EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0835681
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.
Mondo Pacific Pty Ltd applied for a TCO in respect of certain flooring and or underlay on 15 October 2008.
Instrument
TCO No 0835681 was made on 14 January 2009. It declares that those certain flooring and or underlay 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. 0835681 is taken to have come into force on 15 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 Customs Act 1901 was enacted to provide a framework for the regulation of customs and excise duties, including mechanisms for tariff concession orders. This legislative instrument, F2009L01269, specifically addresses the need to grant tariff concessions on certain goods that are not produced in Australia, thereby encouraging imports and potentially lowering costs for businesses and consumers. This instrument was introduced to address the gap in the tariff structure where certain goods, such as specific flooring and underlay products, were subject to a higher rate of customs duty than would be beneficial to the market. The policy objective is to ensure that goods which cannot be produced domestically are imported at a reduced tariff rate, fostering economic efficiency and competition. The instrument was enacted by the Australian Government, allowing the Chief Executive Officer of Customs to make Tariff Concession Orders, thus facilitating the import of these goods at a lower duty rate.
Scope and Application
The Tariff Concession Instrument No. 0835681 under the Customs Act 1901 applies to the specific goods for which Mondo Pacific Pty Ltd applied, namely certain flooring and underlay. The instrument provides a lower rate of customs duty on these goods by declaring them as subject to a Tariff Concession Order (TCO). This legislation is part of a broader scheme under section 269F of the Customs Act 1901, which allows for the application of tariff concessions by the Chief Executive Officer of Customs (CEO). The CEO is required to ensure that the application does not involve goods specified in section 269SJ of the Act, which are ineligible for a TCO. If the CEO determines that the application meets the core criteria set out in section 269C, a TCO is issued, effectively altering the applicable customs duty rate for the specified goods. The instrument's geographic reach is limited to Australia, where the customs duty rates are set out in the Customs Tariff Act 1995. The TCO does not affect any existing rights or liabilities of persons other than the Commonwealth and does not impose any new liabilities on any person. Importers of the specified goods are, however, entitled to apply for a refund of duty under the Customs Act 1901.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0835681, made under the Customs Act 1901, establish the framework for Tariff Concession Orders (TCOs) as outlined in section 269F (1). This instrument, effective from 14 January 2009, applies specifically to certain flooring and underlay, which are now subject to a duty rate of free, as opposed to the general rate of 5%, as specified in item 50 of Schedule 4 to the Customs Tariff Act 1995. The instrument was made after Mondo Pacific Pty Ltd applied for a TCO on 15 October 2008, and the Chief Executive Officer of Customs (CEO) was satisfied that no substitutable goods were produced in Australia at the time the application was lodged, meeting the core criteria as set out in sections 269C and 269P (3).
The Customs Act 1901 imposes specific obligations on both the CEO and applicants for TCOs. For the CEO, the primary obligation is to assess whether an application meets the core criteria as stipulated in section 269C. This includes verifying that no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. Additionally, the CEO must publish a notice in the Gazette once an application is accepted, inviting any interested parties to submit reasons why the TCO should not be made, as required by subsection 269K(1). For applicants, they must ensure that their application includes all necessary information and meets the core criteria to be considered valid.
There are no explicit offences or penalties outlined in this particular Tariff Concession Instrument. However, breaches of the Customs Act 1901, in general, may result in significant consequences. For instance, false or misleading statements in an application could lead to criminal charges and penalties under sections 239 and 240 of the Act. The maximum penalties for such offences can include substantial fines or imprisonment. Moreover, any misuse or improper claiming of tariff concessions could also result in civil penalties, including financial penalties and the requirement to repay any wrongly claimed concessions, as well as potential criminal charges for fraud.