EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516612
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.
Cigweld Pty Ltd applied for a TCO in respect of certain welding rods on 24 November 2005.
Instrument
TCO No 0516612 was made on 6 February 2006. It declares that the certain welding rods are good 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. 0516612 is taken to have come into force on 24 November 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 was enacted by the Australian Parliament to regulate customs and excise duties, among other things. One of its key functions is to provide a scheme for the imposition of Tariff Concession Orders (TCOs), as outlined in Part XVA of the Act. This scheme was designed to address the problem of imposing lower rates of customs duty on certain goods where no substitutable goods are produced in Australia. Specifically, the Act allows for applications to the Chief Executive Officer of Customs (CEO) to obtain a TCO for goods that meet the core criteria, ensuring that such goods benefit from reduced customs duties. This was implemented to encourage trade and support industries by reducing the cost of importing specific goods, thereby aiding in economic efficiency and competitiveness. The explanatory statement for Tariff Concession Instrument No. 0516612, issued on 6 February 2006, exemplifies this process by granting a tariff concession for certain welding rods, reducing the duty rate from 5% to free.
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 (CEO) to provide lower rates of customs duty on certain goods. The Act applies to individuals or entities that apply for a TCO concerning specific goods that are not listed in section 269SJ as ineligible for tariff concessions. The application process requires the CEO to determine if the goods are substitutable by Australian-produced goods, as outlined in sections 269C and 269D, and if they are produced in the ordinary course of business as per section 269E. Once the CEO is satisfied that the core criteria are met, a written TCO is issued, reducing the customs duty on the specified goods. For instance, TCO No. 0516612 was issued for certain welding rods on 6 February 2006, setting their duty rate at free, down from the general rate of 5%. The Act's application is nationwide, covering all jurisdictions within Australia, and it does not disadvantage any person by affecting their rights as of the date of the TCO registration. The TCO also ensures that no liabilities are imposed on any individual or entity for actions taken prior to the TCO's effective date.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269F, 269P, and 269S. Section 269F (1) allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) concerning specific goods, subject to certain conditions. If the CEO determines that the application meets the core criteria set out in section 269C, a TCO will be issued. This is detailed in section 269P (3), which mandates that the CEO must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (Tariff) when satisfied that the core criteria are met. Section 269S (1) states that a TCO is considered to have come into force on the day the application for the TCO was lodged, which is 24 November 2005 in this instance.
The Act imposes several obligations on the parties it governs. The CEO must determine whether an application for a TCO meets the core criteria and must make a written order if it does. The CEO is also required to publish a notice in the Gazette, inviting submissions from interested parties who might oppose the TCO. In this case, the CEO did not receive any submissions opposing the TCO. Importers of the goods, who benefit from the concession, may apply for a refund of duty on goods imported since the TCO came into force, under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 may result in various civil and criminal consequences. Although the Explanatory Statement does not detail specific offences or penalties for breaches of the TCO, the Customs Act generally provides for penalties including fines and imprisonment for violations. The maximum penalties can be severe, depending on the nature and severity of the offence. It is important to note that these penalties are applicable to breaches of the broader Customs Act and not specifically to breaches of a TCO, but they serve as a reminder of the seriousness with which the law treats non-compliance.