EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619998
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.
Road Gear Australasia Pty Ltd applied for a TCO in respect of certain car mat sets on 20 December 2006.
Instrument
TCO No 0619998 was made on 9 March 2007. It declares that those certain car mat sets 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 10%. 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. 0619998 is taken to have come into force on 20 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, enacted by the Australian Parliament, establishes a framework through which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) to apply lower rates of customs duty on specific goods. The Act's purpose is to facilitate the import of certain goods that are not produced domestically, thus promoting competition and providing cost benefits to consumers. This legislative mechanism was introduced to address the gap where certain imported goods could benefit from tariff reductions, enhancing economic efficiency and consumer welfare. The explanatory statement for Tariff Concession Instrument No. 0619998 outlines the process and conditions under which such concessions are granted, ensuring that the application adheres to the core criteria specified in the Act, particularly focusing on the absence of substitutable goods produced in Australia. The policy objective is to provide tariff relief to importers of specified goods, thereby improving market access and supporting the importation of competitive products.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply lower rates of customs duty to specified goods. This Act applies to entities and individuals who seek to import goods and potentially benefit from reduced duty rates through the application process outlined in the Act. The TCO mechanism is available for goods that are not specified in section 269SJ of the Act, which excludes certain items from tariff concessions. The scope of the Act is national, as it operates under the Commonwealth jurisdiction, impacting all states and territories within Australia. The application process includes a core criteria assessment by the CEO, requiring that no substitutable goods are produced in Australia at the time of application, as defined in sections 269C, 269D, and 269E of the Act. The application for TCO No. 0619998 by Road Gear Australasia Pty Ltd for car mat sets exemplifies this process, leading to a TCO that reduces the duty rate from 10% to 0% for the specified goods. The Act ensures that the rights of third parties are protected and that no new liabilities are imposed on individuals or entities due to the TCO, as outlined in subsection 269S(1) of the Act.
Key Provisions
Section 269F of the Customs Act 1901 allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria set out in section 269C, they must make a TCO, declaring that the goods in question are subject to a lower rate of customs duty as specified in Schedule 4 to the Customs Tariff Act 1995. For instance, TCO No. 0619998 applies a 0% duty rate to certain car mat sets, down from the general rate of 10%.
The CEO has certain obligations under the Act when considering a TCO application. Firstly, the CEO must ensure that the goods specified in the application are not listed in section 269SJ, which outlines goods that cannot be subject to a TCO. Secondly, the CEO must assess whether the application meets the core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Furthermore, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the TCO should not be made (subsection 269K(1)). The TCO is effective from the day the application was lodged (subsection 269S(1)).
Any breach of the obligations and requirements set out in the Customs Act 1901 can result in various consequences. The Act does not specify particular offences or penalties for failing to comply with the TCO provisions, but general legal principles and other relevant legislation could apply. For instance, if a person knowingly imports goods that should have been subject to a higher duty rate due to a TCO, they could face civil or criminal penalties under other sections of the Customs Act or related legislation.
The TCO itself provides certain protections and benefits. For example, it ensures that the rights of persons other than the Commonwealth are not adversely affected by the concessions. Specifically, under paragraph 126(1)(r) of the Regulations, importers can apply for a refund of duty paid on goods imported since the effective date of the TCO. This provision aims to ensure that the concessions do not impose new liabilities on any person but instead provide a benefit to eligible importers.