EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718648
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.
Matrix Process Solutions Pty Ltd applied for a TCO in respect of certain sealing grommets on 19 December 2007.
Instrument
TCO No 0718648 was made on 7 March 2008. It declares that those certain sealing grommets 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 10%. 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. 0718648 is taken to have come into force on 19 December 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 Tariff Concession Instrument No. 0718648, made under the Customs Act 1901, addresses the issue of applying lower rates of customs duty on specific goods, in this case, certain sealing grommets. Enacted by the Chief Executive Officer of Customs, the instrument was made in response to an application by Matrix Process Solutions Pty Ltd on 19 December 2007, and came into effect on the same date. The policy objective behind this concession is to ensure that goods for which no substitutable Australian-produced alternatives exist are subject to preferential tariff treatment, thereby potentially lowering import costs and enhancing competitiveness for businesses importing these goods. The instrument declares that the sealing grommets in question are subject to a duty-free rate, which contrasts with the general rate of 10% applicable to such goods. No submissions opposing the concession were received during the consultation period.
Scope and Application
The Tariff Concession Instrument No. 0718648, under the Customs Act 1901, pertains to the application of a Tariff Concession Order (TCO) for specific sealing grommets, effectively reducing the customs duty on these goods from a general rate of 10% to zero. This instrument applies to the entity that submitted the application, Matrix Process Solutions Pty Ltd, as well as to any future imports of the specified sealing grommets by other entities. The application of this TCO is confined to the goods mentioned in the instrument, specifically as they relate to item 50 of Schedule 4 to the Customs Tariff Act 1995, and does not extend to other goods or industries. The geographic reach of the TCO is national, as it applies to all importations of the specified goods into Australia. The TCO does not disadvantage any person or impose liabilities on anyone in relation to activities conducted before the TCO's effective date, which is 19 December 2007. The instrument does not explicitly state any exclusions or exemptions, but it does note that the application of the TCO does not affect the rights of any person, except for potentially benefiting importers who may apply for duty refunds on goods imported since the TCO's effective date. The scope of the TCO may be extended or restricted through subordinate instruments as per the Customs Act 1901.
Key Provisions
The Customs Act 1901, as modified by Tariff Concession Instrument No. 0718648, provides a framework for the application and issuance of Tariff Concession Orders (TCOs) (section 269F). Under this scheme, a lower rate of customs duty is applied to goods that are the subject of a TCO. An applicant may apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specific goods, provided the goods do not fall under the category specified in section 269SJ of the Act, which lists goods ineligible for a TCO. If the CEO determines that the application meets the core criteria outlined in section 269C, they are required to make a written order declaring that the specified goods are subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995, effectively reducing the duty rate for those goods.
The obligations imposed by the Act on parties and entities include the requirement for the CEO to assess applications against the core criteria set out in section 269C. This involves verifying that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who might oppose the issuance of a TCO, as per section 269K(1). Furthermore, the Act ensures that the issuance of a TCO does not adversely affect the rights of any person, except the Commonwealth, with respect to actions taken before the registration date of the TCO (subsection 269S(1)).
Should any party fail to comply with the obligations set forth in the Act, including not adhering to the process for application and assessment of TCOs, there may be legal consequences. However, the explanatory statement does not provide explicit details on specific offences, penalties, or civil/criminal consequences for breaches. It is understood that the Act and its associated regulations could impose penalties for non-compliance, but these are not specified within the given text. The focus remains on ensuring that the process for granting tariff concessions is transparent and fair, with the aim of benefiting importers of the specified goods.