EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0837499
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.
Osmoflo Pty Ltd applied for a TCO in respect of certain flexible stainless steel couplings on 29 October 2008.
Instrument
TCO No 0837499 was made on 16 January 2009. It declares that those certain flexible stainless steel couplings 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. 0837499 is taken to have come into force on 29 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 Commonwealth Parliament, establishes a framework for administering customs duties and tariffs in Australia. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at providing relief from customs duties on certain goods under specific conditions. This legislative instrument addresses the gap by allowing for tariff concessions to be granted to importers of goods for which no substitutable goods are produced domestically. The primary objective, as outlined in the Act, is to ensure that the import of certain goods is facilitated by reducing or eliminating customs duty, thereby potentially lowering costs and increasing competitiveness without disadvantaging existing rights or imposing new liabilities on non-Commonwealth entities. The Explanatory Statement for Tariff Concession Instrument No. 0837499 exemplifies this process, where Osmoflo Pty Ltd successfully applied for a TCO on flexible stainless steel couplings, leading to a reduction in the duty rate from 5% to free, effective from 29 October 2008.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to individuals and entities seeking to import goods that may qualify for a reduced rate of customs duty through a TCO. The application process involves determining whether the goods in question are substitutable by any goods produced in Australia in the ordinary course of business. If the CEO is satisfied that no such substitutable goods are produced domestically and that the application meets the core criteria, a TCO is issued, effectively applying a prescribed tariff item from the Customs Tariff Act 1995. The geographic reach of this legislation is national, applying across all states and territories within Australia. The Act does not specify exclusions, but it does exclude certain goods from being subject to a TCO as outlined in section 269SJ. The Act may extend its application through subordinate instruments, which could provide further clarification or additional criteria for TCO applications.
Key Provisions
The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) which can apply lower rates of customs duty to specified goods. According to section 269F, an application can be made to the Chief Executive Officer of Customs (CEO) for such an order, provided that the goods in question are not specified in section 269SJ, which lists goods ineligible for a TCO. The CEO must determine if the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. The definitions of "goods produced in Australia", "ordinary course of business", and "substitutable goods" are provided in sections 269D, 269E, and 269P respectively. If the CEO is satisfied that the application meets these criteria, they are required to make a written order under section 269P(3) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a reduced rate of duty.
The obligations under the Act include the requirement for the CEO to publish a notice in the Gazette inviting submissions if there are concerns about the application for a TCO, as per subsection 269K(1). The CEO must also ensure that any TCO made does not adversely affect the rights of any person, as per subsection 269S(1). This ensures that the rights of existing parties are protected and that no new liabilities are imposed on them. In the case of TCO No. 0837499, which was applied for by Osmoflo Pty Ltd on 29 October 2008 and made on 16 January 2009, the CEO determined that no substitutable goods were produced in Australia, and therefore, the application met the core criteria. The TCO came into force on the day the application was lodged, and importers of the specified goods can apply for a refund of duty from that date.
Failure to comply with the provisions of the Customs Act 1901 may result in various penalties. While the specific offences and penalties are not detailed in the explanatory statement, it is understood that breaches of customs legislation can lead to both civil and criminal consequences. For instance, the importation of goods without the necessary approvals or in violation of tariff laws could result in fines, seizure of goods, and potential criminal charges. The maximum penalties can vary significantly depending on the nature and severity of the breach, but they are designed to enforce compliance and protect the integrity of the customs duty system.