EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704735
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.
Futuris Automotive Interiors applied for a TCO in respect of certain window regulators on 30 March 2007.
Instrument
TCO No 0704735 was made on 15 June 2007. It declares that those certain window regulators 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. 0704735 is taken to have come into force on 30 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 Commonwealth Parliament, establishes a framework for the administration of customs and excise duties in Australia. One of its key components is the scheme for Tariff Concession Orders (TCOs), which allows for the reduction of customs duty rates on specified goods. The primary problem this scheme addresses is the potential economic disadvantage faced by importers of goods that are not produced domestically or for which no suitable domestic substitutes exist. The 2007 Explanatory Statement outlines the process for the consideration and implementation of TCOs, ensuring that such concessions are granted fairly and in accordance with specific criteria. The Tariff Concession Instrument No. 0704735, made under this Act, exemplifies the application of the TCO scheme by providing a concession on customs duties for certain window regulators, reducing the duty from 5% to 0% based on the absence of substitutable goods produced in Australia. This instrument came into force on the date of the application, 30 March 2007, and benefits importers by allowing them to apply for refunds of duty paid on these goods since that date, without imposing any new liabilities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to any person or entity seeking to import goods into Australia and benefits those who can demonstrate that no substitutable goods are produced in Australia, thereby qualifying for a concession on customs duty. The Act's jurisdictional reach is national, as it operates under the authority of the Commonwealth of Australia. Exclusions are clearly defined, with certain goods specified in section 269SJ of the Act ineligible for TCOs. The application of the Act can be extended or refined through subordinate instruments, which provide additional details and procedural requirements for TCO applications. The TCOs themselves do not retroactively disadvantage any person or impose liabilities for actions taken prior to their registration, though they do provide benefits to importers by potentially allowing them to apply for refunds of duty paid on eligible goods since the effective date of the TCO.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0704735 under the Customs Act 1901 (the Act) involve the creation and implementation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (the CEO) (section 269F). The instrument, which was made on 15 June 2007, pertains to certain window regulators and specifies that these goods are subject to a 0% duty rate as outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995. This concession applies as of the date the application for the TCO was lodged, 30 March 2007 (section 269S(1)).
The Act imposes specific obligations on the CEO when processing a TCO application. Firstly, the CEO must determine whether the application meets the core criteria set out in section 269C, which involves verifying that no substitutable goods were produced in Australia on the day the application was lodged (section 269D). If the CEO is satisfied that these criteria are met, they must make a written TCO order (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may oppose the making of the TCO (section 269K(1)). This was done for TCO No. 0704735, but no submissions were received.
Under the Act, there are civil and criminal consequences for breaches related to TCOs. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs regulations generally can result in civil penalties, such as fines, and in more serious cases, criminal penalties including imprisonment. The precise penalties depend on the nature and severity of the breach as outlined in the broader customs legislation.
Importers benefit from this TCO as they can apply for a refund of duty on goods imported since the effective date of the TCO (section 126(1)(r) of the Regulations). The TCO does not impose any new liabilities on any person, and it does not affect the rights of any person, except to the extent that those rights are beneficially affected by the tariff concession.
In summary, the Tariff Concession Instrument No. 0704735 provides for a 0% duty rate on certain window regulators, effective from 30 March 2007. The CEO must ensure applications meet the core criteria and publish notices inviting submissions, although no submissions were received for this TCO. Importers stand to benefit from this concession, with no new liabilities imposed under the Act.