EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706220
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.
Carba-Tec Pty Ltd applied for a TCO in respect of certain bandsaws on 30 April 2007.
Instrument
TCO No 0706220 was made on 13 July 2007. It declares that those certain bandsaws 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. 0706220 is taken to have come into force on 30 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 enacted by the Australian Parliament to facilitate the regulation of customs and border control, among other things. It was introduced to address the need for a structured and systematic approach to the management of customs duties and the regulation of goods entering and exiting the country. Tariff Concession Instrument No. 0706220 was introduced as part of this legislative framework, enabling the Chief Executive Officer of Customs to make Tariff Concession Orders that lower the rate of customs duty on certain goods, provided specific criteria are met. This particular instrument was enacted to address the application by Carba-Tec Pty Ltd for a tariff concession on certain bandsaws, aiming to ensure that no substitutable goods were produced in Australia at the time of the application. The policy objective of this instrument is to support Australian businesses by reducing customs duties on specific goods, thereby making them more competitive both domestically and internationally.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework whereby the Chief Executive Officer (CEO) of Customs may issue Tariff Concession Orders (TCO) that apply a reduced rate of customs duty on certain goods. These orders are applicable to goods that are subject to the application and are not specified in section 269SJ of the Act as ineligible for tariff concessions. The Act stipulates that for a TCO to be issued, no substitutable goods can be produced in Australia in the ordinary course of business on the day the application is lodged. A TCO is made if the CEO is satisfied that the application meets the core criteria, which is contingent upon the goods not being replaceable by Australian-produced alternatives. The application process requires the CEO to publish a notice in the Gazette inviting any interested parties to lodge submissions opposing the TCO; however, no submissions were received in response to the notice for TCO No. 0706220. The TCO applies from the date the application was lodged and does not affect any pre-existing rights or impose new liabilities on any person, except for potentially beneficial impacts on importers who may apply for a refund of duties paid on goods imported since the TCO's effective date. The scope of the TCO is further refined through subordinate instruments under the Customs Tariff Act 1995.
Key Provisions
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (section 269F). If an application for a TCO is made in respect of goods, the CEO must determine if the application meets the core criteria (section 269C). These criteria are satisfied if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C, 269D, 269E). If these criteria are met, the CEO is required to make a TCO that applies a lower rate of customs duty to the goods in question (section 269P(3)). For instance, in the case of TCO No. 0706220, the CEO was satisfied that no substitutable bandsaws were produced in Australia, thus meeting the core criteria, and a TCO was made effective from 30 April 2007 (section 269S(1)).
Entities applying for a TCO must ensure their application details the goods in question and the reasons why a lower rate of customs duty should apply (section 269F). The CEO has a duty to assess whether the application meets the core criteria and, if so, to make the TCO (section 269C, 269P(3)). The CEO is also required to publish a notice in the Gazette inviting any interested parties to submit objections to the making of the TCO (subsection 269K(1)). This was done for TCO No. 0706220, but no submissions were received (subsection 269K(1)). The TCO will apply from the date the application was lodged, without affecting any pre-existing rights or imposing new liabilities (subsection 269S(1)).
In the event of a breach of the provisions of the Customs Act 1901 or the associated regulations, various penalties may apply. Offences under the Customs Act can result in both civil and criminal penalties, including fines and imprisonment. For example, knowingly making a false statement in an application for a TCO could result in a fine of up to $22,200 or imprisonment for up to two years, or both (subsection 285(1)). Additionally, importers who do not comply with the refund provisions may face penalties under the Customs (Prohibited Imports) Regulations 1998. Failure to apply for a refund of duty as permitted under the TCO may result in fines or other administrative penalties.
The obligations of the CEO in processing a TCO application include verifying the application against the core criteria, publishing a notice in the Gazette, and considering any submissions received (sections 269K, 269P). The CEO must ensure that the TCO is made in compliance with the Act and that it does not disadvantage any person or impose new liabilities. Importers, on the other hand, must ensure they are aware of the TCO and its implications, including the ability to apply for a refund of duty under the Regulations. Failure to comply with these obligations may result in the nullification of the TCO and potential penalties under the Act.