EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618623
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.
Smokeshield applied for a TCO in respect of certain strobe lights on 17 November 2006.
Instrument
TCO No 0618623 was made on 02 February 2007. It declares that those certain strobe lights 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. 0618623 is taken to have come into force on 17 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, enacted by the Australian Parliament, establishes a framework within which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs). These orders provide for lower rates of customs duty on certain goods. The problem this Act was designed to address is the potential for unfair economic disadvantages faced by Australian businesses when competing against imported goods for which higher tariffs apply. This can be particularly pertinent when considering the competitiveness of locally produced goods against imported alternatives. The policy objective of the Act is to ensure that Australian businesses can operate on a more level playing field by reducing the tariff burden on specific goods through TCOs, thereby supporting local industries and economic growth.
Scope and Application
The Tariff Concession Instrument No. 0618623, made under the Customs Act 1901, applies to specific goods, in this case, certain strobe lights, and the process is initiated by an application to the Chief Executive Officer of Customs (CEO) by a person or entity, such as Smokeshield. The Act allows for the application of a lower rate of customs duty on goods specified in a Tariff Concession Order (TCO), provided the core criteria are met, including the absence of substitutable goods produced in Australia. The CEO’s decision to grant a TCO is contingent on satisfying these criteria, as outlined in sections 269C and 269SJ of the Act. Once a TCO is issued, the specified goods attract a free rate of duty instead of the general rate, which in this instance is reduced from 5% to free. The application of this legislation is national in scope and impacts importers of the specified goods by potentially allowing them to claim refunds for duties paid on those goods prior to the TCO's effective date. Notably, the TCO does not affect the rights of any person as at the date of registration or impose any liabilities on any person in respect of actions taken prior to the registration.
Key Provisions
The Customs Act 1901 establishes a framework through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) (sections 269C, 269F, and 269P(3)). A TCO application can be submitted by any person seeking a lower rate of customs duty for specific goods. If the CEO determines that the application pertains to goods not listed in section 269SJ, they must assess whether the application meets the core criteria outlined in section 269C. These criteria require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively.
Upon satisfying these core criteria, the CEO is mandated to issue a written order in the form of a TCO, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (Tariff) (section 269P(3)). For example, TCO No. 0618623 pertains to certain strobe lights, which are subject to item 50 of Schedule 4, granting them a duty-free rate instead of the general 5% duty. This TCO came into effect on the day the application was lodged, 17 November 2006, as per subsection 269S(1). The CEO is also required to publish a notice in the Gazette inviting any objections to the TCO, although no submissions were received in this instance (subsection 269K(1)).
The Act imposes several obligations on the parties involved. The applicant must ensure that the TCO application is valid and meets the core criteria. The CEO must rigorously assess the application against these criteria and, if satisfied, issue a TCO. Additionally, the CEO must publish a notice in the Gazette to allow for any objections. The Act ensures that the TCO does not retroactively disadvantage any person or impose new liabilities (subsection 269S(1)). Instead, it benefits importers by allowing them to apply for duty refunds on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations).
Failure to comply with the requirements of the Customs Act 1901 or misuse of the TCO process could result in various legal consequences. While the explanatory statement does not explicitly detail offences or penalties, breaches of customs laws generally attract significant penalties. For instance, section 141 of the Customs Act 1901 provides for both civil and criminal penalties, including substantial fines and imprisonment, depending on the severity of the offence. Therefore, any party found to be in violation of the Act's provisions could face these severe penalties.