EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0803403
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.
Lewis Pulleys Pty Ltd applied for a TCO in respect of certain ventilated pulleys on 22 February 2008.
Instrument
TCO No 0803403 was made on 09 May 2008. It declares that those certain ventilated pulleys 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 10%. 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. 0803403 is taken to have come into force on 22 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 Tariff Concession Instrument No. 0803403 was enacted under the Customs Act 1901 to address the need for providing tariff concessions for specific goods, thereby facilitating trade and potentially lowering import costs. This legislative instrument was introduced to support the economic objectives of the Customs Act by enabling the Chief Executive Officer of Customs to grant tariff concessions on goods where certain criteria are met, such as the absence of substitutable goods being produced in Australia. This was done to ensure that Australian businesses can compete effectively in the global market by reducing the cost of imported goods, which in turn could lead to increased efficiency and competitiveness. The Tariff Concession Instrument No. 0803403, which came into force on 22 February 2008, was made without any adverse impact on the rights of non-Commonwealth entities and provides a pathway for importers to apply for duty refunds on eligible goods.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at reducing the customs duty on specific goods. This legislation applies to any person or entity that wishes to apply for a TCO in relation to goods that are not explicitly excluded by section 269SJ of the Act. The application process requires the CEO to determine if the goods in question meet the core criteria, primarily by verifying that no substitutable goods are produced in Australia in the ordinary course of business. Once a TCO is granted, it affects the importation of the specified goods by granting them a lower rate of duty, as per the prescribed item of Schedule 4 to the Customs Tariff Act 1995. The TCO’s geographic and jurisdictional reach is national, given that the Customs Act operates throughout Australia. Importantly, the TCO does not retroactively disadvantage any person or impose liabilities on anyone in respect of actions taken before the order's registration date. The commencement of the TCO is effective from the date the application is lodged, and the rights of importers are beneficially affected by the concession. The scope of the Act may be extended or refined through subordinate instruments, but the primary focus remains on facilitating tariff concessions for eligible goods.
Key Provisions
The main operative sections of this legislation concern the application and creation of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901. Section 269F allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning specific goods. The CEO must assess whether the application meets the core criteria, which are outlined in sections 269C and 269P. If the application is deemed valid, the CEO must issue a written TCO (section 269P(3)). For instance, TCO No. 0803403 was issued for ventilated pulleys, effectively reducing their customs duty from 10% to free.
The Customs Act imposes several obligations on the parties involved. The CEO must ensure that the application does not pertain to goods specified in section 269SJ, which are ineligible for TCOs. The CEO must also determine that no substitutable goods are produced in Australia, as per section 269C. Additionally, once a TCO application is accepted, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). This ensures transparency and provides an opportunity for objections. In this case, no submissions were received, allowing the TCO to proceed.
Failure to comply with the provisions of the Customs Act can lead to various consequences. If a person knowingly provides false or misleading information in a TCO application, they may be liable for civil penalties under section 283-55 of the Crimes Act 1914. The maximum penalty for such an offence is 10,000 penalty units or imprisonment for five years, or both. Criminal prosecution can also result from more severe breaches, such as knowingly importing goods in contravention of the Customs Act, which can lead to significant fines and imprisonment. For civil penalties, the maximum fine can be up to 10,000 penalty units, reflecting the seriousness of non-compliance.