EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703023
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.
Futurewood Pty Ltd applied for a TCO in respect of certain synthetic timber on 26 February 2007.
Instrument
TCO No 0703023 was made on 18 May 2007. It declares that those certain synthetic timbers 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 free.
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. 0703023 is taken to have come into force on 26 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 customs and excise duties within Australia, providing a framework for the administration and collection of these duties. In addressing the specific problem of tariff concessions for certain goods, Part XVA of the Customs Act 1901 was introduced to facilitate the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders lower the customs duty on goods not produced in Australia in the ordinary course of business, thereby promoting trade and potentially reducing costs for importers. The legislation establishes a structured process for the application and approval of TCOs, ensuring that the CEO can assess applications against specified criteria and make informed decisions. The policy objective is to support Australian importers by making certain goods more affordable, thereby encouraging their use and integration into the domestic market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework through which Tariff Concession Orders (TCO) can be issued by the Chief Executive Officer of Customs. This legislation allows for a reduced rate of customs duty on goods that are the subject of a TCO, applicable when an applicant meets certain core criteria set out in the Act. These criteria include the condition that, on the day the application is lodged, there must be no goods produced in Australia that can substitute for the goods in question. The Act applies to any person who can demonstrate that they are importing goods that meet these conditions, effectively granting them tariff concessions. The geographic reach of this Act is national, as it applies across all states and territories within Australia. However, it excludes goods specified in section 269SJ of the Act, which are not eligible for a TCO. The Act's application can also be extended or restricted through subordinate instruments, which may provide further clarification or detail on the implementation of TCOs.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0703023 pertain to the process and criteria for granting Tariff Concession Orders (TCOs) under the Customs Act 1901 (sections 269C, 269F, 269K, and 269P). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided the goods do not fall under the exclusions outlined in section 269SJ. Section 269C stipulates that a TCO application will meet the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269K mandates that the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. Section 269P(3) requires the CEO to make a written order (a TCO) if satisfied that the application meets the core criteria, specifying the applicable tariff concession.
The Act imposes several obligations on the parties involved. Firstly, applicants such as Futurewood Pty Ltd must ensure their applications comply with the statutory requirements, including providing all necessary information and meeting the core criteria specified in section 269C. The CEO has the obligation to review the applications, consider any submissions received, and decide whether to grant the TCO. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid (subsection 269K(1)). Additionally, the CEO must ensure that any TCO granted does not disadvantage any person or impose liabilities on them in respect of actions taken before the TCO's effective date.
Failure to comply with the requirements of the Customs Act 1901 or the provisions of a TCO may lead to civil or criminal consequences. For example, incorrect or misleading information in a TCO application could result in the application being rejected or the TCO being revoked. Civil penalties may include fines or financial compensation, depending on the nature and severity of the breach. Criminal penalties could be imposed if the breach is deliberate or involves significant dishonesty, potentially leading to imprisonment. The specific maximum penalties are not detailed in the explanatory statement, but they would be determined under the relevant sections of the Customs Act 1901 and associated regulations.