EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0611639
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.
B & R Enclosures applied for a TCO in respect of certain ventilators on 12 July 2006.
Instrument
TCO No 0611639 was made on 29 September 2006. It declares that those certain ventilators 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. 0611639 is taken to have come into force on 12 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 Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the imposition of customs duties and the management of imported goods. To address the need for tariff concessions that encourage trade and economic growth, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This mechanism was introduced to provide relief on customs duties for certain goods that meet specific criteria, thereby facilitating access to essential products and supporting industry competitiveness. The policy objective behind this legislation is to ensure that such concessions are granted judiciously, considering the broader economic implications and the need to protect domestic industries where necessary.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can apply lower rates of customs duty on specified goods. This legislative framework is designed to benefit importers by potentially reducing the duty payable on certain goods, provided that these goods are not listed in section 269SJ as ineligible for TCOs and that no substitutable goods are produced in Australia in the ordinary course of business, as outlined in sections 269C, 269D, and 269E. The instrument in question, Tariff Concession Instrument No. 0611639, was made on 29 September 2006, and it applies to certain ventilators by reducing their customs duty rate from the general 5% to 0%. This concession does not affect any existing rights or impose liabilities on parties other than the Commonwealth, and it came into force on 12 July 2006, the date the application was lodged. Importers may also apply for a refund of duty on these goods imported since the effective date of the TCO, as permitted under the Regulations.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0611639, under the Customs Act 1901, provide for the concession of customs duty for certain specified goods. Section 269F allows an application to be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. The CEO, in turn, assesses the application against the core criteria outlined in sections 269C, 269B, and 269D of the Act to determine if a TCO is appropriate. If the CEO is satisfied that no substitutable goods were produced in Australia in the ordinary course of business, a TCO may be made, as stipulated in section 269P(3). In this case, the TCO declares that the specified ventilators are subject to a 0% duty rate instead of the general 5% rate, under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations and requirements imposed by this Act on the parties it governs include ensuring that any application for a TCO complies with the legislative criteria. The applicant must demonstrate that the goods in question are not substitutable by Australian-produced goods and that the application is not in respect of goods specified in section 269SJ of the Act. The CEO is required to assess the application against these criteria and publish a notice in the Gazette inviting submissions from any interested parties. If no submissions are received, the CEO may proceed to make the TCO. Additionally, section 269K(1) mandates the CEO to publish a notice as soon as practicable after accepting a TCO application as valid. In this instance, the CEO did not receive any submissions and subsequently made the TCO on 29 September 2006.
The Customs Act 1901 provides for specific consequences in the event of breaches of its provisions. While the explanatory statement does not detail specific offences or penalties for non-compliance with the TCO process, general penalties under the Customs Act may apply. For instance, section 266 of the Act stipulates penalties for incorrect or misleading declarations, which may include fines of up to $22,000 or imprisonment for up to five years, or both, for individuals, and fines of up to $110,000 for bodies corporate. Further, section 267 provides for the seizure of goods where there is non-compliance with the customs laws. While these general penalties pertain to broader customs compliance, they underscore the seriousness with which the Act treats breaches, thereby indirectly enforcing adherence to the TCO provisions.