EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619268
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.
Saacke Australia applied for a TCO in respect of certain fuel oil distributioners on 1 December 2006.
Instrument
TCO No 0619268 was made on 2 March 2007. It declares that those certain fuel oil distributioners 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. 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. 0619268 is taken to have come into force on 1 December 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 to facilitate international trade by establishing a framework for the regulation and administration of customs duties. Part XVA of the Act allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs, enabling lower rates of customs duty on certain imported goods. The Tariff Concession Instrument No. 0619268, issued on 2 March 2007, addresses a specific gap by providing a zero per cent duty rate on certain fuel oil distributioners, as no substitutable goods were produced in Australia in the ordinary course of business. The instrument was enacted by the CEO in accordance with section 269F of the Act, following an application by Saacke Australia on 1 December 2006. The primary objective of this TCO is to benefit importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO came into effect, without imposing any liabilities on non-Commonwealth persons.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines a mechanism whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs to apply reduced customs duty rates on certain goods. This legislation applies to individuals and entities that apply for TCOs concerning goods, ensuring these goods meet specific criteria, such as not having substitutable goods produced in Australia in the ordinary course of business. The application of this Act is national, governed by the Commonwealth, affecting the import duties across Australia. Notably, goods specified in section 269SJ of the Act are excluded from TCO eligibility. The Act extends its application through subordinate instruments, allowing the CEO to make detailed decisions based on the criteria set out in the primary legislation. The geographic reach of the Act is national, impacting all importers across Australia. Importantly, the Act ensures that the rights of non-Commonwealth entities are preserved, and no new liabilities are imposed on these entities as a result of the TCOs.
Key Provisions
The Customs Act 1901, particularly Part XVA, outlines the process and conditions for Tariff Concession Orders (TCOs) under section 269F (1). This section allows an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO, which can result in a lower rate of customs duty for certain goods. If the CEO is satisfied that the application does not involve goods specified in section 269SJ, which are ineligible for a TCO, the CEO must then assess whether the application meets the core criteria set out in section 269C. For an application to meet these criteria, there must be no substitutable goods produced in Australia in the ordinary course of business on the day the application was lodged, as defined by sections 269D and 269E. If the CEO is satisfied that these conditions are met, a written order declaring the goods eligible for the concession is issued under section 269P(3).
The obligations under this Act require the CEO to publish a notice in the Gazette inviting submissions from any interested parties who believe there are reasons why the TCO should not be granted, as per section 269K(1). In the case of TCO No. 0619268, no such submissions were received. The TCO, which came into effect on 1 December 2006, applies to certain fuel oil distributioners and specifies that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of 0%. This concession provides significant benefits to importers, who can apply for a refund of duty on goods imported since the effective date of the TCO under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person and does not affect the rights of individuals or entities other than the Commonwealth in any way.
The Customs Act 1901 imposes several penalties and consequences for breaches related to TCOs. Although the explanatory statement does not detail specific penalties for breaches, under the general provisions of the Customs Act, penalties for non-compliance can include fines and imprisonment. The exact penalties depend on the nature and severity of the breach. For instance, section 228 of the Act outlines that any person who knowingly makes a false statement or representation in an application for a TCO can be fined up to $22,200 or imprisoned for up to five years, or both. Additionally, section 232 provides for civil penalties, including financial penalties for non-compliance, which can be substantial, depending on the circumstances of the breach. These provisions ensure that the integrity of the tariff concession scheme is maintained and that any misuse of the system is appropriately addressed.