EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703653
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.
Fea Timber Pty Ltd applied for a TCO in respect of certain chipping knives on 7 March 2007.
Instrument
TCO No 0703653 was made on 25 May 2007. It declares that those certain chipping knives 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. 0703653 is taken to have come into force on 7 March 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. 0703653, introduced under the Customs Act 1901, was enacted to facilitate tariff concessions for specific goods. This instrument addresses the need for lower customs duty rates for certain imported goods, provided that no substitutable goods are produced domestically in the ordinary course of business. This initiative aims to ensure that businesses importing these goods are not at a competitive disadvantage due to higher tariff rates. The Customs Act 1901, administered by the Parliament of Australia, allows the Chief Executive Officer of Customs to make Tariff Concession Orders if an application meets the core criteria, such as the absence of domestic production of similar goods. The policy objective is to support Australian industries by ensuring that imported goods are subject to appropriate tariff rates, thereby balancing economic interests and encouraging fair competition.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs) scheme, applies to any person or entity seeking to import goods that qualify for a lower rate of customs duty. Specifically, the Act facilitates applications for tariff concessions, which are considered by the Chief Executive Officer of Customs (CEO). This legislative framework applies to goods not specified in section 269SJ of the Act, which outlines goods ineligible for tariff concessions. The application process is governed by section 269F, where the CEO assesses whether the application meets the core criteria specified in sections 269C and 269D. For instance, the CEO determines if no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged. The geographic reach of the Act is national, as it is a Commonwealth Act, impacting all states and territories within Australia. However, the Act does not impose liabilities on any person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration of a TCO. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force. The Act extends its application through subordinate instruments, such as the Regulations, which provide further details on the refund process for importers.
Key Provisions
The Customs Act 1901, specifically under Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) which lower the customs duty rates on certain goods (section 269F). A TCO can be applied for by any person under section 269F of the Act. The CEO must then determine whether the application meets the core criteria specified in section 269C of the Act. The core criteria, as defined, require that on the day the application was lodged, no goods that can substitute for the goods in question were produced in Australia in the ordinary course of business (section 269C).
The obligations imposed by the Act on the CEO include accepting valid TCO applications and publishing notices in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed (subsection 269K(1)). Once the CEO is satisfied that the application meets the core criteria, they must make a written TCO, specifying the reduced rate of customs duty applicable to the goods (subsection 269P(3)). This process was followed in the case of Fea Timber Pty Ltd, where a TCO was issued for certain chipping knives on 25 May 2007, reducing their duty rate from 5% to 0%.
Under the Customs Act 1901, failure to comply with the provisions of a TCO can result in civil or criminal penalties. For example, importing goods subject to a TCO without adhering to the specified conditions could lead to fines or other penalties as stipulated under the Act. Additionally, section 269SJ of the Act lists goods that are ineligible for TCOs, and any applications for such goods are to be rejected. The penalties for non-compliance may include fines and, in serious cases, criminal charges. The maximum penalties for breaches of customs duties are set out in the Customs Act 1901 and can be severe, reflecting the seriousness of evading duties through fraudulent means.