EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716880
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.
Chemring Australia Pty Ltd applied for a TCO in respect of certain balloon covers on 04 October 2007.
Instrument
TCO No 0716880 was made on 14 December 2007. It declares that those certain balloon covers 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 7.50%. 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. 0716880 is taken to have come into force on 04 October 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, serves as the foundational legislation governing customs and border control in Australia. The Act was designed to regulate and facilitate trade by imposing customs duties on imported goods and by providing a mechanism for tariff concessions where appropriate. The problem or gap addressed by this legislation is the need to balance revenue collection through customs duties with the facilitation of trade, ensuring that Australian industries are protected while also allowing for competitive imports. In the context of Tariff Concession Instrument No. 0716880, the policy objective is to provide tariff relief to specific goods, in this case certain balloon covers, under the condition that no substitutable goods are produced in Australia. This ensures that Australian manufacturers are not unfairly disadvantaged, while also promoting efficient trade practices. The instrument was introduced to offer a concession by way of a lower customs duty, thereby addressing specific economic considerations relevant to the importing of these goods.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs) scheme, applies to individuals and entities seeking to import specific goods into Australia, particularly those who qualify for reduced or waived customs duties under certain conditions. The Act mandates that the Chief Executive Officer of Customs (CEO) must assess whether the application for a TCO meets the core criteria, which includes ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If these criteria are met, the CEO issues a TCO, granting tariff concessions to the applicant. This process is subject to national jurisdiction, affecting the entire Commonwealth of Australia. Notably, the application of this Act does not extend to goods specified under section 269SJ, which are ineligible for tariff concessions. Additionally, the Act may be extended or further specified through subordinate instruments, ensuring flexibility and precision in its application.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0716880 under the Customs Act 1901 (section 269C) require the Chief Executive Officer of Customs (CEO) to determine if a Tariff Concession Order (TCO) application meets the core criteria, specifically if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must issue a written order, or TCO, stating that the goods in question are subject to a lower rate of customs duty (section 269P(3)). In this case, the CEO found that certain balloon covers met these criteria and, therefore, issued TCO No. 0716880, applying a zero rate of duty to these goods.
The Act imposes several obligations on the parties involved. The applicant, in this case Chemring Australia Pty Ltd, must submit a valid application for a TCO under section 269F, ensuring that the goods in question do not fall under the prohibited categories outlined in section 269SJ. The CEO is mandated to assess the application against the core criteria (section 269C), determine if the goods are substitutable by any goods produced in Australia (sections 269D and 269E), and issue the TCO if the criteria are met. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may oppose the TCO (subsection 269K(1)).
The Customs Act 1901 includes provisions for penalties and consequences in the event of non-compliance with the Act's requirements. Although specific penalties are not detailed in the explanatory statement, breaches of the Act generally attract penalties under the Crimes Act 1914. These can include fines and imprisonment for individuals and corporations found guilty of offences such as making false statements, evading duty, or contravening the Act. The severity of penalties depends on the nature and extent of the breach but can be significant, particularly for repeat or egregious violations.
TCO No. 0716880, effective from 4 October 2007, benefits importers by allowing them to apply for a refund of duty paid on the specified goods since the date the TCO came into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any new liabilities on persons other than the Commonwealth and does not affect any pre-existing rights. This ensures that the rights of importers are positively impacted without imposing any disadvantages or liabilities stemming from actions prior to the TCO's registration.