EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510609
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.
Vintech Systems Pty Ltd applied for a TCO in respect of certain Electronic Safes on 11 August 2005.
Instrument
TCO No 0510609 was made on 21 October 2005. It declares that those certain Electronic Safes 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. 0510609 is taken to have come into force on 11 August 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 within which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs (CEO) to provide tariff concessions on certain goods. The Tariff Concession Instrument No. 0510609, which was introduced to address the problem of imposing tariffs on goods for which no substitutable goods were produced in Australia, provides a lower rate of customs duty for such goods, thereby reducing the financial burden on importers. The policy objective of this legislation is to ensure that the application of customs duties is fair and reasonable, particularly in cases where local production of substitutable goods is not feasible. The CEO, upon receiving an application for a TCO, must determine if the application meets the core criteria, such as the absence of substitutable goods produced in Australia, and if satisfied, issue a written order to effect the tariff concession. This legislative measure aims to support the import industry by providing financial relief through reduced customs duties on specific goods, thereby facilitating trade and potentially encouraging local consumption of these goods.
Scope and Application
The Customs Act 1901, as amended, incorporates a scheme for Tariff Concession Orders (TCOs) under which the Chief Executive Officer of Customs (CEO) may grant reduced rates of customs duty on specified goods. This process is applicable to any person or entity that meets the criteria set out in section 269C of the Act, provided that the goods in question are not listed in section 269SJ as those that cannot be subject to a TCO. Specifically, the Act applies to goods for which no substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269D, 269E and 269F. The application for a TCO must be made to the CEO, and if the CEO is satisfied that the application meets the core criteria, a TCO will be issued. The instrument, TCO No. 0510609, for example, pertains to certain Electronic Safes and sets the rate of duty for these goods at 0% under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 11 August 2005. The CEO is also required to invite submissions from any interested parties following the acceptance of a valid TCO application, though no submissions were received for TCO No. 0510609. The TCO does not affect any existing rights or impose liabilities on persons other than the Commonwealth, and importers of the affected goods may apply for a refund of duty paid on imports since the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0510609, made under the Customs Act 1901, outlines a process for granting tariff concessions on certain goods. Specifically, section 269F (1) of the Act allows for the application to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application is valid and that the goods are not prohibited from receiving a TCO under section 269SJ, they must then determine if the application meets the core criteria set out in section 269C. This core criterion requires that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.
The obligations imposed by the Act on applicants and the CEO are clearly defined. Section 269K (1) mandates that the CEO must publish a notice in the Gazette once an application is accepted as valid. This notice includes an invitation for any interested parties to submit reasons why the TCO should not be made. However, in the case of Vintech Systems Pty Ltd’s application for Electronic Safes, no submissions were received.
Should the CEO be satisfied that the application meets the core criteria, they are required to make a written TCO under section 269P (3), specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods. For Vintech Systems, this meant that certain Electronic Safes would be subject to a 0% duty rate, as opposed to the general 5% duty rate.
In terms of potential breaches and penalties, the Act does not explicitly outline criminal or civil penalties for non-compliance with the provisions of a TCO. However, any failure to adhere to the conditions set out in the TCO could potentially lead to disputes or claims for refunds, as importers may apply for duty refunds under paragraph 126(1)(r) of the Regulations for goods imported since the TCO was taken to have come into force. The Act ensures that the rights of persons (other than the Commonwealth) are not adversely affected by the TCO, meaning that no new liabilities are imposed on them for actions taken prior to the registration date of the TCO.