EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719544
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.
Gmcat Pty Ltd applied for a TCO in respect of certain paint scraper on 14 November 2007.
Instrument
TCO No 0719544 was made on 29 January 2008. It declares that those certain paint scraper 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. 0719544 is taken to have come into force on 14 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 Customs Act 1901, enacted by the Parliament of Australia, addresses the need for a structured process for providing tariff concessions on certain imported goods. This Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that lower the customs duty on specific goods, provided that certain conditions are met. The policy objective underpinning this legislation is to facilitate trade by reducing the duty on goods that are not produced in Australia and for which there are no suitable substitutes available domestically. Gmcat Pty Ltd's application for a TCO concerning certain paint scrapers was approved on 29 January 2008, leading to Tariff Concession Order No. 0719544, which reduces the duty on these goods from 5% to free. This legislative framework ensures that trade is not unduly hindered while also protecting the interests of domestic producers by preventing concessions on goods that could be sourced locally.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the framework for Tariff Concession Orders (TCOs) that can be made by the Chief Executive Officer of Customs (CEO). The Act allows for a lower rate of customs duty to apply to goods that are the subject of a TCO, and it provides a process for individuals or entities to apply for such concessions. A TCO application is subject to core criteria, which include a determination by the CEO that no substitutable goods are produced in Australia in the ordinary course of business. If the application meets these criteria, the CEO is mandated to issue a TCO, which declares that the specified goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. The application process also involves public consultation, where the CEO must publish a notice in the Gazette inviting any objections to the proposed TCO. In this case, Gmcat Pty Ltd successfully applied for a TCO concerning certain paint scrapers, which are now subject to a zero percent duty rate instead of the general 5% duty. The TCO's effective date aligns with the application date, ensuring that the rights of importers are advantageously impacted, and any pre-existing duties can be refunded. The Act ensures that the TCO does not disadvantage any person other than the Commonwealth or impose new liabilities.
Key Provisions
The primary operative sections of this legislation concern the process for applying for and making Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F), the core criteria that must be met for a TCO to be considered (section 269C), and the definition of terms like 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods' (sections 269B, 269D, 269E, and 269F). When an application for a TCO is submitted, the Chief Executive Officer of Customs (CEO) must determine whether it meets the core criteria by confirming that no substitutable goods are produced in Australia in the ordinary course of business (section 269C). If the application meets these criteria, the CEO must issue a written TCO (section 269P(3)), as seen in TCO No. 0719544 for certain paint scrapers, which specifies that these goods are subject to a lower duty rate (item 50 of Schedule 4 to the Tariff) and is effective from the date the application was lodged (subsection 269S(1)).
The Act imposes several obligations and requirements on the parties involved. Firstly, any person wishing to apply for a TCO must ensure their application is made in accordance with the Act's provisions and that it pertains to goods that are not specified in section 269SJ of the Act, which excludes certain goods from TCO eligibility. Once an application is accepted as valid, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). Additionally, the CEO is required to make a decision on whether the application meets the core criteria and to issue a TCO if satisfied (section 269P(3)). In this case, the CEO received no submissions opposing the TCO for certain paint scrapers, facilitating the issuance of TCO No. 0719544.
Breaching the requirements or failing to comply with the obligations stipulated in the Act can lead to various consequences. Although the specific civil or criminal penalties are not outlined in this explanatory statement, general breaches of customs legislation can result in substantial fines, imprisonment, or both, depending on the severity and intent of the breach. The Act also ensures that the rights of any person, other than the Commonwealth, are not adversely affected by the TCO, and no new liabilities are imposed on them in respect of actions taken before the TCO's effective date. Importers, however, will benefit from the TCO by being able to apply for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).