EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716473
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.
AFT Australia Pty Ltd applied for a TCO in respect of certain assemblies sprinkler flexible hose on 28 September 2007.
Instrument
TCO No 0716473 was made on 08 February 2008. It declares that those certain assemblies sprinkler flexible hoses 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. 0716473 is taken to have come into force on 28 September 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, establishes a framework for the application of customs duties on imported goods. This Act includes provisions for Tariff Concession Orders (TCOs), which allow for reduced customs duties on certain goods under specific conditions. One such TCO, No. 0716473, was introduced to address the issue of applying a lower rate of customs duty to certain assemblies of sprinkler flexible hoses, which were determined not to have substitutable goods produced in Australia at the time of application. The policy objective behind this concession is to promote the import of goods that are not domestically produced, thereby potentially lowering costs for businesses and consumers while also encouraging the import of innovative products. This particular TCO was made on 8 February 2008, following an application by AFT Australia Pty Ltd on 28 September 2007, and it came into effect on the date of the application.
Scope and Application
The Customs Act 1901, specifically through Part XVA, establishes a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation allows for the application of a lower rate of customs duty on goods that are subject to a TCO. The Act applies to any person who may apply for a TCO for goods not specified in section 269SJ, which excludes certain goods from eligibility. The CEO is mandated to assess applications against core criteria, particularly under section 269C, ensuring that no substitutable goods are produced in Australia in the ordinary course of business. Once the CEO determines that an application meets these criteria, they must issue a written TCO. The instrument, TCO No. 0716473, was issued on 8 February 2008, declaring that certain assemblies sprinkler flexible hoses are subject to a zero rate of duty, applicable from 28 September 2007. This TCO does not affect the rights of any person adversely or impose new liabilities, while it provides beneficial rights to importers, including the ability to apply for duty refunds. The scope of this Act is national, applying across Australia and impacting all entities involved in the importation of the specified goods.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines the procedure for issuing Tariff Concession Orders (TCOs), which are designed to reduce the customs duty on certain goods. Section 269F allows for the application for a TCO by any person, provided the goods in question are not those specified in section 269SJ that cannot be subject to a TCO. If an application is deemed valid, the Chief Executive Officer (CEO) of Customs must then assess whether it meets the core criteria set out in section 269C. This means that, on the day the application is lodged, no substitutable goods should be produced in Australia in the ordinary course of business. The terms ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are further defined in sections 269D, 269E, and 269F of the Act, respectively.
Once the CEO determines that the application meets the core criteria, they are required by section 269P(3) to issue a written order, or TCO, that specifies the goods to which a particular item of Schedule 4 to the Customs Tariff Act 1995 applies. This TCO, in turn, determines the applicable rate of duty for the specified goods. In the case of AFT Australia Pty Ltd's application for a TCO on certain assemblies of sprinkler flexible hoses, the CEO issued TCO No. 0716473 on 8 February 2008. This order declared that the specified goods are subject to item 50 of Schedule 4 to the Tariff, with a general duty rate of 5% reduced to free under the TCO.
The Act imposes several obligations on the CEO and applicants. For instance, as per section 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit their views on whether the TCO should be granted. In the case of TCO No. 0716473, no submissions were received in response to this invitation. Furthermore, section 269S(1) stipulates that a TCO is effective from the day the application is lodged, which, for TCO No. 0716473, was 28 September 2007. Importantly, the TCO does not adversely affect the rights of any person, except the Commonwealth, with respect to actions taken before the TCO's registration.
Should any party breach the obligations set out in the Act, the consequences can be severe. While the specific offences and penalties are not detailed in the explanatory statement, under Australian law, breaches of customs regulations can lead to both civil and criminal penalties. Civil penalties may include fines up to a certain amount, while criminal penalties can range from fines to imprisonment, depending on the severity of the breach. The exact penalties would be determined based on the specific breach and the relevant sections of the Customs Act 1901 and any other applicable legislation.