EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0612370
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.
Carrier Air Conditioning Pty Ltd applied for a TCO in respect of certain condenser air conditioner parts on 24 July 2006.
Instrument
TCO No 0612370 was made on 13 October 2006. It declares that those certain condenser air conditioner parts 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. 0612370 is taken to have come into force on 24 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, outlines the framework for imposing customs duty on imported goods. Specifically, Part XVA of the Act introduces a scheme where Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty to certain goods. The policy objective of this scheme is to encourage the importation of goods that are not produced domestically, thereby supporting the availability and affordability of such goods in the Australian market. The CEO is required to evaluate applications for TCOs based on whether substitutable goods are being produced in Australia, as specified in section 269C of the Act. The 2006 Instrument No. 0612370 under this scheme, issued on 13 October 2006, concerns certain condenser air conditioner parts, where the CEO determined that no substitutable goods were produced in Australia, resulting in a tariff concession that set the duty rate at free instead of the general rate of 10%. The TCO was effective from 24 July 2006, the date of the application, and does not impose any liabilities or disadvantage any person other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to any person or entity that seeks a concession on customs duty for specific goods by applying for a TCO. The scope of the legislation includes the examination of whether the goods for which a concession is sought are substitutable by Australian-produced goods. If no such substitutable goods are found, and the goods in question do not fall under the restricted category outlined in section 269SJ of the Act, the CEO is mandated to make a TCO. This legislative instrument has a national reach within Australia and does not extend beyond its borders. The application of TCOs is further defined and possibly extended through subordinate instruments, such as regulations, which may include procedural aspects and administrative details. Exclusions to this Act include goods specified in section 269SJ, which inherently cannot be subject to a TCO. The commencement of a TCO is effective from the date the application is lodged, as per subsection 269S(1) of the Act, and it does not affect any pre-existing rights or liabilities of parties other than the Commonwealth.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0612370 include sections 269C, 269B, 269D, 269E, 269F, 269K, 269P, and 269SJ of the Customs Act 1901, which outline the criteria for making a Tariff Concession Order (TCO) and the process for application. Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO regarding certain goods. Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, with definitions provided in sections 269B, 269D, and 269E. Section 269P(3) mandates that if the CEO is satisfied that an application meets the core criteria, they must issue a written order (TCO) applying a prescribed item of Schedule 4 to the Customs Tariff Act 1995 to the goods in question.
The obligations imposed by the Act on the parties involved primarily concern the application process and the conditions for granting a TCO. An applicant must ensure their application complies with the core criteria set out in section 269C, particularly that no substitutable goods were produced in Australia on the day the application was lodged. The CEO is obliged to review the application, determine whether it meets the core criteria, and publish a notice in the Gazette inviting submissions from any interested parties. If no objections are received, the CEO must then make a written TCO. Importers, on the other hand, must be aware of their eligibility to apply for a refund of duty on goods imported since the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations.
Regarding potential offences and penalties, the Act does not explicitly outline specific criminal penalties for breaches related to TCO applications. However, any actions that contravene the conditions set out in the TCO or the Act could potentially lead to civil consequences, such as fines or other monetary penalties, depending on the specific breach. For example, if a person knowingly imports goods under a TCO when they do not qualify for the concession, they might face penalties under the Customs Act. The maximum penalties for contraventions of the Customs Act can vary widely, but they often include substantial fines and, in some cases, imprisonment, depending on the severity of the breach.