EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707863
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.
Electrolux Home Products Pty Limited applied for a TCO in respect of certain domestic condenser dryers on 24 May 2007.
Instrument
TCO No 0707863 was made on 03 August 2007. It declares that those certain domestic condenser dryers 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. 0707863 is taken to have come into force on 24 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 was amended to introduce a scheme for Tariff Concession Orders (TCOs) under Part XVA, allowing the Chief Executive Officer of Customs to reduce customs duty rates on certain goods if specific criteria are met. Enacted by the Australian Parliament, this legislative amendment aimed to address the need for a mechanism that could facilitate tariff reductions for imported goods under defined conditions, thereby encouraging trade and potentially benefiting consumers through lower prices. The policy objective was to streamline the process for reducing customs duties on goods where Australian production does not exist or is not viable, thus fostering a competitive market environment. Electrolux Home Products Pty Limited's application for a TCO in respect of certain domestic condenser dryers, which was subsequently approved, exemplifies the practical application of this legislative framework to benefit specific industries and consumers.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the framework for the creation of Tariff Concession Orders (TCOs), which can be applied for by individuals or entities seeking a lower rate of customs duty on specified goods. This Act applies to the Chief Executive Officer of Customs (CEO) who is responsible for evaluating and making decisions on TCO applications. The CEO must ensure that the goods in question are not excluded under section 269SJ of the Act and meet the core criteria set out in sections 269C, 269D, and 269E. If the CEO determines that a TCO application meets these criteria, a written order is issued, applying a prescribed lower duty rate as specified in the Customs Tariff Act 1995. The application process involves publishing a notice in the Gazette to invite submissions from interested parties, although in the case of TCO No. 0707863, no such submissions were received. The TCO, once made, is retroactive to the date the application was lodged and benefits importers by potentially entitling them to refunds of duty paid on the specified goods since that date, without imposing any new liabilities on persons other than the Commonwealth.
Key Provisions
The key operative sections of this legislation (Tariff Concession Instrument No. 0707863) pertain to the creation and effects of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO for certain goods. Section 269C sets out the core criteria for a TCO, which must be satisfied by the CEO, primarily that no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets the core criteria, they must make a written order, the TCO, under section 269P(3), specifying that the goods in question are subject to a prescribed tariff item. In this case, the CEO issued TCO No. 0707863 on 3 August 2007, applying to certain domestic condenser dryers, and specifying that they are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of free, as opposed to the general rate of 5%.
The obligations imposed by the Act on the parties involved, particularly the CEO, are quite specific. The CEO must first assess whether the application for a TCO is valid, which includes ensuring that the goods specified in the application are not listed in section 269SJ of the Act as ineligible for a TCO. If the application is deemed valid, the CEO must then determine if it meets the core criteria as outlined in section 269C. This involves verifying that no substitutable goods were produced in Australia at the time the application was lodged, with definitions provided by sections 269D and 269E. Upon satisfying these criteria, the CEO must make a written TCO and publish a notice in the Gazette inviting any interested parties to submit objections, as required by section 269K(1). In this instance, no objections were received, allowing the TCO to proceed.
Under this legislation, there are no specific offences listed, but breaches of the requirements could potentially lead to civil or administrative penalties. For example, if a person were to falsely claim that substitutable goods were not produced in Australia when they were, this could be viewed as a misrepresentation to the CEO, which might result in penalties under the relevant sections of the Customs Act 1901. Additionally, any failure to comply with the terms of the TCO could lead to financial penalties or other administrative actions. The maximum penalties for offences under the Customs Act 1901 can be severe, including fines up to $22,000 or imprisonment for up to two years, or both, for serious breaches. However, the specific penalties would depend on the nature and severity of the breach.