EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721995
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.
Olex Australia Pty Limited applied for a TCO in respect of certain drum twister on 24 December 2007.
Instrument
TCO No 0721995 was made on 14 March 2008. It declares that those certain drum twister 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. 0721995 is taken to have come into force on 24 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 was enacted by the Parliament of Australia to provide a framework for the administration of customs and excise duties, and to ensure the effective regulation of the importation and exportation of goods. The Act addresses the need for a streamlined process to provide tariff concessions on specific goods, thereby promoting trade and economic growth by reducing the cost of importing certain goods. Tariff Concession Orders (TCOs) are a mechanism within the Act that allows for the reduction or exemption of customs duty on goods under certain conditions. The Explanatory Statement for Instrument No. 0721995, made under the Customs Act 1901, outlines the process by which the Chief Executive Officer of Customs can grant a TCO, provided that the application meets specific criteria, such as the absence of substitutable goods produced in Australia. The instrument was introduced to benefit importers by reducing the duty on certain drum twisters to zero, effective from the date the application was lodged, 24 December 2007.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs), which allow for lower rates of customs duty on certain goods. This legislation applies to any person who may apply to the Chief Executive Officer of Customs for a TCO, provided that the goods in question are not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The scope of the Act is limited to goods that are not substitutable by any goods produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. The Act applies across the Commonwealth of Australia and is implemented nationally. The Act can extend its application through subordinate instruments, such as the Customs Tariff Act 1995, which further details the specific duties and concessions applicable to various goods. The TCO process also involves a period for public consultation, as outlined in subsection 269K(1), although no objections were raised in the case of TCO No. 0721995. The TCOs do not retroactively affect the rights or impose liabilities on persons other than the Commonwealth in relation to actions taken before the registration of the TCO.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0721995, which is grounded in the Customs Act 1901, revolve around the facilitation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Specifically, section 269F (1) allows for an application to be made to the CEO for a TCO in respect of goods, provided that the goods are not those specified in section 269SJ, which cannot be subject to a TCO. The CEO must then decide whether the application meets the core criteria outlined in section 269C, which requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This criterion is further defined in sections 269D, 269E and 269F, which explain the meaning of "goods produced in Australia", "ordinary course of business", and "substitutable goods" respectively. If the CEO is satisfied that the application meets the core criteria, they are mandated under subsection 269P(3) to make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which specifies the applicable duty rates.
Entities and individuals governed by this Act have specific obligations and requirements. For example, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested party to lodge a submission if they believe there are reasons why the TCO should not be made. This requirement is set out in subsection 269K(1) of the Act. Additionally, once a TCO is made, it is taken to have come into force on the day on which the application for the TCO was lodged, as stipulated in subsection 269S(1) of the Act. Furthermore, TCOs do 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.
In terms of offences, penalties, or civil/criminal consequences for breach, the explanatory statement does not detail specific offences or penalties related to the failure to comply with the provisions of the TCO. However, it is implied that any breach of the Customs Act 1901, which governs the creation and operation of TCOs, could lead to civil or criminal penalties as outlined in the Act. Typically, breaches of customs legislation can result in substantial fines and, in severe cases, imprisonment. However, the precise nature and extent of these penalties would need to be determined by reference to the broader provisions of the Customs Act 1901 and any relevant subsidiary legislation.