria are met. The Customs Tariff Concession Instrument No. 0508475 was introduced to address the need for tariff concessions for particular goods, ensuring that if no substitutable goods are produced domestically, then lower duty rates can be applied to imported goods. This instrument was created following an application by Australian Welding Supplies Pty Ltd for a concession on certain Respiratory Filters, leading to the reduction of the duty rate from 5% to 0% for these goods, effective from 29 June 2005. The policy objective behind this concession is to support Australian industries by preventing the local production of substitutable goods, thereby facilitating a more competitive market environment.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders can reduce the rate of customs duty on particular goods, provided that the CEO is satisfied that certain criteria are met. An application for a TCO can be made by any person, and it must not be in respect of goods that are specified in section 269SJ of the Act as ineligible for tariff concessions. Once an application is deemed to meet the core criteria, primarily that no substitutable goods are being produced in Australia in the ordinary course of business, the CEO is required to issue a TCO. This instrument applies across the Commonwealth of Australia and affects importers of the specified goods by potentially allowing them to apply for a refund of duties paid on imports of those goods since the effective date of the TCO. The TCO does not disadvantage any person other than the Commonwealth or impose liabilities for actions taken prior to the order's registration. The Act may also extend its application through subordinate instruments, although the specifics of such extensions are not detailed in the provided explanatory statement.
Key Provisions
The main operative sections of the Customs Act 1901, as referenced in the Tariff Concession Instrument No. 0508475, concern the process and criteria for granting Tariff Concession Orders (TCOs) (sections 269C, 269F, 269P, and 269SJ). Section 269F allows an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. The CEO must determine whether the application meets the core criteria, primarily that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). If these criteria are satisfied, the CEO must issue a written order (section 269P(3)). The instrument specifies that the Respiratory Filters, subject to the TCO, are to be treated under item 50 of Schedule 4 to the Customs Tariff Act 1995, with a reduced duty rate from 5% to 0%.
The obligations imposed by the Customs Act 1901 on parties involved with TCOs include the requirement for applicants to ensure their applications meet the specified core criteria, particularly the absence of substitutable goods produced in Australia. The CEO is obligated to evaluate each application against these criteria and, if satisfied, to issue a TCO. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any interested parties, though in this instance, no submissions were received (subsection 269K(1)). The Act also mandates that TCOs do not affect the rights of persons, other than the Commonwealth, as at the date of registration in a way that would disadvantage them or impose new liabilities (subsection 269S(1)).
Should a party fail to comply with the requirements set out in the Customs Act 1901, the consequences can be both civil and criminal, depending on the nature and severity of the breach. Civil penalties may include fines and other financial penalties as stipulated by the relevant legislation. Criminal offences could lead to imprisonment, with the maximum penalties varying according to the specific offence. However, in the context of the TCO for Respiratory Filters, no explicit penalties are mentioned for breaches related to the TCO itself, but general compliance with the Customs Act 1901 is enforced rigorously to ensure the smooth operation of the tariff concession scheme.