EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721940
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 quick connect couplings on 21 December 2007.
Instrument
TCO No 0721940 was made on 14 March 2008. It declares that those certain quick connect couplings 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. 0721940 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 Australian Parliament, facilitates the application of tariff concessions on specific goods through Tariff Concession Orders (TCOs). This legislative framework was introduced to address the need for a streamlined process that allows for the reduction or exemption of customs duty on goods, particularly where no suitable substitute is produced domestically. The explanatory statement for Tariff Concession Instrument No. 0721940, made on 14 March 2008, elucidates the procedure for applying for and granting a TCO. It specifies that for a TCO to be granted, the goods in question must not have substitutable equivalents produced in Australia. In the case of Total Rubber Ltd's application for a TCO on quick connect couplings, the Chief Executive Officer of Customs was satisfied that no such domestic substitutes existed, thereby allowing the application to proceed. This legislative mechanism ensures that the rights of importers are positively impacted, offering them potential duty refunds for imports made since the effective date of the TCO, while ensuring no new liabilities are imposed on any party.
Scope and Application
The Customs Act 1901, through its Part XVA, provides the framework for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation allows for a lower rate of customs duty on goods that meet certain criteria and are subject to a TCO. The Act applies to any person or entity seeking a tariff concession on specific goods, provided these goods are not those listed in section 269SJ, which are ineligible for such concessions. The CEO must determine if an application meets the core criteria, specifically if no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged, as outlined in sections 269C, 269D, and 269E of the Act. The instrument in question, TCO No. 0721940, was made effective from 21 December 2007, the date the application was lodged, and concerns certain quick connect couplings, which now attract a duty rate of free instead of the general rate of 5%. The scope of the legislation extends across Australia, with the CEO required to publish notices in the Gazette to invite submissions on TCO applications, although no submissions were received for this particular order. The commencement of the TCO ensures that it does not affect the rights of any person in a way that would disadvantage them or impose liabilities for actions taken prior to the order's effective date.
Key Provisions
The Tariff Concession Order No. 0721940 (the "Order") establishes a concessional rate of customs duty for certain quick connect couplings, as outlined in section 269P(3) of the Customs Act 1901. The Order was made on 14 March 2008 by the Chief Executive Officer of Customs (the "CEO") following an application from Total Rubber Ltd on 21 December 2007. According to section 269F of the Act, the CEO was required to assess the application to determine if it met the core criteria specified in section 269C. The Order specifies that these particular quick connect couplings are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, which sets the duty rate at zero percent, thereby providing a tariff concession.
Entities governed by this Order, primarily importers and manufacturers of quick connect couplings, must comply with the specific tariff rates as outlined in the Order. Importers of these goods can benefit by applying for a refund of duty on imports since the Order's effective date, which is 21 December 2007 under section 269S(1). The CEO must ensure that the application meets the core criteria, which includes confirming that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged, as per section 269C.
Failure to comply with the provisions of the Order can lead to legal consequences. Section 269K(1) of the Act mandates that the CEO must publish a notice in the Gazette inviting submissions from any interested parties who might have reasons against the Order. Although no submissions were received in this instance, any non-compliance with the conditions specified in the Order could result in civil or criminal penalties. The maximum penalties for breaches of the Customs Act 1901 include fines and imprisonment, as outlined in other sections of the Act. However, specific penalties for this Order are not detailed in the explanatory statement, but they would generally align with the broader penalties provided under the Customs Act.