EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705207
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.
Imtrade Australia Pty Ltd applied for a TCO in respect of certain insecticides on 10 April 2007.
Instrument
TCO No 0705207 was made on 22 June 2007. It declares that those certain insecticides 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. 0705207 is taken to have come into force on 10 April 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 through which Tariff Concession Orders (TCOs) can be issued, allowing for reduced customs duties on certain goods. The Act was introduced to provide a mechanism for addressing the economic implications of importing certain goods by reducing their customs duty rates, thereby supporting trade and industry where domestic production is not feasible or competitive. The Tariff Concession Instrument No. 0705207 was enacted to provide a tariff concession for specific insecticides, addressing the gap where such goods could benefit from lower customs duty rates, facilitating easier access to these essential products and potentially lowering costs for businesses and consumers. The instrument was made by the Chief Executive Officer of Customs after it was determined that no substitutable goods were produced in Australia, aligning with the core criteria set out in the Customs Act 1901.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs. This legislation allows for a reduced rate of customs duty on goods specified in a TCO, provided that certain conditions are met. The process begins when a person applies to the CEO for a TCO in respect of specific goods, and the CEO must assess whether the application aligns with the core criteria established in the Act, particularly ensuring that no substitutable goods are produced in Australia in the ordinary course of business. Once the CEO is satisfied that the application meets these criteria, a written order, or TCO, is issued, specifying the lower duty rate for the goods in question. The instrument does not impose any disadvantages or liabilities on individuals or entities other than the Commonwealth and may provide benefits to importers who can apply for refunds on duties paid on goods imported after the TCO came into effect. The Act's reach is comprehensive, applying to any goods subject to a valid TCO, and it extends its application through subordinate instruments such as regulations that further define terms and processes.
Key Provisions
The key provisions of the Customs Act 1901, particularly as they pertain to Tariff Concession Orders (TCOs), are set out in sections 269C, 269B, 269D, 269E, 269F, 269P, 269S, 269SJ, and 269K. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO for certain goods. If the CEO is satisfied that the application meets the core criteria, notably that no substitutable goods are produced in Australia (section 269C), they must make a written order (section 269P(3)). The order specifies a lower rate of customs duty for these goods, as outlined in Schedule 4 to the Customs Tariff Act 1995. The CEO must also invite submissions from interested parties if they accept a TCO application as valid (section 269K(1)). Importantly, the TCO takes effect from the date the application was lodged (section 269S(1)).
Under the Act, the CEO has several obligations when dealing with TCO applications. Firstly, the CEO must determine whether the application meets the core criteria as set out in section 269C, which involves assessing whether substitutable goods are produced in Australia. If the application is not in respect of goods specified in section 269SJ, which are ineligible for a TCO, the CEO must make a written order if the core criteria are met. The CEO is also required to publish a notice in the Gazette inviting submissions from interested parties (section 269K(1)). Should no submissions be received, the CEO proceeds to make the TCO. Furthermore, the TCO does not affect any rights or impose any liabilities on persons (other than the Commonwealth) in respect of actions taken before the TCO's registration date.
Breaches of the requirements set out in the Customs Act 1901 can result in both civil and criminal consequences. For example, failure to comply with the conditions of a TCO could lead to financial penalties, with the maximum penalty varying depending on the nature and severity of the breach. Specific offences and penalties are not detailed in the provided text but generally, the Act provides for significant fines and potential imprisonment for serious breaches. Importers and other parties must ensure they adhere to the conditions of any TCO to avoid these consequences. The Act also allows for the recovery of duty paid on goods imported before the TCO took effect, providing a mechanism for rectifying any overpayments due to misunderstandings about the TCO's scope or application.