EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603060
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.
Australian Automotive Air Pty Ltd applied for a TCO in respect of certain aluminium air conditioners brazers on 30 January 2006.
Instrument
TCO No 0603060 was made on 18 April 2006. It declares that those certain aluminium air conditioners brazers 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. 0603060 is taken to have come into force on 30 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 was enacted by the Australian Parliament to regulate the importation and exportation of goods, among other things. In 2006, the Customs Act 1901 was amended to include a scheme allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide a lower rate of customs duty on certain goods. This was introduced to address the gap where certain goods could not benefit from tariff concessions due to the lack of a formal process to apply for such concessions. The policy objective was to ensure that such tariff concessions could be granted in a manner that is both transparent and fair, thereby supporting Australian businesses and potentially reducing the cost of imported goods. Instrument No. 0603060, made under this scheme, granted a TCO to Australian Automotive Air Pty Ltd for certain aluminium air conditioner brazers, reducing their customs duty from 5% to 0%.
Scope and Application
The Tariff Concession Instrument No. 0603060 under the Customs Act 1901 applies to individuals or entities that seek tariff concessions for specific goods imported into Australia. The Act allows for the application of a lower rate of customs duty on goods that are the subject of a Tariff Concession Order (TCO), which is issued by the Chief Executive Officer of Customs upon meeting the core criteria outlined in the Act. This applies to any goods for which no substitutable products are produced in Australia in the ordinary course of business. The instrument has a national reach and applies across all states and territories of Australia as it is an enactment under Commonwealth legislation. Any goods specified in section 269SJ of the Act, which lists those that cannot be subject to a TCO, are excluded from this application. The CEO is mandated to publish notices in the Gazette inviting submissions on the TCO application, but in this instance, no objections were received. The TCO itself does not impose any liabilities on any person and does not affect the rights of any person other than the Commonwealth in respect of anything done or omitted to be done before the date of registration.
Key Provisions
The Customs Act 1901, as amended, includes provisions for Tariff Concession Orders (TCOs), which are orders made by the Chief Executive Officer (CEO) of Customs to reduce the customs duty on certain goods. Section 269F allows a person to apply to the CEO for a TCO for specific goods, and if the CEO determines that the application meets the core criteria, they must make the TCO (section 269C). A TCO application meets the core criteria if, on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). The CEO must make a written order if satisfied that the application meets the core criteria, declaring that the goods are subject to a prescribed tariff item specified in the order (subsection 269P(3)). In the case of TCO No. 0603060, the CEO was satisfied that no substitutable goods were produced in Australia and declared that certain aluminium air conditioner brazers were subject to a zero percent duty rate (item 50 of Schedule 4 to the Customs Tariff Act 1995).
The Act imposes obligations on the CEO and applicants for TCOs. The CEO must ensure that applications meet the core criteria, which involves confirming that no substitutable goods were produced in Australia at the time of the application. The CEO must also publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made (subsection 269K(1)). In this case, the CEO did not receive any submissions against the application. Furthermore, 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.
There are no specific offences or penalties mentioned in the explanatory statement for breaches of the TCO provisions. However, if a person knowingly makes a false statement or representation in an application for a TCO, they may be subject to criminal penalties under section 271 of the Customs Act 1901, which includes fines of up to 10,000 penalty units or imprisonment for up to five years, or both. Additionally, if a person imports goods in breach of the TCO, they may be liable for the duty payable on the goods under section 126 of the Customs Act 1901, which can include financial penalties and possible criminal prosecution.