EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602852
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.
Sea to Summit Pty Ltd applied for a TCO in respect of certain headlamps on 24 January 2006.
Instrument
TCO No 0602852 was made on 7 April 2006. It declares that those certain headlamps 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. 0602852 is taken to have come into force on 24 January 2006.
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, establishes a framework for the imposition and concession of customs duties. This Act enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) to lower customs duty rates for certain goods under specific conditions. The Tariff Concession Instrument No. 0602852, issued in 2006, addresses the need to provide tariff concessions for goods that are not produced domestically, thereby ensuring fair competition and economic efficiency. The instrument specifically applies to headlamps, reducing the duty from 5% to 0%, provided no substitutable goods are manufactured in Australia. The policy objective is to facilitate the importation of goods that are not domestically produced, thereby benefiting importers and potentially reducing consumer prices.
Scope and Application
The Customs Act 1901, under Part XVA, authorises the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specified goods. The Act applies to any person or entity seeking to import goods that may benefit from tariff concessions, provided the goods meet the criteria set out in the Act, specifically that no substitutable goods are produced in Australia in the ordinary course of business. This concession is intended to benefit importers by potentially reducing their duty liabilities for certain goods, as illustrated in the case of Sea to Summit Pty Ltd's application for a TCO on certain headlamps, which resulted in a duty reduction from 5% to 0%. The CEO’s decision to issue a TCO must be made in accordance with the criteria outlined in the Act, and once a TCO is issued, it comes into force on the date the application was lodged. The Act also includes a provision for public consultation where any interested party can submit objections to the TCO, although in this instance, no submissions were received. The TCO does not retroactively affect the rights of any person, ensuring that it only benefits those transactions occurring after the TCO's effective date.
Key Provisions
The main operative sections of this legislation (sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S) establish a framework for the application and approval of Tariff Concession Orders (TCOs). Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. If the CEO determines that the application meets the core criteria, they must make a written order declaring that the goods in question are subject to a lower rate of customs duty as specified in the Customs Tariff Act 1995. For instance, in this case, Sea to Summit Pty Ltd successfully applied for a TCO on certain headlamps, resulting in a duty rate of 0% instead of the general rate of 5%.
The Act imposes several obligations and requirements on the parties involved. For example, the CEO must ensure that no substitutable goods are produced in Australia when considering a TCO application, as outlined in section 269C. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed, as stipulated in subsection 269K(1). In this instance, no submissions were received in response to the published notice.
In terms of consequences for non-compliance, the Act does not explicitly detail specific offences or penalties for breaches related to TCOs. However, general compliance with the Customs Act 1901 is expected, and any failure to adhere to the legislative requirements could potentially lead to civil or criminal consequences under other provisions of the Act. It is also important to note that the rights of importers will be beneficially affected, and they may apply for a refund of duty on goods imported since the date the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person, as outlined in subsection 269S(1).