EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706105
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.
All Rubber Pty Ltd applied for a TCO in respect of certain natural and/or synthetic unvulcanised compounded rubber on 26 April 2007.
Instrument
TCO No 0706105 was made on 06 July 2007. It declares that those certain natural and/or synthetic unvulcanised compounded rubbers 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. 0706105 is taken to have come into force on 26 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, includes provisions under Part XVA for the establishment of Tariff Concession Orders (TCOs) to provide lower rates of customs duty on specific goods. The Act was introduced to address the need for a structured scheme to facilitate tariff concessions for imported goods that are not produced domestically, ensuring that Australian consumers benefit from lower prices without adversely impacting domestic producers. The explanatory statement for Tariff Concession Instrument No. 0706105, made on 6 July 2007, indicates that the instrument was introduced following an application by All Rubber Pty Ltd for a TCO on certain natural and synthetic unvulcanised compounded rubbers. The policy objective was to allow these goods to be imported at a free rate of duty, as no substitutable goods were produced in Australia, thereby encouraging competition and benefiting importers who could apply for duty refunds on goods imported since the TCO's effective date. The Tariff Concession Instrument ensures that the rights of existing parties are not disadvantaged and does not impose any new liabilities.
Scope and Application
The Customs Act 1901, through its Part XVA, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the rate of customs duty on specified goods. Any person may apply to the CEO for a TCO on goods, provided the goods are not those specified in section 269SJ of the Act, which includes goods that are prohibited or controlled. For an application to meet the core criteria under section 269C of the Act, it must be established that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The Act defines 'substitutable goods' as those produced in Australia that serve a use corresponding to the goods for which the TCO is being sought. If the CEO is satisfied that the application meets these criteria, they must issue a TCO, effectively applying a prescribed tariff rate from Schedule 4 of the Customs Tariff Act 1995 to the specified goods. This legislative framework facilitates tariff concessions aimed at ensuring that Australian consumers and businesses have access to competitively priced imported goods, while also protecting domestic industries from unfair competition.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0706105 under the Customs Act 1901 (sections 269C, 269B, 269D, 269E, 269P(3), 269K(1) and 269S(1)) establish the criteria for making a Tariff Concession Order (TCO) and the process for its implementation. Specifically, section 269C requires that a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B defines key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, they must make a written order declaring the goods to which the concession applies (section 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (section 269K(1)). A TCO comes into force on the day the application for the TCO was lodged (section 269S(1)).
The obligations imposed by the Act on the parties or entities it governs include the requirement for applicants to ensure their applications meet the core criteria specified in the Act. This involves demonstrating that no substitutable goods were produced in Australia in the ordinary course of business on the day the application is lodged. The CEO is obligated to review the application, make a decision based on the core criteria, and publish a notice in the Gazette inviting submissions. If no submissions are received, the CEO must proceed to make the TCO. Importers of the goods subject to the TCO have the right to apply for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations.
Breaching the provisions of the Customs Act 1901 can lead to both civil and criminal consequences. For instance, providing false information in an application for a TCO could result in civil penalties, including fines and the imposition of additional duties. In more serious cases, such as fraud or deliberate misrepresentation, criminal charges may be pursued, which could lead to imprisonment. The maximum penalties for such offences are not specified in the explanatory statement but generally align with the penalties prescribed under the Customs Act and associated regulations, which can include significant fines and imprisonment terms depending on the severity of the breach.