EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718970
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.
Fein Power Tools Pty Ltd applied for a TCO in respect of certain power tool kits on 7 November 2007.
Instrument
TCO No 0718970 was made on 29 January 2008. It declares that those certain power tool kits 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. 0718970 is taken to have come into force on 7 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. 0718970 was enacted in 2008 to address the need for tariff concessions under the Customs Act 1901. This legislation was introduced to provide relief on customs duty for specific goods, in this instance, certain power tool kits, which were the subject of an application by Fein Power Tools Pty Ltd. The Act facilitates the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, provided the goods in question are not substitutable by Australian-produced goods and meet other stipulated criteria. The policy objective is to ensure that Australian businesses and consumers benefit from reduced customs duties on imported goods that are not readily available domestically, thereby promoting competition and consumer choice.
The instrument was made following the application by Fein Power Tools Pty Ltd, and after assessing that no substitutable goods were being produced in Australia, the CEO determined that the application met the necessary criteria. Consequently, the TCO was issued, resulting in a reduction of customs duty for the specified power tool kits from the general rate of 5% to zero. The instrument was published in the Gazette, inviting any interested parties to submit objections, though none were received. The tariff concession came into effect on the date the application was lodged, 7 November 2007, and it does not disadvantage any existing rights of importers, who may apply for duty refunds on imports made since the effective date.
Scope and Application
The Tariff Concession Instrument No. 0718970, under the Customs Act 1901, applies to specific power tool kits for which Fein Power Tools Pty Ltd made an application on 7 November 2007. The Act enables the Chief Executive Officer of Customs (CEO) to grant Tariff Concession Orders (TCOs) to lower customs duty rates on certain goods, provided no substitutable goods are produced in Australia in the ordinary course of business. This particular TCO, effective from the date of application, exempts these power tool kits from the general rate of duty of 5%, making them duty-free. The scope of the legislation is limited to the goods specified in the application and does not extend to other goods unless similarly applied for and approved. The Act operates on a Commonwealth level, affecting all importers who bring the specified goods into Australia, and does not disadvantage any person who had rights as of the date of registration.
The Act does not impose any new liabilities on individuals or entities, nor does it disadvantage anyone with existing rights as of the registration date. However, it provides a benefit to importers by allowing them to apply for refunds on duties paid on these goods since the effective date of the TCO. The legislation excludes goods specified in section 269SJ of the Act, which are ineligible for TCOs. The CEO must consult by publishing a notice in the Gazette, inviting submissions from any interested parties, although in this case, no submissions were received. The Act’s application can be further extended or restricted through subordinate instruments, but this particular TCO is limited to the power tool kits specified in Fein Power Tools Pty Ltd’s application.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines the framework for Tariff Concession Orders (TCOs), which provide for a reduced rate of customs duty on certain goods. An application for a TCO can be made to the Chief Executive Officer of Customs (section 269F), provided the goods do not fall within the category of goods specified in section 269SJ, which are ineligible for TCOs. If the application is deemed valid, the CEO must determine whether it meets the core criteria outlined in section 269C. This criterion is satisfied if, on the day the application was lodged, there were no substitutable goods produced in Australia in the ordinary course of business. The terms "substitutable goods" and "ordinary course of business" are defined in sections 269D and 269E, respectively. If the CEO is satisfied that the application meets these criteria, a written TCO is issued, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question (section 269P(3)).
The obligations imposed by the Customs Act 1901 on parties or entities governed by the legislation include the requirement for applicants to ensure their applications are valid and meet the core criteria for a TCO. This involves demonstrating that no substitutable goods are produced in Australia at the time of application. The CEO, on the other hand, is required to review the application, publish a notice inviting submissions, and make a decision based on the evidence provided. If the application is approved, the CEO must issue a TCO that specifies the applicable customs duty rate. Importers also have obligations under the Regulations, including the ability to apply for a refund of duty on goods imported since the TCO came into force.
Failure to comply with the provisions of the Customs Act 1901, particularly in relation to the submission of false information in a TCO application, can result in legal consequences. Section 273 of the Customs Act 1901 provides that any person who knowingly makes a false or misleading statement in an application for a TCO is liable for a penalty. The maximum penalty for such an offence is 10,000 penalty units, reflecting the seriousness of providing misleading information to the CEO. Additionally, any person who uses or authorises the use of goods in relation to a false TCO application may also face criminal penalties, as outlined in the Act. These provisions underscore the importance of accuracy and integrity in the application process.