EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712041
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.
Group Technologies Australasia Pty Ltd applied for a TCO in respect of certain audio frequency power amplifiers on 26 July 2007.
Instrument
TCO No 0712041 was made on 08 October 2007. It declares that those certain audio frequency power amplifiers 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. 0712041 is taken to have come into force on 26 July 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 the framework for the imposition of customs duties on imported goods. One of the mechanisms introduced by this Act to address economic and trade policy objectives is the Tariff Concession Order (TCO). The 2007 Explanatory Statement details Tariff Concession Instrument No. 0712041, which addresses a specific economic gap by providing tariff concessions for certain audio frequency power amplifiers, ensuring that these goods attract a lower rate of customs duty when imported. The policy objective is to facilitate access to these goods for Australian businesses and consumers by reducing the cost of importation, thereby promoting competition and consumer choice without imposing any new liabilities on importers or other stakeholders.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the procedures for Tariff Concession Orders (TCOs) that can be made by the Chief Executive Officer of Customs. This Act applies to any person who may apply to the CEO for a TCO in respect of goods, provided that these goods are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The application must meet the core criteria as outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. This Act has a national reach within Australia and is administered at the federal level. The instrument, Tariff Concession Instrument No. 0712041, was applied to certain audio frequency power amplifiers, granting them a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from the date the application was lodged, 26 July 2007. The CEO must publish a notice in the Gazette inviting any objections to the TCO, although in this instance, no submissions were received. The TCO does not retroactively affect any person's rights and does not impose any liabilities on individuals other than the Commonwealth.
Key Provisions
The main sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269B, 269D, 269E, and 269F (paragraphs 1-2). Section 269C outlines the core criteria that an application must meet for a TCO to be granted, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B defines key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria and does not pertain to goods specified in section 269SJ, a TCO must be issued. TCO No. 0712041, made on 8 October 2007, is an example where the CEO granted a concession on certain audio frequency power amplifiers, resulting in a reduction of the duty from 5% to free.
The Act imposes several obligations and requirements on the parties involved. The CEO of Customs must ensure that any TCO application not pertaining to goods specified in section 269SJ of the Act is assessed against the core criteria outlined in section 269C. This includes verifying that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). In the case of TCO No. 0712041, the CEO did not receive any submissions in response to the published notice. Furthermore, the Act ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the issuance of a TCO.
Breaches of the provisions set out in the Customs Act 1901 can lead to significant civil and criminal consequences. For example, under section 234A of the Act, a person who knowingly or recklessly makes a false or misleading statement in an application for a TCO can be subject to a penalty of up to 10,000 penalty units, which as of 2023 is equivalent to AUD 1,700,000. Additionally, under section 234C of the Act, a person who is found guilty of an offence against the Act can be subject to imprisonment for up to five years or both imprisonment and a fine. These penalties underscore the importance of compliance with the Act’s provisions, particularly in the context of applying for and issuing Tariff Concession Orders.