EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516816
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.
Surf Hardware International applied for a TCO in respect of certain production kits on 20 December 2005.
Instrument
TCO No 0516816 was made on 10 March 2006. It declares that those certain production kits 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. 0516816 is taken to have come into force on 20 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 Australian Parliament, addresses the need for tariff concessions to facilitate trade and economic efficiency. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism enables the application of a lower rate of customs duty on goods specified in a TCO. The Act was designed to promote trade by reducing duties on goods for which no domestic alternatives are produced, thereby encouraging imports and supporting economic activities reliant on such goods. The policy objective is to ensure that the application of a TCO does not disadvantage existing domestic producers while allowing for a competitive advantage for importers, thus fostering a balanced and efficient market. The instrument in question, Tariff Concession Instrument No. 0516816, was made to provide a zero per cent duty on certain production kits, reflecting the absence of substitutable goods produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 0516816 under the Customs Act 1901 applies to goods specified in the instrument, in this case, certain production kits, and the application of a lower rate of customs duty for these goods. The Act applies to the Chief Executive Officer of Customs who is responsible for making Tariff Concession Orders (TCOs) and to any persons or entities that import the specified goods, granting them the benefit of reduced customs duty rates. The instrument has a national reach, applying across Australia under the Commonwealth's legislative jurisdiction. Exclusions to this concession include goods specified in section 269SJ of the Act, which cannot be subject to a TCO. Additionally, the Act does not disadvantage any person's rights as at the date of registration and does not impose liabilities on any person except the Commonwealth. The scope of the Act can be further defined or extended through subordinate instruments, which may provide additional details or clarifications on the application and enforcement of the tariff concessions.
Key Provisions
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) under section 269F, whereby the Chief Executive Officer of Customs (CEO) may grant a lower rate of customs duty on certain goods. An application for a TCO must be made by a person and, if not disqualified under section 269SJ, the CEO must determine if it meets the core criteria in section 269C. For a TCO to be issued, it must be established that no substitutable goods are produced in Australia in the ordinary course of business, as per section 269P(3). In the case of Surf Hardware International's application for certain production kits, the CEO was satisfied that no such goods were produced in Australia, leading to the issuance of TCO No. 0516816. This TCO, effective from 20 December 2005, specifies that the production kits are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of 0% instead of the general rate of 5%.
Entities governed by the Customs Act 1901, such as importers and applicants for TCOs, have specific obligations. Importers must ensure that their goods are correctly classified under the applicable tariff schedule, including any concessions granted via TCOs. Applicants for TCOs must submit a valid application that meets the criteria set out in sections 269C and 269P of the Act, providing all necessary information and evidence to support the application. The CEO is required to publish a notice in the Gazette inviting submissions from interested parties, as stipulated in subsection 269K(1), although in this instance, no submissions were received.
Breaches of the Customs Act 1901 can result in both civil and criminal penalties. For instance, knowingly making a false statement or providing false information in an application for a TCO can lead to a fine of up to 10,000 penalty units or imprisonment for five years, or both, under section 269ZZ of the Act. Additionally, any person who fails to comply with the terms of a TCO or who attempts to evade the duty payable on goods may face further penalties, including fines and imprisonment. These provisions underscore the importance of adherence to the Act's requirements to avoid severe consequences.