EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702647
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.
APC Socotherm Pty Ltd applied for a TCO in respect of certain grit blasting machines on 28 February 2007.
Instrument
TCO No 0702647 was made on 25 May 2007. It declares that those certain grit blasting machines 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. 0702647 is taken to have come into force on 28 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 Customs Act 1901 was enacted to regulate the importation and exportation of goods into and out of Australia, including the imposition of customs duties. The Act provides a mechanism for tariff concession orders (TCO) to be made under certain circumstances. Specifically, the Tariff Concession Instrument No. 0702647, which was made on 25 May 2007, addresses the issue of applying lower rates of customs duty on goods that are not substitutable by goods produced in Australia. The instrument was introduced to provide tariff concessions to APC Socotherm Pty Ltd for certain grit blasting machines, which will now be subject to a 0% duty rate, down from the general rate of 5%. This was enacted by the Chief Executive Officer of Customs, who determined that the application met the core criteria set out in the Customs Act 1901. The policy objective is to facilitate the import of goods that cannot be substituted by Australian-made products, thereby encouraging trade and economic growth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the establishment of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs, applicable to goods that are subject to a TCO. This instrument pertains to individuals or entities that apply for tariff concessions on specific goods, ensuring that these goods do not have substitutable alternatives produced in Australia. The scope of the Act extends to all goods that can be the subject of a TCO, provided they are not specified in section 269SJ of the Act, which lists goods that cannot be subject to such concessions. The TCO process is designed to apply nationally across Australia, as it is a Commonwealth Act. Notably, the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration, and does not impose any liabilities on any person. The application process involves publishing a notice in the Gazette, inviting submissions from any person who may have reasons why the TCO should not be made, although in the case of TCO No. 0702647, no such submissions were received. The TCO comes into force on the day the application is lodged, thereby providing immediate benefits to importers who can apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0702647 (TCO No. 0702647) under the Customs Act 1901 (section 269F) is a specific order made by the Chief Executive Officer of Customs (CEO) which applies a reduced rate of customs duty to certain grit blasting machines. According to section 269P(3) of the Act, this order was made following an application by APC Socotherm Pty Ltd on 28 February 2007, which declared that these particular grit blasting machines are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of 0% instead of the general 5%. This TCO came into effect on the date the application was lodged, as stipulated by subsection 269S(1) of the Act.
The Act imposes specific obligations on both the CEO and the applicant when a Tariff Concession Order (TCO) is sought. The CEO must assess whether the application meets the core criteria specified in section 269C, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to submit their reasons (subsection 269K(1)). In this instance, no submissions were received. Additionally, the TCO ensures that it does not affect the rights of any person other than the Commonwealth in a manner that would disadvantage them or impose liabilities in respect of actions taken before the TCO's registration.
Failure to comply with the obligations set out in the Customs Act 1901 or the Tariff Concession Instrument No. 0702647 could result in various legal consequences. While the explanatory statement does not specify detailed penalties for breaches, general penalties for breaches of the Customs Act can include fines and imprisonment. The maximum penalties for customs-related offences can be substantial, depending on the severity and nature of the breach. For instance, under section 250 of the Customs Act, a person found guilty of an offence may be liable to a penalty of up to 10,000 penalty units for individuals and significantly higher for bodies corporate. These penalties underscore the importance of adhering to the statutory requirements and obligations outlined in the Act and the TCO.