EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703991
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.
Gmcat Pty Ltd applied for a TCO in respect of certain pneumatic tool kits on 14 March 2007.
Instrument
TCO No 0703991 was made on 8 June 2007. It declares that those certain pneumatic tool kits 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. 0703991 is taken to have come into force on 14 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. 0703991 was enacted in 2007 under the Customs Act 1901, which provides a framework for the Chief Executive Officer of Customs to establish Tariff Concession Orders (TCOs) to reduce customs duties on specific goods. This legislative instrument was introduced to address the need for tariff reductions on imported goods that are not produced domestically. Gmcat Pty Ltd applied for a TCO for certain pneumatic tool kits, and after the CEO determined that no substitutable goods were being produced in Australia, a TCO was issued, effectively reducing the duty on these goods from 5% to 0%. The instrument ensures that the rights of importers are not adversely affected and allows for the potential refund of duties paid before the TCO came into effect. The instrument came into force on 14 March 2007, the date of application, and did not elicit any objections from interested parties.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework for Tariff Concession Orders (TCOs) which can be applied for and granted by the Chief Executive Officer of Customs. The primary application of this Act pertains to individuals or entities seeking a reduction in customs duty rates for particular goods by applying for a TCO. The Act applies to goods that are not specified in section 269SJ as ineligible for TCOs and meets the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of the Act is national, as it applies to all goods entering Australia, and its application is extended through subordinate instruments such as the Customs Tariff Act 1995. The Act does not disadvantage any person by affecting their rights as at the date of registration and does not impose liabilities on any person in respect of anything done or omitted to be done before the date of registration. For example, in the case of Gmcat Pty Ltd's application for a TCO on certain pneumatic tool kits, the CEO was satisfied that no substitutable goods were produced in Australia, and thus a TCO was granted, resulting in a reduction of the duty rate from 5% to 0%.
Key Provisions
The main operative sections of the Customs Act 1901, particularly under Part XVA, establish a framework for the creation of Tariff Concession Orders (TCOs) (s 269C, s 269F, s 269P(3)). Section 269F allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specific goods. If the CEO determines that the application is valid and meets the core criteria, such as the absence of substitutable goods produced in Australia (s 269C), the CEO must issue a written order (s 269P(3)). This order effectively declares that the specified goods are subject to a lower rate of customs duty as outlined in Schedule 4 of the Customs Tariff Act 1995.
Entities or individuals who apply for a TCO must ensure that their application adheres to the stipulations set forth in the Customs Act 1901. Specifically, the application must not pertain to goods explicitly excluded under section 269SJ. Furthermore, the application must demonstrate that no substitutable goods are being produced in Australia, as defined by section 269D. The CEO has a duty to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed (s 269K(1)). This ensures transparency and provides a mechanism for interested parties to voice their concerns.
The Act imposes several obligations on the CEO, including the requirement to assess the validity of TCO applications against the core criteria and to publish notices in the Gazette for public comment. Additionally, the CEO must ensure that no substitutable goods are produced in Australia at the time the application is made. For applicants, the primary obligation is to submit a well-founded application that satisfies all criteria laid out in the Act. Failure to meet these obligations can result in the rejection of the TCO application.
Breach of the conditions outlined in the Customs Act 1901 can lead to various consequences. If an entity or individual submits a fraudulent application or provides misleading information, they may face legal repercussions. The Act does not explicitly detail specific penalties for breaches, but general provisions in the Customs Act 1901 and associated regulations may apply. These could include fines or other penalties as prescribed by the relevant laws. Additionally, any misrepresentation or fraudulent activity may also be subject to criminal prosecution under broader Commonwealth laws.