EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703793
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.
Fatura Pty Ltd applied for a TCO in respect of certain refrigerators on 12 March 2007.
Instrument
TCO No 0703793 was made on 7 August 2007. It declares that those certain refrigerators 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. 0703793 is taken to have come into force on 12 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 Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the regulation of customs and excise within Australia. This legislation addresses the need for streamlined and efficient customs processes to facilitate international trade while ensuring compliance with Australian laws and regulations. Specifically, Part XVA of the Act enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which lower the customs duty on certain imported goods, provided they meet specific criteria. Fatura Pty Ltd’s application for a TCO for certain refrigerators was approved, resulting in Tariff Concession Instrument No. 0703793, which was made on 7 August 2007. The policy objective behind this instrument is to support Australian businesses by reducing the cost of imported goods, thereby enhancing their competitiveness and encouraging economic growth without disadvantaging other stakeholders. The instrument was published in the Gazette, inviting public submissions, none of which were received, and it came into effect on 12 March 2007, the date the application was lodged.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. These orders apply to specific goods for which an application has been submitted, and they effectively reduce the customs duty on those goods. The application process requires that the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The CEO evaluates applications based on criteria set out in sections 269C, 269D, and 269E, ensuring that no substitutable goods are produced in Australia and that the goods are produced in the ordinary course of business. The CEO is also mandated to publish a notice in the Gazette inviting submissions from interested parties, although no submissions were received in the case of Fatura Pty Ltd’s application for tariff concessions on certain refrigerators. Once a TCO is made, it applies retroactively to the date the application was lodged, benefiting importers by potentially entitling them to a refund of duties paid on the goods since that date, without imposing any new liabilities on them.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0703793 under the Customs Act 1901 (section 269F) involve the application process for a Tariff Concession Order (TCO) and the conditions for the Chief Executive Officer (CEO) of Customs to grant such an order. When a person applies for a TCO, the CEO must first ensure that the goods in question are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, which is defined in section 269C of the Act, they must make a written order declaring the goods to which the TCO applies. The TCO in this case, No. 0703793, declares that certain refrigerators are subject to a 0% duty rate instead of the general rate of 5%, due to the CEO's satisfaction that no substitutable goods were produced in Australia on the day the application was lodged.
The obligations imposed on parties by this Act include the requirement for the CEO to ensure that the goods subject to a TCO application do not fall under the restricted list in section 269SJ and to confirm that no substitutable goods were produced in Australia on the application date. The CEO must also publish a notice in the Gazette inviting any person who believes the TCO should not be made to lodge a submission, as per section 269K(1). In this instance, the CEO did not receive any submissions in response to the notice. Additionally, the Act mandates that the TCO should come into force on the date the application was lodged, and the rights of importers will be beneficially affected by the concession.
In terms of the consequences for breach, the Act does not explicitly state offences, penalties, or civil/criminal consequences for failing to comply with the TCO provisions. However, it is important to note that the TCO does not affect the rights of a person, other than the Commonwealth, in a way that would disadvantage them or impose liabilities for actions taken before the date of registration. The rights of importers will be beneficially affected, and they may apply for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations. The Act ensures that no new liabilities are imposed on any person by the TCO.