EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0709263
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.
Interface Aust Pty Limited applied for a TCO in respect of certain carpet shearing machines on 18 June 2007.
Instrument
TCO No 0709263 was made on 24 August 2007. It declares that those certain carpet shearing machines 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. 0709263 is taken to have come into force on 18 June 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 Parliament of Australia, establishes a framework within which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders provide for lower rates of customs duty on specified goods. The Act was designed to address the need for flexible customs duty arrangements that could support Australian industries and consumers by making certain goods more affordable. The primary policy objective is to promote economic efficiency and consumer benefit by reducing the duty on goods for which no suitable Australian-made alternatives exist. In this context, TCO No. 0709263 was introduced on 24 August 2007, granting free duty status to certain carpet shearing machines, following an application by Interface Aust Pty Limited on 18 June 2007. This decision was made after it was determined that no substitutable goods were produced in Australia, thus meeting the core criteria outlined in the Act.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, designed to provide reduced customs duty rates on certain imported goods. This Act applies to any person or entity that imports goods subject to a TCO, with the primary objective of encouraging trade and industry by mitigating the cost of importing specific items. The application of a TCO is contingent upon the absence of substitutable goods produced in Australia, as outlined in sections 269C and 269SJ of the Act. This legislation has a national reach as it operates under the Commonwealth jurisdiction. Importantly, the Act stipulates that the TCOs do not retroactively disadvantage any person or impose liabilities for actions taken prior to the TCO's effective date, thereby safeguarding existing rights and obligations. Subordinate instruments may further define or refine the application of the TCOs, extending or restricting their scope as necessary.
Key Provisions
The main operative sections of the Customs Act 1901, as detailed in the Explanatory Statement, include sections 269C, 269B, 269D, 269E, 269F, 269P, 269K, and 269S. These sections establish the framework for Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. The CEO must assess whether the application meets the core criteria, which is defined by section 269C and involves determining if no substitutable goods were produced in Australia on the day the application was lodged. If the CEO determines that the application meets these criteria, they are required to make a written order under section 269P, declaring that the goods are subject to a prescribed tariff rate. Section 269K mandates that the CEO must publish a notice in the Gazette inviting submissions on the TCO application, while section 269S specifies that the TCO is effective from the date the application was lodged.
The Act imposes several obligations on the parties involved. For applicants, the primary obligation is to submit a valid TCO application to the CEO, ensuring that the application complies with the requirements outlined in section 269F. The CEO, on the other hand, has the responsibility to evaluate the application against the core criteria specified in sections 269C and 269P. This evaluation must be thorough, ensuring that the application does not pertain to goods listed in section 269SJ, which cannot be subject to a TCO. Additionally, the CEO must publish a notice in the Gazette under section 269K, allowing interested parties to lodge submissions. If no submissions are received, the CEO must proceed to make the TCO as per section 269P. The Act also requires that the rights of third parties are not adversely affected by the TCO, as stipulated in section 269S.
Failure to comply with the requirements of the Customs Act 1901 may result in various penalties and consequences. While the explanatory statement does not specify criminal penalties, breaches of the Act could lead to civil liabilities. For instance, if a TCO is issued improperly, it could result in financial losses for the government due to lost customs revenue. Moreover, any person found to be deliberately misapplying for a TCO might face legal action to recover any undue benefits gained. Importers who take advantage of a wrongly granted TCO could also be subject to penalties for improperly claiming duty refunds. The specific penalties would depend on the nature and extent of the breach but could include fines or other civil remedies to ensure compliance with the Act.