EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719099
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.
Brolton Group Pty Ltd applied for a TCO in respect of certain sand dryers on 09 November 2007.
Instrument
TCO No 0719099 was made on 21 January 2008. It declares that those certain sand dryers 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. 0719099 is taken to have come into force on 09 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. 0719099, enacted in 2008, is an instrument under the Customs Act 1901 designed to facilitate tariff concessions for specific goods. This legislation was introduced to address the need for reducing customs duties on particular imported goods to foster trade and economic benefits. The instrument was created to ensure that the application for tariff concessions follows a structured process, overseen by the Chief Executive Officer of Customs, who must verify that the application meets the core criteria set out in the Act. This process ensures that the tariff concessions are applied appropriately and that the rights of importers are protected, while also maintaining the integrity of the trade regulations.
The instrument was enacted by the Australian Parliament and its policy objective is to streamline the application process for tariff concessions, thereby enhancing trade efficiency and economic growth. By providing a pathway for certain goods to receive a lower rate of customs duty, the legislation aims to support businesses that rely on importing specific products by reducing their overall costs and increasing their competitiveness in the market. This, in turn, is expected to contribute to broader economic benefits by encouraging trade and investment.
Scope and Application
The Customs Act 1901, under Part XVA, establishes a scheme whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The primary objective of this scheme is to apply lower rates of customs duty to goods that are subject to a TCO. A person can apply to the CEO for a TCO in respect of goods, provided those goods are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The CEO assesses whether the application meets the core criteria, particularly whether 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, they must issue a written order, a TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question. This process was applied to a specific case where Brolton Group Pty Ltd successfully applied for a TCO concerning certain sand dryers, leading to the issuance of TCO No 0719099 on 21 January 2008, which effectively made the duty on these goods free, as opposed to the general rate of 5%.
Key Provisions
The Tariff Concession Instrument No. 0719099, made under section 269F of the Customs Act 1901, pertains to the application of tariff concessions for certain sand dryers. Specifically, section 269P(3) requires the Chief Executive Officer of Customs (CEO) to issue a written order if satisfied that the application meets the core criteria, which in this case means that no substitutable goods were produced in Australia at the time of the application. This is defined under section 269C, where the goods in question are considered not to have substitutable Australian-produced alternatives. The instrument declares that these sand dryers are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with the general duty rate being 5%, reduced to free duty for the goods covered by the TCO.
Under the Customs Act 1901, section 269K(1) mandates that the CEO must publish a notice in the Gazette once a TCO application is accepted as valid, inviting any interested parties to submit reasons why the concession should not be granted. In this case, no submissions were received in response to the published notice. The TCO is deemed to have come into force on the day the application was lodged, as specified in subsection 269S(1). Importantly, the TCO does not affect the rights of any person, except the Commonwealth, in a manner that would disadvantage them or impose liabilities for actions taken prior to the TCO’s registration.
The obligations imposed by the Customs Act 1901 on parties and entities governed by this TCO primarily involve ensuring compliance with the tariff concession. Importers of the specified sand dryers can apply for a refund of duties paid since the TCO’s effective date, as per paragraph 126(1)(r) of the Regulations. The CEO’s role includes verifying that the core criteria for the TCO are met and ensuring that the TCO is properly communicated and implemented. The CEO must also ensure that no substitutable goods were produced in Australia on the date the application was lodged, as per section 269C.
Failure to comply with the provisions of the Customs Act 1901, including the requirements for a TCO, can result in civil or criminal penalties. For instance, if a person knowingly or recklessly makes a false statement in an application for a TCO, they may be liable for a penalty under section 257 of the Act. The maximum penalty for this offence is 10,000 penalty units or imprisonment for five years, or both. Additionally, any individual or entity that benefits from an improperly granted TCO may be required to repay any duty that should have been paid but was not, potentially leading to financial and legal repercussions. The Act also provides for the imposition of fines for non-compliance with TCO-related duties and obligations, ensuring that the tariff concessions are applied fairly and correctly.