EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618155
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.
Prime Engineering Services Pty Ltd applied for a TCO in respect of certain dividers and/or aligners and/or turners on 02 November 2006.
Instrument
TCO No 0618155 was made on 30 January 2007. It declares that those certain dividers and/or aligners and/or turners 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. 0618155 is taken to have come into force on 02 November 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 by the Australian Parliament to provide a comprehensive framework for the regulation of customs and excise. Specifically, Tariff Concession Orders (TCOs) under Part XVA of the Act were introduced to address the need for reduced customs duties on certain imported goods under particular circumstances, particularly when no substitutable goods are produced in Australia. This allows for the application of lower duty rates on goods that meet certain criteria, fostering economic benefits and competitiveness. The policy objective is to encourage the import of goods that are not domestically produced, thereby benefiting consumers and importers by reducing the cost of such goods. The Customs Act 1901 thus plays a crucial role in regulating international trade and ensuring fair practices within the Australian market.
Scope and Application
The Customs Act 1901, under Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities that seek to apply for a TCO in respect of goods that are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The Act applies to all industries and conducts that involve the importation of goods for which a TCO is sought. Its jurisdictional reach is within the Commonwealth of Australia. The Act sets specific exclusions, such as goods listed in section 269SJ, which cannot be subject to a TCO. The scope of the Act may be extended or restricted through subordinate instruments, such as regulations, which can provide additional criteria or definitions necessary for the application of the Act. The TCO in question, Instrument No. 0618155, was made in respect of certain dividers and/or aligners and/or turners, which now enjoy a duty-free rate under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Key Provisions
The key operative sections of the Customs Act 1901, as relevant to this legislation, are sections 269C, 269B, 269D, 269E, 269F, 269P, 269K, and 269S. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets the core criteria outlined in sections 269C and 269B, a TCO is made (section 269P(3)). The TCO applies to goods that are the subject of the application and specifies the rate of duty applicable to these goods. Section 269K requires the CEO to publish a notice in the Gazette inviting submissions on the TCO application, while section 269S stipulates that a TCO comes into force on the day the application is lodged.
The Act imposes several obligations on the parties involved. The CEO must determine whether a TCO application meets the core criteria, which includes verifying that no substitutable goods are produced in Australia on the day the application is lodged. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties and consider any submissions received before making a decision on the TCO application. Importers, on the other hand, must ensure their goods are correctly classified under the terms of any applicable TCO and may apply for a refund of duty on goods imported since the TCO came into force under the Customs (Refunds) Regulations 1995.
Breaching the provisions of the Customs Act 1901 can result in various consequences. For instance, misclassifying goods or incorrectly claiming tariff concessions can lead to civil penalties. The maximum penalty for making a false statement or representation in an application for a TCO is 2,500 penalty units or imprisonment for five years, or both, under section 274A. Furthermore, any person who knowingly or recklessly contravenes a TCO may face criminal charges, including fines and imprisonment. These penalties are intended to ensure compliance with the tariff concession scheme and to protect the integrity of the customs duty system.