EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0838257
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.
Sun Metals Pty Ltd applied for a TCO in respect of certain electrical diode rectiformer parts on 04 November 2008.
Instrument
TCO No 0838257 was made on 23 January 2009. It declares that those certain electrical diode rectiformer 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. 0838257 is taken to have come into force on 04 November 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. 0838257, made under the Customs Act 1901, addresses the problem of ensuring fair access to essential goods that are not produced domestically, thus providing economic benefits by reducing the cost of these goods through tariff concessions. Enacted by the Chief Executive Officer of Customs, the instrument aims to facilitate the importation of specific goods without imposing additional burdens on importers or disadvantaging any party by retroactively applying the concessions from the date of the application. This legislative measure was introduced to support industries by reducing the customs duty on certain electrical diode rectiformer parts, thereby improving the competitiveness of businesses that rely on these components.
Scope and Application
The Tariff Concession Instrument No. 0838257, made under Part XVA of the Customs Act 1901, applies to individuals or entities seeking tariff concessions on specific goods imported into Australia. The scope of the Act is primarily concerned with applications for Tariff Concession Orders (TCOs) which allow for a reduced rate of customs duty on goods not produced in Australia in the ordinary course of business. The legislation allows the Chief Executive Officer of Customs to assess applications and, if deemed appropriate, to issue a TCO, effectively reducing the duty rate on the specified goods. This legislation is applicable across the Commonwealth of Australia and extends to all entities and individuals involved in the importation of the specified goods, including importers who can apply for a refund of duty under the Customs Regulations 1995. The TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on persons for actions taken prior to the TCO's effective date. Additionally, the Act provides for the possibility of further regulation through subordinate instruments, which could expand or restrict the application of the TCO scheme.
Key Provisions
The Customs Act 1901 provides a framework for the implementation of Tariff Concession Orders (TCOs), as outlined in Part XVA of the Act (s 269C). This legislation enables the Chief Executive Officer of Customs (CEO) to reduce the rate of customs duty on specified goods, provided certain conditions are met. A TCO application can be made by a person under section 269F if the goods are not excluded as per section 269SJ. The core criteria for a TCO, as per section 269C, require that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Definitions of key terms, such as 'substitutable goods' and 'ordinary course of business', are provided in sections 269D and 269E. If the CEO is satisfied that the application meets the core criteria, they must issue a written order under section 269P(3).
The Act imposes obligations on both the CEO and applicants for TCOs. The CEO must ensure that applications meet the core criteria and, if satisfied, must make a TCO (s 269P(3)). The CEO is also required to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed (s 269K(1)). In the case of TCO No. 0838257, the CEO did not receive any submissions. Once a TCO is issued, it comes into force on the date the application was lodged, as per subsection 269S(1). This means that the TCO benefits importers by allowing them to apply for a refund of duty on goods imported since the effective date of the TCO (Reg. 126(1)(r)).
Breach of the provisions in the Customs Act 1901 can lead to various legal consequences. While the explanatory statement does not detail specific offences or penalties, it is reasonable to infer that any non-compliance with the Act or its regulations could result in civil or criminal penalties. Under Australian law, breaches of customs regulations can lead to fines and, in serious cases, imprisonment. The maximum penalties for customs-related offences can vary significantly depending on the nature and severity of the breach, but they can include substantial fines and lengthy prison sentences for wilful and repeated violations. The Act's provisions are designed to ensure that the scheme for TCOs operates fairly and effectively, with clear implications for those who fail to comply with its requirements.