EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616926
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.
Moto National Pty Ltd applied for a TCO in respect of certain protective vests on 08 September 2006.
Instrument
TCO No 0616926 was made on 01 December 2006. It declares that those certain protective vests 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 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. 0616926 is taken to have come into force on 08 September 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, provides a framework for the administration of customs duties and includes provisions for tariff concession orders (TCOs). These TCOs allow for the application of lower rates of customs duty on certain goods, provided specific criteria are met. The problem or gap this legislation addresses is the potential for unfair duty rates on goods that are not adequately substituted by domestic production, thereby encouraging imports and potentially benefiting consumers and importers. Tariff Concession Instrument No. 0616926, made under the authority of the Customs Act, was introduced to grant a tariff concession for specific protective vests, reducing the duty rate from the general 5% to free, effective from the date the application was lodged, 8 September 2006. The instrument was made after the CEO of Customs was satisfied that the application met the core criteria, and no submissions were received opposing the concession. The policy objective of this instrument is to ensure that importers of these vests can benefit from the reduced duty rate, facilitating more competitive pricing and potentially increasing market accessibility for these goods.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which are designed to lower the customs duty on specific goods. An application for a TCO must be made by a person in relation to goods that are not specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. If the CEO is satisfied that the application meets the core criteria, including the absence of substitutable goods produced in Australia in the ordinary course of business, a TCO will be made. This instrument applies to the particular protective vests for which Moto National Pty Ltd applied on 08 September 2006, which were granted a TCO on 01 December 2006, resulting in a reduction of the duty rate from the general rate of 5% to free duty. The TCO came into effect on the date of the application, 08 September 2006, without affecting any pre-existing rights or imposing new liabilities. Importers of these goods can apply for duty refunds since the TCO's effective date, under the relevant regulations.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0616926 under the Customs Act 1901 (section 269P(3)) specify that the Chief Executive Officer of Customs (CEO) must make a written order (a Tariff Concession Order or TCO) if satisfied that an application meets the core criteria. This process applies to goods that are not specified in section 269SJ of the Act and for which no substitutable goods are produced in Australia. The TCO declares that certain goods are subject to a lower rate of customs duty, with item 50 of Schedule 4 to the Customs Tariff Act 1995 applying to the specific goods mentioned (section 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions on the application, although in this case, no submissions were received (subsection 269K(1)).
The obligations imposed by the Act on parties involve ensuring that any goods subject to a TCO application are not substitutable by goods produced in Australia and are not specified in section 269SJ of the Act. The CEO must assess applications against these criteria and, if satisfied, issue a TCO. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who may have concerns about the TCO. This transparency measure ensures that all relevant parties are given an opportunity to voice any objections before the TCO is finalised. Additionally, the Act requires that the TCO does not adversely affect the rights of any person, except the Commonwealth, prior to its registration date.
If any party breaches the provisions of the Customs Act 1901, there are potential civil and criminal consequences. Although specific offences, penalties, or maximum penalties are not detailed in the explanatory statement, breaches of customs legislation generally attract penalties that can include fines and imprisonment. The severity of the penalty depends on the nature and extent of the breach. For instance, knowingly making a false statement in an application for a TCO could lead to criminal charges, while failing to comply with customs regulations could result in civil penalties. The Act and associated regulations provide the framework within which these consequences are applied.
In summary, the Tariff Concession Instrument No. 0616926 outlines a clear process for the CEO to issue TCOs under the Customs Act 1901, ensuring that certain protective vests are subject to a lower customs duty. The Act imposes specific obligations on the CEO to assess applications and publish notices in the Gazette, while also ensuring that the rights of non-Commonwealth persons are not adversely affected. Breaches of the Act may result in civil or criminal penalties, although the specific details of these penalties are not provided in the explanatory statement.