EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707612
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.
Godfrey Hirst Australia Pty Ltd applied for a TCO in respect of certain extruders on 22 May 2007.
Instrument
TCO No 0707612 was made on 10 August 2007. It declares that those certain extruders 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. 0707612 is taken to have come into force on 22 May 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, provides a framework for the regulation of customs and excise duties, among other things. Specifically, Part XVA of the Act outlines the process for making Tariff Concession Orders (TCOs), which allow for the reduction or elimination of customs duty on certain goods. The problem or gap this legislative framework was introduced to address is the need for a structured mechanism to temporarily reduce or exempt customs duties on specific goods, thereby encouraging the import of these goods under certain conditions. The policy objective is to facilitate the import of goods that are not domestically produced, thereby benefiting consumers and potentially stimulating local industries by making imported goods more competitively priced. Godfrey Hirst Australia Pty Ltd's application for a TCO in respect of certain extruders is an example of how this mechanism operates in practice, leading to a reduction in the customs duty rate from 5% to 0% for these goods.
Scope and Application
The Customs Act 1901, as supplemented by Tariff Concession Instrument No. 0707612, pertains to the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) in relation to specific goods. This legislation applies to entities or individuals who apply for a TCO for goods that are not explicitly excluded under section 269SJ of the Act, which includes certain categories such as military goods, certain types of vehicles, and goods that are deemed harmful to health and safety. The application process requires the CEO to verify that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is made, as per sections 269C and 269D of the Act. Once the CEO determines that the application meets the core criteria, a TCO is issued, granting a lower rate of customs duty on the specified goods, thereby benefiting importers by reducing their duty liability. The instrument's jurisdiction is national, operating under the Commonwealth framework, and the rights of non-Commonwealth entities are protected from any retrospective disadvantages or liabilities stemming from the TCO.
Key Provisions
The main operative sections of the Customs Act 1901, relevant to Tariff Concession Orders (TCOs), require the Chief Executive Officer of Customs (CEO) to assess applications for TCOs (section 269F) and determine if the application meets the core criteria (section 269C). If satisfied, the CEO must make a written order declaring that the goods in question are subject to a lower rate of customs duty as specified in the Tariff Concession Instrument (section 269P(3)). Specifically, section 269C stipulates that the application meets the core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business, while sections 269D and 269E define 'goods produced in Australia' and 'ordinary course of business', respectively. Additionally, section 269B defines 'substitutable goods'.
The Customs Act imposes several obligations on the parties involved in the TCO process. Firstly, it requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). This notice must be published as soon as practicable after accepting a TCO application as valid. Furthermore, the CEO must decide whether the application meets the core criteria based on the definitions and criteria provided in sections 269C, 269D, 269E, and 269B. If the CEO is satisfied, they must make a written order as per section 269P(3). Importers, in turn, have the right to apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).
Breaching the provisions of the Customs Act that govern TCOs can result in both civil and criminal consequences. Under section 269Q of the Act, a person who makes a false or misleading statement in an application for a TCO commits an offence and is liable to a fine of up to 10,000 penalty units or imprisonment for up to two years, or both. The maximum penalties are severe and underscore the importance of ensuring that applications are truthful and meet the criteria as stipulated by the Act. Failure to comply with these provisions can lead to legal repercussions, highlighting the need for due diligence in the application process.