EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0512190
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.
Heron Tower Pty Ltd applied for a TCO in respect of certain Non-Inflatable Wheels on 14 September 2005.
Instrument
TCO No 0512190 was made on 5 December 2005. It declares that those certain Non-Inflatable Wheels 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. 0512190 is taken to have come into force on 14 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework for the administration of customs and excise duties. Specifically, Part XVA of the Act establishes the mechanism for Tariff Concession Orders (TCOs), allowing the Chief Executive Officer of Customs to reduce the customs duty on certain goods if specific criteria are met. This mechanism was introduced to address the need for a streamlined process to provide tariff relief on goods that are not produced domestically and for which there are no suitable substitutes. The policy objective behind this legislative provision is to facilitate the importation of goods that are necessary for Australian consumers and businesses but are not manufactured locally, thereby potentially lowering costs and encouraging competition. Heron Tower Pty Ltd’s application for a TCO for certain Non-Inflatable Wheels was approved based on the absence of substitutable goods in Australia, resulting in a reduction of the duty rate from 5% to 0%.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders are applicable to goods for which a lower rate of customs duty is granted, provided the goods meet the core criteria outlined in the Act. An application for a TCO can be submitted by any person, but the goods in question must not be specified in section 269SJ of the Act, which lists those ineligible for tariff concessions. The CEO must assess whether the application meets the core criteria, specifically whether substitutable goods are not produced in Australia in the ordinary course of business on the day the application is lodged. If the criteria are met, the CEO is mandated to issue a written order declaring the applicable rate of customs duty on the goods. This mechanism applies nationally across Australia and is governed by the provisions of the Customs Act 1901 and the Customs Tariff Act 1995. Any subordinate instruments or regulations further refine the application of this Act, ensuring its scope and application are well-defined and regulated.
Key Provisions
The Tariff Concession Instrument No. 0512190 under the Customs Act 1901 applies specifically to certain Non-Inflatable Wheels, establishing a zero percent duty rate for these goods as opposed to the general 5% rate (sections 269F, 269P(3)). This instrument, issued on 5 December 2005, follows a valid application by Heron Tower Pty Ltd on 14 September 2005. The instrument became effective on the date the application was lodged, as per subsection 269S(1) of the Act. The instrument was made after satisfying the core criteria under section 269C, ensuring that no substitutable goods were produced in Australia on the date the application was made.
In terms of obligations, the Chief Executive Officer of Customs (CEO) is required to ensure that applications for Tariff Concession Orders (TCOs) meet the core criteria and are not in respect of goods specified in section 269SJ of the Act. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who might object to the TCO being issued (subsection 269K(1)). In this instance, no submissions were received, leading to the issuance of the TCO.
Failure to comply with the provisions of the Customs Act 1901 may result in penalties. Although the explanatory statement does not detail specific penalties for non-compliance with the TCO, general penalties under the Customs Act can include fines and, in severe cases, imprisonment. For breaches of the Tariff Act or other related regulations, penalties can be substantial, including fines up to $22,200 for individuals and $111,000 for corporations, with additional civil and criminal consequences for more serious breaches. The exact penalties would depend on the specific nature and severity of the breach.