EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0809407
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.
Edoma Australia applied for a TCO in respect of certain sweeping machines on 22 May 2008.
Instrument
TCO No 0809407 was made on 08 August 2008. It declares that those certain sweeping machines 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. 0809407 is taken to have come into force on 22 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 managing customs and border controls, including the establishment of a scheme for Tariff Concession Orders (TCOs). The Act was designed to facilitate the import of goods that are not produced in Australia, thereby supporting economic efficiency and consumer choice. The explanatory statement for Tariff Concession Instrument No. 0809407 clarifies the process for issuing a TCO, which was applied to certain sweeping machines in this instance. The instrument was introduced to ensure that no substitutable goods were produced in Australia, thus allowing for the concession of lower customs duty rates. The policy objective is to provide relief from customs duties on imported goods that have no local equivalent, thereby promoting trade and economic activity without disadvantaging existing rights or imposing new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0809407, made under the Customs Act 1901, applies to certain sweeping machines, with Edoma Australia being the specific applicant for the concession. The Act allows for the application of lower rates of customs duty on goods that are the subject of a Tariff Concession Order (TCO), provided that the application meets the core criteria stipulated in section 269C of the Act. In this instance, the Chief Executive Officer of Customs (CEO) determined that the application met the core criteria, as no substitutable goods were produced in Australia on the day the application was lodged. As a result, the TCO declares that the sweeping machines are subject to a rate of duty of free, whereas the general rate of duty on these goods is 5%. The instrument is effective as of the date the application was lodged, 22 May 2008, and does not impose any liabilities on any person other than the Commonwealth. Importantly, the TCO does not affect the rights of any person, except the Commonwealth, in a way that would disadvantage them or impose liabilities for actions taken before the registration date. Importers, in particular, will benefit from the ability to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The key provisions of the Customs Act 1901, as applied in Tariff Concession Instrument No. 0809407, involve the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty to certain goods. Specifically, section 269F (1) of the Act allows for applications to the CEO for TCOs in respect of goods. The CEO must then assess whether the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO determines that these criteria are met, a written order declaring the goods subject to the concession must be made, as per section 269P (3). For the sweeping machines in question, the CEO made TCO No. 0809407 on 8 August 2008, applying a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, given the general duty rate is 5%.
Entities and individuals governed by the Act must adhere to the procedures outlined for applying for and receiving a TCO. This involves ensuring that the goods in question meet the eligibility criteria, particularly that no substitutable goods are produced in Australia. The CEO must also publish a notice in the Gazette inviting submissions from interested parties, as per section 269K (1). If no objections are received, the TCO can proceed as made. The Act ensures that the rights of the Commonwealth and others are protected, and no liabilities are imposed on anyone due to the TCO, as stated in subsection 269S (1).
The Act imposes several obligations on the parties involved. The applicant must ensure that their application for a TCO is made in accordance with the Act and that all relevant information is provided to the CEO. The CEO must then assess the application against the core criteria and publish a notice in the Gazette inviting submissions. The CEO's role is critical in ensuring that the TCO process is transparent and that all interested parties have an opportunity to voice their concerns. The obligations extend to ensuring that the rights of importers are protected, particularly regarding the ability to apply for duty refunds under paragraph 126 (1) (r) of the Regulations.
Failure to comply with the provisions of the Act or the terms of a TCO can lead to civil and criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs laws generally can result in fines and imprisonment. For instance, under section 276 of the Customs Act 1901, penalties can include fines up to $22,000 or imprisonment for up to two years, or both, for serious breaches. The exact penalties would depend on the nature and severity of the breach. The Act ensures that there are robust mechanisms in place to enforce compliance and protect the interests of all stakeholders involved.