EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0815259
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.
Robert Bosch Proprietary Limited applied for a TCO in respect of certain fan control module on 30 June 2008.
Instrument
TCO No 0815259 was made on 19 September 2008. It declares that those certain fan control module 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. 0815259 is taken to have come into force on 30 June 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, addresses the issue of providing tariff concessions for certain goods that are not produced in Australia and therefore do not have substitutable domestic equivalents. The Act establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on specified goods, facilitating trade and potentially benefiting importers by reducing their duty liabilities. In line with the policy objective to promote fair trade practices and economic efficiency, TCOs are subject to a rigorous application process where the CEO must be satisfied that the goods in question meet specific criteria, including the absence of substitutable Australian-made products. The Explanatory Statement for Tariff Concession Instrument No. 0815259, for example, details an application by Robert Bosch Proprietary Limited for a TCO on certain fan control modules, which was granted because no substitutable goods were produced in Australia, thereby resulting in a duty-free rate for these goods.
Scope and Application
The Customs Act 1901, under Part XVA, outlines a mechanism for granting Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can reduce customs duties on specified goods. The Act applies to entities and individuals seeking to import goods into Australia, provided that the goods do not fall under the list of ineligible items stipulated in section 269SJ. The application process requires the applicant to demonstrate that no substitutable goods are produced in Australia, as defined in sections 269D and 269E of the Act. Upon approval, a TCO can significantly lower the customs duty on the specified goods, as illustrated by Tariff Concession Instrument No. 0815259, which applies a zero-duty rate to certain fan control modules, effectively benefiting importers who can claim refunds for duties paid prior to the TCO’s effective date. This legislative framework ensures that while the rights of importers are positively impacted, no existing liabilities are imposed on any party other than the Commonwealth.
Key Provisions
The Tariff Concession Order (TCO) No. 0815259 under the Customs Act 1901 applies to certain fan control modules. Pursuant to section 269F, an applicant can request the Chief Executive Officer of Customs (CEO) to create a TCO, provided the goods in question do not fall under the prohibitions outlined in section 269SJ. If the CEO determines that the application meets the core criteria, as defined in section 269C, they are required to issue a TCO. For a TCO application to meet these criteria, it must be established that no substitutable goods were produced in Australia at the time of the application, as per section 269C. This determination is made by considering whether the goods are produced in Australia (as defined by section 269D) and whether they are produced in the ordinary course of business (as per section 269E). Additionally, the concept of 'substitutable goods' is clarified in section 269D, indicating goods that can be used in a manner similar to the goods in question. If the CEO is satisfied that these conditions are met, they must issue a written TCO, as per section 269P(3), specifying the tariff concession under Schedule 4 of the Customs Tariff Act 1995.
The obligations under this Act for parties include ensuring that any application for a TCO is made in accordance with the legislative requirements. The CEO has the responsibility to assess whether the application meets the core criteria and, if so, to issue the TCO. Importers must be aware that if they import the specified goods, they may be eligible for a refund of duty under paragraph 126(1)(r) of the Regulations, provided they apply for such a refund after the TCO has come into effect. The Act ensures that the rights of individuals are protected, such that the TCO does not disadvantage anyone or impose liabilities for actions taken prior to the TCO's effective date.
Failure to comply with the provisions of the Customs Act 1901 regarding the application or issuance of a TCO could lead to legal consequences. While the explanatory statement does not specify detailed offences or penalties, breaches of customs regulations generally can result in both civil and criminal penalties. Civil penalties might include financial penalties or the confiscation of goods, while criminal penalties could include fines and imprisonment, depending on the severity of the breach. The exact penalties would be determined by the relevant sections of the Customs Act and any related legislation, and could vary based on the specific circumstances of the breach.