EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0608076
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.
Toyota Tsusho (Australia) Pty Ltd applied for a TCO in respect of certain nylon car mats on 09 May 2006.
Instrument
TCO No 0608076 was made on 22 September 2006. It declares that those certain nylon car mats 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 10%. 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. 0608076 is taken to have come into force on 09 May 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 Commonwealth Parliament to regulate the import and export of goods in Australia, including the imposition of customs duty. The Tariff Concession Instrument No. 0608076, made under the Act, aims to provide a lower rate of customs duty on certain goods through Tariff Concession Orders (TCOs) when the goods are not produced in Australia or do not have substitutable goods produced domestically. This legislative instrument was introduced to address the need for tariff concessions that could benefit businesses by reducing the cost of imported goods. The policy objective is to support Australian businesses and consumers by lowering the cost of certain imports, provided that no substitutable goods are produced in Australia. In the case of Toyota Tsusho (Australia) Pty Ltd's application for a TCO on certain nylon car mats, the CEO of Customs determined that no substitutable goods were produced in Australia, thereby justifying the concession. The instrument, which came into force on the day the application was lodged, does not affect any pre-existing rights or impose liabilities on any person other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can grant lower rates of customs duty on certain goods. This process is applicable to entities and individuals who seek to import goods for which a TCO can be applied, provided that no substitutable goods are produced in Australia in the ordinary course of business. The Act’s geographic reach is national, as it pertains to the importation of goods into Australia. The application of the Act is contingent on the CEO’s satisfaction that the core criteria are met, particularly the absence of substitutable goods produced locally. The instrument, TCO No. 0608076, made on 22 September 2006, is an example of how the Act is applied, in this case, to certain nylon car mats, resulting in a duty-free status for these goods. The Act extends its application through subordinate instruments such as the Customs Tariff Act 1995, which specifies the rates and schedules relevant to customs duties.
Key Provisions
The main sections of the Tariff Concession Instrument No. 0608076, which relate to the concessions under the Customs Act 1901, include section 269F, which outlines the process for applying for a Tariff Concession Order (TCO), and section 269C, which details the core criteria for the CEO to consider when deciding whether to grant a TCO. Section 269F requires that an application for a TCO can be made to the CEO by any person, provided that the goods in question are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. Section 269C stipulates that a TCO application will meet the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
The Act imposes certain obligations on the parties involved. Under section 269K(1), the CEO is required to publish a notice in the Gazette once a TCO application has been accepted as valid. This notice must include an invitation for any person who believes there are reasons why the TCO should not be made to lodge a submission with the CEO. In the case of TCO No. 0608076, the CEO did not receive any submissions in response to this invitation. Furthermore, section 269P(3) mandates that if the CEO is satisfied that a TCO application meets the core criteria, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively reducing the duty rate to zero.
The Act also specifies various offences and penalties for breaches. Under section 276 of the Customs Act 1901, any person who makes a false or misleading statement in an application for a TCO is liable to a penalty of up to 10,000 penalty units or imprisonment for up to two years, or both. Additionally, any person who knowingly uses goods that are the subject of a TCO for a purpose other than that specified in the order may be subject to criminal charges and penalties for evading duty. The Act also provides for civil penalties, including fines, for breaches related to the misuse of TCOs, ensuring that the concessions are not exploited for unintended purposes. These penalties serve as deterrents to ensure compliance with the conditions set out in the TCOs and the Act as a whole.