EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705865
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.
ING Real Estate Development Australia Pty Ltd applied for a TCO in respect of certain observation wheel lighting assemblies on 23 April 2007.
Instrument
TCO No 0705865 was made on 29 June 2007. It declares that those certain observation wheel lighting assemblies 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. 0705865 is taken to have come into force on 23 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 was amended to incorporate the Tariff Concession Instrument No. 0705865 in 2007. This instrument was introduced to provide a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on certain goods, thereby addressing the need for a streamlined process to reduce customs duties on specific items not produced in Australia. The instrument facilitates the application process for tariff concessions, ensuring that such applications can be effectively reviewed and approved if they meet the stipulated core criteria, particularly focusing on the non-availability of substitutable goods produced domestically. The objective of this legislative action, as per the explanatory statement, is to support businesses by lowering the cost of importing certain goods, thus potentially boosting trade and economic activity. The instrument was enacted by the relevant executive authority under the provisions of the Customs Act 1901, without requiring legislative approval from the Parliament.
Scope and Application
The Tariff Concession Instrument No. 0705865, under the Customs Act 1901, applies to individuals or entities seeking to import specific goods into Australia for which a lower customs duty rate is requested. This instrument specifically relates to certain observation wheel lighting assemblies for which ING Real Estate Development Australia Pty Ltd applied, leading to a Tariff Concession Order (TCO) by the Chief Executive Officer of Customs (CEO). The TCO applies when the CEO determines that the imported goods are not substitutable by goods produced in Australia and that no such substitutable goods were produced in the ordinary course of business on the date the application was lodged. The application of this TCO reduces the duty rate from the general rate of 5% to 0%. The scope of the Act extends across the Commonwealth, with the TCO being effective from the date the application was lodged, 23 April 2007. No exclusions or exemptions are mentioned in this particular TCO, and it does not affect the rights or impose any liabilities on persons other than the Commonwealth in relation to actions taken before the TCO was registered.
Key Provisions
The Customs Act 1901, as amended, provides for the creation of Tariff Concession Orders (TCOs) that apply reduced customs duty rates to certain goods. Section 269F (1) allows an individual to apply for a TCO for specific goods, provided the goods are not prohibited under section 269SJ. The Chief Executive Officer (CEO) of Customs must then assess the application to ensure it meets the core criteria, primarily that no substitutable goods are being produced in Australia at the time of the application (section 269C). The CEO must also determine that the goods in question are not already being produced domestically in the ordinary course of business (section 269B and 269E). If these criteria are met, the CEO is required to issue a written TCO, which specifies the lower duty rate applicable to the goods (section 269P(3)).
The obligations imposed by the Act on the parties involved are significant. The applicant must ensure that their TCO application is thorough and meets all criteria set out in the Act, particularly the absence of substitutable goods being produced in Australia. The CEO, on receiving the application, has a statutory duty to assess the application against these criteria and make a decision within the legislative timeframes. The CEO must also ensure that the application is published in the Gazette, inviting any interested parties to lodge submissions (subsection 269K(1)). This transparency requirement ensures that the process is open and that all relevant concerns are considered before a TCO is issued.
Should a person or entity fail to comply with the requirements of the Customs Act 1901 or the terms of a TCO, they may face various legal consequences. For example, if a TCO is issued fraudulently or without meeting the necessary criteria, the CEO may revoke the TCO, and the party responsible could face criminal charges. Under section 274 of the Act, such offences could result in fines up to $22,200 or imprisonment for up to two years, or both, if prosecuted and convicted in a court. Additionally, civil penalties may apply for non-compliance, which could include financial penalties or orders for restitution.
The Act ensures that the rights of individuals and entities are protected. For instance, the rights of any person other than the Commonwealth are not adversely affected by the issuance of a TCO (subsection 269S(1)). Importers of the affected goods are entitled to apply for a refund of duties paid on those goods since the TCO came into effect (paragraph 126(1)(r) of the Regulations). This provision ensures that any financial implications are mitigated for those who have already imported the goods before the TCO was issued. The Act is designed to balance the needs of industry and consumers with the fiscal requirements of the government, ensuring that the concessions granted do not lead to broader economic distortions or unfair competitive advantages.