EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718676
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.
Autofab Australia Pty Ltd applied for a TCO in respect of certain polyvinyl chloride sheeting on 1 November 2007.
Instrument
TCO No 0718676 was made on 30 January 2008. It declares that those certain polyvinyl chloride sheeting 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. 0718676 is taken to have come into force on 1 November 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. 0718676, enacted in 2008, serves to address a gap in tariff regulation concerning certain goods under the Customs Act 1901. This legislative instrument, developed by the Chief Executive Officer of Customs, aims to provide tariff concessions for specified goods, in this case, certain polyvinyl chloride sheeting, by reducing the customs duty from the general rate to zero. This was enacted to ensure that such goods, which had no substitutable Australian production, would be subject to a more favourable tariff, thereby encouraging trade and potentially reducing costs for importers. The policy objective is to foster an equitable trading environment by ensuring that Australian importers are not at a disadvantage due to the absence of local production of these specific goods.
The process of establishing such a concession involves an application by interested parties, subject to the core criteria outlined in the Customs Act, followed by an assessment by the CEO of Customs. Once the application meets the stipulated criteria, a Tariff Concession Order is issued, which in this instance, resulted in the concession for the specified polyvinyl chloride sheeting. The instrument also ensures that it does not adversely affect any existing rights or impose new liabilities on individuals or entities, thereby maintaining a balanced approach to tariff regulation.
Scope and Application
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCO) under which certain goods may be subject to a reduced rate of customs duty. This applies to any person who lodges an application with the Chief Executive Officer (CEO) of Customs, provided the goods do not fall under the exclusions set out in section 269SJ of the Act. The CEO is mandated to evaluate whether the application meets the core criteria specified in section 269C, which includes ensuring that no substitutable goods are produced in Australia at the time of application, as defined in sections 269D and 269E. If the CEO determines that the application meets these criteria, a TCO is issued, effective from the date the application was lodged as per subsection 269S(1). This legislative framework allows for the modification of duty rates through subordinate instruments, facilitating adjustments in the customs tariff schedule. The rights of persons other than the Commonwealth are protected, and the TCO does not impose any liabilities for actions taken prior to its registration.
Key Provisions
The Customs Act 1901 (the Act) establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (the CEO), as detailed in Part XVA of the Act. Section 269F of the Act allows any person to apply for a TCO for certain goods. If the application pertains to goods not specified in section 269SJ, which lists goods ineligible for a TCO, the CEO must assess whether the application meets the core criteria outlined in section 269C. To meet these criteria, no substitutable goods must have been produced in Australia in the ordinary course of business on the day the application was submitted.
The Act further defines terms such as "goods produced in Australia" (section 269D), "ordinary course of business" (section 269E), and "substitutable goods" (section 269D). Specifically, substitutable goods are those produced in Australia that can be used in the same way, including design uses, as the goods for which the TCO is being sought. If the CEO is satisfied that the application meets these core criteria, they are required by subsection 269P(3) to issue a TCO, effectively reducing the customs duty on the specified goods.
Under this legislative framework, Autofab Australia Pty Ltd applied for a TCO for certain polyvinyl chloride sheeting on 1 November 2007. Following this application, TCO No. 0718676 was issued on 30 January 2008, declaring that the specified polyvinyl chloride sheeting would be subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%. The TCO was effective from 1 November 2007, the date of the application. The CEO published a notice in the Gazette inviting submissions against the TCO, but no objections were received.
Failure to comply with the requirements set out in the Customs Act 1901 can result in various consequences. While the Act does not explicitly outline specific penalties for non-compliance with TCOs, breaches of the broader Customs Act can lead to both civil and criminal penalties. For example, section 166 of the Act provides for fines and imprisonment for offences related to customs duty evasion or fraudulent importation practices. In the context of TCOs, any misrepresentation or fraudulent application could potentially lead to these broader penalties, highlighting the importance of adherence to the legislative requirements.