EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0808039
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.
KDB Engineering Pty LTd applied for a TCO in respect of certain examination couches on 14 May 2008.
Instrument
TCO No 0808039 was made on 25 July 2008. It declares that those certain examination couches 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. 0808039 is taken to have come into force on 14 May 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, enacted by the Australian Parliament, provides a framework for the regulation of customs and excise through various instruments, including Tariff Concession Orders (TCOs). The Act was introduced to address the need for a streamlined process to provide tariff concessions on certain imported goods, ensuring that Australian businesses and consumers benefit from reduced customs duty rates where appropriate. Instrument No. 0808039, which came into effect on 14 May 2008, was made under this legislative scheme to provide a tariff concession for specific examination couches, resulting in a reduction of the duty rate from 5% to free. The policy objective of this measure is to support Australian businesses by lowering the cost of importing certain goods, thereby enhancing their competitiveness. The instrument was developed following an application by KDB Engineering Pty Ltd, and no objections were received during the consultation period.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) which lower the rate of customs duty on specified goods. These orders can be applied for by any person and are subject to approval by the Chief Executive Officer of Customs, who must ensure that the goods in question are not specified in section 269SJ of the Act as ineligible for such concessions. The application process mandates that the CEO assess whether no substitutable goods were produced in Australia at the time of application, as defined in section 269C of the Act. If the core criteria are met, the CEO issues a written TCO, effectively applying a lower duty rate as specified in the Customs Tariff Act 1995. The TCO mechanism is designed to benefit importers by potentially allowing them to seek refunds on duties paid on goods imported since the effective date of the TCO, which is the date the application was lodged. Importantly, the TCO does not disadvantage any person or impose liabilities for actions taken prior to the order’s registration.
Key Provisions
The Tariff Concession Instrument No. 0808039, issued under the Customs Act 1901, outlines the provisions for a Tariff Concession Order (TCO) for certain examination couches (section 269P(3)). This instrument is crucial as it stipulates that these goods are subject to a 5% duty rate, down from the general rate applicable to similar goods (section 269P(3)). Section 269C of the Act details the core criteria that must be satisfied for a TCO to be issued. Specifically, the application must demonstrate that no substitutable goods are produced in Australia on the date the application is lodged (section 269C). The definitions of key terms, such as "goods produced in Australia" and "ordinary course of business," are found in sections 269D and 269E, respectively.
The obligations imposed by this Act are significant for applicants and the Chief Executive Officer of Customs (CEO). The applicant must ensure that their application for a TCO is made in good faith and that it meets the criteria set out in the Act, particularly the requirement that no substitutable goods are produced in Australia (section 269C). The CEO, on the other hand, has the duty to review the application and make a decision based on the core criteria. Furthermore, as per subsection 269K(1), the CEO must publish a notice in the Gazette, inviting submissions from any interested parties who might have reasons to oppose the TCO (subsection 269K(1)). In this case, the CEO did not receive any submissions against the application, facilitating the issuance of the TCO.
Failure to comply with the provisions of the Customs Act 1901 could result in various legal consequences. While the Act does not explicitly outline offences or penalties for non-compliance with TCO applications, breaches of other sections of the Customs Act could lead to civil or criminal penalties. For example, knowingly making a false statement in a customs document can result in a fine of up to 10,000 penalty units or imprisonment for five years, or both (subsection 228D(4)). Additionally, if the TCO provisions are manipulated to circumvent the intended benefits, this could potentially lead to legal action under the general customs fraud provisions, which carry severe penalties including substantial fines and imprisonment.