EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0612969
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.
R&I Zambesi applied for a TCO in respect of certain filter mats on 2 August 2006.
Instrument
TCO No 0612969 was made on 20 October 2006. It declares that those certain filter mats 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 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. 0612969 is taken to have come into force on 2 August 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 was enacted to provide a comprehensive framework for the administration of customs duties in Australia. This Act, administered by the Parliament of Australia, was introduced to address the need for a systematic approach to regulating the importation of goods, ensuring that duties are collected and managed efficiently while facilitating trade. Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce the customs duty on certain goods under specific conditions. The objective of this legislative framework is to support economic growth by reducing the cost of imported goods and enhancing competitiveness where local production does not meet demand or is not feasible. The explanatory statement for Tariff Concession Instrument No. 0612969, issued under this Act, details the process and criteria for the concession, illustrating the application of these provisions in practice.
Scope and Application
The Customs Act 1901, as amended, provides for the application of Tariff Concession Orders (TCO) which may be made by the Chief Executive Officer of Customs in respect of goods, providing a lower rate of customs duty. Specifically, Part XVA of the Act outlines the process for applying for and receiving a TCO. This legislation applies to individuals or entities seeking a tariff concession for goods that meet the criteria outlined in the Act, specifically when no substitutable goods are produced in Australia in the ordinary course of business. The scope of the Act extends across the Commonwealth of Australia, and while it generally applies to all who meet the criteria, there are specific exclusions noted in section 269SJ which prohibits certain goods from being subject to a TCO. The application process includes a requirement for public notification and consultation, although in this instance, no submissions were received. The TCO in question, Instrument No. 0612969, was made in respect of certain filter mats and effectively reduced the duty rate from 10% to 0%, with the concession applying from the date the application was lodged. The Act also provides mechanisms for refund of duties paid on eligible goods prior to the TCO being registered, without imposing additional liabilities on any person.
Key Provisions
The Customs Act 1901, particularly Part XVA, sets out a framework for Tariff Concession Orders (TCOs), which the Chief Executive Officer (CEO) of Customs can make. When an application for a TCO is made under section 269F, the CEO must determine if it complies with the core criteria specified in section 269C. This involves ensuring that, on the date the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. If these criteria are met, the CEO must issue a written TCO, declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995, as detailed in section 269P(3).
For entities and individuals applying for TCOs, the obligations include providing sufficient evidence that no substitutable goods were produced in Australia on the date of application. The CEO must also ensure transparency by publishing a notice in the Gazette inviting submissions from any interested parties who might have objections to the TCO, as required by subsection 269K(1). In the case of R&I Zambesi, which applied for a TCO for certain filter mats on 2 August 2006, the CEO's satisfaction of the core criteria led to the issuance of TCO No. 0612969 on 20 October 2006, making the filter mats subject to item 50 of Schedule 4 to the Tariff with a reduced duty rate of 0% instead of the general rate of 10%.
Failure to comply with the requirements of the Customs Act 1901 regarding TCOs could result in significant consequences. While the Act does not explicitly detail specific offences or penalties for breaches related to TCOs, general contraventions of the Customs Act can lead to both civil and criminal penalties. Civil penalties can include fines, while criminal penalties can range from fines to imprisonment, depending on the severity and intent of the breach. The exact penalties are determined by the courts and can vary significantly based on the circumstances of each case.
Additionally, the Act ensures that the rights of any person (other than the Commonwealth) are not adversely affected by the TCO. This means that the rights of importers will be positively affected, and they can apply for refunds of duties paid on goods imported since the date the TCO is taken to have come into force, as outlined in paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any new liabilities on any person.