EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718168
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.
CSR Building Products Ltd applied for a TCO in respect of certain plasterboard plant on 25 October 2007.
Instrument
TCO No 0718168 was made on 29 January 2008. It declares that those certain plasterboard plant 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. 0718168 is taken to have come into force on 25 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, provides a framework for the regulation of customs duties and the management of imports and exports. Part XVA of this Act introduces the concept of Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs to apply a lower rate of customs duty on specified goods. This legislative instrument addresses the problem of ensuring that certain imported goods, which are not produced in Australia and for which no substitutable goods are domestically produced, are subject to more favourable tariff treatment. The aim is to facilitate trade by making imported goods more competitive in the Australian market without imposing additional burdens on domestic producers or consumers. The policy objective is to encourage the importation of goods that are not produced locally, thereby benefiting consumers and importers while maintaining a balanced approach to trade regulation.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) scheme, allows for the application of a lower rate of customs duty on certain goods, provided specific criteria are met. This legislation applies to any person or entity seeking a reduction in customs duty on goods that are not produced in Australia and for which no suitable substitute is available domestically. The scope of the Act is national, as it is a Commonwealth statute, and it extends to all industries and transactions involving the importation of goods that meet the criteria for tariff concessions. The Act does not impose any liabilities or disadvantage existing rights of persons other than the Commonwealth, particularly in relation to actions taken prior to the issuance of a TCO. While the Act itself sets out the framework and criteria for tariff concessions, the specifics and detailed application are further governed through subordinate instruments, such as the Customs Tariff Act 1995, which lists the applicable tariff items for goods subject to a TCO.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for the application and consideration of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (sections 269F, 269C). A TCO can be applied for by a person in respect of goods, and if the CEO determines that the application meets certain criteria, a written order is made declaring the goods subject to a reduced rate of duty (section 269P(3)). For instance, in Tariff Concession Instrument No. 0718168, the CEO made an order in respect of certain plasterboard plant, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, which reduces the duty from the general rate of 5% to free (section 269P(3)).
The obligations under the Act include the requirement for the CEO to consider applications for TCOs and to determine whether they meet the core criteria, which involves assessing whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made, although in this case, no submissions were received (subsection 269K(1)). The TCO, once made, has the effect of applying from the day the application was lodged, meaning that it has retrospective effect for the purposes of duty rates, though it does not impose liabilities on any person in respect of actions taken before the date of registration (subsection 269S(1)).
The legislation does not explicitly state any offences or penalties for non-compliance with the Act's provisions concerning TCOs. However, it is understood that failure to adhere to the requirements for applying for a TCO or any subsequent misuse of the concession granted by a TCO could potentially lead to legal consequences. For instance, if the concession is abused, it may result in civil or criminal penalties under other sections of the Customs Act 1901 or related legislation. Although the specific penalties are not detailed in the explanatory statement, breaches of customs regulations generally can incur significant fines and other legal repercussions.