EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0701768
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.
Gmc Powertools Australia applied for a TCO in respect of certain cleaning guns on 5 February 2007.
Instrument
TCO No 0701768 was made on 30 April 2007. It declares that those certain cleaning guns 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. 0701768 is taken to have come into force on 5 February 2007.
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 Tariff Concession Instrument No. 0701768 was enacted in 2007 under the Customs Act 1901 to provide a lower rate of customs duty for specific goods, in this case certain cleaning guns, which are subject to a Tariff Concession Order (TCO). This instrument was introduced to address the issue of ensuring that Australian businesses have access to competitively priced imported goods that are not produced domestically, thereby fostering a more competitive market. The instrument was developed by the Chief Executive Officer of Customs following an application by Gmc Powertools Australia, and it became effective from the date the application was lodged, 5 February 2007. The policy objective here is to provide tariff relief where no substitutable goods are produced in Australia, ensuring that Australian consumers and businesses benefit from lower duty rates on imported goods that do not have local alternatives. The TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before its registration.
Scope and Application
The Tariff Concession Instrument No. 0701768 under the Customs Act 1901 applies to entities that seek tariff concessions for specific goods imported into Australia. The Act enables the Chief Executive Officer of Customs to grant a Tariff Concession Order (TCO) if an application meets the core criteria, which include the absence of substitutable goods produced in Australia at the time of application. This instrument was applied to certain cleaning guns, for which the general rate of duty is 5%, but under the TCO, the rate is reduced to 0%. The application of the Act is national, given its roots in the Commonwealth Customs Act, and it does not specify any exclusions or exemptions aside from those mentioned in section 269SJ of the Act, which details goods that cannot be subject to a TCO. The commencement of the TCO is retroactive to the date of application, 5 February 2007, thereby protecting the rights of importers who may apply for a refund of duty on goods imported from that date.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Order No. 0701768, establish a framework under which certain cleaning guns will now attract a concessional rate of customs duty, as per item 50 of Schedule 4 to the Customs Tariff Act 1995. The order declares that these particular cleaning guns are subject to a zero rate of duty, as opposed to the general rate of duty of 5% (sections 269C and 269P(3)). The concessional rate is applicable from the date the application for the Tariff Concession Order (TCO) was lodged, which in this case was 5 February 2007 (subsection 269S(1)).
The Customs Act 1901 imposes certain obligations on the parties involved in the TCO process. Firstly, a person who wishes to apply for a TCO must do so by lodging an application with the Chief Executive Officer (CEO) of Customs. The CEO must then determine if the application is valid and meets the core criteria, which include ensuring that no substitutable goods are being produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to submit any reasons why the TCO should not be made (subsection 269K(1)). In this case, the CEO did not receive any submissions in response to the published notice.
Breaching the provisions of the Customs Act 1901 may result in various civil or criminal consequences, depending on the nature and severity of the breach. For example, knowingly importing goods that do not comply with the Act or the Customs Tariff Act 1995 may result in a fine or imprisonment, or both, depending on the value of the goods involved. In the case of Tariff Concession Order No. 0701768, the primary consequence of non-compliance would be the failure to benefit from the reduced duty rate for the specified cleaning guns, which could result in increased costs for importers. However, it is important to note that this particular TCO does not impose any new liabilities on any person.