EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618830
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.
Diskwood Pty Ltd applied for a TCO in respect of certain grinders and polishers on 9 November 2006.
Instrument
TCO No 0618830 was made on 14 February 2007. It declares that those certain grinders and polishers 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 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. One submission objecting to the TCO application was received from King Concepts Australia.
Further, subsection 269M(1) of the Act provides that if the CEO considers that, in relation to a particular TCO application, a person may have reason to oppose the making of the TCO to which the application relates, he or she may, by notice in writing, invite the person to lodge a written submission with the CEO. The CEO invited King Concepts Australia to lodge a written submission.
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. 0618830 is taken to have come into force on 9 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 and establishes the framework for the administration of customs duties and regulations. The Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can provide lower rates of customs duty on specified goods. This process was introduced to address the gap in ensuring that Australian businesses have access to competitively priced goods by allowing the importation of goods that are not produced domestically, provided they do not substitute for locally manufactured items. TCO No. 0618830, made in 2007, is an example of this mechanism in action, granting a zero percent duty rate on certain grinders and polishers, thereby reducing the financial burden on importers and potentially lowering consumer prices. The policy objective behind such concessions is to foster economic efficiency and consumer benefit by facilitating the importation of goods that are not produced within Australia, ensuring that Australian businesses and consumers have access to a broader range of competitively priced products.
Scope and Application
The Tariff Concession Instrument No. 0618830 under the Customs Act 1901 applies to specific goods for which a Tariff Concession Order (TCO) has been requested and approved by the Chief Executive Officer of Customs. This Act enables the application for tariff concessions on certain goods, providing a lower rate of customs duty if the application meets the core criteria. Specifically, the instrument pertains to grinders and polishers that Diskwood Pty Ltd applied for on 9 November 2006, which the CEO deemed eligible for a concession following a determination that no substitutable goods were produced in Australia at the time of the application. The instrument came into force on the same day the application was lodged, effective from 9 November 2006. The scope of the legislation is limited to the goods specified in the TCO and does not extend to other goods not covered by this particular order. Additionally, the Act ensures that the rights of importers are protected and beneficially affected, allowing them to apply for refunds of duty paid on the goods since the effective date of the concession. The Act operates nationally within Australia, governed by the Commonwealth, and does not impose any liabilities on persons other than the Commonwealth.
Key Provisions
The key operative sections of this legislation include sections 269C, 269F, and 269P of the Customs Act 1901. Section 269F permits an application to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods, provided the goods do not fall under the categories specified in section 269SJ. Section 269C mandates that a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. If the CEO is satisfied that the application meets these criteria, section 269P requires the CEO to make a written order, declaring that the goods are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties involved. Firstly, the CEO must ensure that any application for a TCO is valid and does not pertain to goods that are excluded under section 269SJ. The CEO must also assess whether the application meets the core criteria, specifically whether substitutable goods were produced in Australia in the ordinary course of business on the application date. Upon determining that the application meets the criteria, the CEO is required to make a TCO. Additionally, the CEO must publish a notice in the Gazette inviting any objections to the application and consider any submissions received.
Failure to comply with the requirements of the Customs Act 1901 may result in various consequences. While the explanatory statement does not detail specific offences or penalties, it is reasonable to infer that any failure to adhere to the statutory obligations could lead to civil or administrative penalties. The CEO's decision to issue or withhold a TCO can be subject to judicial review if the decision is deemed to be unreasonable or if procedural fairness was not observed. Additionally, if a TCO is issued in error or based on incorrect information, the CEO may be required to rectify the mistake, potentially resulting in financial implications for the affected parties.
The commencement of a TCO is outlined in subsection 269S(1), which stipulates that a TCO is taken to have come into force on the date the application was lodged. This means that the benefits of the TCO, such as reduced customs duty rates, apply retroactively from the date of application. Importantly, the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration in a manner that would disadvantage that person or impose liabilities for actions taken prior to the registration date. Importers of the goods affected by the TCO may apply for a refund of duty paid on goods imported since the TCO is deemed to have come into force, as per paragraph 126(1)(r) of the Regulations.