EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516788
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.
Sony Australia Ltd applied for a TCO in respect of certain thermal transparent printing film on 12 December 2005.
Instrument
TCO No 0516788 was made on 03 March 2006. It declares that those certain thermal transparent printing film 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. 0516788 is taken to have come into force on 12 December 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, addresses the need for a mechanism to provide tariff concessions for certain goods, which can promote trade and economic efficiency. Part XVA of the Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on goods specified in the order, provided certain criteria are met. Specifically, a TCO can be issued if no substitutable goods are produced in Australia on the day the application was lodged. This legislation was introduced to ensure that Australian industries do not face undue competition from domestically produced substitutes, thereby supporting local production where it exists.
The Tariff Concession Instrument No. 0516788, issued on 3 March 2006, exemplifies the application of this scheme. Sony Australia Ltd successfully applied for a TCO concerning certain thermal transparent printing film, and the CEO determined that no substitutable goods were produced in Australia at the time of application. Consequently, the CEO issued a TCO that set the duty rate for these goods to free, down from the general rate of 5%. This instrument was published in the Gazette, inviting submissions from the public, none of which were received. The TCO aims to benefit importers by allowing them to apply for refunds on duties paid on goods imported since the TCO's effective date, 12 December 2005, without imposing any new liabilities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to persons who may apply for a TCO in respect of goods, and it operates within the Commonwealth jurisdiction. The TCO mechanism is designed to provide a lower rate of customs duty on specified goods, contingent upon the absence of substitutable goods being produced in Australia. The application process involves ensuring the goods in question meet the core criteria outlined in the Act, specifically that no substitutable goods are produced domestically in the ordinary course of business. Sony Australia Ltd's application for a TCO on certain thermal transparent printing film exemplifies this process. The TCO, once approved, reduces the customs duty rate for these specific goods from the general rate of 5% to free. The process mandates public consultation, though in this instance, no submissions were received against the TCO. The TCO becomes effective from the date of application, and it does not disadvantage or impose liabilities on any person other than the Commonwealth, while benefiting importers by allowing them to apply for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) sets out a framework for the application of Tariff Concession Orders (TCOs) as detailed in Part XVA. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of specific goods. The CEO must decide whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are met, the CEO must issue a TCO as stated in subsection 269P(3). For example, TCO No. 0516788, issued on 3 March 2006, declared that certain thermal transparent printing films are subject to the concessions outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995, reducing the duty rate from 5% to free.
The obligations imposed by the Act on the parties involved are primarily focused on the application and assessment process. The CEO must assess the application against the core criteria and ensure that no substitutable goods were produced in Australia. This includes verifying the definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods," as outlined in sections 269D, 269E, and 269F respectively. If the CEO is satisfied with the application, they must make a written order declaring the goods to which the TCO applies. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit any objections to the TCO, as required by subsection 269K(1). This ensures a transparent process and allows for any concerns to be addressed before the TCO is issued.
Failure to comply with the requirements of the Act or the terms of a TCO can result in significant consequences. The Act does not explicitly outline specific offences or penalties for breaches related to TCOs, but breaches of customs regulations generally can lead to substantial penalties. For instance, the Customs Act 1901 includes provisions for fines and imprisonment for offences such as providing false or misleading information in an application. Importers may also face financial penalties or be required to repay duties if they incorrectly claim concessions or fail to comply with customs obligations. These consequences underscore the importance of adherence to the Act’s provisions and the TCO terms.