EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0802798
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.
Toshiba International Corp Pty Ltd applied for a TCO in respect of certain transformers on 19 February 2008.
Instrument
TCO No 0802798 was made on 28 April 2008. It declares that those certain transformers 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. 0802798 is taken to have come into force on 19 February 2008.
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 provide a framework for the administration of customs and excise duties. Part XVA of this Act establishes a scheme for Tariff Concession Orders (TCOs), which allows for the application of lower rates of customs duty on specified goods. Enacted to address the gap in tariff concessions for certain imported goods that are not produced domestically, the Act enables the Chief Executive Officer of Customs to make these orders if certain criteria are met. In the case of Tariff Concession Instrument No. 0802798, Toshiba International Corp Pty Ltd applied for a TCO for certain transformers on 19 February 2008, and the instrument was made on 28 April 2008. The instrument declares that the specified transformers are subject to a free rate of duty, down from the general rate of 5%, as no substitutable goods were produced in Australia. This TCO is designed to benefit importers by potentially allowing them to apply for a refund of duty on goods imported since the effective date of the order, 19 February 2008, without imposing any liabilities on non-Commonwealth persons.
Scope and Application
The Customs Act 1901, specifically Part XVA, authorises the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) that apply a reduced rate of customs duty to certain goods. The legislation applies to any person or entity that applies for a TCO in respect of goods, provided the application meets the core criteria set out in the Act. These criteria include the absence of substitutable goods produced in Australia in the ordinary course of business. The scope of the Act extends to all goods that are eligible for tariff concessions, as defined by the Act, and the instrument applies on a national level as it pertains to Commonwealth legislation. Exclusions from the application of a TCO are explicitly stated in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO’s authority to issue TCOs may be further defined or extended through subordinate instruments, although the primary parameters are established within the Act itself. The TCO in question, Instrument No. 0802798, effectively grants a free duty rate on certain transformers, benefiting importers by potentially allowing them to claim refunds on duties paid prior to the TCO’s effective date.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0802798 under the Customs Act 1901 pertain to the establishment of tariff concession orders (TCOs) for specific goods. Section 269F enables an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning goods. If the application is not in respect of goods listed in section 269SJ, which are ineligible for TCOs, the CEO must evaluate the application against the core criteria (section 269C). A TCO application meets these criteria if, on the application date, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions for terms such as "substitutable goods" and "ordinary course of business" are provided in sections 269D, 269E, and 269F of the Act. If the CEO determines that the application meets the core criteria, they must issue a written order (section 269P(3)), declaring that the goods in question are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by this Act on parties or entities include the requirement for an applicant to ensure their TCO application complies with the core criteria set out in the Act. The CEO must review applications to verify that they are not in respect of ineligible goods and that no substitutable goods were produced in Australia. Upon meeting these criteria, the CEO must publish a notice in the Gazette inviting submissions from interested parties (subsection 269K(1)) and make a decision on the application. The TCO will apply from the date the application was lodged (subsection 269S(1)). Importers benefit from this process as they can apply for a refund of duty on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
The Act imposes civil and criminal consequences for breaches. While the explanatory statement does not detail specific penalties, the Customs Act 1901 generally provides for significant fines and imprisonment for customs-related offences. The maximum penalties can vary depending on the nature and severity of the breach, but they may include substantial fines and/or imprisonment for individuals found guilty of knowingly making false statements or engaging in fraudulent activities related to customs duties and tariffs. Legal and compliance obligations are stringent, underscoring the importance of adhering to the provisions of the Customs Act 1901 and its subsidiary instruments.