EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721938
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.
Total Rubber Ltd applied for a TCO in respect of certain coupling components on 21 December 2007.
Instrument
TCO No 0721938 was made on 07 March 2008. It declares that those certain coupling components 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. 0721938 is taken to have come into force on 21 December 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, provides a framework for the regulation of customs and excise in Australia. Part XVA of this Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that grant lower rates of customs duty on specified goods, provided that certain criteria are met. Specifically, the Act ensures that the goods subject to a TCO are not substitutable by goods produced in Australia in the ordinary course of business. Total Rubber Ltd's application for a TCO regarding certain coupling components, granted via Instrument TCO No. 0721938 on 07 March 2008, exemplifies this process. The TCO effectively reduces the duty rate from the general 5% to free, effective from the date the application was lodged on 21 December 2007. The legislation also mandates public consultation on TCO applications, although no submissions were received for this particular TCO. Importantly, the TCO does not retroactively affect the rights of non-Commonwealth entities and does not impose liabilities on anyone.
Scope and Application
The Tariff Concession Instrument No. 0721938, made under the Customs Act 1901, applies to specific coupling components for which Total Rubber Ltd sought a tariff concession order (TCO) on 21 December 2007. The application was processed and approved by the Chief Executive Officer of Customs, who determined that no substitutable goods were produced in Australia at the time, thereby meeting the core criteria as outlined in section 269C of the Act. The TCO was issued on 7 March 2008, declaring that the specified coupling components are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, effectively reducing the duty rate from 5% to free. This concession does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth, and it came into effect from the date the application was lodged. Importers of the affected goods can apply for a refund of duty from the date the TCO was taken to be in force.
Key Provisions
The main provisions of Tariff Concession Order No. 0721938 (TCO No. 0721938) under the Customs Act 1901 (section 269C) involve the application process for tariff concessions on certain coupling components. When a person, such as Total Rubber Ltd, applies for a tariff concession order (section 269F), the Chief Executive Officer of Customs (CEO) must determine if the application meets the core criteria, specifically if no substitutable goods are produced in Australia (section 269P(3)). If the application meets these criteria, the CEO is required to make a written order declaring that the goods in question are subject to a lower rate of customs duty, which is free in this case, as opposed to the general rate of 5% (section 269P(3)).
The obligations imposed by the Act on the parties involved include ensuring that the application for a tariff concession order is made in accordance with the stipulated requirements. The CEO must assess the application against the core criteria, including the absence of substitutable goods produced in Australia, and make a decision based on this assessment. Furthermore, the CEO is obligated to publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the concession should not be granted (subsection 269K(1)). In this instance, the CEO did not receive any submissions against the concession.
Any breach of the conditions or obligations set out in the Act may lead to civil or criminal consequences. However, the explanatory statement does not explicitly outline specific offences or penalties for breaches in this context. The consequences of non-compliance would generally be determined by the courts based on the broader provisions of the Customs Act 1901 and any relevant regulations. The explanatory statement notes that the TCO does not affect the rights of any person as at the date of registration or impose liabilities on any person in respect of actions taken before the registration date. Importers, however, benefit from being able to apply for a refund of duty on goods imported since the TCO came into force.
Overall, TCO No. 0721938 effectively reduces the customs duty on certain coupling components to zero, provided that the conditions set out in the Customs Act 1901 are met. The Act and the associated regulations ensure that the application process is transparent and that any interested parties have an opportunity to be heard before a decision is made.