EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617947
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.
Boskalis Australia Pty Ltd applied for a TCO in respect of certain vertical wick drains on 25 October 2006.
Instrument
TCO No 0617947 was made on 12 January 2007. It declares that those certain vertical wick drains 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. 0617947 is taken to have come into force on 25 October 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 Parliament of Australia, established a framework for the administration of customs duties and the importation of goods. To address the need for flexibility and responsiveness in tariff regulation, Part XVA of the Customs Act 1901 introduced the mechanism for Tariff Concession Orders (TCOs). These orders allow the Chief Executive Officer of Customs to apply a lower rate of customs duty on specific goods under certain conditions, thereby promoting trade and industry benefits. The explanatory statement for Tariff Concession Instrument No. 0617947, made in 2007, illustrates this process by detailing the application of Boskalis Australia Pty Ltd for vertical wick drains, which led to the issuance of TCO No. 0617947. This instrument declared that the specified goods are subject to a free rate of duty, effective from the date of application, 25 October 2006, and facilitated a tariff concession in alignment with the core criteria outlined in the Act.
Scope and Application
The Tariff Concession Instrument No. 0617947 under the Customs Act 1901 provides a framework for granting tariff concessions on certain goods, specifically vertical wick drains, which are subject to a rate of customs duty of free, as opposed to the general rate of 5%. The application of this legislation is targeted at entities that import or intend to import the specified goods, as it provides them with a lower rate of customs duty, thereby potentially reducing their import costs. This Act applies on a Commonwealth level, as it is an instrument under the Customs Act 1901, which is federal legislation. However, the application of this particular TCO is limited to the goods specified in the instrument and does not extend to other goods not listed within it. The instrument does not impose any new liabilities on importers and safeguards their rights, ensuring that they are not disadvantaged by the application of the TCO to past transactions. The process for making a TCO involves an application to the Chief Executive Officer of Customs, who must determine whether the application meets the core criteria set out in the Act, particularly ensuring that no substitutable goods are produced in Australia. The CEO also has a responsibility to publish notices in the Gazette and invite submissions from interested parties, although in this case, no submissions were received.
Key Provisions
The Customs Act 1901 (section 269F) facilitates the application process for Tariff Concession Orders (TCO) by allowing any person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods. If the CEO is satisfied that the application is valid and does not pertain to goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO, they must determine whether the application meets the core criteria. For a TCO application to meet the core criteria, it is essential that on the date the application is lodged, no substitutable goods are being produced in Australia in the ordinary course of business, as outlined in section 269C. The definitions for 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are further elaborated in sections 269D, 269E, and 269F respectively.
The obligations imposed by the Act on the parties include the requirement for the CEO to assess each TCO application against the core criteria. Once the CEO determines that the application meets these criteria, they must issue a written TCO (section 269P(3)), declaring the goods subject to the order and specifying the applicable rate of duty. Additionally, section 269K(1) mandates that the CEO must publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made. In the case of TCO No. 0617947, no submissions were received.
Failure to comply with the requirements of the Act may result in civil or criminal consequences. Although the explanatory statement does not specify exact penalties, it is understood that breaches of the Customs Act can lead to penalties under various sections of the Act, including fines and imprisonment. The precise penalties would depend on the specific nature of the breach, but they can be severe, reflecting the importance of adhering to customs regulations.
Overall, the Act provides a structured process for the application and assessment of TCOs, ensuring that only eligible goods receive tariff concessions. The obligations on the CEO and the applicants are clear, and the publication requirements ensure transparency and the opportunity for public input. The commencement date for a TCO aligns with the date of application, ensuring that any rights or liabilities are not unfairly impacted by the concession.