EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0834894
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.
Woolworths Limited applied for a TCO in respect of certain conveyance parts on 10 October 2008.
Instrument
TCO No 0834894 was made on 14 January 2009. It declares that those certain conveyance parts 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. 0834894 is taken to have come into force on 10 October 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. 0834894 was enacted in 2009 under the Customs Act 1901 to provide tariff concessions for certain goods, specifically conveyance parts in this case. The Customs Act 1901 establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs, allowing for reduced customs duty rates on specified goods. This legislative instrument was introduced to address the issue of ensuring that Australian businesses can access goods that are not produced domestically at competitive rates, thereby encouraging economic efficiency and supporting local industries.
The instrument was made following an application by Woolworths Limited for a TCO concerning certain conveyance parts. After the Chief Executive Officer of Customs confirmed that no substitutable goods were produced in Australia, a TCO was issued to apply a zero rate of duty on these parts, reducing the general duty rate from 5%. The instrument came into effect on the date the application was lodged, 10 October 2008, and does not disadvantage any person or impose liabilities on anyone other than the Commonwealth. Importers of these goods will benefit from the ability to apply for a refund of duty on imports since the TCO's effective date.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply a reduced rate of customs duty on specified goods. This Act applies to any person or entity seeking tariff concessions for goods not produced in Australia, as outlined by section 269SJ. The geographic reach of the Act is national, extending across the Commonwealth of Australia. Notably, the Act excludes certain goods from TCO consideration, such as those specified in section 269SJ, and requires that the goods in question are not substitutable by any produced within Australia. The Act also mandates that a TCO application must not pertain to goods for which substitutable products are already manufactured domestically, as per sections 269C and 269P(3). Once a TCO is issued, it applies retroactively to the date the application was lodged, as per subsection 269S(1), ensuring that importers of the affected goods can apply for duty refunds from that date. The Act allows for the expansion of its application through subordinate instruments, which may further detail the criteria and processes involved in TCO applications.
Key Provisions
The Tariff Concession Instrument No. 0834894 under the Customs Act 1901 provides for the application of a lower rate of customs duty on certain conveyance parts. According to section 269P(3) of the Act, if the Chief Executive Officer (CEO) of Customs is satisfied that a Tariff Concession Order (TCO) application meets the core criteria, they must make a written order declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. In this instance, TCO No. 0834894 was made on 14 January 2009, specifying that the certain conveyance parts are goods to which item 50 of Schedule 4 applies, with a rate of duty free, whereas the general rate is 5%.
Under section 269C of the Act, the core criteria for a TCO application are met if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269F respectively. The CEO must also ensure that the application is not in respect of goods specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO.
The Act imposes several obligations on the parties involved. The CEO must, upon receiving a valid TCO application, publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to submit a response. In this case, as stated in the explanatory statement, no submissions were received. Furthermore, once a TCO is made, it is taken to have come into force on the day the application was lodged. Therefore, TCO No. 0834894 is effective from 10 October 2008, the day the application was made.
Any breach of the obligations under the Customs Act 1901 may result in civil or criminal penalties. However, the explanatory statement does not provide specifics on the penalties for non-compliance with the TCO provisions. The penalties for breaches of the Customs Act generally can range from fines to imprisonment, depending on the severity and nature of the breach. For example, under section 254 of the Act, a person who commits an offence against the Act can be subject to a penalty of up to $22,200 or imprisonment for up to five years, or both. However, these penalties are not specifically related to TCOs but apply broadly to breaches of the Customs Act.