EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0836432
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.
Jord International Pty Ltd applied for a TCO in respect of certain filter separator parts on 22 October 2008.
Instrument
TCO No 0836432 was made on 16 January 2009. It declares that those certain filter separator 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. 0836432 is taken to have come into force on 22 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, enacted by the Australian Parliament, establishes a framework for the imposition of customs duty on imported goods. The Act aims to regulate the importation of goods into Australia and to provide for the collection of customs duty and excise. Within this framework, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders provide for a lower rate of customs duty on specified goods, provided certain criteria are met. The Tariff Concession Instrument No. 0836432, made in 2009, is an example of such an order. This instrument was introduced to address the specific need of Jord International Pty Ltd for tariff concessions on certain filter separator parts, which were determined to have no substitutable goods produced in Australia, thereby meeting the core criteria for a TCO. The instrument was made without any submissions opposing the concession, and it came into force on the date the application was lodged, thereby ensuring that the rights of importers were beneficially affected without imposing any new liabilities.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes the framework for Tariff Concession Orders (TCOs), which are issued by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on certain goods. These orders are applicable to individuals or entities seeking to import goods that meet the criteria outlined in the Act, which include the absence of substitutable goods produced in Australia at the time of the application. The TCO applies nationally, as it is a Commonwealth instrument, and its effect is governed by the Customs Act 1901 and the Customs Tariff Act 1995. Notably, the TCO does not retroactively affect the rights or impose liabilities on individuals or entities, thus protecting them from any disadvantage or obligation in relation to actions taken prior to the order's effective date. The scope of the TCO is limited to the specific goods for which it was applied and granted, and it does not extend to goods specified in section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0836432, made under the Customs Act 1901, are sections 269C, 269F, and 269P. Section 269F (3) mandates that the Chief Executive Officer of Customs (CEO) must make a Tariff Concession Order (TCO) if satisfied that the application for a TCO meets the core criteria specified in section 269C. Section 269P(3) further outlines the requirement for the CEO to issue a written order declaring the goods subject to the TCO. According to section 269C, the core criteria for a TCO application include ensuring that no substitutable goods were produced in Australia on the day the application was lodged. This determination is made under the definitions provided in sections 269D, 269E, and 269F.
The obligations imposed by this Act on the parties or entities it governs include the requirement for applicants to ensure that their applications for TCOs meet the specified core criteria. Specifically, applicants must demonstrate that the goods for which they are seeking tariff concessions are not substitutable by any goods produced in Australia in the ordinary course of business. The CEO, upon receiving an application, must assess the application against these criteria and, if satisfied, issue a TCO. Additionally, the CEO is obligated to publish a notice in the Gazette, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission. In this case, the CEO did not receive any submissions in response to the published notice.
Failure to comply with the requirements of the Customs Act 1901, particularly in relation to the submission of false information or the provision of misleading details in a TCO application, may result in various consequences. Under section 274 of the Customs Act 1901, penalties for providing false or misleading information can include fines of up to $22,200 for individuals and $111,000 for corporations, depending on the severity of the breach. Furthermore, in the event of fraudulent activities or deliberate non-compliance, more severe penalties, including imprisonment, may apply. The Act also provides for civil and criminal consequences, which can include fines and imprisonment, for breaches related to customs duties and related offences.