EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719546
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.
CSR Building Products Limited applied for a TCO in respect of certain aluminium foil on 15 November 2007.
Instrument
TCO No 0719546 was made on 29 January 2008. It declares that those certain aluminium foil 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. 0719546 is taken to have come into force on 15 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 was enacted by the Australian Parliament to regulate the importation and exportation of goods, including the imposition of customs duty. The Act provides for the creation of Tariff Concession Orders (TCOs) to grant concessions on customs duty rates for specific goods under certain conditions. The problem or gap that the Act was introduced to address was the need for a flexible mechanism to provide tariff concessions on goods that are not produced domestically and for which there are no substitutable goods available in Australia. TCO No. 0719546, made on 29 January 2008, is an instrument under Part XVA of the Customs Act 1901, which allows the Chief Executive Officer of Customs to grant tariff concessions on certain aluminium foil, reducing the duty rate from 5% to free. The policy objective of the instrument is to provide tariff relief to importers of the specified aluminium foil, thereby potentially lowering the cost of these goods and making them more competitive in the market. The instrument was made after CSR Building Products Limited applied for a TCO on 15 November 2007, and no submissions were received in response to the invitation for public comment on the application.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the process through which Tariff Concession Orders (TCOs) are granted, allowing for a reduced rate of customs duty on certain goods. These orders are made by the Chief Executive Officer of Customs (CEO) and apply to goods for which an application has been submitted and approved, provided they do not pertain to goods that cannot be subject to a TCO as specified in section 269SJ. The application must meet core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia at the time of application. The CEO is mandated to make a written order if the application is deemed to meet these criteria. The TCO affects the rate of duty applicable to the specified goods, as demonstrated in TCO No. 0719546 for certain aluminium foil, where the duty rate was reduced from 5% to free, effective from the date the application was lodged. The legislation ensures that the rights of importers are advantageously impacted, with potential duty refunds available for imports since the TCO's effective date, while not imposing any liabilities on persons other than the Commonwealth.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines a process for applying for Tariff Concession Orders (TCOs) to reduce customs duty on certain goods. Under section 269F, a person can apply to the Chief Executive Officer (CEO) of Customs for a TCO. If the CEO determines that the application pertains to goods that are not excluded under section 269SJ, they must assess whether the application meets the core criteria set out in section 269C. For the application to meet these criteria, it must be established that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, they must issue a written order under section 269P(3), declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
The obligations imposed by the Act on the parties involved primarily focus on the application and assessment process for TCOs. The CEO must promptly assess the validity of the application against the core criteria and ensure that the application is not for goods that are ineligible under section 269SJ. Furthermore, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties if they believe the TCO should not be granted, as per subsection 269K(1). Once a TCO is issued, it is effective from the date the application was lodged, as specified in subsection 269S(1). This means that the concessions granted by the TCO apply retroactively from the date the application was submitted.
Breaching the provisions of the Customs Act 1901, particularly in the context of TCOs, can lead to both civil and criminal consequences. While the explanatory statement does not detail specific penalties, general provisions under the Customs Act and related Acts may impose fines or other penalties for non-compliance. For instance, making false statements or providing misleading information in an application could result in fines or imprisonment, depending on the severity of the offence. Additionally, any misuse of the tariff concessions, such as attempting to import goods under false pretenses to benefit from the reduced duty, could lead to further legal repercussions including civil penalties or criminal charges.