EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606373
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.
Avon Products Pty Ltd applied for a TCO in respect of certain a-frame construction picking lines on 5 April 2006.
Instrument
TCO No 0606373 was made on 30 June 2006. It declares that those certain a-frame construction picking lines 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. 0606373 is taken to have come into force on 5 April 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 Tariff Concession Instrument No. 0606373 was enacted in 2006 as part of the Customs Act 1901, which provides the framework for the administration of customs and excise in Australia. The primary aim of this legislation is to offer tariff concessions on specific goods, thereby reducing the customs duty payable on those goods. This instrument was introduced to address the need for tariff concessions that could stimulate economic activity by making certain imported goods more affordable. The Customs Act 1901, enacted by the Australian Parliament, enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) if certain criteria are met. The policy objective behind this legislation is to support industries by lowering the cost of imported goods that do not have local substitutes, thus fostering competition and potentially lowering consumer prices. The instrument in question grants a tariff concession on certain a-frame construction picking lines, reducing their duty rate from 5% to free, effective from the date the application was lodged.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCO) which can be applied for by any person in respect of certain goods, provided the goods do not fall under the exclusions set out in section 269SJ of the Act. The Chief Executive Officer of Customs (CEO) has the authority to make these orders if the application meets the core criteria outlined in section 269C, namely that no substitutable goods are produced in Australia in the ordinary course of business as of the date the application was lodged. The instrument, Tariff Concession Instrument No. 0606373, made on 30 June 2006, pertains to specific a-frame construction picking lines and declares them to be subject to a free rate of duty, reducing the general rate of 5% for such goods. The instrument's application is effective from the date the application was lodged, 5 April 2006, and it does not retroactively affect any rights or liabilities incurred before this date. The CEO is required to publish notices in the Gazette inviting submissions on such applications, although no submissions were received for this particular TCO.
Key Provisions
Section 269F of the Customs Act 1901 allows for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of specific goods. If the CEO determines that the application pertains to goods not listed in section 269SJ, which specifies goods ineligible for a TCO, they must assess if the application meets the core criteria set out in section 269C. The core criteria are satisfied if, on the application date, no substitutable goods were produced in Australia in the ordinary course of business, with definitions provided by sections 269D, 269E, and 269F. Upon meeting these criteria, the CEO is mandated to issue a written TCO, specifying the applicable prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations under this legislation require applicants to ensure that their goods meet the core criteria for a TCO, particularly that no substitutable goods were produced in Australia at the time of application. The CEO has the responsibility to publish a notice in the Gazette inviting submissions on the proposed TCO and to consider these submissions before making a decision. For the goods in question, Avon Products Pty Ltd successfully applied for a TCO, leading to Tariff Concession Order No. 0606373 which specifies that the a-frame construction picking lines are subject to a free rate of duty, down from the general rate of 5%.
Under the Customs Act 1901, failure to comply with the provisions regarding the application and processing of TCOs could result in civil or criminal penalties. The specific penalties depend on the nature and severity of the breach but may include fines or imprisonment for serious offences. For instance, providing false or misleading information in an application could lead to penalties under section 271 of the Act, which may include fines up to $22,200 or imprisonment for up to two years, or both. The exact penalties are determined by the courts based on the circumstances of the breach.
The commencement of a TCO is governed by section 269S(1) of the Act, which specifies that a TCO comes into force on the date the application is lodged. This means that Tariff Concession Order No. 0606373 is effective from 5 April 2006. Importantly, the TCO does not affect any person's rights as of the registration date, thereby avoiding any disadvantage or imposition of new liabilities for actions taken before the TCO's effective date. Importers of the affected goods can benefit from the reduced duty rates and may apply for a refund of duties paid on goods imported since the TCO's commencement, as per paragraph 126(1)(r) of the Regulations.