EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0511528
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.
Independent Tyre Distributors applied for a TCO in respect of certain tyres on 02 September 2005.
Instrument
TCO No 0511528 was made on 18 November 2005. It declares that those certain tyres 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. 0511528 is taken to have come into force on 02 September 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. 0511528 was enacted in 2005 under the Customs Act 1901 to address a specific need for tariff concessions on certain tyres, as requested by Independent Tyre Distributors. This instrument allows for a lower rate of customs duty on these goods, effectively making the duty free, provided no substitutable goods are produced in Australia. The process involves the Chief Executive Officer of Customs assessing the application against the core criteria specified in the Act, which include ensuring that no suitable domestic alternatives exist. Upon meeting these criteria, a written order, known as a Tariff Concession Order, is issued, and the reduced duty rate is applied retroactively from the date the application was lodged. This legislative action aims to facilitate the importation of specific goods by removing financial barriers, thereby supporting trade and potentially benefiting importers who can claim duty refunds for imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This scheme applies to individuals or entities seeking to import goods that qualify for a reduced rate of customs duty under a TCO. The application process requires the applicant to demonstrate that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO determines that the application meets the core criteria, a TCO is issued, thereby applying a prescribed lower rate of duty to the specified goods. The legislation extends its application nationally, as it operates under the authority of the Commonwealth. There are, however, exclusions; goods specified in section 269SJ of the Act are ineligible for TCOs. The scope of the Act can be further defined through subordinate instruments, which may provide additional criteria or detail regarding the application and enforcement of TCOs.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269P, and 269S of the Customs Act 1901 (the Act). Section 269C sets out the core criteria that must be met for a Tariff Concession Order (TCO) to be granted. Specifically, it states that an application for a TCO meets the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) requires the Chief Executive Officer of Customs (the CEO) to make a written TCO if the application meets the core criteria. Section 269S provides that a TCO comes into effect on the date the application is lodged.
The Act imposes several obligations on the CEO in relation to the processing of TCO applications. The CEO must ensure that the application is not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, they must make a written TCO. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made. In this case, the CEO did not receive any submissions in response to the notice.
Failure to comply with the requirements of the Customs Act 1901 may result in penalties. Although the legislation does not explicitly state the penalties for non-compliance, breaches of the Act may result in civil or criminal consequences. For instance, under section 230 of the Act, a person who contravenes any provision of the Act, or any regulation or order made under the Act, is liable to a penalty not exceeding 10,000 penalty units, which is approximately AUD 1.7 million, or imprisonment for a term not exceeding five years, or both. The exact penalties will depend on the nature and severity of the breach.
The Tariff Concession Instrument No. 0511528 specifically applies to tyres, reducing the duty on these goods from the general rate of 5% to free. This concession came into effect on 2 September 2005, the date the application was lodged. Importantly, this TCO does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on any person in respect of anything done or omitted before the date of registration. Importers of the affected goods can apply for a refund of duty on goods imported since the TCO came into effect.