EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0608907
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.
Electrolux Home Products Pty Ltd applied for a TCO in respect of certain induction frameless motors on 23 May 2006.
Instrument
TCO No 0608907 was made on 11 August 2006. It declares that those certain induction frameless motors 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. 0608907 is taken to have come into force on 23 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, enacted by the Australian Parliament, provides a framework for the regulation of customs duties and tariffs in Australia. One of its provisions, specifically Part XVA, allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that lower the rate of customs duty on certain goods. This was introduced to address the problem of ensuring that Australian businesses, particularly those that rely on imported components, are not unduly burdened by high customs duties when no local alternatives exist. The Tariff Concession Instrument No. 0608907, made on 11 August 2006, is an example of this mechanism in action, reducing the customs duty on certain induction frameless motors from 5% to 0% after an application by Electrolux Home Products Pty Ltd. This instrument aims to provide relief to businesses by lowering their input costs, thereby supporting competitiveness and economic activity.
Scope and Application
The Tariff Concession Instrument No. 0608907 under the Customs Act 1901 applies to goods specified in the order, which in this case are certain induction frameless motors, and to entities such as Electrolux Home Products Pty Ltd, who applied for the tariff concession. The Act facilitates the application of a lower rate of customs duty on goods that meet specific criteria, provided by the Chief Executive Officer of Customs (CEO) under section 269F of the Act. The application process involves ensuring that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business, as outlined in sections 269C, 269D, and 269E of the Act. The geographic reach of the Act is national, applying across Australia as it pertains to federal customs duties. The Act excludes goods specified in section 269SJ which cannot be subject to a Tariff Concession Order (TCO). The application of the Act can be extended or restricted through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the prescribed items and rates of duty. The TCO No. 0608907 came into force on the date the application was lodged, 23 May 2006, and it does not affect the rights of any person as at the date of registration in a way that disadvantages them or imposes liabilities in respect of anything done before the date of registration.
Key Provisions
The primary sections of the Customs Act 1901, as implemented by the Tariff Concession Instrument No. 0608907, establish a framework for Tariff Concession Orders (TCOs) (sections 269C, 269D, 269E, 269F, 269K, 269P, 269S, 269SJ, and 269SJ). These sections outline the process for applying for and granting TCOs, which provide reduced customs duty rates for certain goods. Specifically, section 269F allows individuals to apply to the Chief Executive Officer of Customs (CEO) for a TCO. If the CEO determines that the application meets the core criteria, including that no substitutable goods are produced in Australia, a TCO is issued (section 269C). The CEO must also ensure that the application is not for goods specified in section 269SJ, which cannot be subject to a TCO. Furthermore, section 269K requires the CEO to publish a notice in the Gazette inviting submissions on the application. Section 269S provides that the TCO comes into force on the day the application is lodged.
The obligations imposed by the Act on the parties involved include the requirement for applicants to ensure their applications meet the core criteria (section 269C) and for the CEO to carefully evaluate each application to confirm that no substitutable goods are produced in Australia (section 269F). The CEO is also mandated to publish notices in the Gazette to invite submissions from interested parties (section 269K). In the case of TCO No. 0608907, the CEO followed these obligations, leading to the issuance of the order for certain induction frameless motors. Importers of these goods benefit from the reduced customs duty rate as specified in the TCO.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations could lead to civil or criminal consequences. While the explanatory statement does not explicitly outline the penalties for non-compliance, general provisions in the Customs Act might impose fines and other penalties for breaches. The maximum penalties for offences under the Customs Act can vary significantly depending on the nature and severity of the offence, ranging from fines to imprisonment. For instance, under section 220 of the Customs Act, a person who contravenes the Act can be fined up to 10,000 penalty units or imprisoned for up to five years, or both, for serious offences. For less severe breaches, the fines can be up to 1,100 penalty units, and imprisonment for up to 12 months. The specifics of penalties would need to be consulted within the broader Customs Act and associated regulations.