EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0817914
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.
Jasco Pty Ltd applied for a TCO in respect of certain mechanical pencils on 14 July 2008.
Instrument
TCO No 0817914 was made on 26 September 2008. It declares that those certain mechanical pencils 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. 0817914 is taken to have come into force on 14 July 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, amended by the Tariff Concession Instrument No. 0817914 enacted in 2008, addresses the need for tariff concessions on certain goods to foster economic efficiency and competitiveness within the Australian market. This instrument enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply reduced customs duty rates on specified goods, provided no substitutable goods are produced in Australia. This legislative measure was introduced to enhance the competitiveness of Australian industries by reducing import costs for certain goods, thereby facilitating more cost-effective imports and potentially lowering consumer prices. The policy objective is to support Australian businesses by making imported goods more affordable and accessible, which can contribute to broader economic benefits by encouraging trade and investment.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the process for Tariff Concession Orders (TCOs) which can be applied for by any person seeking lower rates of customs duty on goods. The Act applies to entities and individuals who wish to import goods and benefit from reduced customs duties under the scheme, provided these goods do not fall under the prohibited list outlined in section 269SJ. The application for a TCO must meet core criteria, primarily that no substitutable goods are produced in Australia, as defined by sections 269C, 269D, 269E, and 269P(3). Once the Chief Executive Officer of Customs is satisfied that the application meets these criteria, they must issue a written order declaring the goods eligible for the reduced duty rate. The application process also requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties, although in the case of TCO No. 0817914, no submissions were received. The TCO itself does not affect existing rights or impose new liabilities, except to beneficially affect the rights of importers who may apply for duty refunds for goods imported since the effective date of the TCO.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 0817914, made under the Customs Act 1901 (the Act), revolve around the establishment of a Tariff Concession Order (TCO) for specific mechanical pencils, as outlined in section 269F (2). The instrument was issued on 26 September 2008, following an application by Jasco Pty Ltd on 14 July 2008. Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, they must issue a TCO. These core criteria, as defined in section 269C, necessitate that no substitutable goods were produced in Australia on the day the application was lodged, with the definitions of "goods produced in Australia", "ordinary course of business" and "substitutable goods" provided in sections 269D, 269E, and 269F respectively. The TCO declares that these mechanical pencils are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, thus attracting a duty rate of free, as opposed to the general rate of 5%.
The obligations imposed by this Act on the parties involved are primarily centred around the application and approval process for TCOs. Section 269K(1) requires the CEO to publish a notice in the Gazette once an application is accepted as valid, inviting submissions from any interested parties. In this case, no submissions were received. Furthermore, subsection 269S(1) stipulates that the TCO comes into force on the day the application was lodged, which, in this instance, is 14 July 2008. This ensures that the rights of persons, apart from the Commonwealth, are not adversely affected by the TCO in relation to actions taken before its registration.
Under the Act, breaches of the provisions or failure to comply with the obligations could lead to various consequences. However, the explanatory statement does not explicitly outline specific offences, penalties, or consequences for breach of the TCO. Typically, breaches of the Customs Act 1901 could result in both civil and criminal penalties, depending on the nature and severity of the breach. Civil penalties might include fines, while criminal penalties could encompass imprisonment, depending on the specific provision contravened and the discretion of the court. It is advisable for parties involved to ensure strict compliance with the Act and its related instruments to avoid any potential penalties or legal repercussions.