EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0611589
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.
Jennmar Australia Pty Ltd applied for a TCO in respect of certain hot forged nuts on 10 July 2006.
Instrument
TCO No 0611589 was made on 22 September 2006. It declares that those certain hot forged nuts 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. 0611589 is taken to have come into force on 10 July 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. 0611589, enacted under the Customs Act 1901, addresses the issue of tariff concessions for specific goods by allowing the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain imported goods. This instrument was introduced to facilitate more competitive pricing for consumers and to support Australian businesses by making imported goods more affordable. The instrument was created in response to an application by Jennmar Australia Pty Ltd for tariff concessions on certain hot forged nuts, which were declared to be subject to a zero per cent duty rate due to the absence of substitutable goods produced in Australia. The policy objective, as per the Customs Act, is to ensure that tariff concessions are granted only when there are no substitutable Australian-produced goods, thereby promoting fair competition and economic efficiency.
The instrument was enacted by the CEO of Customs following the guidelines set out in the Customs Act, which mandates the publication of an invitation for submissions in the Gazette upon accepting a valid application for a tariff concession. In this instance, no submissions were received against the application. The tariff concession order came into effect on the date the application was lodged, 10 July 2006, and it does not disadvantage any person other than the Commonwealth nor impose liabilities for actions taken prior to the order's registration. Importers stand to benefit from this order as they can apply for duty refunds on goods imported since the effective date of the concession.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This mechanism applies to any person who may apply for a TCO in respect of goods, with the aim of potentially lowering the customs duty applied to those goods. Specifically, a TCO applies to goods that are not specified in section 269SJ of the Act, which excludes certain goods from eligibility for a tariff concession. A TCO application is considered valid if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269C, 269D, and 269E of the Act. If the CEO determines that the application meets these criteria, they are required to issue a written order, effectively reducing the duty on the specified goods. The application process includes a consultation period where interested parties can submit objections; however, in this case, no submissions were received. The TCO, once made, applies retroactively to the date of the application, with no retroactive liabilities imposed on any party other than the Commonwealth. This legislative instrument impacts the rights of importers by potentially allowing them to claim a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The primary operative sections of the Tariff Concession Order No. 0611589 under the Customs Act 1901 (section 269F) allow the Chief Executive Officer of Customs (CEO) to establish a lower rate of customs duty on certain goods when a Tariff Concession Order (TCO) is made. Section 269C of the Act stipulates that a TCO application is valid if no substitutable goods are produced in Australia at the time the application is lodged. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the specified goods are subject to the prescribed tariff concession (section 269P(3)). In this case, TCO No. 0611589 was made on 22 September 2006, declaring that certain hot forged nuts are subject to a 0% duty rate, down from the general rate of 5% (Schedule 4, item 50 of the Customs Tariff Act 1995).
The Act imposes specific obligations on the CEO and applicants for a TCO. The CEO must ensure that an application meets the core criteria, which include verifying that no substitutable goods are produced in Australia on the day the application is lodged (section 269C). The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who may have reasons to oppose the TCO (subsection 269K(1)). In this case, no submissions were received by the CEO. Furthermore, the Act mandates that a TCO is effective from the date the application is lodged (subsection 269S(1)), meaning that TCO No. 0611589 is effective from 10 July 2006.
The Customs Act 1901 imposes penalties for non-compliance with its provisions. While the explanatory statement does not detail specific penalties for breaches related to TCOs, general provisions in the Act may apply. For instance, under section 269T, the CEO has the authority to cancel a TCO if it is found that the application did not meet the core criteria or if there has been a significant change in circumstances. Additionally, any fraudulent application or misrepresentation of facts could potentially lead to criminal charges under section 269U, which carries a maximum penalty of 200 penalty units for individuals and 10,000 penalty units for bodies corporate. These penalties underscore the importance of adhering to the statutory requirements when applying for or managing a TCO.