EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0709587
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.
GMCAT Pty Ltd applied for a TCO in respect of certain heat gun kits on 21 June 2007.
Instrument
TCO No 0709587 was made on 31 August 2007. It declares that those certain heat gun kits 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. 0709587 is taken to have come into force on 21 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 Australian Parliament, provides a framework for the regulation of customs and excise duties. This Act was introduced to ensure the efficient management of customs procedures and to facilitate international trade by reducing barriers. Specifically, the Customs Act 1901 addresses the need to provide tariff concessions for certain goods, thereby supporting economic growth and competitiveness. Part XVA of the Act outlines the process for Tariff Concession Orders (TCOs), which can be applied for by individuals or entities seeking reduced customs duties on specific goods, provided certain criteria are met. The Explanatory Statement for Tariff Concession Instrument No. 0709587, made on 31 August 2007, illustrates this process, where the CEO of Customs granted a concession for certain heat gun kits, resulting in a reduction of the duty rate from 5% to free. The policy objective is to ensure that tariff concessions are granted fairly and in accordance with the legislative criteria, thereby supporting the economic interests of businesses and consumers.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the process for Tariff Concession Orders (TCOs) which can be applied for by any person seeking a lower rate of customs duty on certain goods. This applies to goods that are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The Chief Executive Officer of Customs (CEO) must assess the application against core criteria, primarily ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If these criteria are met, the CEO issues a written order, effectively reducing or eliminating customs duty on the specified goods. The geographic scope of this Act is national, with its application extending to all entities within Australia seeking tariff concessions on eligible goods. The Act does not impose any disadvantages or liabilities on persons other than the Commonwealth, and its application is effective from the date the application is lodged. The Act may be extended or restricted through subordinate instruments, such as regulations, which can further define terms and processes related to TCOs.
Key Provisions
The primary operative sections of this legislation, specifically Instrument No. 0709587, concern Tariff Concession Orders (TCO) under Part XVA of the Customs Act 1901 (section 269C). This instrument was made under section 269F, which allows the Chief Executive Officer of Customs (CEO) to make a TCO if certain criteria are met. The instrument specifies that certain heat gun kits are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, which results in a duty rate of free, down from the general rate of 5% (section 269P(3)).
The obligations and requirements imposed by this legislation are primarily on the CEO, who must ensure that any TCO application meets the core criteria set out in section 269C of the Act. These criteria include verifying that no substitutable goods were produced in Australia on the day the application was lodged, as defined by sections 269D and 269E of the Act. The CEO must also publish a notice in the Gazette (subsection 269K(1)) to invite submissions from any person who might oppose the TCO, which was done in this case but did not receive any submissions. Once the CEO is satisfied that the application meets the criteria, they must make a written TCO order (subsection 269P(3)).
Any failure to comply with the obligations set out in the Customs Act 1901 may result in civil or criminal consequences. For instance, if an entity fails to comply with the requirements for a TCO application or makes false statements in an application, they could face penalties. The exact penalties are not specified in the explanatory statement, but under Australian law, penalties for such breaches can include fines and, in some cases, imprisonment. The Act does not specify maximum penalties for breaches in this context, but penalties can vary widely depending on the severity of the breach and are determined by the courts.