EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0609141
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.
Staedtler Pacific Pty Ltd applied for a TCO in respect of certain pencil slats on 26 May 2006.
Instrument
TCO No 0609141 was made on 11 August 2006. It declares that those certain pencil slats 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. 0609141 is taken to have come into force on 26 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, facilitates a framework for tariff concession orders (TCOs) through Part XVA. This mechanism allows the Chief Executive Officer of Customs to reduce customs duty rates for specific goods, provided no substitutable goods are produced in Australia in the ordinary course of business. The problem or gap this legislation addresses is the potential for higher customs duties on goods where local production alternatives do not exist. Policy objective of the Act is to encourage imports by reducing the duty on certain goods, thereby aiding businesses in accessing cheaper materials and potentially lowering costs for consumers. The Tariff Concession Instrument No. 0609141, made on 11 August 2006, exemplifies the application of this scheme, granting a tariff concession for certain pencil slats by setting the duty rate to 0% instead of the general rate of 5%.
Scope and Application
The Tariff Concession Instrument No. 0609141 applies to specific goods, in this case certain pencil slats, as identified in an application made to the Chief Executive Officer of Customs under Part XVA of the Customs Act 1901. The legislation primarily concerns itself with the application and approval process for tariff concessions, ensuring that goods for which a concession is sought do not have substitutable equivalents produced within Australia. The Act's jurisdiction is Commonwealth, and its application is not limited by state or territory boundaries. However, it excludes goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The application of the Act may be further refined or extended through subordinate instruments, although the primary focus remains on the criteria set out in the Act itself. This particular instrument took effect on 26 May 2006, the date the application was lodged, and it does not affect the rights of any person as at the date of registration, ensuring that no existing liabilities or rights are adversely impacted by its implementation.
Key Provisions
The Tariff Concession Instrument No. 0609141, made under section 269P of the Customs Act 1901, establishes a lower rate of customs duty for certain pencil slats specified in the instrument. According to section 269F, a person may apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the CEO determines that the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the date the application was lodged, a TCO can be made. In this case, since no substitutable goods were produced in Australia, the CEO was satisfied that the application for pencil slats met the core criteria and issued TCO No. 0609141 on 11 August 2006, which declared that the pencil slats are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995 with a duty rate of 0%.
The Act imposes several obligations on the parties involved. Firstly, applicants for a TCO must ensure that their application is not in respect of goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. Secondly, the CEO must assess the application against the core criteria in section 269C. If satisfied, the CEO must make a written TCO and declare the goods to which the prescribed item of Schedule 4 applies. Additionally, as per section 269K, the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made. In this instance, no submissions were received.
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO can lead to civil or criminal consequences. While the explanatory statement does not specify particular offences under the Act, breaches of customs laws generally can result in penalties. Under section 283 of the Customs Act, penalties for breaches can include fines up to the greater of $525,000 or three times the value of the goods involved in the breach. Additionally, offences under the Customs Act can lead to criminal charges, with maximum penalties including imprisonment for up to 10 years, particularly for serious offences such as smuggling or making false statements. These penalties underscore the importance of adhering to the provisions and obligations set out by the Act and the TCOs issued under it.